485BPOS 1 d485bpos.txt PE AMT. #6 TO FORM S-6 PLAT. INV. VUL I & II Registration No. 333-42567 As filed with the Securities and Exchange Commission on December 11, 2001 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-6 POST-EFFECTIVE AMENDMENT NO. 6 TO REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R (Exact Name of Trust) AMERICAN GENERAL LIFE INSURANCE COMPANY (Exact Name of Depositor) 2727-A Allen Parkway Houston, Texas 77019-2191 (Complete Address of Depositor's Principal Executive Offices) Pauletta P. Cohn, Esq. General Counsel, Life Insurance Operations American General Life Companies 2929 Allen Parkway Houston, Texas 77019 (Name and Complete Address of Agent for Service) Title and Amount of Securities Being Registered: An Indefinite Amount of Units of Interest in American General Life Insurance Company Separate Account VL-R Under Variable Life Insurance Policies Amount of Filing Fee: None required. It is proposed that this filing will become effective on January 2, 2002 pursuant to paragraph (b) of Rule 485. Registrant elects to be governed by Rule 63-e(T)(b)(13)(i)(A) under the Investment Company Act of 1940, with respect to the Variable Life Insurance Policies described in the Prospectus. NOTE This Post-Effective Amendment No. 6 to the Form S-6 Registration Statement No. 333-42567 ("Registration Statement") of American General Life Insurance Company ("Depositor") and its Separate Account VL-R ("Registrant") is being filed solely for the purposes of (a) including in the Registration Statement a supplement for the purpose of adding three additional investment options, (b) changing the name of one of the Funds and two of the investment options available under the Policies, (c) updating financials and (d) updating Part II information for the Depositor and the Registrant. All other pertinent information regarding this Registration Statement, including the Prospectus, was previously filed in Registrant's Post-Effective Amendment No. 5 on April 25, 2001, and is incorporated by reference herein. AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R RECONCILIATION AND TIE BETWEEN ITEMS IN FORM N-8B-2 AND THE PROSPECTUS (PURSUANT TO INSTRUCTION 4 OF FORM S-6) CROSS REFERENCE SHEET ITEM NO. OF FORM N-8B-2* PROSPECTUS CAPTION ------------------------ ------------------ 1 Additional Information: Separate Account VL-R 2 Additional Information: AGL. 3 Inapplicable.** 4 Additional Information: Distribution of Policies. 5, 6 Additional Information: Separate Account VL-R. 7 Inapplicable.** 8 Inapplicable.** 9 Additional Information: Legal Matters. 10(a) Additional Information: Your Beneficiary, Assigning Your Policy. 10(b) Basic Questions You May Have: How will the value of my investment in a Policy change over time? 10(c)(d) Basic Questions You May Have: How can I change my Policy's insurance coverage? How can I access my investment in a Policy? Can I choose the form in which AGL pays out any proceeds from my Policy? 10(e) Basic Questions You May Have: Must I invest any minimum amount in a policy? 10(f) Additional Information: Voting Privileges. 10(g)(1), 10(g)(4), 10(h)(3), 10(h)(2) Basic Questions You May Have: To what extent will AGL vary the terms and conditions of the Policies in particular cases? Additional Information: Voting Privileges; Additional Rights That We Have. 10(g)(3), 10(g)(4), 10(h)(3), 10(h)(4) Inapplicable.** 10(i) Additional Information: Separate Account VL-R; Tax Effects. 11 Basic Questions You May Have: How will the value of my investment in a Policy change over time? 12(a) Additional Information: Separate Account VL-R. Front Cover. 12(b) Inapplicable.** 12(c), 12(d) Inapplicable.** 12(e) Inapplicable, because the Separate Account did not commence operations. 13(a) Basic Questions You May Have: What charges will AGL deduct from my investment in a Policy? What charges and expenses will the Mutual Funds deduct from the amounts I invest through my Policy? Additional Information: More About Policy Charges. 13(b) Illustrations of Hypothetical Policy Benefits. 13(c) Inapplicable.** 13(d) Basic Questions You May Have: To what extent will AGL vary the terms and conditions of the Policy in particular cases? 13(e), 13(f), 13(g) None. 14 Basic Questions You May Have: How can I invest money in a Policy? 15 Basic Questions You May Have: How can I invest money in a Policy? How do I communicate with AGL? 16 Basic Questions You May Have: How will the value of my investment in a Policy change over time? Additional Information: Separate Account VL-R. ITEM NO. ADDITIONAL INFORMATION -------- ---------------------- 17(a), 17(b) Captions referenced under Items 10(c), 10(d), and 10(e). 17(c) Inapplicable.** 18(a) Captions referred to under Item 16. 18(b), 18(d) Inapplicable.** 18(c) Additional Information: Separate Account VL-R. 19 Additional Information: Separate Account VL-R; Our Reports to Policy Owners. 20(a), 20(b), 20(c), 20(d), 20(e), 20(f) Inapplicable.** 21(a), 21(b) Basic Questions You May Have: How can I access my investment in a Policy? Additional Information: Payment of Policy Proceeds. 21(c) Inapplicable.** 22 Additional Information: Payment of Policy Proceeds- Delay to Challenge Coverage. 23 Inapplicable.** 24 Additional Information. Additional Rights That We Have. 25 Additional Information: AGL. 26 Inapplicable, because the Separate Account has not yet commenced operations. 27 Additional Information: AGL. 28 Additional Information: AGL's Management. 29 Additional Information: AGL. 30, 31, 32, 33, 34 Inapplicable, because the Separate Account has not yet commenced operations. 35 Inapplicable.** 36 Inapplicable.** 37 None. 38, 39 Additional Information: Distribution of the Policies. 40 Inapplicable, because the Separate Account has not yet commenced operations. 41(a) Additional Information: Distribution of the Policies. 41(b), 41(c) Inapplicable.** 42, 43 Inapplicable, because the Separate Account has not yet commenced operations or issued any securities. 44(a)(1), 44(a)(2), 44(a)(3) Basic Questions You May Have: How will the value of my investment in a Policy change over time? 44(a)(4) Additional Information: Tax Effects- Our taxes. 44(a)(5), 44(a)(6) Basic Questions You May Have: What charges will AGL deduct from my investment in a Policy? 44(b) Inapplicable.** 44(c) Caption referenced in 13(d) above. 45 Inapplicable, because the Separate Account has not yet commenced operations. 46(a) Captions referenced in 44(a) above. 46(b) Inapplicable.** 47, 48, 49 None. 50 Inapplicable.** 51 Inapplicable.** 52(a), 52(c) Basic Questions You May Have: To what extent can AGL vary the terms and conditions of the Policy in particular cases? Additional Information: Additional Rights That We Have. 52(b), 52(d) None. 53(a) Additional Information: Tax Effects- Our taxes. 53(b), 54 Inapplicable.** 55 Illustrations of Hypothetical Policy Benefits. 56-59 Inapplicable.** * Registrant includes this Reconciliation and Tie in its Registration Statement in compliance with Instruction 4 as to the Prospectus as set out in Form S-6. Separate Account VL-R (Account) has previously filed a notice of registration as an investment company on Form N-8A under the Investment Company Act of 1940 (Act), and a Form N-8B-2 Registration Statement. Pursuant to Sections 8 and 30(b)(1) of the Investment Company Act of 1940 ("Act"), Rule 30a-1 under the Act, and Forms N-8B-2 and N-SAR under that Act, the Account will keep its Form N-8B-2 Registration Statement current through the filing of periodic reports required by the Securities and Exchange Commission (Commission). ** Not required pursuant to either Instruction 1(a) as to the Prospectus as set out in Form S-6 or the administrative practice of the Commission and its staff of adapting the disclosure requirements of the Commission's registration statement forms in recognition of the differences between variable life insurance policies and other periodic payment plan certificates issued by investment companies and between separate accounts organized as management companies and unit investment trusts. AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R PLATINUM INVESTOR I/SM/ AND PLATINUM INVESTOR II/SM/ FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY SUPPLEMENT DATED JANUARY 2, 2002 TO PROSPECTUS DATED MAY 1, 2001 AS SUPPLEMENTED SEPTEMBER 4, 2001 Effective January 2, 2002, American General Life Insurance Company ("AGL") is amending the prospectus for the purpose of adding three additional investment options and changing the name of one of the Funds and one of its related investment options available under the Policies. FIRST, on page one of the prospectus, add the following information to the chart of Funds, Investment Advisers and Investment Options.
FUND INVESTMENT ADVISER INVESTMENT OPTION ------------------------------------- ---------------------------------- ------------------------------------------------- * Franklin Templeton Variable.......... Franklin Advisers, Inc............. Franklin U.S. Government Fund - Class 2 Insurance Products Trust Franklin Mutual Advisers, LLC...... Mutual Shares Securities Fund - Class 2 Templeton Investment Counsel, LLC.. Templeton International Securities Fund - Class 2
SECOND, add the following information to the chart that begins on page 10 of the prospectus under "What charges and expenses will the Mutual Funds deduct from amounts I invest through my Policy?". Footnotes 2-12 to this chart appear in the prospectus and are not relevant to the addition of these investment options.
FUND OTHER FUND TOTAL FUND MANAGEMENT OPERATING OPERATING FEES (AFTER EXPENSES (AFTER EXPENSES (AFTER EXPENSE 12B-1 EXPENSE EXPENSE NAME OF FUND REIMBURSEMENT) FEES REIMBURSEMENT) REIMBURSEMENT) -------------- ------ ---------------- ---------------- FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST: /1, 13/ Franklin U.S. Government Fund - Class 2 /14/ 0.51% 0.25% 0.01% 0.77% Mutual Shares Securities Fund - Class 2 0.60% 0.25% 0.20% 1.05% Templeton International Securities Fund - Class 2 0.67% 0.25% 0.20% 1.12%
/1/ The Fund's advisers have entered into arrangements under which they pay certain amounts to AGL for services such as proxy mailing and tabulation, mailing of fund related information and responding to Policy owners' inquiries about the Funds. The fees shown above for Total Fund Operating Expenses are unaffected by these arrangements. To the extent we receive these fees, we do not lower the Policy fees we charge you. We do not generate a profit from these fees, but only offset the cost of the services. (See "Certain Arrangements" on page 48 and "Services Agreements" on page 62.) /13/ The Fund's Class 2 distribution plan or "rule 12b-1 plan" is described in the Fund's prospectus. /14/ The Fund pays for administrative expenses indirectly through the Fund Management Fee. THIRD, on page 36 of the prospectus, the first paragraph is deleted in its entirety and replaced with the following: For record keeping and financial reporting purposes, Separate Account VL-R is divided into 68 separate "divisions," 44 of which correspond to the 44 variable "investment options" available since the inception of the Policy. The remaining 24 divisions, and some of these 44 divisions, represent investment options available under other variable life policies we offer. We hold the Mutual Fund shares in which we invest your accumulation value for an investment option in the division that corresponds to that investment option. FOURTH, the name of the Ayco Large Cap Growth Fund I has been changed to Ayco Growth Fund. For a period of time certain reports we issue may refer to Ayco Growth Fund by its former name. FIFTH, the name of North American Funds Variable Product Series I has been changed to VALIC Company I. The name of the Money Market Fund investment option has been changed to Money Market I Fund. American General Advisers, the investment adviser for VALIC Company I, has changed its name to VALIC. For a period of time certain reports we issue may refer to VALIC Company I, Money Market I Fund and VALIC by their former names. 2 REPORT OF INDEPENDENT AUDITORS TO THE BOARD OF DIRECTORS OF AMERICAN GENERAL LIFE INSURANCE COMPANY AND CONTRACT OWNERS OF AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R - PLATINUM INVESTOR DIVISIONS We have audited the accompanying statement of net assets of American General Life Insurance Company Separate Account VL-R - Platinum Investor Divisions (comprised of the following divisions: AIM V.I. International Equity Fund, AIM V.I. Value Fund, Ayco Large Cap Growth Fund I, Dreyfus IP MidCap Stock Portfolio, Dreyfus VIF Quality Bond Portfolio, Dreyfus VIF Small Cap Portfolio, Fidelity VIP Equity-Income Portfolio, Fidelity VIP Growth Portfolio, Janus Aspen International Growth Portfolio-Service Shares, Janus Aspen Worldwide Growth Portfolio-Service Shares, Janus Aspen Aggressive Growth Portfolio-Service Shares, J.P. Morgan Small Company Portfolio, MFS Emerging Growth Series, MFS Research Series, MFS Capital Opportunities Series, MFS New Discovery Series, Neuberger Berman AMT Mid-Cap Growth Portfolio, North American-AG International Equities Fund, North American-AG MidCap Index Fund, North American-AG Money Market Fund, North American-AG Nasdaq-100 Index Fund, North American-AG Stock Index Fund, North American-AG Small Cap Index Fund, North American-T. Rowe Price Science & Technology Fund, PIMCO Short-Term Bond Portfolio Admin. Class, PIMCO Real Return Bond Portfolio Admin. Class, PIMCO Total Return Bond Portfolio Admin. Class, Putnam VT Diversified Income Fund-Class IB Shares, Putnam VT Growth and Income Fund Fund-Class IB Shares, Putnam VT International Growth and Income Fund-Class IB Shares, SAFECO RST-Equity Portfolio, SAFECO RST-Growth Opportunities Portfolio, UIF Equity Growth Portfolio, UIF High Yield Portfolio, Vanguard VIF High Yield Bond Portfolio, Vanguard VIF REIT Index Portfolio, and Van Kampen LIT Strategic Stock Portfolio-Class I Shares) (collectively, the "Separate Account") as of December 31, 2000, and the related statement of operations for the periods then ended and the statement of changes in net assets for the periods ended December 31, 2000 and 1999. The financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included VL-R-1 confirmation of securities owned as of December 31, 2000, by correspondence with the custodians. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the divisions constituting Separate Account VL-R - Platinum Investor Divisions at December 31, 2000, the results of their operations for the periods ended December 31, 2000 and changes in their net assets for the periods ended December 31, 2000 and 1999, in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP Houston, Texas March 5, 2001 VL-R-2 AMERICAN GENERAL LIFE INSURANCE COMPANY PLATINUM INVESTOR DIVISIONS SEPARATE ACCOUNT VL-R SUMMARY OF FINANCIAL STATEMENTS
ALL DIVISIONS -------------- STATEMENT OF NET ASSETS DECEMBER 31, 2000 ASSETS: Investment securities - at market (cost $112,821,387) $ 101,058,131 Due from American General Life Insurance Company 11,263 ------------- NET ASSETS $ 101,069,394 ============== STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 INVESTMENT INCOME: Dividends from mutual funds $ 1,491,035 EXPENSES: Mortality and expense risk and administrative fees (2,139,530) -------------- NET INVESTMENT LOSS (648,495) -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investments 1,401,981 Capital gain distributions from mutual funds 6,912,798 Net unrealized depreciation of investments during the year (16,371,331) -------------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (8,056,552) -------------- DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (8,705,047) ==============
STATEMENTS OF CHANGES IN NET ASSETS ALL DIVISIONS ---------------------------------- 2000 1999 ---------------------------------- OPERATIONS: Net investment loss $ (648,495) $ (418,384) Net realized gain on investments 1,401,981 319,326 Capital gain distributions from mutual funds 6,912,798 968,029 Net unrealized appreciation (depreciation) of investments during the year (16,371,331) 4,188,998 -------------- ------------- Increase (decrease) in net assets resulting from operations (8,705,047) 5,057,969 -------------- ------------- PRINCIPAL TRANSACTIONS: Net premiums 62,375,862 39,086,929 Purchase payments from internal rollover transactions 7,550,436 6,371,853 Cost of insurance and maintenance charges (10,375,835) (4,042,521) Policy loans (1,093,573) (2,664,047) Terminations, withdrawals and net transfers (1,809,544) (290,342) -------------- ------------- Increase in net assets resulting from principal transactions 56,647,346 38,461,872 -------------- ------------- TOTAL INCREASE IN NET ASSETS 47,942,299 43,519,841 NET ASSETS: Beginning of year 53,127,095 9,607,254 -------------- ------------- End of year $ 101,069,394 $ 53,127,095 ============== =============
See accompanying notes. VL-R-3 AMERICAN GENERAL LIFE INSURANCE COMPANY PLATINUM INVESTOR DIVISIONS SEPARATE ACCOUNT VL-R
DIVISIONS -------------------------------------------------- AIM V.I. International AIM V.I. Value Ayco Large Cap Equity Fund Fund Growth Fund I (1) ------------- --------------- ----------------- STATEMENTS OF NET ASSETS DECEMBER 31, 2000 ASSETS: Investment securities - at market $ 3,815,776 $ 12,199,159 $ 8,296 Due from (to) American General Life Insurance Company 287 979 (3) ----------- ------------ ----------- NET ASSETS $ 3,816,063 $ 12,200,138 $ 8,293 =========== ============ =========== STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 INVESTMENT INCOME: Dividends from mutual funds $ 9,435 $ 14,777 $ 8 EXPENSES: Mortality and expense risk and administrative fees (30,646) (184,384) 25 ----------- ------------ ----------- NET INVESTMENT INCOME (LOSS) (21,211) (169,607) 33 ----------- ------------ ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 295,131 295,322 - Capital gain distributions from mutual funds 241,532 514,795 - Net unrealized appreciation (depreciation) of investments during the year (1,612,830) (2,732,337) (417) ----------- ------------ ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (1,076,167) (1,922,220) (417) ----------- ------------ ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(1,097,378) $ (2,091,827) $ (384) =========== ============ ===========
(1) Since inception December 2000. (2) Since inception November 2000. See accompanying notes. VL-R-4
DIVISIONS ------------------------------------------------------------------------------------------------------------------------------------ Janus Aspen Janus Aspen Worldwide Growth Dreyfus IP Dreyfus VIF Fidelity VIP Equity- International Portfolio - MidCap Stock Quality Bond Dreyfus VIF Small Income Portfolio Fidelity VIP Growth Growth Portfolio - Service Portfolio (1) Portfolio Cap Portfolio (2) Portfolio (2) Service Shares (1) Shares (1) ------------------ ------------- ----------------- --------------------- ------------------- -------------------- ------------- $ 5,784 $ 6,731,100 $ 6,034,118 $ 12,789 $ 113,515 $ 11,664 $ 53,786 (1) 576 486 339 (3) 3 (2) ----------- ----------- ------------ ----------- --------- --------- --------- $ 5,783 $ 6,731,676 $ 6,034,604 $ 13,128 $ 113,512 $ 11,667 $ 53,784 =========== =========== ============ =========== ========= ========= ========= $ 10 $ 330,669 $ 19,878 $ - $ - $ 9 $ 15 (4) (55,763) (45,702) (4) (2,496) (33) (32) ----------- ----------- ------------ ----------- --------- --------- --------- 6 274,906 (25,824) (4) (2,496) (24) (17) ----------- ----------- ------------ ----------- --------- --------- --------- - (29,853) 218,126 - (1,013) (32) - 87 - 2,606,064 - - - - 248 299,624 (2,392,534) 340 (2,525) 41 (73) ----------- ----------- ------------ ----------- --------- --------- --------- 335 269,771 431,656 340 (3,538) 9 (73) ----------- ----------- ------------ ----------- --------- --------- --------- $ 341 $ 544,677 $ 405,832 $ 336 $ (6,034) $ (15) $ (90) =========== =========== ============ =========== ========= ========= =========
VL-R-5 AMERICAN GENERAL LIFE INSURANCE COMPANY PLATINUM INVESTOR DIVISIONS SEPARATE ACCOUNT VL-R
