-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IvrqNfElvW98ZQdPNisKlz6zSnEHSbD7T1gBCHVxobVZgHNWp7foUVxzvS2MYThE 8WCQL17lJLM/Q8WTvVVJxA== 0001193125-05-091497.txt : 20050502 0001193125-05-091497.hdr.sgml : 20050502 20050502104129 ACCESSION NUMBER: 0001193125-05-091497 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20050502 DATE AS OF CHANGE: 20050502 EFFECTIVENESS DATE: 20050502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AGL SEPARATE ACCOUNT VL-R CENTRAL INDEX KEY: 0001051485 IRS NUMBER: 250598210 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-43264 FILM NUMBER: 05788709 BUSINESS ADDRESS: STREET 1: 2727-A ALLEN PARKWAY CITY: HOUSTON STATE: TX ZIP: 77019 BUSINESS PHONE: 713-522-1111 MAIL ADDRESS: STREET 1: 2727-A ALLEN PARKWAY CITY: HOUSTON STATE: TX ZIP: 77019 FORMER COMPANY: FORMER CONFORMED NAME: AGL SEPARATE ACCOUNT VL R DATE OF NAME CHANGE: 19990907 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN GENERAL LIFE INSURANCE CO SEPARATE ACCOUNT VL R DATE OF NAME CHANGE: 19971216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AGL SEPARATE ACCOUNT VL-R CENTRAL INDEX KEY: 0001051485 IRS NUMBER: 250598210 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08561 FILM NUMBER: 05788710 BUSINESS ADDRESS: STREET 1: 2727-A ALLEN PARKWAY CITY: HOUSTON STATE: TX ZIP: 77019 BUSINESS PHONE: 713-522-1111 MAIL ADDRESS: STREET 1: 2727-A ALLEN PARKWAY CITY: HOUSTON STATE: TX ZIP: 77019 FORMER COMPANY: FORMER CONFORMED NAME: AGL SEPARATE ACCOUNT VL R DATE OF NAME CHANGE: 19990907 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN GENERAL LIFE INSURANCE CO SEPARATE ACCOUNT VL R DATE OF NAME CHANGE: 19971216 485BPOS 1 d485bpos.txt PEA 10 AGL PLATINUM INVESTOR III VUL Registration Nos. 333-43264 811-08561 As filed With the Securities and Exchange Commission on May 2, 2005 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No. [ 10 ] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ] Amendment No. [ 41 ] AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R (Exact Name of Registrant) AMERICAN GENERAL LIFE INSURANCE COMPANY (Name of Depositor) 2727-A Allen Parkway Houston, Texas 77019-2191 (Address of Depositor's Principal Executive Offices) (Zip Code) Depositor's Telephone Number, including Area Code (713) 831-8470 Lauren W. Jones, Esq. Deputy General Counsel American General Life Companies, LLC 2929 Allen Parkway Houston, Texas 77019-2191 (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering: Continuous It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) [ X ] on May 2, 2005 pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) pursuant to paragraph (a)(1) of Rule 485. If appropriate, check the following box: [ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment. PLATINUM INVESTOR(R) III FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES (the "Policies") issued by American General Life Insurance Company ("AGL") through its Separate Account VL-R This Prospectus is dated May 2, 2005 This prospectus describes Platinum Investor III flexible premium variable life insurance Policies issued by AGL. If there are any differences between this prospectus and your Policy, the provisions of your Policy will control. Platinum Investor III Policies provide life insurance coverage with flexibility in death benefits, premium payments and investment options. During the lifetime of the insured person you may designate or change the beneficiary to whom Platinum Investor III pays the death benefit upon the insured person's death. You choose one of three death benefit options. We guarantee a death benefit if the monthly guarantee premium is paid and your Policy has not lapsed. For information on how to contact AGL, please see "Contact Information" page 5. The Index of Special Words and Phrases on page 58 will refer you to pages that contain more about many of the words and phrases that we use. All of the words and phrases listed in the Index will be underlined and written in bold the first time they appear in this prospectus. This prospectus generally describes only the variable portions of the Policy, except where the fixed account is specifically mentioned. Please read this prospectus carefully and keep it for future reference. The