DIVISIONS -------------------------------------------------------- Janus Aspen Aggressive J.P. Morgan Small Growth Portfolio - Company Portfolio MFS Emerging Service Shares (1) (2) Growth Series -------------------- ------------------ -------------- STATEMENTS OF NET ASSETS DECEMBER 31, 2000 ASSETS: Investment securities - at market $ 7,490 $ 2,893 $ 10,923,015 Due from (to) American General Life Insurance Company (807) - 915 ---------------- ----------- ------------ NET ASSETS $ 6,683 $ 2,893 $ 10,923,930 ================ =========== ============ STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 INVESTMENT INCOME: Dividends from mutual funds $ - $ - $ - EXPENSES: Mortality and expense risk and administrative fees 14 (13) (88,865) ---------------- ----------- ------------ NET INVESTMENT INCOME (LOSS) 14 (13) (88,865) ---------------- ----------- ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments - - 408,360 Capital gain distributions from mutual funds - - 467,445 Net unrealized appreciation (depreciation) of investments during the year (246) 189 (3,412,811) ---------------- ----------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (246) 189 (2,537,006) ---------------- ----------- ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (232) $ 176 $ (2,625,871) ================ =========== ============
(1) Since inception November 2000. (2) Since inception December 2000. See accompanying notes. VL-R-6
DIVISIONS --------------------------------------------------------------------------------------------------------------------------- Neuberger Berman MFS Capital AMT Mid-Cap North American - North American - North American - MFS Research Opportunities MFS New Discovery Growth AG International AG MidCap Index AG Money Market Series (2) Series (2) Series (2) Portfolio (2) Equities Fund Fund Fund ------------ ------------- ----------------- ---------------- ---------------- ---------------- ---------------- $ 29,394 $ - $ 6,928 $ 103,234 $ 1,088,712 $ 5,883,402 $ 10,292,109 (1) 858 (952) (2) (324) 487 847 ------------ ------------- ----------------- ---------------- --------------- ---------------- ---------------- $ 29,393 $ 858 $ 5,976 $ 103,232 $ 1,088,388 $ 5,883,889 $ 10,292,956 ============ ============ ================= ================ =============== ================ ================ $ - $ - $ - $ - $ 8,780 $ 38,169 $ 502,009 (18) (2) 3 (4,798) (9,817) (33,288) (1,192,542) ------------ ------------ ----------------- ---------------- --------------- ---------------- ---------------- (18) (2) 3 (4,798) (1,037) 4,881 (690,533) ------------ ------------ ----------------- ---------------- --------------- ---------------- ---------------- - - - (3,001) 2,268 (14,243) - - - - - 128,988 1,278,577 - 59 - 37 (458) (287,902) (743,776) - ------------ ------------ ----------------- ---------------- --------------- ---------------- ---------------- 59 - 37 (3,459) (156,646) 520,558 - ------------ ------------ ----------------- ---------------- --------------- ---------------- ---------------- $ 41 $ (2) $ 40 $ (8,257) $ (157,683) $ 525,439 $ (690,533) ============ ============ ================= ================ =============== ================ ================
VL-R-7 AMERICAN GENERAL LIFE INSURANCE COMPANY PLATINUM INVESTOR DIVISIONS SEPARATE ACCOUNT VL-R
DIVISIONS ---------------------------------------------------- North American - North American - North American - AG Nasdaq - 100 AG Stock Index AG Small Cap Index Fund (1) Fund Index Fund (1) ---------------- ---------------- ------------------ STATEMENTS OF NET ASSETS DECEMBER 31, 2000 ASSETS: Investment securities - at market $ 23,441 $ 17,532,418 $ - Due from (to) American General Life Insurance Company 16 1,483 1,026 -------- ------------ ------- NET ASSETS $ 23,457 $ 17,533,901 $ 1,026 ======== ============ ======= STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 INVESTMENT INCOME: Dividends from mutual funds $ 6 $ 126,783 $ - EXPENSES: Mortality and expense risk and administrative fees (757) (289,713) (2) -------- ------------ ------- NET INVESTMENT INCOME (LOSS) (751) (162,930) (2) -------- ------------ ------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments - 241,938 - Capital gain distributions from mutual funds - 476,215 - Net unrealized appreciation (depreciation) of investments during the year (5,126) (2,482,593) - -------- ------------ ------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (5,126) (1,764,440) - -------- ------------ ------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (5,877) $ (1,927,370) $ (2) ======== ============ =======
(1) Since inception December 2000. See accompanying notes. VL-R-8
DIVISIONS ------------------------------------------------------------------------------------------------------------------------------------ Putnam VT North American - T. PIMCO Short- PIMCO Real PIMCO Total Putnam VT Putnam VT International Rowe Price Science Term Bond Return Bond Return Bond Diversified Growth and Growth and & Technology Fund Portfolio Admin. Portfolio Admin. Portfolio Admin. Income Fund - Income Fund - Income Fund - (1) Class (1) Class (1) Class (1) Class IB Shares Class IB Shares Class IB Shares ------------------ ---------------- ---------------- ---------------- --------------- --------------- --------------- $ 5,565 $ 26,927 $ - $ - $ 1,018,282 $ 4,032,118 $ 2,595,449 (796) - 564 561 155 369 1,207 ------------------ ---------------- ---------------- ---------------- --------------- --------------- -------------- $ 4,769 $ 26,927 $ 564 $ 561 $ 1,018,437 $ 4,032,487 $ 2,596,656 ------------------ ---------------- ---------------- ---------------- --------------- --------------- -------------- $ - $ 25 $ - $ - $ 75,607 $ 47,920 $ 69,877 (3) (17) 1 (1) (2,223) 16,944 (24,296) ------------------ ---------------- ---------------- ---------------- --------------- --------------- -------------- (3) 8 1 (1) 73,384 64,864 45,581 ------------------ ---------------- ---------------- ---------------- --------------- --------------- -------------- - - - - (43,714) (174,805) 9,555 - - - - - 229,780 154,309 (237) 21 - - (37,643) 145,753 (175,763) ------------------ ---------------- ---------------- ---------------- --------------- --------------- -------------- (237) 21 - - (81,357) 200,728 (11,899) ------------------ ---------------- ---------------- ---------------- --------------- --------------- -------------- $ (240) $ 29 $ 1 $ (1) $ (7,973) $ 265,592 $ 33,682 ================== ================ ================ ================ =============== =============== ==============
VL-R-9 AMERICAN GENERAL LIFE INSURANCE COMPANY PLATINUM INVESTOR DIVISIONS SEPARATE ACCOUNT VL-R
DIVISIONS ---------------------------------------------------- SAFECO RST- Growth SAFECO RST- Opportunities UIF Equity Growth Equity Portfolio Portfolio Portfolio ---------------- ------------- ----------------- STATEMENTS OF NET ASSETS DECEMBER 31, 2000 ASSETS: Investment securities - at market $ 5,624,462 $ 3,335,361 $ 6,698,451 Due from American General Life Insurance Company 1,180 247 529 ---------------- ------------- ---------------- NET ASSETS $ 5,625,642 $ 3,335,608 $ 6,698,980 ================ ============= ================ STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 INVESTMENT INCOME: Dividends from mutual funds $ 43,090 $ - $ - EXPENSES: Mortality and expense risk and administrative fees (46,316) (23,729) (67,571) ---------------- ------------- ---------------- NET INVESTMENT INCOME (LOSS) (3,226) (23,729) (67,571) ---------------- ------------- ---------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (113,835) 51,044 304,377 Capital gain distributions from mutual funds - 363,673 430,889 Net unrealized appreciation (depreciation) of investments during the year (360,317) (661,337) (1,693,012) ---------------- ------------- ---------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (474,152) (246,620) (957,746) ---------------- ------------- ---------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (477,378) $ (270,349) $ (1,025,317) ================ ============= ================
(1) Since Inception December 2000. See accompanying notes. VL-R-10 DIVISIONS ---------------------------------------------------------------------- Van Kampen LIT Vanguard VIF Vanguard VIF Strategic Stock UIF High Yield High Yield Bond REIT Index Portfolio - Class I Portfolio Portfolio (1) Portfolio (1) Shares -------------- --------------- ------------- ------------------- $ 1,666,741 $ - $ 1,145 $ 1,174,607 134 564 - 342 -------------- --------------- ------------- ------------------- $ 1,666,875 $ 564 $ 1,145 $ 1,174,949 ============== =============== ============= =================== $ 194,199 $ - $ - $ 9,769 (20,152) 1 12 (33,343) -------------- --------------- ------------- ------------------- 174,047 1 12 (23,574) -------------- --------------- ------------- ------------------- (16,049) - - (27,595) - - - 20,444 (342,805) - 14 127,085 -------------- --------------- ------------- ------------------- (358,854) - 14 119,934 -------------- --------------- ------------- ------------------- $ (184,807) $ 1 $ 26 $ 96,360 ============== =============== ============= =================== VL-R-11 AMERICAN GENERAL LIFE INSURANCE COMPANY PLATINUM INVESTOR DIVISIONS SEPARATE ACCOUNT VL-R
DIVISIONS ------------------------------------------------ AIM V.I. International AIM V.I. Value Ayco Large Cap Equity Fund Fund Growth Fund (1) ------------- -------------- --------------- STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 2000 OPERATIONS: Net investment income (loss) $ (21,211) $ (169,607) $ 33 Net realized gain (loss) on investments 295,131 295,322 - Capital gain distributions from mutual funds 241,532 514,795 - Net unrealized appreciation (depreciation) of investments during the year (1,612,830) (2,732,337) (417) ------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (1,097,378) (2,091,827) (384) ------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 796,946 2,231,610 - Purchase payments from internal rollover transactions 25,127 41,361 - Cost of insurance and maintenance charges (433,872) (1,124,681) - Policy loans 33,161 23,502 - Terminations, withdrawals and net transfers 2,296,814 5,868,650 8,677 ------------- -------------- -------------- Increase in net assets resulting from principal transactions 2,718,176 7,040,442 8,677 ------------- -------------- -------------- TOTAL INCREASE IN NET ASSETS 1,620,798 4,948,615 8,293 NET ASSETS: Beginning of year 2,195,265 7,251,523 - ------------- -------------- -------------- End of year $ 3,816,063 $ 12,200,138 $ 8,293 ============= ============== ============== UNITS OUTSTANDING, END OF PERIOD: 343,503.148 961,067.888 852.830 VALUE PER UNIT: $ 11.109252 $ 12.694356 $ 9.723617 STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 1999 OPERATIONS: Net investment income (loss) $ (15,926) $ (37,789) $ - Net realized gain (loss) on investments 21,154 25,143 - Capital gain distributions from mutual funds 58,038 96,007 - Net unrealized appreciation (depreciation) of investments during the year 529,122 857,137 - ------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 592,388 940,498 - ------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 286,903 984,166 - Purchase payments from internal rollover transactions 2,644 89,183 - Cost of insurance and maintenance charges (64,377) (334,169) - Policy loans (10,656) (106,562) - Terminations, withdrawals and net transfers 1,084,795 5,096,907 - ------------- -------------- -------------- Increase in net assets resulting from principal transactions 1,299,309 5,729,525 - ------------- -------------- -------------- TOTAL INCREASE IN NET ASSETS 1,891,697 6,670,023 - NET ASSETS: Beginning of year 303,568 581,500 - ------------- -------------- -------------- End of year $ 2,195,265 $ 7,251,523 $ - ============= ============== ============== UNITS OUTSTANDING, END OF PERIOD: 144,345.508 483,928.161 - VALUE PER UNIT: $ 15.208402 $ 14.984710 $ -
(1) Since inception December 2000. (2) Since inception November 2000. See accompanying notes. VL-R-12
DIVISIONS ------------------------------------------------------------------------------------------------------------------------------------ Fidelity Janus Aspen Janus Aspen Dreyfus IP Dreyfus VIF VIP Equity- International Worldwide Growth MidCap Stock Quality Bond Dreyfus VIF Small Income Portfolio Fedelity VIP Growth Growth Portfolio - Portfolio - Service Portfolio (1) Portfolio Cap Portfolio (2) Portfolio (2) Service Shares (1) Shares (1) ------------- ------------ ----------------- ---------------- ------------------- ------------------ ------------------- $ 6 $ 274,906 $ (25,824) $ (4) $ (2,496) $ (24) $ (17) - (29,853) 218,126 - (1,013) (32) - 87 - 2,606,064 - - - - 248 299,624 (2,392,534) 340 (2,525) 41 (73) ------------- ------------ ---------------- -------------- ----------------- ----------------- ------------------ 341 544,677 405,832 336 (6,034) (15) (90) ------------- ------------ ---------------- -------------- ----------------- ----------------- ------------------ - 592,079 844,458 136 65 150 - - - 5,843 - - - - - (455,287) (434,167) - - - - - 70,169 (8,128) - - - - 5,442 3,677,345 3,393,747 12,656 119,481 11,532 53,874 ------------- ------------ ---------------- -------------- ----------------- ----------------- ------------------ 5,442 3,884,306 3,801,753 12,792 119,546 11,682 53,874 ------------- ------------ ---------------- -------------- ----------------- ----------------- ------------------ 5,783 4,428,983 4,207,585 13,128 113,512 11,667 53,784 - 2,302,693 1,827,019 - - - - ------------- ------------ ---------------- -------------- ----------------- ----------------- ------------------ $ 5,783 $ 6,731,676 $ 6,034,604 $ 13,128 $ 113,512 $ 11,667 $ 53,784 ============= ============ ================ ============== ================= ================= ================== 589.240 611,171.527 468,476.170 1,298.375 12,688.881 1,302.400 5,971.961 $ 9.814198 $ 11.014381 $ 12.881347 $ 10.111470 $ 8.945794 $ 8.958088 $ 9.006153 $ - $ 55,667 $ (24,537) $ - $ - $ - $ - - (14,321) 2,452 - - - - - - - - - - - - (58,368) 267,550 - - - - ------------- ------------ ---------------- -------------- ----------------- ----------------- ------------------ - (17,022) 245,465 - - - - ------------- ------------ ---------------- -------------- ----------------- ----------------- ------------------ - 329,825 371,635 - - - - - 2,644 1,999 - - - - - (91,579) (188,171) - - - - - (55,945) (39,961) - - - - - 1,923,862 988,970 - - - - ------------- ------------ ---------------- -------------- ----------------- ----------------- ------------------ - 2,108,807 1,134,472 - - - - ------------- ------------ ---------------- -------------- ----------------- ----------------- ------------------ - 2,091,785 1,379,937 - - - - - 210,908 447,082 - - - - ------------- ------------ ---------------- -------------- ----------------- ----------------- ------------------ $ - $ 2,302,693 $ 1,827,019 $ - $ - $ - $ - ============= ============ ================ ============== ================= ================= ================== - 230,742.366 159,509.564 - - - - $ - $ 9.979496 $ 11.453979 $ - $ - $ - $ -
VL-R-13 AMERICAN GENERAL LIFE INSURANCE COMPANY PLATINUM INVESTOR DIVISIONS SEPARATE ACCOUNT VL-R
DIVISIONS ----------------------------------------------------- Janus Aspen Aggressive J.P. Morgan Small Growth Portfolio - Company Portfolio MFS Emerging Service Shares (1) (2) Growth Series ------------------ ----------------- ------------- STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 2000 OPERATIONS: Net investment income (loss) $ 14 $ (13) $ (88,865) Net realized gain (loss) on investments - - 408,360 Capital gain distributions from mutual funds - - 467,445 Net unrealized appreciation (depreciation) of investments during the year (246) 189 (3,412,811) ------------------ ----------------- ------------ Increase (decrease) in net assets resulting from operations (232) 176 (2,625,871) ------------------ ----------------- ------------ PRINCIPAL TRANSACTIONS: Net premiums 29 39 1,806,994 Purchase payments from internal rollover transactions - - 53,922 Cost of insurance and maintenance charges (60) - (744,093) Policy loans - - (74,541) Terminations, withdrawals and net transfers 6,946 2,678 8,126,645 ------------------ ----------------- ------------ Increase in net assets resulting from principal transactions 6,915 2,717 9,168,927 ------------------ ----------------- ------------ TOTAL INCREASE IN NET ASSETS 6,683 2,893 6,543,056 NET ASSETS: Beginning of year - - 4,380,874 ------------------ ----------------- ------------ End of year $ 6,683 $ 2,893 $ 10,923,930 ================== ================= ============ UNITS OUTSTANDING, END OF PERIOD: 861.017 306.563 657,978.793 VALUE PER UNIT: $ 7.761251 $ 9.436826 $ 16.602253 STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 1999 OPERATIONS: Net investment income (loss) $ - $ - $ 13,224 Net realized gain on investments - - 67,519 Capital gain distributions from mutual funds - - - Net unrealized appreciation (depreciation) of investments during the year - - 1,407,958 ------------------ ----------------- ------------ Increase (decrease) in net assets resulting from operations - - 1,488,701 ------------------ ----------------- ------------ PRINCIPAL TRANSACTIONS: Net premiums - - 498,236 Purchase payments from internal rollover transactions - - 89,183 Cost of insurance and maintenance charges - - (157,435) Policy loans - - (85,249) Terminations, withdrawals and net transfers - - 2,205,588 ------------------ ----------------- ------------ Increase in net assets resulting from principal transactions - - 2,550,323 ------------------ ----------------- ------------ TOTAL INCREASE IN NET ASSETS - - 4,039,024 NET ASSETS: Beginning of year - - 341,850 ------------------ ----------------- ------------ End of year $ - $ - $ 4,380,874 ================== ================= ============ UNITS OUTSTANDING, END OF PERIOD: - - 210,553.680 VALUE PER UNIT: $ - $ - $ 20.806447
(1) Since inception November 2000. (2) Since inception December 2000. See accompanying notes. VL-R-14
DIVISIONS ------------------------------------------------------------------------------------------------------------------------------------ MFS Capital Neuberger Berman North American - North American - North American - MFS Research Opportunities MFS New Discovery AMT Mid-Cap AG International AG MidCap Index AG Money Market Series (2) Series (2) Series (2) Growth Profolio (2) Equities Fund Fund Fund ------------ ------------- ----------------- ------------------- ---------------- ---------------- ---------------- $ (18) $ (2) $ 3 $ (4,798) $ (1,037) $ 4,881 $ (690,533) - - - (3,001) 2,268 (14,243) - - - - - 128,988 1,278,577 - 59 - 37 (458) (287,902) (743,776) - ------------ ------------- ----------------- ------------------- ---------------- ---------------- --------------- 41 (2) 40 (8,257) (157,683) 525,439 (690,533) ------------ ------------- ----------------- ------------------- ---------------- ---------------- --------------- - 34 68 36 146,223 745,532 45,679,836 - - - - 386 2,329 7,228,677 - (8) - - (103,391) (369,033) (2,979,374) - - - - (272) 68,927 (1,043,919) 29,352 834 5,868 111,453 782,668 3,045,643 (45,185,662) ------------ ------------- ----------------- ------------------- ---------------- ---------------- --------------- 29,352 860 5,936 111,489 825,614 3,493,398 3,699,558 ------------ ------------- ----------------- ------------------- ---------------- ---------------- --------------- 29,393 858 5,976 103,232 667,931 4,018,837 3,009,025 - - - - 420,457 1,865,052 7,283,931 ------------ ------------- ----------------- ------------------- ---------------- ---------------- --------------- $ 29,393 $ 858 $ 5,976 $ 103,232 $ 1,088,388 $ 5,883,889 $ 10,292,956 ============ ============= ================= =================== ================ ================ =============== 3,266.797 96.135 639.747 12,427.475 97,047.375 395,606.281 917,345.841 $ 8.997476 $ 8.922557 $ 9.341320 $ 8.306729 $ 11.215019 $ 14.873092 $ 11.220366 $ - $ - $ - $ - $ (4,331) $ 1,657 $ (421,477) - - - - 3,319 14,314 - - - - - 19,333.00 397,105.00 - - - - - 42,209 (228,619) - ------------ ------------- ----------------- ------------------- ---------------- ---------------- --------------- - - - - 60,530 184,457 (421,477) ------------ ------------- ----------------- ------------------- ---------------- ---------------- --------------- - - - - 79,364 252,322 31,550,723 - - - - - 29,388 6,018,001 - - - - (42,399) (88,570) (1,297,670) - - - - - (2,664) (2,213,823) - - - - 275,680 1,254,917 (29,863,802) ------------ ------------- ----------------- ------------------- ---------------- ---------------- --------------- - - - - 312,645 1,445,393 4,193,429 ------------ ------------- ----------------- ------------------- ---------------- ---------------- --------------- - - - - 373,175 1,629,850 3,771,952 - - - - 47,282 235,202 3,511,979 ------------ ------------- ----------------- ------------------- ---------------- ---------------- --------------- $ - $ - $ - $ - $ 420,457 $ 1,865,052 $ 7,283,931 ============ ============= ================= =================== ================ ================ =============== - - - - 30,772.162 145,099.120 683,020.883 $ - $ - $ - $ - $ 13.663545 $ 12.853645 $ 10.664287
VL-R-15 AMERICAN GENERAL LIFE INSURANCE COMPANY PLATINUM INVESTOR DIVISIONS SEPARATE ACCOUNT VL-R
DIVISIONS ---------------------------------------------------- North American - North American - North American - AG Nasdaq - 100 AG Stock Index AG Small Cap Index Fund (1) Fund Index Fund (1) ---------------- ---------------- ------------------ STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 2000 OPERATIONS: Net investment income (loss) $ (751) $ (162,930) $ (2) Net realized gain (loss) on investments - 241,938 - Capital gain distributions from mutual funds - 476,215 - Net unrealized appreciation (depreciation) of investments during the year (5,126) (2,482,593) - ---------- -------------- ---------- Increase (decrease) in net assets resulting from operations (5,877) (1,927,370) (2) ---------- -------------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 29,325 4,260,120 53 Purchase payments from internal rollover transactions - 147,430 - Cost of insurance and maintenance charges - (1,268,324) (20) Policy loans - (155,885) - Terminations, withdrawals and net transfers 9 5,313,226 995 ---------- -------------- ---------- Increase in net assets resulting from principal transactions 29,334 8,296,567 1,028 ---------- -------------- ---------- TOTAL INCREASE IN NET ASSETS 23,457 6,369,197 1,026 NET ASSETS: Beginning of year - 11,164,704 - ---------- -------------- ---------- End of year $ 23,457 $ 17,533,901 $ 1,026 ========== ============== ========== UNITS OUTSTANDING, END OF PERIOD: 3,215.675 1,435,517.445 104.852 VALUE PER UNIT: $ 7.294648 $ 12.214342 $ 9.782059 STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 1999 OPERATIONS: Net investment income (loss) $ - $ 25,514 $ - Net realized gain (loss) on investments - 184,308 - Capital gain distributions from mutual funds - 86,440 - Net unrealized appreciation (depreciation) of investments during the year - 838,489 - ---------- -------------- ---------- Increase (decrease) in net assets resulting from operations - 1,134,751 - ---------- -------------- ---------- PRINCIPAL TRANSACTIONS: Net premiums - 2,009,489 - Purchase payments from internal rollover transactions - 95,070 - Cost of insurance and maintenance charges - (699,593) - Policy loans - (47,953) - Terminations, withdrawals and net transfers - 7,390,664 - ---------- -------------- ---------- Increase in net assets resulting from principal transactions - 8,747,677 - ---------- -------------- ---------- TOTAL INCREASE IN NET ASSETS - 9,882,428 - NET ASSETS: Beginning of year - 1,282,276 - ---------- -------------- ---------- End of year $ - $ 11,164,704 $ - ========== ============== ========== UNITS OUTSTANDING, END OF PERIOD: - 822,382.117 - VALUE PER UNIT: $ - $ 13.576054 $ -
(1) Since inception December 2000. See accompanying notes. VL-R-16
DIVISIONS ------------------------------------------------------------------------------------------------------------------------------------ Putnam VT North American - T. PIMCO Short- PIMCO Real PIMCO Total Putnam VT Putnam VT International Rowe Price Science Term Bond Return Bond Return Bond Diversified Growth and Growth and & Technology Fund Portfolio Admin. Portfolio Admin. Portfolio Admin. Income Fund - Income Fund - Income Fund - (1) Class (1) Class (1) Class (1) Class IB Shares Class IB Shares Class IB Shares ------------------- ---------------- ---------------- ---------------- --------------- --------------- ---------------- $ (3) $ 8 $ 1 $ (1) $ 73,384 $ 64,864 $ 45,581 - - - - (43,714) (174,805) 9,555 - - - - - 229,780 154,309 (237) 21 - - (37,643) 145,753 (175,763) --------- ---------- ---------- ---------- ------------ ------------ ------------ (240) 29 1 (1) (7,973) 265,592 33,682 --------- ---------- ---------- ---------- ------------ ------------ ------------ - 41 20 20 191,539 908,484 510,220 - - - - - (7,178) 386 (29) - - - (82,662) (535,691) (253,221) - - - - (31,393) 17,009 (2,790) 5,038 26,857 543 542 123,715 763,530 1,267,656 --------- ---------- ---------- ---------- ------------ ------------ ------------ 5,009 26,898 563 562 201,199 1,146,154 1,522,251 --------- ---------- ---------- ---------- ------------ ------------ ------------ 4,769 26,927 564 561 193,226 1,411,746 1,555,933 - - - - 825,211 2,620,741 1,040,723 --------- ---------- ---------- ---------- ------------ ------------ ------------ $ 4,769 $ 26,927 $ 564 $ 561 $ 1,018,437 $ 4,032,487 $ 2,596,656 ========= ========== ========== ========== ============ ============ ============ 629.273 2,673.619 54.940 54.430 107,206.344 360,304.925 222,879.091 $7.579384 $10.071251 $10.264030 $10.301079 $ 9.499786 $ 11.191872 $ 11.650516 $ - $ - $ - $ - $ 11,677 $ (13,003) $ (6,189) - - - - (3,110) 18,418 4,190 - - - - - 83,791.00 - - - - - (7,535) (145,838) 82,489 --------- ---------- ---------- ---------- ------------ ------------ ------------ - - - - 1,032 (56,632) 80,490 --------- ---------- ---------- ---------- ------------ ------------ ------------ - - - - 216,432 454,003 108,262 - - - - - 23,192 - - - - - (144,359) (197,917) (41,349) - - - - - (39,961) - - - - - 492,961 2,134,835 734,746 --------- ---------- ---------- ---------- ------------ ------------ ------------ - - - - 565,034 2,374,152 801,659 --------- ---------- ---------- ---------- ------------ ------------ ------------ - - - - 566,066 2,317,520 882,149 - - - - 259,145 303,221 158,574 --------- ---------- ---------- ---------- ------------ ------------ ------------ $ - $ - $ - $ - $ 825,211 $ 2,620,741 $ 1,040,723 ========= ========== ========== ========== ============ ============ ============ - - - - 86,070.302 250,833.043 89,838.353 $ - $ - $ - $ - $ 9.587642 $ 10.448149 $ 11.584388
VL-R-17 AMERICAN GENERAL LIFE INSURANCE COMPANY PLATINUM INVESTOR DIVISIONS SEPARATE ACCOUNT VL-R
DIVISIONS ------------------------------------------------------ SAFECO RST- Growth SAFECO RST- Opportunities UIF Equity Growth Equity Portfolio Portfolio Portfolio ---------------- ------------- ----------------- STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 2000 OPERATIONS: Net investment income (loss) $ (3,226) $ (23,729) $ (67,571) Net realized gain (loss) on investments (113,835) 51,044 304,377 Capital gain distributions from mutual funds - 363,673 430,889 Net unrealized appreciation (depreciation) of investments during the year (360,317) (661,337) (1,693,012) ------------ ------------ ------------ Increase (decrease) in net assets resulting from operations (477,378) (270,349) (1,025,317) ------------ ------------ ------------ PRINCIPAL TRANSACTIONS: Net premiums 750,201 641,820 1,389,292 Purchase payments from internal rollover transactions (7,183) (3,203) 62,539 Cost of insurance and maintenance charges (472,359) (435,802) (454,829) Policy loans 75,227 (30,859) (49,911) Terminations, withdrawals and net transfers 2,762,903 796,448 3,874,690 ------------ ------------ ------------ Increase in net assets resulting from principal transactions 3,108,789 968,404 4,821,781 ------------ ------------ ------------ TOTAL INCREASE IN NET ASSETS 2,631,411 698,055 3,796,464 NET ASSETS: Beginning of year 2,994,231 2,637,553 2,902,516 ------------ ------------ ------------ End of year $ 5,625,642 $ 3,335,608 $ 6,698,980 ============ ============ ============ UNITS OUTSTANDING, END OF PERIOD: 525,483.607 398,260.210 522,047.496 VALUE PER UNIT: $ 10.705647 $ 8.375448 $ 12.832128 STATEMENT OF CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 1999 OPERATIONS: Net investment income (loss) $ (7,494) $ (31,962) $ (3,201) Net realized gain (loss) on investments 23,265 (44,931) 13,446 Capital gain distributions from mutual funds 135,302 - 91,761.00 Net unrealized appreciation (depreciation) of investments during the year (57,164) 227,476 476,708 ------------ ------------ ------------ Increase (decrease) in net assets resulting from operations 93,909 150,583 578,714 ------------ ------------ ------------ PRINCIPAL TRANSACTIONS: Net premiums 523,017 585,529 441,551 Purchase payments from internal rollover transactions 4 - 20,545 Cost of insurance and maintenance charges (198,534) (273,920) (117,398) Policy loans (50,617) (5,328) (5,328) Terminations, withdrawals and net transfers 2,187,016 1,430,705 1,456,661 ------------ ------------ ------------ Increase in net assets resulting from principal transactions 2,460,886 1,736,986 1,796,031 ------------ ------------ ------------ TOTAL INCREASE IN NET ASSETS 2,554,795 1,887,569 2,374,745 NET ASSETS: Beginning of year 439,436 749,984 527,771 ------------ ------------ ------------ End of year $ 2,994,231 $ 2,637,553 $ 2,902,516 ============ ============ ============ UNITS OUTSTANDING, END OF PERIOD: 247,639.492 293,295.140 198,132.167 VALUE PER UNIT: $ 12.091087 $ 8.992831 $ 14.649396
(1) Since inception December 2000. See accompanying notes. VL-R-18 DIVISIONS -------------------------------------------------------------------------- Van Kampen LIT Vanguard VIF Vanguard VIF Strategic Stock UIF High Yield High Yield Bond REIT Index Portfolio - Class I Portfolio Portfolio (1) Portfolio (1) Shares -------------- --------------- ------------- ------------------- $ 174,047 $ 1 $ 12 $ (23,574) (16,049) - - (27,595) - - - 20,444 (342,805) - 14 127,085 ------------ --------- ---------- ------------ (184,807) 1 26 96,360 ------------ --------- ---------- ------------ 502,186 20 39 348,247 - - - - (136,483) - - (92,449) (4,496) - - 20,626 512,541 543 1,080 365,497 ------------ --------- ---------- ------------ 873,748 563 1,119 641,921 ------------ --------- ---------- ------------ 688,941 564 1,145 738,281 977,934 - - 436,668 ------------ --------- ---------- ------------ $ 1,666,875 $ 564 $ 1,145 $ 1,174,949 ============ ========= ========== ============ 177,064.449 57.087 104.923 103,852.489 $ 9.413945 $9.881840 $10.912613 $ 11.313631 $ 45,550 $ - $ - $ (5,764) 1,271 - - 2,889 - - - 252 (22,995) - - (19,621) ------------ --------- ---------- ------------ 23,826 - - (22,244) ------------ --------- ---------- ------------ 294,761 - - 100,711 - - - - (78,833) - - (26,248) - - - - 594,044 - - 321,109 ------------ --------- ---------- ------------ 809,972 - - 395,572 ------------ --------- ---------- ------------ 833,798 - - 373,328 144,136 - - 63,340 ------------ --------- ---------- ------------ $ 977,934 $ - $ - $ 436,668 ============ ========= ========== ============ 92,186.504 - - 41,452.063 $ 10.608209 $ - $ - $ 10.534296 VL-R-19 NOTES TO FINANCIAL STATEMENTS PLATINUM INVESTOR DIVISIONS SEPARATE ACCOUNT VL-R Note A - Organization The Platinum Investor Divisions (the "Divisions") of American General Life Insurance Company Separate Account VL-R (the "Separate Account") received their first deposits in May 1998. The Separate Account was established by resolution of the Board of Directors of American General Life Insurance Company (the "Company") on May 6, 1997. The Separate Account is registered under the Investment Company Act of 1940 as a unit investment trust and consists of sixty- five investment divisions at December 31, 2000. The forty-one Divisions, funded by series of independently managed mutual fund portfolios ("Funds"), available to Platinum Investor I and Platinum Investor II Variable Life Insurance policy owners are as follows: AIM Variable Insurance Funds ("V.I."): AIM V.I. International Equity Fund AIM V.I. Value Fund American Century Variable Portfolios, Inc. ("VP"): VP Value Fund/(1)/* Ayco Series Trust: Ayco Large Cap Growth Fund I /2)/* Dreyfus Investment Portfolios ("IP"): MidCap Stock Portfolio/(1)/ Dreyfus Variable Investment Fund ("VIF") Quality Bond Portfolio Small Cap Portfolio Fidelity Variable Insurance Products Fund ("VIP"): VIP Equity-Income Portfolio/(1)/ VIP Growth Portfolio/(1)/ VIP Asset Manager Portfolio/(1)/* VIP Contrafund Portfolio/(1)/* Janus Aspen Series - Service Shares: International Growth Portfolio/(1)/ Worldwide Growth Portfolio/(1)/ Aggressive Growth Portfolio/(1)/ J.P. Morgan Series Trust II: J.P. Morgan Small Company Portfolio/(1)/ MFS Variable Insurance Trust: MFS Emerging Growth Series MFS Research Series/(1)/ MFS Capital Opportunities Series/(1)/ MFS New Discovery Series/(1)/ Neuberger Berman Advisers Management Trust ("AMT"): Mid-Cap Growth Portfolio/(1)/ North American Funds Variable Product Series I/(3)/ (a related party): International Equities Fund MidCap Index Fund Money Market Fund Nasdaq-100 Index Fund/(1)/* Stock Index Fund Small Cap Index Fund/(1)/ Science & Technology Fund/(1)/* PIMCO Variable Insurance Trust Admin. Class: PIMCO Short-Term Bond Portfolio/(1)/* PIMCO Real Return Bond Portfolio/(1)/* PIMCO Total Return Bond Portfolio/(1)/* Putnam Variable Trust - Class IB Shares ("VT"): Putnam VT Diversified Income Fund Putnam VT Growth and Income Fund Putnam VT International Growth and Income Fund SAFECO Resource Series Trust ("RST"): Equity Portfolio Growth Opportunities Portfolio/(4)/ The Universal Institutional Funds, Inc. ("UIF"): Equity Growth Portfolio High Yield Portfolio Vanguard Variable Insurance Fund ("VIF"): High Yield Bond Portfolio/(1)/* REIT Index Portfolio/(1)/* Van Kampen Life Investment Trust ("LIT") - Class I Shares: Strategic Stock Portfolio Warburg Pincus Trust: Small Company Growth Portfolio/(1)/* * As of December 31, 2000, these Divisions are not active. (1) Effective November 1, 2000, these additional divisions became available to Platinum Investor contract owners. (2) Effective December 1, 2000, the Ayco Large Cap Growth Fund I became an additional division available to Platinum Investor contract owners. (3) Effective October 1, 2000, American General Series Portfolio Company (AGSPC) changed its name to North American Funds Variable Product Series I. (4) Effective May 1, 2000, SAFECO Growth Portfolio changed its name to SAFECO Growth Opportunities Portfolio. VL-R-20 Note A - Organization - Continued Net premiums are allocated to the Divisions and invested in accordance with contract owner's instructions. There is no assurance that the investment objectives of any of the divisions will be met. Contract owners solely bear the investment risk of premium payments allocated to a division. Note B - Summary of Significant Accounting Policies and Basis of Presentation The accompanying financial statements of the Divisions of the Separate Account have been prepared on the basis of accounting principles generally accepted in the United States ("GAAP"). The accounting principles followed by the Divisions and the methods of applying those principles are presented below. Security valuation - The investments in shares of the Funds listed above are valued at the closing net asset value (market) per share as determined by the fund on the day of measurement. Security transactions and related investment income - Security transactions are accounted for on the date the order to buy or sell is executed (trade date). Dividend income and distributions of capital gains are recorded on the ex- dividend date and reinvested upon receipt. Realized gains and losses from security transactions are determined on the basis of identified cost. Policy loans - When a policy loan is made, the loan amount is transferred to the Company from the policyholder's selected investment Division(s), and held as collateral. Interest on this collateral amount is credited to the policy at an effective annual rate of 4%, and loan interest is charged to the policy at an effective annual rate of 4.75%. Loan repayments are invested in the policyholder's selected investment Division(s), after they are first used to repay all loans taken from the declared fixed interest account option. Contract charges Deductions from premium payments. Certain jurisdictions require that a deduction be made from each premium payment for taxes. The amount of such deduction currently ranges from 0.75% to 3.5%. Prior to allocation to the Separate Account, an additional 2.5% is deducted from each after-tax premium payment. For the year ended December 31, 2000, this deduction totaled $1,562,406. Separate Account charges. Currently, daily charges at an annual rate of 0.75% on the daily net asset value of the Divisions are paid to the Company. These charges are made in return for the Company's assumption of mortality and expense risks associated with the policies issued. For each policy, a reduction in the current daily charge by 0.25% will occur after policy year 10, and a further reduction of 0.25% will occur after policy year 20. Because the policies were first offered in 1998, no decreases in daily charges have occurred for any outstanding policy. Other charges paid to the Company include: deductions for monthly maintenance charges, the cost of insurance, additional benefit riders, and withdrawal charges. The monthly maintenance charge deduction is $6 for each policy in force. An additional monthly expense deduction for Platinum Investor II policies is charged during the first two policy years, and for the first two years on any increase in specified amount. The amount of this charge varies from $0.0999 per $1,000 of specified amount to $1.88 per $1,000 of specified amount (or increase in specified amount), depending upon the age and other characteristics of the insured person. Since determination of both the insurance rate and the Company's net amount at risk depends upon several factors, the cost of insurance deduction may vary from month to month. Policy accumulation value, specified amount of insurance and certain characteristics of the insured person are among the variables included in the calculation for the monthly cost of insurance deduction. For the year ended December 31, 2000, cost of insurance, maintenance charges, and additional expense deductions of $10,375,835 were collected. VL-R-21 SEPARATE ACCOUNT VL-R - PLATINUM INVESTOR DIVISIONS NOTES TO FINANCIAL STATEMENTS - CONTINUED Note B - Summary of Significant Accounting Policies and Basis of Presentation - Continued Contract charges - Continued Surrender charges are deducted for the Platinum Investor I policies if the policy is surrendered during the policy's first 10 years. Beginning in the fourth policy year, the amount of the surrender charge decreases by a constant amount each policy year. In addition, a $25 transaction fee per policy is charged for each partial surrender made. Total surrender charges collected for the year ended December 31, 2000 were $256,506. Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the period. Actual results could differ from those estimates. Note C - Federal Income Taxes The Company is taxed as a life insurance company under the Internal Revenue Code and includes the operations of the Separate Account in determining its federal income tax liability. As a result, the Separate Account is not taxed as a "Regulated Investment Company" under subchapter M of the Internal Revenue Code. Under existing federal income tax law, the investment income and capital gains from sales of investments realized by the Separate Account are not taxable. Therefore, no federal income tax provision has been made. Note D - Investments For the period ended December 31, 2000, the aggregate cost of purchases and proceeds from the sales of investments were:
Funds Purchases Sales AIM V.I. International Equity Fund $ 4,244,753 $ 1,306,407 AIM V.I. Value Fund 8,749,154 1,364,056 Ayco Large Cap Growth Fund I 8,714 - Dreyfus IP MidCap Stock Portfolio 5,536 - Dreyfus VIF Quality Bond Portfolio 5,001,756 842,977 Dreyfus VIF Small Cap Portfolio 7,116,674 735,054 Fidelity VIP Equity-Income Portfolio 12,449 - Fidelity VIP Growth Portfolio 187,477 70,425 Janus Aspen International Growth Portfolio - Service Shares 13,043 1,388 Janus Aspen Worldwide Growth Portfolio - Service Shares 53,859 - Janus Aspen Aggressive Growth Portfolio - Service Shares 7,736 - J.P. Morgan Small Company Portfolio 2,704 - MFS Emerging Growth Series 10,608,565 1,061,703 MFS Research Series 29,334 - MFS New Discovery Series 6,891 - Neuberger Berman AMT Mid-Cap Growth Portfolio 175,831 69,138 North American - AG International Equities Fund 1,100,015 146,000 North American - AG MidCap Index Fund 5,391,726 615,242 North American - AG Money Market Fund 36,329,773 33,321,146 North American - AG Nasdaq - 100 Index Fund 28,566 - North American - AG Stock Index Fund 10,825,143 2,216,085 North American - T. Rowe Price Science & Technology Fund 5,802 - PIMCO Short-Term Bond Portfolio - Admin. Class 26,906 - Putnam VT Diversified Income Fund - Class IB Shares 673,743 399,130 Putnam VT Growth and Income Fund - Class IB Shares 2,456,687 1,016,096 Putnam VT International Growth and Income Fund - Class IB Shares 2,187,196 465,764 SAFECO RST-Equity Portfolio 4,775,925 1,671,356 SAFECO RST-Growth Opportunities Portfolio 2,278,161 969,898 UIF Equity Growth Portfolio 6,138,107 953,359 UIF High Yield Portfolio 1,306,711 258,989 Vanguard VIF REIT Index Portfolio 1,131 - Van Kampen LIT Strategic Stock Portfolio - Class I Shares 796,677 157,988 ------------ ----------- Total $110,546,745 $47,642,201 ============ ===========
VL-R-22 Note E - Investments The cost of fund shares is the same for financial reporting and federal income tax purposes. The following is a summary of fund shares owned as of December 31, 2000:
Value of Unrealized Net Asset Shares at Cost of Shares Appreciation/ Funds Shares Value Market Held (Depreciation) AIM Variable Insurance Funds ---------------------------- AIM V.I. International Equity Fund 189,650.917 $ 20.12 $ 3,815,776 $ 4,875,758 $(1,059,982) AIM V.I. Value Fund 446,692.029 27.31 12,199,159 14,025,335 (1,826,176) ----------- ----------- ----------- 16,014,935 18,901,093 (2,886,158) Ayco Series Trust ----------------- Ayco Large Cap Growth Fund I 853.534 9.72 8,296 8,714 (418) Dreyfus Investment Portfolio ---------------------------- MidCap Stock Portfolio 404.748 14.29 5,784 5,536 248 Dreyfus Variable Investment Fund -------------------------------- Quality Bond Fund 590,965.776 11.39 6,731,100 6,491,974 239,126 Small Cap Portfolio 149,729.985 40.30 6,034,118 8,142,361 (2,108,243) ----------- ----------- ----------- 12,765,218 14,634,335 (1,869,117) Fidelity Variable Insurance Products Fund ----------------------------------------- VIP Equity-Income Portfolio 503.292 25.41 12,789 12,449 340 VIP Growth Portfolio 2,613.735 43.43 113,515 116,039 (2,524) ----------- ----------- ----------- 126,304 128,488 (2,184) Janus Aspen Series - Service Shares ----------------------------------- International Growth Portfolio 380.682 30.64 11,664 11,623 41 Worldwide Growth Portfolio 1,462.757 36.77 53,786 53,859 (73) Aggressive Growth Portfolio 208.232 35.97 7,490 7,736 (246) ----------- ----------- ----------- 72,940 73,218 (278) J.P. Morgan Series Trust II --------------------------- J.P. Morgan Small Company Portfolio 201.214 14.38 2,893 2,704 189 MFS Variable Insurance Trust ---------------------------- MFS Emerging Growth Series 378,745.318 28.84 10,923,015 12,870,346 (1,947,331) MFS Reasearch Series 1,413.150 20.80 29,394 29,334 60 MFS New Discovery Series 417.097 16.61 6,928 6,891 37 ----------- ----------- ----------- 10,959,337 12,906,571 (1,947,234) Neuberger Berman Advisers Management Trust ------------------------------------------ Mid-Cap Growth Portfolio 4,592.252 22.48 103,234 103,692 (458) North American Funds Variable Product Series I ---------------------------------------------- International Equities Fund 109,970.903 9.90 1,088,712 1,333,269 (244,557) MidCap Index Fund 299,409.757 19.65 5,883,402 6,826,383 (942,981) Money Market Fund 10,292,108.590 1.00 10,292,109 10,292,109 - Nasdaq-100 Index Fund 3,535.561 6.63 23,441 28,566 (5,125) Stock Index Fund 451,866.449 38.80 17,532,418 19,018,931 (1,486,513) Science & Technology Fund 246.471 22.58 5,565 5,802 (237) ----------- ----------- ----------- 34,825,647 37,505,060 (2,679,413)
VL-R-23 SEPARATE ACCOUNT VL-R - PLATINUM INVESTOR DIVISIONS NOTES TO FINANCIAL STATEMENTS - CONTINUED Note E - Investments - Continued
Value at Unrealized Net Asset Shares at Cost of Shares Appreciation/ Funds Shares Value Market Held (Depreciation) PIMCO Variable Insurance Trust Admin Class ------------------------------------------ PIMCO Short-Term Bond Portfolio 2,690.018 $ 10.01 $ 26,927 $ 26,906 $ 21 Putnam Variable Trust - Class IB Shares --------------------------------------- Putnam VT Diversified Income Fund 111,776.251 9.11 1,018,282 1,060,784 (42,502) Putnam VT Growth and Income Fund 156,526.322 25.76 4,032,118 4,014,847 17,271 Putnam VT International Growth and Income Fund 195,882.944 13.25 2,595,449 2,680,393 (84,944) ------------ ------------ ------------ 7,645,849 7,756,024 (110,175) SAFECO Resource Series Trust ---------------------------- Equity Portfolio 204,823.830 27.46 5,624,462 6,020,543 (396,081) Growth Opportunities Portfolio 177,318.490 18.81 3,335,361 3,782,932 (447,571) ------------ ------------ ------------ 8,959,823 9,803,475 (843,652) The Universal Institutional Funds, Inc. --------------------------------------- Equity Growth Portfolio 399,668.890 16.76 6,698,451 7,865,171 (1,166,720) High Yield Portfolio 209,389.623 7.96 1,666,741 2,035,624 (368,883) ------------ ------------ ------------ 8,365,192 9,900,795 (1,535,603) Vanguard Variable Insurance Fund -------------------------------- REIT Index Portfolio 95.115 12.04 1,145 1,131 14 Van Kampen Life Investment Trust -------------------------------- Strategic Stock Portfolio - Class I Shares 98,211.254 11.96 1,174,607 1,063,645 110,962 ------------ ------------ ------------ Total $101,058,131 $112,821,387 $(11,763,256) ============ ============ ============
VL-R-24 Note F - Summary of Changes in Units Summary of Changes in Units for the Year Ended December 31, 2000
DIVISIONS ---------------------------------------------------------------------------------------- AIM V.I. Dreyfus IP Dreyfus VIF Dreyfus VIF International AIM V.I. Value Ayco Large Cap MidCap Stock Quality Bond Small Cap Equity Fund Fund Growth Fund I Portfolio Portfolio Portfolio Outstanding at beginning of year 144,345.508 483,928.161 - - 230,742.366 159,509.564 Net premiums 62,501.070 149,501.730 - - 56,548.388 65,528.332 Transfers between funds 170,734.833 406,293.860 852.830 589.240 375,638.426 289,485.799 Cost of insurance and administrative charges (29,609.336) (68,727.348) - - (42,820.594) (41,742.780) Policy loans 1,960.478 1,986.456 - - 6,814.094 (808.692) Surrenders (6,429.405) (11,914.971) - - (15,751.153) (3,496.053) ----------- ----------- ------- ------- ----------- ----------- Outstanding at end of year 343,503.148 961,067.888 852.830 589.240 611,171.527 468,476.170 =========== =========== ======= ======= =========== ===========
Janus Aspen Janus Aspen Janus Aspen Fidelity VIP International Worldwide Aggressive J.P. Morgan Equity-Income Fidelity VIP Growth Portfolio Growth Portfolio Growth Portfolio- Small Company Portfolio Growth Portfolio - Service Shares - Service Shares Service Shares Portfolio Outstanding at beginning of year - - - - - - Net premiums 13.584 6.132 16.104 - 3.334 4.448 Transfers between funds 1,284.791 12,682.749 1,286.296 5,971.961 860.586 302.115 Cost of insurance and administrative charges - - - - (2.903) - Policy loans - - - - - - Surrenders - - - - - - --------- ---------- --------- --------- ------- ------- Outstanding at end of year 1,298.375 12,688.881 1,302.400 5,971.961 861.017 306.563 ========= ========== ========= ========= ======= =======
Neuberger MFS Capital MFS New Berman AMT Mid- North American- MFS Emerging MFS Research Opportunities Discovery Cap Growth AG International Growth Series Series Series Series Portfolio Equities Fund Outstanding at beginning of year 210,553.680 - - - - 30,772.162 Net premiums 91,883.899 - 3.725 7.715 3.304 11,848.238 Transfers between funds 421,312.896 3,266.797 92.795 632.032 12,424.171 59,891.349 Cost of insurance and administrative charges (46,869.070) - (0.385) - - (5,281.861) Policy loans (3,755.042) - - - - (19.505) Surrenders (15,147.570) - - - - (163.008) ----------- --------- ------ ------- ---------- ---------- Outstanding at end of year 657,978.793 3,266.797 96.135 639.747 12,427.475 97,047.375 =========== ========= ====== ======= ========== ==========
North American- T. Rowe Price North American North American North American North American- North American Science & -AG MidCap -AG Money -AG Nasdaq - AG Stock Index -AG Small Cap Technology Index Fund Market Fund 100 Index Fund Fund Index Fund Fund Outstanding at beginning of year 145,099.120 683,020.883 - 822,382.117 - - Net premiums 52,345.622 4,755,450.035 3,215.675 324,353.376 5.550 - Transfers between funds 223,846.089 (4,090,487.373) - 407,084.723 100.864 629.715 Cost of insurance and administrative charges (25,467.157) (298,650.122) - (99,688.700) (1.562) (0.442) Policy loans 5,245.615 (96,741.599) - (11,304.518) - - Surrenders (5,463.008) (35,245.983) - (7,309.553) - - ----------- ----------- --------- ------------- ------- ------- Outstanding at end of year 395,606.281 917,345.841 3,215.675 1,435,517.445 104.852 629.273 =========== =========== ========= ============= ======= =======
VL-R-25 SEPARATE ACCOUNT VL-R - PLATINUM INVESTOR DIVISIONS NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the Year Ended December 31, 2000 - Continued
DIVISIONS --------------------------------------------------------------------------------------------------- Putman VT PIMCO Short- PIMCO Real PIMCO Total Putnam VT Putnam VT International Term Bond Return Bond Return Bond Diversified Growth and Growth and Portfolio Admin. Portfolio Admin. Portfolio Admin. Income Fund - Income Fund - Income Fund - Class Class Class Class IB Shares Class IB Shares Class IB Shares Outstanding at beginning of year - - - 86,070.302 250,833.043 89,838.353 Net premiums 3.778 1.859 1.846 20,222.203 90,655.409 44,555.757 Transfers between funds 2,669.841 53.081 52.584 15,263.580 63,388.130 105,019.280 Cost of insurance and administrative charges - - - (10,564.981) (41,719.305) (14,906.541) Policy loans - - - (3,367.436) 1,633.126 (260.934) Surrenders - - - (417.324) (4,485.478) (1,366.824) --------- ------ ------ ----------- ----------- ----------- Outstanding at end of year 2,673.619 54.940 54.430 107,206.344 360,304.925 222,879.091 ========= ====== ====== =========== =========== ===========
SAFECO RST- Growth SAFECO RST- Opportunities UIF Equity UIF High Yield Equity Portfolio Portfolio Growth Portfolio Portfolio Outstanding at beginning of year 247,639.492 293,295.140 198,132.167 92,186.504 Net premiums 64,441.887 68,960.415 96,412.328 49,768.741 Transfers between funds 259,739.308 73,989.369 260,736.341 51,205.153 Cost of insurance and administrative charges (43,362.481) (31,848.721) (28,625.210) (12,890.057) Policy loans 6,673.004 (3,344.679) (3,339.168) (558.428) Surrenders (9,647.603) (2,791.314) (1,268.962) (2,647.464) ----------- ----------- ----------- ----------- Outstanding at end of year 525,483.607 398,260.210 522,047.496 177,064.449 =========== =========== =========== ===========
Van Kampen Vanguard VIF Vanguard VIF LIT Strategic High Yield Bond REIT Index Stock Portfolio - Portfolio Portfolio Class I Shares Outstanding at beginning of year - - 41,452.063 Net premiums 1.928 3.536 32,416.031 Transfers between funds 55.159 101.387 37,529.751 Cost of insurance and administrative charges - - (8,715.965) Policy loans - - 1,910.044 Surrenders - - (739.435) ------- -------- ------------ Outstanding at end of year 57.087 104.923 103,852.489 ======= ======== ============
VL-R-26 Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the Year Ended December 31, 1999
DIVISIONS ------------------------------------------------------------------------------------------------- AIM V.I. Dreyfus VIF Dreyfus VIF North American- International AIM V.I. Value Quality Bond Small Cap MFS Emerging AG International Equity Fund Fund Portfolio Portfolio Growth Series Equities Fund Outstanding at beginning of year 30,713.853 50,026.584 21,010.980 47,704.765 28,814.529 4,436.692 Net premiums 26,281.858 79,981.983 32,591.377 36,492.578 40,779.820 6,511.514 Transfers between funds 94,617.068 387,804.113 192,290.748 96,803.114 156,202.346 21,573.057 Cost of insurance and administrative charges (6,213.121) (23,602.280) (8,891.227) (13,376.626) (8,549.785) (1,704.197) Policy loans (1,054.150) (8,851.066) (6,200.774) (4,365.187) (6,656.161) (44.904) Surrenders - (1,431.173) (58.738) (3,749.080) (37.069) - ----------- ----------- ----------- ----------- ----------- ----------- Outstanding at end of year 144,345.508 483,928.161 230,742.366 159,509.564 210,553.680 30,772.162 =========== =========== =========== =========== =========== ===========
Putnam VT Putnam VT Putnam VT International North American North American North American Diversified Growth and Growth and -AG MidCap -AG Money -AG Stock Index Income Fund - Income Fund - Income Fund - Index Fund Market Fund Fund Class IB Shares Class IB Shares Class IB Shares Outstanding at beginning of year 20,868.560 342,364.576 113,016.969 27,293.197 29,223.137 16,892.483 Net premiums 23,631.577 3,526,814.165 154,767.505 22,313.263 43,462.179 9,712.196 Transfers between funds 106,600.952 (2,831,055.718) 613,720.337 43,561.001 200,042.675 68,031.752 Cost of insurance and administrative charges (5,725.508) (127,220.507) (46,150.529) (6,966.779) (17,970.001) (4,746.687) Policy loans (200.958) (227,881.633) (4,185.319) (130.380) (3,870.359) (51.391) Surrenders (75.503) - (8,786.846) - (54.588) - ----------- ------------ ----------- ---------- ----------- ----------- Outstanding at end of year 145,099.120 683,020.883 822,382.117 86,070.302 250,833.043 89,838.353 =========== ============ =========== ========== =========== ===========
SAFECO RST- Van Kampen Growth LIT Strategic SAFECO RST- Opportunities UIF Equity UIF High Yield Stock Portfolio - Equity Portfolio Portfolio Growth Portfolio Portfolio Class I Shares Outstanding at beginning of year 39,424.941 87,429.519 49,858.521 14,442.238 5,939.258 Net premiums 42,619.416 71,969.323 36,430.256 27,417.644 8,948.758 Transfers between funds 188,150.221 162,763.979 123,020.879 55,765.867 28,894.161 Cost of insurance and administrative charges (16,738.427) (26,490.215) (10,673.142) (5,382.722) (2,261.617) Policy loans (4,693.079) (656.492) (456.380) (56.523) 30.965 Surrenders (1,123.580) (1,720.974) (47.967) - (99.462) ------------ ------------ ------------ ---------- ----------- Outstanding at end of year 247,639.492 293,295.140 198,132.167 92,186.504 41,452.063 ============ ============ ============ ========== ===========
VL-R-27 American General Life Insurance Company Consolidated Balance Sheet (Unaudited) September 30, 2001 -------------- (In Thousands) ASSETS Investments: Fixed maturity securities, at fair value (amortized cost - $27,926,731) $28,564,297 Equity securities, at fair value (cost - $368,061) 377,593 Mortgage loans on real estate 2,186,268 Policy loans 1,298,848 Investment real estate 66,790 Other long-term investments 48,532 Short-term investments 1,346,183 Other Assets 29,753 ----------- Total investments 33,918,264 Cash 31,076 Investment in Parent Company (cost - $7,958) 63,389 Indebtedness from affiliates 134,443 Accrued investment income 487,615 Accounts receivable 1,728,452 Deferred policy acquisition costs 1,865,592 Property and equipment 76,487 Other assets 416,766 Assets held in separate accounts 17,934,389 ----------- Total assets $56,656,473 =========== Q-1 American General Life Insurance Company Consolidated Balance Sheet (Unaudited) September 30, 2001 -------------- (In Thousands) LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities: Future policy benefits $30,538,002 Other policy claims and benefits payable 44,484 Other policyholders' funds 463,086 Federal income taxes 621,632 Indebtedness to affiliates 9,953 Other liabilities 3,109,156 Liabilities related to separate accounts 17,934,389 ----------- Total liabilities 52,720,702 Shareholders' equity: Common stock, $10 par value, 600,000 shares authorized, issued, and outstanding 6,000 Preferred stock, $100 par value, 8,500 shares authorized, issued, and outstanding 850 Additional paid-in capital 1,417,250 Accumulated other comprehensive income/(loss) 335,227 Retained earnings 2,176,444 ----------- Total shareholders' equity 3,935,771 ----------- Total liabilities and shareholders' equity $56,656,473 =========== Q-2 American General Life Insurance Company Consolidated Income Statement (Unaudited) Nine months ended September 30, 2001 ------------------ (In Thousands) Revenues: Premiums and other considerations $ 554,185 Net investment income 1,789,048 Net realized investment loss (148,240) Other 94,453 ---------- 2,289,446 Benefits and expenses: Benefits 1,392,669 Operating costs and expenses 383,737 Merger related charges 161,854 ---------- Total benefits and expenses 1,938,260 ---------- Income before income tax expense 351,186 Income tax expense 100,157 ---------- $ 251,029 Cumulative effect of accounting change (22,383) ---------- Net Income $ 228,646 ========== Q-3 [Ernst & Young Letterhead] Report of Independent Auditors Board of Directors and Stockholder American General Life Insurance Company We have audited the accompanying consolidated balance sheets of American General Life Insurance Company (an indirectly wholly-owned subsidiary of American General Corporation) and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, shareholder's equity, comprehensive income, and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of American General Life Insurance Company and subsidiaries at December 31, 2000 and 1999, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. February 5, 2001 /s/ Ernst & Young F-1 American General Life Insurance Company Consolidated Balance Sheets
December 31 2000 1999 ------------------------------------ (In Thousands) Assets Investments: Fixed maturity securities, at fair value (amortized cost - $27,098,978 in 2000 and $27,725,167 in 1999) $ 26,991,695 $ 27,029,409 Equity securities, at fair value (cost - $413,959 in 2000 and $198,640 in 1999) 413,908 237,065 Mortgage loans on real estate 2,084,299 1,918,956 Policy loans 1,297,438 1,234,729 Investment real estate 124,117 125,563 Other long-term investments 46,833 129,155 Short-term investments 140,496 123,779 ------------------------------------ Total investments 31,098,786 30,798,656 Cash 44,747 45,983 Investment in Parent Company (cost - $8,597 in 2000 and 1999) 57,019 53,083 Indebtedness from affiliates 78,225 75,195 Accrued investment income 472,187 482,652 Accounts receivable 664,395 186,592 Deferred policy acquisition costs 2,090,810 1,956,653 Property and equipment 80,665 78,908 Other assets 228,685 250,299 Assets held in separate accounts 22,225,525 23,232,419 ------------------------------------ Total assets $ 57,041,044 $ 57,160,440 ====================================
F-2 Consolidated Balance Sheets
December 31 2000 1999 ------------------------------------ (In Thousands) Liabilities and shareholder's equity Liabilities: Future policy benefits $ 29,524,610 $ 29,901,842 Other policy claims and benefits payable 47,369 53,326 Other policyholders' funds 388,433 371,632 Federal income taxes 466,314 375,332 Indebtedness to affiliates 6,909 7,086 Other liabilities 920,570 372,416 Liabilities related to separate accounts 22,225,525 23,232,419 ------------------------------------ Total liabilities 53,579,730 54,314,053 Shareholder's equity: Common stock, $10 par value, 600,000 shares authorized, issued, and outstanding 6,000 6,000 Preferred stock, $100 par value, 8,500 shares authorized, issued, and outstanding 850 850 Additional paid-in capital 1,370,821 1,371,687 Accumulated other comprehensive loss (31,466) (356,865) Retained earnings 2,115,109 1,824,715 ------------------------------------ Total shareholder's equity 3,461,314 2,846,387 ------------------------------------ Total liabilities and shareholder's equity $ 57,041,044 $ 57,160,440 ====================================
See accompanying notes. F-3 American General Life Insurance Company Consolidated Statements of Income
Year ended December 31 2000 1999 1998 ------------------------------------------------------ (In Thousands) Revenues: Premiums and other considerations $ 659,901 $ 540,029 $ 470,238 Net investment income 2,362,694 2,348,196 2,316,933 Net realized investment gains (losses) (98,109) 5,351 (33,785) Other 134,769 82,581 69,602 ------------------------------------------------------ Total revenues 3,059,255 2,976,157 2,822,988 Benefits and expenses: Benefits 1,775,120 1,719,375 1,788,417 Operating costs and expenses 481,107 495,606 467,067 Interest expense 734 74 15 Litigation settlement - - 97,096 ------------------------------------------------------ Total benefits and expenses 2,256,961 2,215,055 2,352,595 ------------------------------------------------------ Income before income tax expense 802,294 761,102 470,393 Income tax expense 260,860 263,196 153,719 ------------------------------------------------------ Net income $ 541,434 $ 497,906 $ 316,674 ======================================================
See accompanying notes. F-4 American General Life Insurance Company Consolidated Statements of Shareholder's Equity
Year ended December 31 2000 1999 1998 ------------------------------------------------------ (In Thousands) Common stock: Balance at beginning of year $ 6,000 $ 6,000 $ 6,000 Change during year - - - ------------------------------------------------------ Balance at end of year 6,000 6,000 6,000 Preferred stock: Balance at beginning of year 850 850 850 Change during year - - - ------------------------------------------------------ Balance at end of year 850 850 850 Additional paid-in capital: Balance at beginning of year 1,371,687 1,368,089 1,184,743 Capital contribution from Parent Company - - 182,284 Other changes during year (866) 3,598 1,062 ------------------------------------------------------ Balance at end of year 1,370,821 1,371,687 1,368,089 Accumulated other comprehensive (loss) income: Balance at beginning of year (356,865) 679,107 427,526 Change in unrealized gains (losses) on securities 325,399 (1,035,972) 251,581 ------------------------------------------------------ Balance at end of year (31,466) (356,865) 679,107 Retained earnings: Balance at beginning of year 1,824,715 1,514,489 1,442,495 Net income 541,434 497,906 316,674 Dividends paid (251,040) (187,680) (244,680) ------------------------------------------------------ Balance at end of year 2,115,109 1,824,715 1,514,489 ------------------------------------------------------ Total shareholder's equity $ 3,461,314 $ 2,846,387 $ 3,568,535 ======================================================
See accompanying notes. F-5 American General Life Insurance Company Consolidated Statements of Comprehensive Income
Year ended December 31 2000 1999 1998 ------------------------------------------------------ (In Thousands) Net income $ 541,434 $ 497,906 $ 316,674 Other comprehensive income: Gross change in unrealized gains (losses) on securities (pretax: $435,000; ($1,581,500); $341,000) 282,743 (1,027,977) 222,245 Less: gains (losses) realized in net income (42,656) 7,995 (29,336) ------------------------------------------------------ Change in net unrealized gains (losses) on securities (pretax: $500,000; ($1,593,800); $387,000) 325,399 (1,035,972) 251,581 ------------------------------------------------------ Comprehensive (loss) income $ 866,833 $ (538,066) $ 568,255 ======================================================
See accompanying notes. F-6 American General Life Insurance Company Consolidated Statements of Cash Flows
Year ended December 31 2000 1999 1998 ---------------------------------------------------------------- (In Thousands) Operating activities Net income $ 541,434 $ 497,906 $ 316,674 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Change in accounts receivable (477,803) 10,004 11,613 Change in future policy benefits and other policy claims (2,566,783) (2,422,221) (866,428) Amortization of policy acquisition costs 23,443 101,066 125,062 Policy acquisition costs deferred (299,306) (307,854) (244,196) Change in other policyholders' funds 16,801 (26,955) 273 Provision for deferred income tax expense 57,228 85,257 15,872 Depreciation 28,677 24,066 19,418 Amortization 22,831 (30,894) (26,775) Change in indebtedness to/from affiliates (3,207) 74,814 (51,116) Change in amounts payable to brokers 478,132 (43,321) (894) Net loss on sale of investments 52,670 45,379 37,016 Other, net 47,646 (170,413) 57,307 ---------------------------------------------------------------- Net cash used in operating activities (2,078,237) (2,163,166) (606,174) Investing activities Purchases of investments and loans made (33,436,962) (44,508,908) (28,231,615) Sales or maturities of investments and receipts from repayment of loans 33,627,301 43,879,377 26,656,897 Sales and purchases of property, equipment, and software, net (45,078) (87,656) (105,907) ---------------------------------------------------------------- Net cash provided by (used in) investing activities 145,261 (717,187) (1,680,625) Financing activities Policyholder account deposits 6,144,393 5,747,658 4,688,831 Policyholder account withdrawals (3,960,747) (2,754,915) (2,322,307) Dividends paid (251,040) (187,680) (244,680) Capital contribution from Parent - - 182,284 Other (866) 3,598 1,062 ---------------------------------------------------------------- Net cash provided by financing activities 1,931,740 2,808,661 2,305,190 ---------------------------------------------------------------- (Decrease) increase in cash (1,236) (71,692) 18,391 Cash at beginning of year 45,983 117,675 99,284 ---------------------------------------------------------------- Cash at end of year $ 44,747 $ 45,983 $ 117,675 ================================================================
Interest paid amounted to approximately $50,673,000, $2,026,000, and $420,000 in 2000, 1999, and 1998, respectively. See accompanying notes. F-7 American General Life Insurance Company Notes to Consolidated Financial Statements December 31, 2000 NATURE OF OPERATIONS American General Life Insurance Company (the "Company") is a wholly-owned subsidiary of AGC Life Insurance Company, which is a wholly-owned subsidiary of American General Corporation (the "Parent Company"). The Company's wholly-owned life insurance subsidiaries are American General Life Insurance Company of New York ("AGNY") and The Variable Annuity Life Insurance Company ("VALIC"). During 1998, the Company formed a new wholly-owned subsidiary, American General Life Companies ("AGLC"), to provide management services to certain life insurance subsidiaries of the Parent Company. The Company offers a complete portfolio of the standard forms of universal life, variable universal life, interest-sensitive whole life, term life, structured settlements, and fixed and variable annuities throughout the United States. In addition, a variety of equity products are sold through its wholly-owned broker/dealer, American General Securities, Inc. The Company serves the estate planning needs of middle- and upper-income households and the life insurance needs of small- to medium-sized businesses. AGNY offers a broad array of traditional and interest-sensitive insurance, in addition to individual annuity products. VALIC provides tax-deferred retirement annuities and employer-sponsored retirement plans to employees of health care, educational, public sector, and other not-for-profit organizations throughout the United States. 1. Accounting Policies 1.1 Preparation of Financial Statements The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include the accounts of the Company and its wholly-owned subsidiaries. Transactions with the Parent Company and other subsidiaries of the Parent Company are not eliminated from the financial statements of the Company. All other material intercompany transactions have been eliminated in consolidation. The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and disclosures of contingent assets and liabilities. Ultimate results could differ from those estimates. F-8 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 1. Accounting Policies (continued) 1.2 Statutory Accounting The Company and its wholly-owned life insurance subsidiaries are required to file financial statements with state regulatory authorities. State insurance laws and regulations prescribe accounting practices for calculating statutory net income and equity. In addition, state regulators may permit statutory accounting practices that differ from prescribed practices. The use of such permitted practices by the Company and its wholly-owned life insurance subsidiaries did not have a material effect on statutory equity at December 31, 2000. Statutory financial statements differ from GAAP financial statements. Significant differences were as follows (in thousands):
2000 1999 1998 ------------------------------------------------------ Net income: Statutory net income (2000 net income is unaudited) $ 360,578 $ 350,294 $ 259,903 Deferred policy acquisition costs and cost of insurance purchased 302,965 200,285 116,597 Deferred income taxes (85,401) (86,456) (53,358) Adjustments to policy reserves 4,717 23,110 52,445 Goodwill amortization (1,910) (2,437) (2,033) Net realized gain (loss) on investments, net of tax (62,075) 2,246 41,488 Litigation settlement - - (63,112) Other, net 22,560 10,864 (35,256) ------------------------------------------------------ GAAP net income $ 541,434 $ 497,906 $ 316,674 ====================================================== Shareholders' equity: Statutory capital and surplus (2000 balance is unaudited) $ 1,908,887 $ 1,753,570 $ 1,670,412 Deferred policy acquisition costs 2,090,810 1,975,667 1,109,831 Deferred income taxes (457,054) (350,258) (698,350) Adjustments to policy reserves (250,808) (202,150) (274,532) Acquisition-related goodwill 27,069 52,317 54,754 Asset valuation reserve ("AVR") 353,818 351,904 310,564 Interest maintenance reserve ("IMR") 18,942 53,226 27,323 Investment valuation differences (121,982) (683,500) 1,487,658 Surplus from separate accounts (155,471) (180,362) (174,447) Other, net 47,103 75,973 55,322 ------------------------------------------------------ Total GAAP shareholders' equity $ 3,461,314 $ 2,846,387 $ 3,568,535 ======================================================
F-9 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 1. Accounting Policies (continued) 1.2 Statutory Accounting (continued) The more significant differences between GAAP and statutory accounting principles are that under GAAP: (a) acquisition costs related to acquiring new business are deferred and amortized (generally in proportion to the present value of expected gross profits from surrender charges and investment, mortality, and expense margins), rather than being charged to operations as incurred; (b) future policy benefits are based on estimates of mortality, interest, and withdrawals generally representing the Company's experience, which may differ from those based on statutory mortality and interest requirements without consideration of withdrawals; (c) deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities, at the enacted tax rates expected to be in effect when the temporary differences reverse; (d) certain assets (principally furniture and equipment, agents' debit balances, computer software, and certain other receivables) are reported as assets rather than being charged to retained earnings; (e) acquisitions are accounted for using the purchase method of accounting rather than being accounted for as equity investments; and (f) fixed maturity investments are carried at fair value rather than amortized cost. In addition, statutory accounting principles require life insurance companies to establish an AVR and an IMR. The AVR is designed to address the credit-related risk for bonds, preferred stocks, derivative instruments, and mortgages and market risk for common stocks, real estate, and other invested assets. The IMR is composed of investment- and liability-related realized gains and losses that result from interest rate fluctuations. These realized gains and losses, net of tax, are amortized into income over the expected remaining life of the asset sold or the liability released. 1.3 Insurance Contracts The insurance contracts accounted for in these financial statements include primarily long-duration contracts. Long-duration contracts include traditional whole life, endowment, guaranteed renewable term life, universal life, limited payment, and investment contracts. Long-duration contracts generally require the performance of various functions and services over a period of more than one year. The contract provisions generally cannot be changed or canceled by the insurer during the contract period; however, most new contracts written by the Company allow the insurer to revise certain elements used in determining premium rates or policy benefits, subject to guarantees stated in the contracts. At December 31, 2000 and 1999, insurance investment contracts of $25.0 million and $25.9 million, respectively, were included in the Company's liabilities. F-10 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 1. Accounting Policies (continued) 1.4 Investments Fixed Maturity and Equity Securities Substantially all fixed maturity and equity securities were classified as available-for-sale and recorded at fair value at December 31, 2000 and 1999. After adjusting related balance sheet accounts as if the unrealized gains (losses) had been realized, the net adjustment is recorded in accumulated other comprehensive income (loss), within shareholders' equity. If the fair value of a security classified as available-for-sale declines below its cost and this decline is considered to be other than temporary, the security's amortized cost is reduced to its fair value, and the reduction is recorded as a realized loss. At various times, the Company holds trading securities and reports them at fair value. Our trading security portfolio was immaterial at year-end 2000 and 1999. Realized and unrealized gains (losses) related to trading securities are included in net investment income, however, trading securities did not have a material effect on net investment income in 2000, 1999, and 1998. Equity partnerships, which are reported in equity securities, are accounted for under the equity method of accounting. For those partnerships that report changes in the fair value of underlying equity investments in earnings, the Company records its proportionate interest in investment gains (losses). Mortgage Loans Mortgage loans are reported at amortized cost, net of an allowance for losses. The allowance for losses covers estimated losses based on our assessment of risk factors such as potential non-payment or non-monetary default. The allowance is primarily based on a loan-specific review. Loans for which the Company determines that collection of all amounts due under the contractual terms is not probable are considered to be impaired. The Company generally looks to the underlying collateral for repayment of impaired loans. Therefore, impaired loans are reported at the lower of amortized cost or fair value of the underlying collateral, less estimated cost to sell. F-11 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 1. Accounting Policies (continued) 1.4 Investments (continued) Policy Loans Policy loans are reported at unpaid principal balance. Real Estate Real estate is classified as held for investment or available for sale, based on management's intent. Real estate held for investment is carried at cost, less accumulated depreciation and impairment write-downs. Real estate available for sale is carried at the lower of cost (less accumulated depreciation, if applicable) or fair value less cost to sell. Dollar Roll Agreements Dollar rolls are agreements to sell mortgage-backed securities and to repurchase substantially the same securities at a specified price and date in the future. We account for dollar rolls as short-term collateralized financings and include the repurchase obligation in other liabilities. There were no dollar rolls outstanding at December 31, 2000 or 1999. Investment Income Interest on fixed maturity securities and performing mortgage loans is recorded as income when earned and is adjusted for any amortization of premium or discount. Interest on delinquent mortgage loans is recorded as income when received. Dividends are recorded as income on ex-dividend dates. Income on mortgage-backed securities is recognized using a constant effective yield based on estimated prepayments of the underlying mortgages. If actual prepayments differ from estimated prepayments, a new effective yield is calculated and the net investment in the security is adjusted accordingly. The adjustment is recognized in net investment income. Realized Investment Gains Realized investment gains (losses) are recognized using the specific-identification method and reported in net realized investment gains (losses). F-12 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 1. Accounting Policies (continued) 1.5 Separate Accounts Separate Accounts are assets and liabilities associated with certain contracts, principally annuities, for which the investment risk lies solely with the contract holder. Therefore, the Company's liability for these accounts equals the value of the account assets. Investment income, realized investment gains (losses), and policyholder account deposits and withdrawals related to separate accounts are excluded from the consolidated statements of income, comprehensive income, and cash flows. Assets held in Separate Accounts are primarily shares in mutual funds, which are carried at fair value based on the quoted net asset value per share. 1.6 Deferred Policy Acquisition Costs ("DPAC") and Cost of Insurance Purchased ("CIP") Certain costs of writing an insurance policy, including commissions, underwriting, and marketing expenses, are deferred and reported as DPAC. CIP represents the cost assigned to insurance contracts in force that are acquired through the purchase of a block of business. At December 31, 2000, CIP of $15.6 million was reported within other assets. DPAC and CIP associated with interest-sensitive life contracts, insurance investment contracts, and participating life insurance contracts is charged to expense in relation to the estimated gross profits of those contracts. If estimated gross profits change significantly, DPAC and CIP balances are recalculated using the new assumptions. Any resulting adjustment is included in current earnings as an adjustment to DPAC or CIP amortization. DPAC and CIP associated with all other insurance contracts is charged to expense over the premium-paying period or as the premiums are earned over the life of the contract. Interest is accreted on the unamortized balance of DPAC at rates used to compute policyholder reserves and on the unamortized balance of CIP at rates of 2.5% to 7.88%. DPAC and CIP are adjusted for the impact on estimated future gross profits as if net unrealized gains (losses) on securities had been realized at the balance sheet date. The impact of this adjustment is included in accumulated other comprehensive income within shareholder's equity. F-13 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 1. Accounting Policies (continued) 1.6 Deferred Policy Acquisition Costs ("DPAC") and Cost of Insurance Purchased ("CIP") (continued) The Company reviews the carrying amount of DPAC and CIP on at least an annual basis. Management considers estimated future gross profits or future premiums, expected mortality, interest earned and credited rates, persistency, and expenses in determining whether the carrying amount is recoverable. Any amounts deemed unrecoverable are charged to expense. 1.7 Other Assets Goodwill is charged to expense in equal amounts, generally over 40 years. The Company reviews goodwill for indicators of impairment in value which it believes are other than temporary, including unexpected or adverse changes in the following: (1) the economic or competitive environments in which the Company operates, (2) profitability analyses, (3) cash flow analyses, and (4) the fair value of the relevant subsidiary. If facts and circumstances suggest that a subsidiary's goodwill is impaired, the Company assesses the fair value of the underlying business based on an independent appraisal and reduce goodwill to an amount that results in the book value of the subsidiary approximating fair value. 1.8 Policy and Contract Claims Reserves Substantially all of the Company's insurance and annuity liabilities relate to long duration contracts. The contracts normally cannot be changed or canceled by the Company during the contract period. For interest-sensitive life insurance and investment contracts, reserves equal the sum of the policy account balance and deferred revenue charges. Reserves for other contracts are based on estimates of the cost of future policy benefits. Reserves are determined using the net level premium method. Interest assumptions used to compute reserves ranged from 2.00% to 13.50% at December 31, 2000. F-14 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 1. Accounting Policies (continued) 1.9 Premium Recognition Most receipts for annuities and interest-sensitive life insurance policies are classified as deposits instead of revenue. Revenues for these contracts consist of mortality, expense, and surrender charges. Policy charges that compensate the Company for future services are deferred and recognized in income over the period earned, using the same assumptions used to amortize DPAC. For limited-payment contracts, net premiums are recorded as revenue, and the difference between the gross premium received and the net premium is deferred and recognized in a constant relationship to insurance in force. For all other contracts, premiums are recognized when due. 1.10 Reinsurance The Company limits its exposure to loss on any single insured to $2.5 million by ceding additional risks through reinsurance contracts with other insurers. The Company diversifies its risk of reinsurance loss by using a number of reinsurers that have strong claims-paying ability ratings. If the reinsurer could not meet its obligations, the Company would reassume the liability as the Company remains primarily liable to the policyholder. A receivable is recorded for the portion of benefits paid and insurance liabilities that have been reinsured. Reinsurance recoveries on ceded reinsurance contracts were $20 million, $28 million, and $63 million, during 2000, 1999, and 1998, respectively. The cost of reinsurance is recognized over the life of the reinsured policies using assumptions consistent with those used to account for the underlying policies. Benefits paid and future policy benefits related to ceded insurance contracts are recorded as reinsurance receivables, and are included in accounts receivable. 1.11 Participating Policy Contracts Participating life insurance accounted for approximately 1% of life insurance in force at December 31, 2000 and 1999. F-15 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 1. Accounting Policies (continued) 1.11 Participating Policy Contracts (continued) The portion of earnings allocated to participating policyholders is excluded from net income and shareholder's equity. Dividends to be paid on participating life insurance contracts are determined annually based on estimates of the contracts' earnings. Policyholder dividends were $4.4 million, $4.6 million, and $4.9 million in 2000, 1999, and 1998, respectively. 1.12 Income Taxes The Company and its life insurance subsidiaries, together with certain other life insurance subsidiaries of the Parent Company, are included in a life/non-life consolidated tax return with the Parent Company and its noninsurance subsidiaries. The Company participates in a tax sharing agreement with other companies included in the consolidated tax return. Under this agreement, tax payments are made to the Parent Company as if the companies filed separate tax returns; and companies incurring operating and/or capital losses are reimbursed for the use of these losses by the consolidated return group. Deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities, at the enacted tax rates expected to be in effect when the temporary differences reverse. The effect of a tax rate change is recognized in income in the period of enactment. State income taxes are included in income tax expense. A valuation allowance for deferred tax assets is provided if it is more likely than not that some portion of the deferred tax asset will not be realized. An increase or decrease in a valuation allowance that results from a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset is included in income. Changes related to fluctuations in fair value of available-for-sale securities are included in the consolidated statements of comprehensive income and accumulated other comprehensive income in shareholder's equity. F-16 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 1. Accounting Policies (continued) 1.13 Accounting Changes SFAS 133 On January 1, 2001, the Company will adopt Statement of Financial Accounting Standards ("SFAS") 133, Accounting for Derivative Instruments and Hedging Activities, which requires all derivative instruments to be recognized at fair value in the balance sheet. Changes in the fair value of a derivative instrument will be reported in net income or other comprehensive income, depending upon the intended use of the derivative instrument. The adoption of SFAS 133 is not expected to have a material impact on the company's results of operations and financial position in future periods. The impact of fair value adjustments on derivatives which do not qualify for hedge accounting and any ineffectiveness resulting from hedging activities will be recorded in investment gains (losses). Codification The Company has performed a review of the revised Accounting Practices and Procedures Manual ("Codification") effective January 1, 2001 and determined that the effect of these changes will not result in a significant reduction in the Company's statutory basis-capital and surplus as of adoption. F-17 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Investments 2.1 Investment Income Investment income by type of investment was as follows for the year ended:
2000 1999 1998 ------------------------------------------------------ (In Thousands) Investment income: Fixed maturities $ 2,050,503 $ 2,118,794 $ 2,101,730 Equity securities 22,996 17,227 1,813 Mortgage loans on real estate 159,414 134,878 148,447 Investment real estate 22,749 20,553 23,139 Policy loans 71,927 69,684 66,573 Other long-term investments 13,062 7,539 3,837 Short-term investments 66,296 24,874 15,492 Investment income from affiliates 10,733 8,695 10,536 ------------------------------------------------------ Gross investment income 2,417,680 2,402,244 2,371,567 Investment expenses 54,986 54,048 54,634 ------------------------------------------------------ Net investment income $ 2,362,694 $ 2,348,196 $ 2,316,933 ======================================================
The carrying value of investments that produced no investment income during 2000 was less than 1.5% of total invested assets. The ultimate disposition of these investments is not expected to have a material effect on the Company's results of operations and financial position. Derivative financial instruments did not have a material effect on net investment income in 2000, 1999, or 1998. F-18 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Investments (continued) 2.2 Net Realized Investment Gains (Losses) Realized gains (losses) by type of investment were as follows for the year ended:
2000 1999 1998 ------------------------------------------------------ (In Thousands) Fixed maturities: Gross gains $ 62,856 $ 118,427 $ 20,109 Gross losses (174,057) (102,299) (62,657) ------------------------------------------------------ Total fixed maturities (111,201) 16,128 (42,548) Equity securities - 793 645 Other investments 13,092 (11,570) 8,118 ------------------------------------------------------ Net realized investment gains (losses) before tax (98,109) 5,351 (33,785) Income tax expense (benefit) (34,338) 1,874 (11,826) ------------------------------------------------------ Net realized investment gains (losses) after tax $ (63,771) $ 3,477 $ (21,959) ======================================================
F-19 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Investments (continued) 2.3 Fixed Maturity and Equity Securities All fixed maturity and equity securities are classified as available-for-sale and reported at fair value. Amortized cost and fair value at December 31, 2000 and 1999 were as follows:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value ------------------------------------------------------------------------ (In Thousands) December 31, 2000 Fixed maturity securities: Corporate securities: Investment-grade $ 18,495,450 $ 420,049 $ (420,341) $ 18,495,158 Below investment-grade 1,662,879 14,888 (287,880) 1,389,887 Mortgage-backed securities* 6,340,762 145,597 (5,907) 6,480,452 U.S. government obligations 215,220 22,526 (21) 237,725 Foreign governments 209,305 7,402 (1,655) 215,052 State and political subdivisions 168,302 2,940 (4,821) 166,421 Redeemable preferred stocks 7,060 - (60) 7,000 ------------------------------------------------------------------------ Total fixed maturity securities $ 27,098,978 $ 613,402 $ (720,685) $ 26,991,695 ======================================================================== Equity securities $ 413,959 $ 10,146 $ (10,197) $ 413,908 ======================================================================== Investment in Parent Company $ 8,597 $ 48,422 $ - $ 57,019 ========================================================================
* Primarily include pass-through securities guaranteed by and mortgage obligations ("CMOs") collateralized by the U.S. government and government agencies. F-20 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Investments (continued) 2.3 Fixed Maturity and Equity Securities (continued)
Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value ------------------------------------------------------------------------ (In Thousands) December 31, 1999 Fixed maturity securities: Corporate securities: Investment-grade $ 19,455,518 $ 134,003 $ (704,194) $ 18,885,326 Below investment-grade 1,368,494 11,863 (114,260) 1,266,098 Mortgage-backed securities* 6,195,003 45,022 (74,746) 6,165,279 U.S. government obligations 276,621 15,217 (2,376) 289,462 Foreign governments 245,782 5,774 (1,767) 249,789 State and political subdivisions 154,034 499 (10,836) 143,697 Redeemable preferred stocks 29,715 43 - 29,758 ------------------------------------------------------------------------ Total fixed maturity securities $ 27,725,167 $ 212,421 $ (908,179) $ 27,029,409 ======================================================================== Equity securities $ 198,640 $ 39,381 $ (956) $ 237,065 ======================================================================== Investment in Parent Company $ 8,597 $ 44,486 $ - $ 53,083 ========================================================================
* Primarily include pass-through securities guaranteed by and mortgage obligations ("CMOs") collateralized by the U.S. government and government agencies. F-21 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Investments (continued) 2.3 Fixed Maturity and Equity Securities (continued) Net unrealized gains (losses) on securities included in accumulated comprehensive income in shareholders' equity at December 31 were as follows:
2000 1999 ------------------------------- (In Thousands) Gross unrealized gains $ 671,970 $ 296,288 Gross unrealized losses (730,882) (909,135) DPAC and other fair value adjustments 23,119 200,353 Deferred federal income taxes 4,330 55,631 Other (3) (2) -------------------------------- Net unrealized losses on securities $ (31,466) $ (356,865) ================================
The contractual maturities of fixed maturity securities at December 31, 2000 were as follows:
2000 1999 ----------------------------------------------------------------------- Amortized Market Amortized Market Cost Value Cost Value ----------------------------------------------------------------------- (In thousands) (In thousands) Fixed maturity securities, excluding mortgage-backed securities: Due in one year or less $ 832,001 $ 833,695 $ 810,124 $ 813,683 Due after one year through five years 5,539,620 5,562,918 5,380,557 5,394,918 Due after five years through ten years 7,492,395 7,433,403 8,350,207 8,080,065 Due after ten years 6,894,200 6,681,227 6,988,799 6,575,461 Mortgage-backed securities 6,340,762 6,480,452 6,195,480 6,165,282 ----------------------------------------------------------------------- Total fixed maturity securities $27,098,978 $ 26,991,695 $27,725,167 $27,029,409 =======================================================================
Actual maturities may differ from contractual maturities, since borrowers may have the right to call or prepay obligations. In addition, corporate requirements and investment strategies may result in the sale of investments before maturity. Proceeds from sales of fixed maturities were $12.3 billion, $12.3 billion, and $5.4 billion, during 2000, 1999, and 1998, respectively. F-22 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Investments (continued) 2.4 Mortgage Loans on Real Estate Diversification of the geographic location and type of property collateralizing mortgage loans reduces the concentration of credit risk. For new loans, the Company requires loan-to-value ratios of 75% or less, based on management's credit assessment of the borrower. The mortgage loan portfolio was distributed as follows at December 31, 2000 and 1999:
Outstanding Percent of Percents Amount Total Nonperforming --------------------------------------------- (In Millions) December 31, 2000 Geographic distribution: South Atlantic $ 461 22.0% 0.0% Pacific 374 17.9 7.6 West South Central 200 9.6 0.0 East South Central 158 7.6 0.0 East North Central 290 13.9 0.0 Mid-Atlantic 374 18.0 0.0 Mountain 89 4.3 0.0 West North Central 68 3.3 0.0 New England 79 3.8 0.0 Allowance for losses (9) (0.4) 0.0 -------------------------- Total $ 2,084 100.0% 1.4% ========================== Property type: Retail $ 596 28.5% 0.0% Office 900 43.2 3.2 Industrial 300 14.4 0.0 Apartments 181 8.7 0.0 Hotel/motel 77 3.7 0.0 Other 39 1.9 0.0 Allowance for losses (9) (0.4) 0.0 -------------------------- Total $ 2,084 100.0% 1.4% ==========================
F-23 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Investments (continued) 2.4 Mortgage Loans on Real Estate (continued)
Outstanding Percent of Percent Amount Total Nonperforming ------------------------------------------------------- (In Millions) December 31, 1999 Geographic distribution: South Atlantic $ 470 24.6% 0.2% Pacific 363 18.9 7.8 Mid-Atlantic 185 9.6 0.0 East North Central 144 7.5 0.0 Mountain 256 13.3 0.0 West South Central 323 16.8 0.9 East South Central 107 5.6 13.8 West North Central 43 2.2 0.0 New England 44 2.3 0.0 Allowance for losses (16) (0.8) 0.0 ----------------------------------- Total $ 1,919 100.0% 2.4% =================================== Property type: Office $ 628 32.6% 2.5% Retail 746 38.9 4.2 Industrial 302 15.7 0.0 Apartments 189 9.9 0.0 Hotel/motel 46 2.4 0.0 Other 24 1.3 0.2 Allowance for losses (16) (0.8) 0.0 ----------------------------------- Total $ 1,919 100.0% 2.4% ===================================
Impaired mortgage loans on real estate and related interest income is not material. F-24 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Deferred Policy Acquisitions Costs The balance of DPAC at December 31 and the components of the change reported in operating costs and expenses for the years then ended were as follows:
2000 1999 1998 ------------------------------------------------------ (In Thousands) Balance at January 1 $ 1,956,653 $ 1,087,718 $ 835,031 Capitalization 174,379 191,143 135,023 Accretion of interest 124,927 116,711 109,173 Amortization (23,443) (101,066) (125,062) Effect of net realized and unrealized gains (losses) on securities (141,706) 662,147 133,553 -------------------------------------------------------- Balance at December 31 $ 2,090,810 $ 1,956,653 $ 1,087,718 ========================================================
4. Other Assets Other assets consisted of the following:
December 31 2000 1999 ------------------------------------ (In Thousands) Goodwill $ 27,069 $ 52,317 Cost of insurance purchased ("CIP") 15,598 19,014 Computer software 73,215 117,571 Other 112,803 61,397 ------------------------------------ Total other assets $ 228,685 $ 250,299 ====================================
F-25 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 4. Other Assets (continued) A rollforward of CIP for the year ended December 31, 2000, was as follows:
2000 1999 ------------------------------------ (In Thousands) Balance at January 1 $ 19,014 $ 22,113 Accretion of interest at 5.02% 788 926 Amortization (3,432) (4,025) Other changes (772) - ------------------------------------ Balance at December 31 $ 15,598 $ 19,014 ====================================
5. Federal Income Taxes 5.1 Tax Liabilities Income tax liabilities were as follows:
December 31 2000 1999 ------------------------------------ (In Thousands) Current tax (receivable) payable $ 9,260 $ 25,074 Deferred tax liabilities, applicable to: Net income 463,117 405,889 Net unrealized investment gains (6,063) (55,631) ------------------------------------ Total deferred tax liabilities 457,054 350,258 ------------------------------------ Total current and deferred tax liabilities $ 466,314 $ 375,332 ====================================
F-26 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 5. Federal Income Taxes (continued) 5.1 Tax Liabilities (continued) Components of deferred tax liabilities and assets at December 31 were as follows:
2000 1999 ------------------------------------ (In Thousands) Deferred tax liabilities applicable to: Deferred policy acquisition costs $ 624,393 $ 601,678 Basis differential of investments 55,603 - Other 143,307 171,763 ------------------------------------ Total deferred tax liabilities 823,303 773,441 Deferred tax assets applicable to: Policy reserves (285,488) (215,465) Basis differential of investments - (158,421) Other (89,761) (141,236) ------------------------------------ Total deferred tax assets before valuation allowance (375,249) (515,122) Valuation allowance 9,000 91,939 ------------------------------------ Total deferred tax assets, net of valuation allowance (366,249) (423,183) ------------------------------------ Net deferred tax liabilities $ 457,054 $ 350,258 ====================================
Under prior Federal income tax law, one-half of the excess of a life insurance company's income form operations over its taxable investment income was not taxed, but was set aside in a special tax account designated as "policyholders' surplus." At December 31, 2000, the Company had approximately $88.2 million of policyholders' surplus on which no payment of Federal income taxes will be required unless it is distributed as a dividend, or under other specified conditions. Barring the passage of unfavorable tax legislation, the Company does not believe that any significant portion of the account will be taxed in the foreseeable future. Accordingly, no deferred tax liability has been recognized in relation to the policyholders' surplus account. If the entire balance of the policyholders' surplus became taxable at the current federal income tax rates, the tax would be approximately $30.9 million. F-27 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 5. Federal Income Taxes (continued) 5.2 Tax Expense Components of income tax expense for the years were as follows:
2000 1999 1998 ------------------------------------------------------ (In Thousands) Current expense $ 174,263 $ 176,725 $ 134,344 Deferred expense (benefit): Deferred policy acquisition cost 82,739 65,377 33,230 Policy reserves 12,738 (22,654) 2,189 Basis differential of investments 14,627 (4,729) 11,969 Litigation settlement 2,764 22,641 (33,983) Year 2000 - - (9,653) Internally developed software 3,702 18,654 - Other, net (29,973) 7,182 15,623 ------------------------------------------------------ Total deferred expense 86,597 86,471 19,375 ------------------------------------------------------ Income tax expense $ 260,860 $ 263,196 $ 153,719 ======================================================
A reconciliation between the income tax expense computed by applying the federal income tax rate (35%) to income before taxes and the income tax expense reported in the financial statement is presented below.
2000 1999 1998 ------------------------------------------------------ (In Thousands) Income tax at statutory percentage of GAAP pretax income $ 279,241 $ 266,386 $ 164,638 Tax-exempt investment income (16,654) (16,423) (11,278) Goodwill 669 853 712 Other (2,396) 12,380 (353) ------------------------------------------------------ Income tax expense $ 260,860 $ 263,196 $ 153,719 ======================================================
F-28 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 5. Federal Income Taxes (continued) 5.3 Taxes Paid Income taxes paid amounted to approximately $182 million, $126 million, and $159 million, in 2000, 1999, and 1998, respectively. 5.4 Tax Return Examinations The Parent Company and the majority of its subsidiaries file a consolidated federal income tax return. The Internal Revenue Service ("IRS") has completed examinations of the Parent Company's tax returns through 1992. The IRS is currently examining tax returns for 1993 through 1999. In addition, the tax returns of companies recently acquired are also being examined. Although the final outcome of any issues raised in examination is uncertain, the Parent Company believes that the ultimate liability, including interest, will not materially exceed amounts recorded in the consolidated financial statements. 6. Transactions With Affiliates Affiliated notes and accounts receivable were as follows:
December 31, 2000 December 31, 1999 -------------------------------------------------------------------- Par Value Book Value Par Value Book Value -------------------------------------------------------------------- (In Thousands) American General Corporation, 9%, due 2008 $ 4,725 $ 3,486 $ 4,725 $ 3,410 American General Corporation, Promissory notes, due 2004 9,786 9,786 12,232 12,232 American General Corporation, Restricted Subordinated Note, 13 1/2%, due 2002 25,321 25,321 27,378 27,378 -------------------------------------------------------------------- Total notes receivable from affiliates 39,832 38,593 44,335 43,020 Accounts receivable from affiliates - 39,632 - 32,175 -------------------------------------------------------------------- Indebtedness from affiliates $ 39,832 $ 78,225 $ 44,335 $ 75,195 ====================================================================
F-29 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 6. Transactions With Affiliates (continued) Various American General companies provide services to the Company, principally mortgage servicing and investment management services, provided by American General Investment Management Corporation on a fee basis. The Company paid approximately $85,002,378, $55,318,000, and $46,921,000, for such services in 2000, 1999, and 1998, respectively. Accounts payable for such services at December 31, 2000 and 1999 were not material. The Company rents facilities and provides services on an allocated cost basis to various American General companies. Beginning in 1998, amounts received by the Company from affiliates include amounts received by its wholly-owned, non-life insurance subsidiary, American General Life Companies ("AGLC"). AGLC provides shared services, including technology, to a number of American General Corporation's life insurance subsidiaries. The Company received approximately $171,650,000, $138,885,000, and $66,550,000, for such services and rent in 2000, 1999, and 1998, respectively. Accounts receivable for rent and services at December 31, 2000 and 1999 were not material. The Company has 8,500 shares of $100 par value cumulative preferred stock authorized and outstanding with an $80 dividend rate, redeemable at $1,000 per share after December 31, 2000. The holder of this stock, The Franklin Life Insurance Company ("Franklin"), an affiliated company, is entitled to one vote per share, voting together with the holders of common stock. 7. Benefit Plans 7.1 Pension Plans The Company has non-contributory defined benefit pension plans covering most employees. Pension benefits are based on the participant's compensation and length of credited service. Equity and fixed maturity securities were 65% and 28%, respectively, of the plans' assets at the plans' most recent balance sheet dates. Additionally, 1% of plan assets were invested in general investment accounts of the Parent Company's subsidiaries through deposit administration insurance contracts. F-30 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 7. Benefit Plans (continued) 7.1 Pension Plans (continued) The benefit plans have purchased annuity contracts from American General Corporation's subsidiaries to provide benefits for certain retirees. These contracts are expected to provide future annual benefits to certain retirees of American General Corporation and its subsidiaries of approximately $58 million. The components of pension (income) expense and underlying assumptions were as follows:
2000 1999 1998 ------------------------------------------------------ (In Thousands) Service cost $ 4,605 $ 3,575 $ 3,693 Interest cost 9,818 7,440 6,289 Expected return on plan assets (17,815) (12,670) (9,322) Amortization (918) (820) (557) Recognized Net Actuarial Loss/(Gain) (868) - - ------------------------------------------------------ Pension (income) expense $ (5,178) $ (2,475) $ 103 ====================================================== Discount rate on benefit obligation 8.00% 7.75% 7.00% Rate of increase in compensation levels 4.50% 4.25% 4.25% Expected long-term rate of return on plan assets 10.35% 10.35% 10.25%
The Company's funding policy is to contribute annually no more than the maximum deductible for federal income tax purposes. The funded status of the plans and the prepaid pension expense included in other assets at December 31 were as follows:
2000 1999 ------------------------------------ (In Thousands) Projected benefit obligation (PBO) $ 130,175 $ 100,600 Plan assets at fair value 187,266 145,863 ------------------------------------ Plan assets at fair value in excess of PBO 57,091 45,263 Other unrecognized items, net (32,730) (26,076) ------------------------------------ Prepaid pension expense $ 24,361 $ 19,187 ====================================
F-31 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 7. Benefit Plans (continued) 7.1 Pension Plans (continued) The change in PBO was as follows:
2000 1999 ------------------------------------ (In Thousands) PBO at January 1 $ 100,600 $ 96,554 Service and interest costs 14,423 11,015 Benefits paid (5,394) (4,919) Actuarial loss 1,668 (12,036) Amendments, transfers, and acquisitions 18,878 9,986 ------------------------------------ PBO at December 31 $ 130,175 $ 100,600 ====================================
The change in the fair value of plan assets was as follows:
2000 1999 ------------------------------------ (In Thousands) Fair value of plan assets at January 1 $ 145,863 $ 120,898 Actual return on plan assets 9,249 17,934 Benefits paid (5,344) (4,919) Acquisitions and other 37,498 11,950 ------------------------------------ Fair value of plan assets at December 31 $ 187,266 $ 145,863 ====================================
Postretirement Benefits Other Than Pensions The Company has life, medical, supplemental major medical, and dental plans for certain retired employees and agents. Most plans are contributory, with retiree contributions adjusted annually to limit employer contributions to predetermined amounts. The Company has reserved the right to change or eliminate these benefits at any time. F-32 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 7. Benefit Plans (continued) 7.2 Postretirement Benefits Other Than Pensions (continued) The life plans are insured through December 31, 1999. A portion of the retiree medical and dental plans is funded through a voluntary employees' beneficiary association ("VEBA"); the remainder is unfunded and self-insured. All of the retiree medical and dental plans' assets held in the VEBA were invested in readily marketable securities at its most recent balance sheet date. Postretirement benefit expense in 2000, 1999, and 1998 was $35,000, $254,000, and $60,000, respectively. The accrued liability for postretirement benefits was $20.5 million and $18.8 million at December 31, 2000, 1999, and 1998, respectively. These liabilities were discounted at the same rates used for the pension plans. 8. Derivative Financial Instruments 8.1 Use of Derivative Financial Instruments The Company's use of derivative financial instruments is generally limited to reducing its exposure to interest rate and currency exchange risk. The Company uses interest rate and currency swap agreements and options to enter into interest rate swap agreements. The Company accounts for these derivative and financial instruments as hedges. Hedge accounting requires a high correlation between changes in fair values or cash flows of the derivative financial instrument and the specific item being hedged, both at inception and throughout the life of the hedge. 8.2 Interest Rate and Currency Swap Agreements Interest rate swap agreements are used to convert specific investment securities from a floating to a fixed rate basis, or vice versa, and to hedge against the risk of declining interest rates on anticipated security purchases. Currency swap agreements are used to convert cash flows from specific investment securities denominated in foreign currencies into U.S. dollars at specific exchange rates and to hedge against currency rate fluctuation on anticipated security purchases. F-33 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 8. Derivative Financial Instruments (continued) 8.2 Interest Rate and Currency Swap Agreements (continued) The difference between amounts paid and received on swap agreements is recorded on an accrual basis as an adjustment to net investment income or interest expense, as appropriate, over the periods covered by the agreements. The related amount payable to or receivable from counterparties is included in other liabilities or assets. The fair values of swap agreements are recognized in the consolidated balance sheets if the hedge investments are carried at fair value or if they hedge anticipated purchases of such investments. In this event, changes in the fair value of a swap agreement are reported in net unrealized gains on securities included in other accumulated comprehensive income in shareholders' equity, consistent with the treatment of the related investment security. For swap agreements hedging anticipated investment purchases, the net swap settlement amount or unrealized gain or loss is deferred and included in the measurement of the anticipated transaction when it occurs. Swap agreements generally have terms of two to ten years. Any gain or loss from early termination of a swap agreement is deferred and amortized into income over the remaining term of the related investment. If the underlying investment is extinguished or sold, any related gain or loss on swap agreements is recognized in income. F-34 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 8. Derivative Financial Instruments (continued) 8.2 Interest Rate and Currency Swap Agreements (continued) Interest rate and currency swap agreements related to investment securities at December 31 were as follows:
2000 1999 --------------------------- (Dollars in Millions) Interest rate swap agreements to receive fixed rate: Notional amount $ 160 $ 160 Average receive rate 6.74% 6.73% Average pay rate 6.94% 6.55% Currency swap agreements (receive U.S. dollars/pay Canadian dollars): Notional amount (in U.S. dollars) $ 74 $ 124 Average exchange rate 1.43 1.50 Currency swap agreements (receive U.S. dollars/pay Australian dollars): Notional amount (in U.S. dollars) $ 23 $ 23 Average exchange rate 1.85 0.65
8.3 Swaptions Options to enter into interest rate swap agreements are used to limit the Company's exposure to reduced spreads between investment yields and interest crediting rates should interest rates decline significantly over prolonged periods. During such periods, the spread between investment yields and interest crediting rates may be reduced as a result of certain limitations on the Company's ability to manage interest crediting rates. Call swaptions allow the Company to enter into interest rate swap agreements to receive fixed rates and pay lower floating rates, effectively increasing the spread between investment yields and interest crediting rates. During prolonged periods of increasing interest rates, the spread between investment yields and interest crediting rates may be reduced if the Company decides to increase interest crediting rates to limit surrenders. Put swaptions, which allow the Company to enter into interest rate swap agreements to pay fixed rates and receive higher floating rates, effectively maintain the spread between investment yields and interest crediting rates during such periods. F-35 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 8. Derivative Financial Instruments (continued) 8.3 Swaptions (continued) Premiums paid to purchase swaptions are included in investments and are amortized to net investment income over the exercise period of the swaptions. If a swaption is terminated, any gain is deferred and amortized to insurance and annuity benefits over the expected life of the insurance and annuity contracts and any unamortized premium is charged to income. If a swaption ceases to be an effective hedge, any related gain or loss is recognized in income. Swaptions at December 31 were as follows:
2000 1999 ------------------------------ (Dollars in Millions) Call swaptions: Notional amount $ 723 $ 3,780 Average strike rate 5.00% 4.52% Put swaptions: Notional amount $ 790 $ 2,140 Average strike rate 8.70% 8.60%
8.4 Credit and Market Risk Derivative financial instruments expose the Company to credit risk in the event of non-performance by counterparties. The Company limits this exposure by entering into agreements with counterparties having high credit ratings and by regularly monitoring the ratings. The Company does not expect any counterparty to fail to meet its obligation; however, non-performance would not have a material impact on the Company's consolidated results of operations or financial position. The Company's exposure to market risk is mitigated by the offsetting effects of changes in the value of the agreements and the related items being hedged. F-36 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 9. Fair Value of Financial Instruments Carrying amounts and fair values for certain of the Company's financial instruments at December 31 are presented below. Care should be exercised in drawing conclusions based on fair value, since (1) the fair values presented do not include the value associated with all the Company's assets and liabilities, and (2) the reporting of investments at fair value without a corresponding evaluation of related policyholders liabilities can be misinterpreted.
2000 1999 Fair Carrying Fair Carrying Value Amount Value Amount ---------------------------------------------------------------- (In millions) Assets Fixed maturity and equity securities $ 27,406 $ 27,406 $ 27,266 $ 27,266 Mortgage loans on real estate 2,090 2,084 1,829 1,919 Policy loans 1,357 1,297 1,205 1,235 Short-term investments 140 140 124 124 Assets held in separate accounts 22,226 22,226 23,232 23,232 Liabilities Insurance investment contracts 25,038 25,328 24,099 25,917 Liabilities related to separate accounting 22,226 22,226 23,232 23,232
The following methods and assumptions were used to estimate the fair value of financial instruments: Fixed Maturity and Equity Securities Fair values of fixed maturity and equity securities were based on quoted market prices, where available. For investments not actively traded, fair values were estimated using values obtained from independent pricing services or, in the case of some private placements, by discounting expected future cash flows using a current market rate applicable to yield, credit quality, and average life of investments. F-37 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 9. Fair Value of Financial Instruments (continued) Mortgage Loans on Real Estate Fair value of mortgage loans was estimated primarily using discounted cash flows, based on contractual maturities and risk-adjusted discount rates. Policy Loans Fair value of policy loans was estimated using discounted cash flows and actuarially determined assumptions, incorporating market rates. Investment in Parent Company The fair value of the investment in Parent Company is based on quoted market prices of American General Corporation common stock. Assets and Liabilities Related to Separate Accounts The fair value of Separate Account assets and liabilities was based on quoted net asset value per share of the underlying mutual funds. Derivative Financial Instruments If the Company elected to terminate the interest rate swaps, they would have paid $-0- million and $4.7 million at December 31, 2000 and 1999, respectively, and received $11.4 million and $2.3 million at December 31, 2000 and 1999. These fair values were estimated using cash flows discounted at current market rates. Insurance Investment Contracts Fair value of insurance investment contracts was estimated using cash flows discounted at market interest rates. F-38 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 9. Fair Value of Financial Instruments (continued) Indebtedness From Affiliates Indebtedness from affiliates is composed of accounts receivable and notes receivable from affiliates. Due to the short-term nature of accounts receivable, fair value is assumed to equal carrying value. Fair value of notes receivable was estimated using discounted cash flows based on contractual maturities and discount rates that were based on U.S. Treasury rates for similar maturity ranges. 10. Dividends Paid American General Life Insurance Company paid $251 million, $187 million, and $244 million, in dividends on common stock to AGC Life Insurance Company in 2000, 1999, and 1998, respectively. The Company also paid $680 thousand per year in dividends on preferred stock to an affiliate, The Franklin Life Insurance Company, in 2000, 1999, and 1998. 11. Restrictions, Commitments, and Contingencies The Company and its insurance subsidiaries are restricted by state insurance laws as to the amounts they may pay as dividends without prior approval from their respective state insurance departments. At December 31, 2000, approximately $3.1 billion of consolidated shareholder's equity represents net assets of the Company, which cannot be transferred, in the form of dividends, loans, or advances to the Parent Company. Approximately $2.3 billion of consolidated shareholders' equity is similarly restricted as to transfer from its subsidiaries to the Company. Generally, the net assets of the Company's subsidiaries available for transfer to the Parent are limited to the amounts that the subsidiaries' net assets, as determined in accordance with statutory accounting practices, exceed minimum statutory capital requirements. However, payments of such amounts as dividends may be subject to approval by regulatory authorities and are generally limited to the greater of 10% of policyholders' surplus or the previous year's statutory net gain from operations. The Company has various leases, substantially all of which are for office space and facilities. Rentals under financing leases, contingent rentals, and future minimum rental commitments and rental expense under operating leases are not material. F-39 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 11. Restrictions, Commitments, and Contingencies (continued) In recent years, various life insurance companies have been named as defendants in class action lawsuits relating to life insurance pricing and sales practices, and a number of these lawsuits have resulted in substantial settlements. On December 16, 1998, American General Corporation announced that certain of its life insurance subsidiaries had entered into agreements to resolve all pending market conduct class action lawsuits. In conjunction with the proposed settlements, the Company recorded a charge of $97.1 million ($63.1 million after-tax) in the fourth quarter of 1998. The charge covered the cost of policyholder benefits and other anticipated expenses resulting from the proposed settlements, as well as other administrative and legal costs. On December 31, 1998, the Company entered into an agreement with the Parent Company whereby the Company assigned, and the Parent Company assumed, $80.1 million of the liabilities of the Company related to the proposed resolution. The liabilities of American General Life Insurance Company of New York, which totaled $17.0 million, were not assumed by the Parent Company. As consideration for the assumption of the liabilities, the Company paid the Parent Company an amount equal to the liabilities recorded with respect to the proposed resolution of the litigation. As of December 31, 2000, the Company has a remaining market conduct litigation liability of $6.3 million recorded. The Company is party to various other lawsuits and proceedings arising in the ordinary course of business. These lawsuits and proceedings include certain class action claims and claims filed by individuals who have excluded themselves from settlement of class action lawsuits relating to life insurance pricing and sales practices. In addition, many of these proceedings are pending in jurisdictions that permit damage awards disproportionate to the actual economic damages alleged to have been incurred. Based upon information presently available, the Company believes that the total amounts that will ultimately be paid, if any, arising from these lawsuits and proceedings will not have a material adverse effect on the Company's results of operations and financial position. However, it should be noted that the frequency of large damage awards, including large punitive damage awards, that bear little or no relation to actual economic damages incurred by plaintiffs in some jurisdictions continues to create the potential for an unpredictable judgment in any given suit. F-40 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 11. Restrictions, Commitments, and Contingencies (continued) Insurance companies that are under regulatory supervision result in assessments by state guaranty funds to cover losses to policyholders of insolvent or rehabilitated insurance companies. Those mandatory assessments may be partially recovered through a reduction in future premium taxes in certain states. At December 31, 2000 and 1999, the Company has accrued $3.8 million and $8.6 million, respectively, for guaranty fund assessments, net of $-0- million and $3.4 million, respectively, of premium tax deductions. The Company has recorded receivables of $5.9 million and $4.4 million at December 31, 2000 and 1999, respectively, for expected recoveries against the payment of future premium taxes. Expenses incurred for guaranty fund assessments were $6.2 million, $2.1 million, and $3.6 million, in 2000, 1999, and 1998, respectively. F-41 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 12. Reinsurance Reinsurance transactions for the years ended December 31, 2000, 1999, and 1998 were as follows:
Ceded to Assumed Percentage Gross Other From Other of Amount Amount Companies Companies Net Amount Assumed to Net ----------------------------------------------------------------------------------- (In Thousands) December 31, 2000 Life insurance in force $ 53,258,777 $ 21,254,765 $ 401,854 $ 32,405,866 1.24% ==================================================================== Premiums: Life insurance and annuities 138,418 77,566 810 61,662 1.31% Accident and health insurance 877 127 - 750 0.00% -------------------------------------------------------------------- Total premiums $ 139,295 $ 77,693 $ 810 $ 62,412 1.30% ==================================================================== December 31, 1999 Life insurance in force $ 50,060,334 $ 17,056,734 $ 524,062 $ 33,527,662 1.56% ==================================================================== Premiums: Life insurance and annuities $ 101,900 $ 49,530 $ 252 $ 52,622 0.48% Accident and health insurance 977 84 - 893 0.00% -------------------------------------------------------------------- Total premiums $ 102,877 $ 49,614 $ 252 $ 53,515 0.47% ==================================================================== December 31, 1998 Life insurance in force $ 46,057,031 $ 13,288,183 $ 629,791 $ 33,398,639 1.89% ==================================================================== Premiums: Life insurance and annuities $ 90,298 $ 42,235 $ 117 $ 48,180 0.24% Accident and health insurance 1,134 87 - 1,047 0.00% -------------------------------------------------------------------- Total premiums $ 91,432 $ 42,322 $ 117 $ 49,227 0.24% ====================================================================
Reinsurance recoverable on paid losses was approximately $12.2 million, $8.0 million, and $7.7 million, at December 31, 2000, 1999, and 1998, respectively. Reinsurance recoverable on unpaid losses was approximately $3.2 million, $10.5 million, and $2.5 million, at December 31, 2000, 1999, and 1998, respectively. F-42 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 13. Division Operations 13.1 Nature of Operations The Company manages its business operation through two divisions, which are based on products and services offered. Retirement Services The Retirement Services Division provides tax-deferred retirement annuities and employer-sponsored retirement plans to employees of educational, health care, public sector, and other not-for-profit organizations marketed nationwide through exclusive sales representatives. Life Insurance The Life Insurance division provides traditional, interest-sensitive, and variable life insurance and annuities to a broad spectrum of customers through multiple distribution channels focused on specific market segments. F-43 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 13. Division Operations 13.2 Division Results Results of each division exclude goodwill amortization, net realized investment gains, and non-recurring items. Division earnings information was as follows:
Revenues Income Before Taxes Earnings ------------------------------------------------------------------------------------------------ 2000 1999 1998 2000 1999 1998 2000 1999 1998 ------------------------------------------------------------------------------------------------ (In Millions) Retirement Services $ 2,215 $ 2,088 $ 1,987 $ 702 $ 567 $ 469 $ 463 $ 374 $ 315 Life Insurance 942 883 870 199 191 162 143 123 107 ------------------------------------------------------------------------------------------------ Total divisions 3,157 2,971 2,857 901 758 631 606 497 422 Goodwill amortization - - - (1) (2) (2) (1) (2) (2) RG (L) (98) 5 (34) (98) 5 (34) (64) 3 (22) Nonrecurring items - - - - - (125)(a) - - (81)(a) ------------------------------------------------------------------------------------------------ Total consolidated $ 3,059 $ 2,976 $ 2,823 $ 802 $ 761 $ 470 $ 541 $ 498 $ 317 ================================================================================================
(a) Includes $97 million pretax ($63 million after-tax) in litigation settlements and $28 million pretax ($18 million after-tax) in Year 2000 costs. Division balance sheet information was as follows:
Assets Liabilities ----------------------------------------------------------------- December 31 ----------------------------------------------------------------- In millions 2000 1999 2000 1999 ----------------------------------------------------------------- Retirement Services $ 46,356 $ 47,323 $ 43,970 $ 45,359 Life Insurance 10,685 9,837 9,610 8,955 ----------------------------------------------------------------- Total consolidated $ 57,041 $ 57,160 $ 53,580 $ 54,314 =================================================================
F-44 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 14. Subsequent Event On March 11, 2001, American General Corporation entered into a definitive merger agreement with Prudential plc. Under the agreement, American General Corporation's shareholders will exchange shares of American General Corporation's common stock for 3.6622 shares of Prudential plc common stock. The transaction, which is subject to shareholder and regulatory approvals, is expected to be completed in third quarter 2001. F-45 PART II (OTHER INFORMATION) UNDERTAKING TO FILE REPORTS Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with the Securities and Exchange Commission such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulation of the Commission heretofore, or hereafter duly adopted pursuant to authority conferred in that section. RULE 484 UNDERTAKING American General Life Insurance Company's Bylaws provide in Article VII, for indemnification of directors, officers and employees of the Company. Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. REPRESENTATION PURSUANT TO SECTION 26(e)(2)(A) OF THE INVESTMENT COMPANY ACT OF 1940 American General Life Insurance Company hereby represents that the fees and charges deducted under the Policy, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and risks assumed by American General Life Insurance Company. II-1 CONTENTS OF REGISTRATION STATEMENT This Registration Statement contains the following papers and documents: The 2 facing sheets, including the Note. Cross-Reference Table. Prospectus supplement consisting of 2 pages of text, plus 27 financial pages of Separate Account VL-R, plus 48 financial pages of American General Life Insurance Company. The undertaking to file reports. The Rule 484 undertaking. Representation pursuant to Section 26(e)(2)(A). The signatures. Written Consents of the following persons: Independent Auditors The following exhibits: 1. Exhibits required by Article IX, paragraph A of Form N-8B-2: (1) (a) Resolutions of Board of Directors of American General Life Insurance Company authorizing the establishment of Separate Account VL-R. (1) (b) Resolutions of Board of Directors of American General Life Insurance Company authorizing the establishment of variable life insurance standards of suitability and conduct. (1) (2) Not applicable. (3) (a) Form of Distribution Agreement between American General Life Insurance Company and American General Distributors, Inc. (17) (b) Form of Selling Group Agreement. (17) (c) Schedule of Commissions (incorporated by reference from the text included under the heading "Distribution of the Policies" in the prospectus that is filed as part of this amended Registration Statement). (4) Not applicable. II-2 (5) (a) (i) Specimen form of the "Platinum Investor I" Variable Universal Life Insurance Policy (Policy Form No. 97600). (1) (ii) Specimen form of the "Platinum Investor II" Variable Universal Life Insurance Policy (Policy Form No. 97610). (1) (6) (a) Amended and Restated Articles of Incorporation of American General Life Insurance Company, effective December 31, 1991. (2) (b) Bylaws of American General Life Insurance Company, adopted January 22, 1992. (3) (c) Amendment to the Amended and Restated Articles of Incorporation of American General Life Insurance Company, effective July 13, 1995. (5) (7) Not applicable. (8) (a) (i) Form of Participation Agreement by and Among AIM Variable Insurance Funds, Inc., A I M Distributors, Inc., American General Life Insurance Company, on Behalf of Itself and its Separate Accounts, and American General Securities Incorporated. (6) (ii) Form of Amendment Four to Participation Agreement by and Among AIM Variable Insurance Funds, Inc., A I M Distributors, Inc., American General Life Insurance Company, on Behalf of Itself and its Separate Accounts, and American General Securities Incorporated. (17) (b) (i) Form of Participation Agreement by and between The Variable Annuity Life Insurance Company, American General Series Portfolio Company, American General Securities Incorporated and American General Life Insurance Company. (10) (ii) Amendment One to Participation Agreement by and between The Variable Annuity Life Insurance Company, American General Series Portfolio Company, American General Securities Incorporated and American General Life Insurance Company dated as of July 21, 1998. (8) (iii) Form of Amendment Two to Participation Agreement by and between The Variable Annuity Life Insurance Company, American General Series Portfolio Company, American General Securities Incorporated and American General Life Insurance Company. (15) II-3 (iv) Form of Amendment Three to Participation Agreement by and between The Variable Annuity Life Insurance Company, American General Series Portfolio Company, American General Securities Incorporated and American General Life Insurance Company. (17) (c)(i) Form of Participation Agreement Between American General Life Insurance Company and Dreyfus Variable Investment Fund, The Dreyfus Socially Responsible Growth Fund, Inc. and Dreyfus Life and Annuity Index Fund, Inc. (6) (ii) Amendment One to Participation Agreement by and among American General Life Insurance Company, Dreyfus Variable Investment Fund, The Dreyfus Socially Responsible Growth Fund, Inc. and Dreyfus Life and Annuity Index Fund, Inc. dated December 1, 1998. (8) (d)(i) Form of Participation Agreement Among MFS Variable Insurance Trust, American General Life Insurance Company and Massachusetts Financial Services Company. (6) (ii) Form of Amendment Five to Participation Agreement by and among MFS Variable Insurance Trust, American General Life Insurance Company and Massachusetts Financial Services Company. (15) (e)(i) Participation Agreement among Morgan Stanley Universal Funds, Inc., Morgan Stanley Asset Management Inc., Miller Anderson & Sherrerd LLP, Van Kampen American Capital Distributors, Inc., American General Life Insurance Company and American General Securities Incorporated. (9) (ii) Amendment Number 1 to Participation Agreement among American General Life Insurance Company, American General Securities Incorporated, Morgan Stanley Universal Funds, Inc., Morgan Stanley Asset Management Inc., Miller Anderson & Sherrerd LLP, Van Kampen American Capital Distributors, Inc., American General Life Insurance Company and American General Securities Incorporated. (11) (iii) Amended Number 2 to Participation Agreement Among Morgan Stanley Universal Funds, Inc., Van Kampen American Capital Distributors, Inc., Morgan Stanley Asset Management Inc., Miller Anderson & Sherrerd, LLP, American General Life Insurance Company, and American General Securities Incorporated. (6) II-4 (iv) Form of Amendment Seven to Participation Agreement Among Morgan Stanley Universal Funds, Inc., Van Kampen American Capital Distributors, Inc., Morgan Stanley Asset Management Inc., Miller Anderson & Sherrerd, LLP, American General Life Insurance Company, and American General Securities Incorporated. (17) (f) Form of Participation Agreement Among Putnam Variable Trust, Putnam Mutual Funds Corp., and American General Life Insurance Company. (6) (g)(i) Form of Participation Agreement Among American General Life Insurance Company, American General Securities Incorporated, SAFECO Resource Series Trust and SAFECO Securities, Inc. (6) (ii) Form of Amendment Four Participation Agreement Among American General Life Insurance Company, American General Securities Incorporated, SAFECO Resource Series Trust, and SAFECO Securities, Inc. (17) (h)(i) Amended and Restated Participation Agreement by and among American General Life Insurance Company, American General Securities Incorporated, Van Kampen American Capital Life Investment Trust, Van Kampen American Capital Asset Management, Inc., and Van Kampen American Capital Distributors, Inc. (9) (ii) Amendment One to Amended and Restated Participation Agreement by and among American General Life Insurance Company, American General Securities Incorporated, Van Kampen American Capital Life Investment Trust, Van Kampen American Capital Asset Management, Inc., and Van Kampen American Capital Distributors, Inc. (8) (iii) Form of Amendment Two to Amended and Restated Participation Agreement among American General Life Insurance Company, American General Securities Incorporated, Van Kampen American Capital Life Investment Trust, Van Kampen American Capital Distributors, Inc. and Van Kampen American Capital Asset Management, Inc. (6) (iv) Form of Amendment Six to Amended and Restated Participation Agreement among Van Kampen Life Investment Trust, Van Kampen Funds Inc., Van Kampen Asset Management Inc., American General Life Insurance Company, and American General Securities Incorporated. (17) (i) Form of Administrative Services Agreement between American General Life Insurance Company and fund distributor. (5) II-5 (j) Form of Administrative Services Agreement between American General Life Insurance Company, Miller Anderson & Sherrerd, LLP and Morgan Stanley Dean Witter Investment Management Inc. (14) (k) Form of Administrative Services Agreement between American General Life Insurance Company and SAFECO Asset Management Company. (11) (l) Form of Services Agreement dated July 31, 1975, (limited to introduction and first two recitals, and sections 1-3) among various affiliates of American General Corporation, including American General Life Insurance Company and American General Life Companies. (7) (m) Administrative Services Agreement dated as of June 1, 1998, between American General Life Insurance Company and AIM Advisors, Inc. (4) (n)(i) Administrative Services Agreement dated as of August 11, 1998, between American General Life Insurance Company and The Dreyfus Corporation. (4) (ii) Amendment to Administrative Services Agreement dated as of August 11, 1998, between American General Life Insurance Company to the Dreyfus Corporation effective as of December 1, 1998. (4) (o) Form of Administrative Service Agreement between Van Kampen Asset Management Inc. and American General Life Insurance Company. (14) (p)(i) Form of Participation Agreement by and between American General Life Insurance Company, Ayco Asset Management and Ayco Series Trust. (15) (ii) Form of Amendment No. 1 to Participation Agreement by and between American General Life Insurance Company, Ayco Asset Management and Ayco Series Trust. (18) (q) Form of Amended and Restated Participation Agreement by and between Variable Insurance Products Fund, Fidelity Distributors Corporation and American General Life Insurance Company. (15) (r) Form of Amended and Restated Participation Agreement by and between Variable Insurance Products Fund II, Fidelity Distributors Corporation and American General Life Insurance Company. (15) II-6 (s) Form of Participation Agreement by and between American General Life Insurance Company and J. P. Morgan Series Trust II. (15) (t) Form of Fund Participation Agreement by and between American General Life Insurance Company and Janus Aspen Series. (15) (u) Form of Participation Agreement by and between American General Life Insurance Company, PIMCO Variable Insurance Trust and PIMCO Funds Distributor LLC. (15) (v) Form of Participation Agreement by and between Vanguard Variable Insurance Funds, The Vanguard Group, Inc., Vanguard Marketing Corporation and American General Life Insurance Company. (15) (w) Form of Participation Agreement by and between American General Life Insurance Company, Warburg Pincus Trust, Credit Suisse Asset Management, LLC and Credit Suisse Asset Management Securities, Inc. (15) (x)(i) Form of Administrative Services Agreement by and between Ayco Asset Management and American General Life Insurance Company. (15) (ii) Form of Amendment No. 1 to Administrative Services Agreement by and between Ayco Asset Management and American General Life Insurance Company. (18) (y) Form of Service Contract by and between Fidelity Distributors Corporation and American General Life Insurance Company. (15) (z) Form of Service Agreement by and between Fidelity Investments Institutional Operations Company, Inc. and American General Life Insurance Company. (15) (aa) Form of Administrative Services Agreement by and between American General Life Insurance Company and Morgan Guaranty Trust Company of New York. (15) (bb) Form of Distribution and Shareholder Services Agreement by and between Janus Distributors, Inc. and American General Life Insurance Company. (15) (cc) Form of Services Agreement by and between American General Life Insurance Company and Pacific Investment Management, LLC. (15) II-7 (dd) Form of PIMCO Variable Insurance Trust Series Agreement by and between American General Life Insurance Company and PIMCO Variable Insurance Trust. (15) (ee) Form of Administrative Services Agreement by and between American General Life Insurance Company and Credit Suisse Asset Management, LLC. (15) (ff)(i) Form of Participation Agreement by and among American General Life Insurance Company, Franklin Templeton Variable Insurance Products Trust and Franklin Templeton Distributors, Inc. (19) (ii) Form of Amendment to Participation Agreement by and among American General Life Insurance Company, Franklin Templeton Variable Insurance Products Trust and Franklin Templeton Distributors, Inc., effective May 1, 2000. (16) (iii) Form of Amendment to Participation Agreement by and among American General Life Insurance Company, Franklin Templeton Variable Insurance Products Trust and Franklin Templeton Distributors, Inc., effective November 1, 2001. (20) (gg)(i) Form of Administrative Services Agreement by and among American General Life Insurance Company and Franklin Templeton Services, Inc., dated as of July 1, 1999. (21) (ii) Form of Amendment to Administrative Services Agreement by and among American General Life Insurance Company and Franklin Templeton Services, LLC, effective November 1, 2001. (20) (hh) Form of Shareholder Services Agreement by and between American General Life Insurance Company and American Century Investment Management, Inc. (23) (ii) Sales Agreement by and between American General Life Insurance Company, Neuberger & Berman Advisors Management Trust and Neuberger & Berman Management Incorporated. (23) (jj) Form of Assignment and Modification Agreement by and between Neuberger & Berman Management Incorporated and American General Life Insurance Company. (23) II-8 (kk) Form of Administrative Services Agreement by and between American General Life Insurance Company and Neuberger & Berman Management Incorporated. (23) (9) Not applicable. (10)(a) Single Insured Life Insurance Application - Part A. (13) (b) Single Insured Life Insurance Application - Part B. (13) (c) Medical Exam Form Life Insurance Application. (13) (d) Specimen form of amended Supplemental Application. (Filed herewith) (e) Form of amended Service Request Form. (Filed herewith) (f) Description of American General Life Insurance Company's Issuance, Transfer and Redemption Procedures for Variable Universal Life Insurance Policies Pursuant to Rule 6e-3(T)(b)(12)(iii) under the Investment Company Act of 1940. (16) (11) Not applicable. Rule 17j(1)(c)(i) of the Investment Company Act of 1940 specifically exempts the Separate Account from adopting a code of ethics. Other Exhibits 2(a) Opinion and Consent of Steven A. Glover, Senior Counsel of American General Life Companies. (6) 2(b) Opinion and Consent of American General Life Insurance Company's actuary. (6) 3 Not applicable. 4 Not applicable. 6 Consent of Independent Auditors. (Filed herewith) 7 Powers of Attorney. (22) --------------------------- II-9 (1) Incorporated by reference to initial filing of Form S-6 Registration Statement (File No. 333-42567) of American General Life Insurance Company Separate Account VL-R filed on December 18, 1997. (2) Incorporated by reference to initial filing of Form N-4 Registration Statement (File No. 33-43390) of American General Life Insurance Company Separate Account D filed on October 16, 1991. (3) Incorporated by reference to Post-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 33-43390) of American General Life Insurance Company Separate Account D filed on April 30, 1992. (4) Incorporated by reference to initial filing of Form N-4 Registration Statement (File No. 333-70667) of American General Life Insurance Company Separate Account D filed on January 15, 1999. (5) Incorporated by reference to Pre-Effective Amendment No. 3 to Form S-6 Registration Statement (File No. 333-53909) of American General Life Insurance Company Separate Account VL-R filed on August 19, 1998. (6) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-42567) of American General Life Insurance Company Separate Account VL-R filed on March 23, 1998. (7) Incorporated by reference to Pre-Effective Amendment No. 23 to Form N-4 Registration Statement (File No. 33-44745) of American General Life Insurance Company Separate Account A filed on April 24, 1998. (8) Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-70667) of American General Life Insurance Company Separate Account D filed on March 18, 1999. (9) Incorporated by reference to Post-Effective Amendment No. 12 to Form N-4 Registration Statement (File No. 33-43390) of American General Life Insurance Company Separate Account D filed on April 30, 1997. (10) Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-40637) of American General Life Insurance Company Separate Account D filed on February 12, 1998. (11) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-80191) of American General Life Insurance Company Separate Account VL-R filed on August 25, 1999. II-10 (12) Incorporated by reference to Post-Effective Amendment No. 2 to Form S-6 Registration Statement (File No. 333-42567) of American General Life Insurance Company Separate Account VL-R filed on April 21, 1999. (13) Incorporated by reference to initial filing of Form S-6 Registration Statement (File No. 333-89897) of American General Life Insurance Company Separate Account VL-R filed on October 29, 1999. (14) Incorporated by reference to Post-Effective Amendment No. 18 to Form N-4 Registration Statement (File No. 33-43390) of American General Life Insurance Company Separate Account D filed on April 12, 2000. (15) Incorporated by reference to Post-Effective Amendment No. 2 to Form S-6 Registration Statement (File No. 333-80191) of American General Life Insurance Company Separate Account VL-R filed on September 20, 2000. (16) Incorporated by reference to Post-Effective Amendment No. 2 to Form S-6 Registration Statement (File No. 333-89897) of American General Life Insurance Company Separate Account VL-R filed on April 10, 2001. (17) Incorporated by reference to Post-Effective Amendment No. 4 to Form S-6 Registration Statement (File No. 333-42567) of American General Life Insurance Company Separate Account VL-R filed on October 11, 2000. (18) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-65170) of American General Life Insurance Company Separate Account VL-R filed on October 10, 2001. (19) Incorporated by reference to Post-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-89897) of American General Life Insurance Company Separate Account VL-R filed on April 26, 2000. (20) Incorporated by reference to Post-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-65170) of American General Life Insurance Company Separate Account VL-R filed on December 3, 2001. (21) Incorporated by reference to Post-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-87307) of American General Life Insurance Company Separate Account VL-R filed on October 10, 2000. (22) Incorporated by reference to Post-Effective Amendment No. 5 to Form S-6 Registration Statement (File No. 333-42567) of American General Life Insurance Company Separate Account VL-R filed on April 25, 2001. II-11 (23) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-89897) of American General Life Insurance Company Separate Account VL-R filed on January 21, 2000. II-12 POWERS OF ATTORNEY Each person whose signature appears below hereby appoints Robert F. Herbert, Jr. and Pauletta P. Cohn and each of them, any one of whom may act without the joinder of the others, as his/her attorney-in-fact to sign on his/her behalf and in the capacity stated below and to file all amendments to this registration statement, which amendment or amendments may make such changes and additions to this registration statement as such attorney-in-fact may deem necessary or appropriate. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant, American General Life Insurance Company Separate Account VL-R, certifies that it meets all of the requirements for effectiveness of this amended registration statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this amended registration statement to be signed on its behalf by the undersigned thereunto duly authorized, and its seal to be hereunto affixed and attested, all in the city of Houston, and state of Texas, on the 7th day of December, 2001. AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R (Registrant) BY: AMERICAN GENERAL LIFE INSURANCE COMPANY (On behalf of the Registrant and itself) BY: /s/ ROBERT F. HERBERT, JR. --------------------------- Robert F. Herbert, Jr. Senior Vice President, Treasurer and Controller [SEAL] ATTEST: /s/ LAUREN W. JONES ---------------------- Lauren W. Jones Assistant Secretary Pursuant to the requirements of the Securities Act of 1933, this amended registration statement has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- RODNEY O. MARTIN, JR.* Director, Chairman and December 7, 2001 ---------------------- Chief Executive Officer (Rodney O. Martin, Jr.) DONALD W. BRITTON* Director December 7, 2001 ------------------ (Donald W. Britton) DAVID L. HERZOG* Director, Executive Vice December 7, 2001 ---------------- President and Chief (David L. Herzog) Financial Officer DAVID A. FRAVEL* Director December 7, 2001 ---------------- (David A. Fravel) ROYCE G. IMHOFF, II* Director December 7, 2001 -------------------- (Royce G. Imhoff, II) JOHN V. LAGRASSE* Director December 7, 2001 ----------------- (John V. LaGrasse) * /s/ ROBERT F. HERBERT, JR. ------------------------------ By: Robert F. Herbert, Jr. Attorney-in-Fact EXHIBIT INDEX: The following exhibits: 1. Exhibits required by Article IX, paragraph A of Form N-8B-2: (10)(d) Specimen form of amended Supplemental Application. (10)(e) Form of amended Service Request Form. Other Exhibits 6 Consent of Independent Auditors. E-1