AGL declared fixed interest account ("Fixed Account") is the fixed investment option for these Policies. You can also use AGL's Separate Account VL-R ("Separate Account") to invest in the Platinum Investor III variable investment options. Currently, the Platinum Investor III variable investment options each purchase shares of a corresponding Fund of: .. AIM Variable Insurance Funds ("AIM V.I.") .. The Alger American Fund ("Alger American") .. American Century Variable Portfolios, Inc. ("American Century VP") .. Credit Suisse Trust ("Credit Suisse Trust") .. Dreyfus Investment Portfolios ("Dreyfus IP") .. Dreyfus Variable Investment Fund ("Dreyfus VIF") .. Fidelity(R) Variable Insurance Products ("Fidelity(R) VIP") .. Franklin Templeton Variable Insurance Products Trust ("Franklin Templeton VIP") .. Janus Aspen Series ("Janus Aspen") .. J.P. Morgan Series Trust II ("JPMorgan ST II") .. MFS(R)Variable Insurance TrustSM ("MFS(R)VIT") .. Neuberger Berman Advisers Management Trust ("Neuberger Berman AMT") .. Oppenheimer Variable Account Funds ("Oppenheimer") .. PIMCO Variable Insurance Trust ("PIMCO VIT") .. Putnam Variable Trust ("Putnam VT") .. SunAmerica Series Trust ("SunAmerica ST") .. The Universal Institutional Funds, Inc. ("UIF") .. VALIC Company I ("VALIC Co. I") .. Van Kampen Life Investment Trust ("Van Kampen LIT") .. Vanguard(R)Variable Insurance Fund ("Vanguard VIF") See "Variable Investment Options" on page 20 for a complete list of the variable investment options and the respective advisers and sub-advisers of the corresponding Funds. You should also read the prospectuses of the Funds underlying the variable investment options that may interest you. You can request free copies from your AGL representative or from our Administrative Center shown under "Contact Information" on page 5. There is no guaranteed cash surrender value for amounts allocated to the variable investment options. If the net cash surrender value (the cash surrender value reduced by any loan balance) is insufficient to cover the charges due under the Policy, the Policy may terminate without value. Buying this Policy might not be a good way of replacing your existing insurance or adding more insurance if you already own a flexible premium variable life insurance Policy. You may wish to consult with your insurance representative or financial adviser. Neither the Securities and Exchange Commission ("SEC") nor any state securities commission has approved or disapproved these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The Policies are not insured by the FDIC, The Federal Reserve Board or any similar agency. They are not a deposit or other obligation of, nor are they guaranteed or endorsed by, any bank or depository institution. An investment in a variable life insurance policy is subject to investment risks, including possible loss of principal invested. The Policies are not available in all states. This prospectus does not offer the Policies in any jurisdiction where they cannot be lawfully sold. You should rely only on the information contained in this prospectus, or on sales materials we have approved or that we have referred you to. We have not authorized anyone to provide you with information that is different. TABLE OF CONTENTS POLICY BENEFITS/RISKS SUMMARY ................................................6 POLICY BENEFITS ..............................................................6 Your Specified Amount ....................................................6 Death Benefit ............................................................6 Death Benefit Proceeds ...............................................6 Death Benefit Option 1, Option 2 and Option 3 ........................7 Death Benefit Option 1 ...........................................7 Death Benefit Option 2 ...........................................7 Death Benefit Option 3 ...........................................7 Full Surrenders, Partial Surrenders, Transfers, and Policy Loans .........7 Full Surrenders ......................................................7 Partial Surrenders ...................................................7 Transfers ............................................................7 Policy Loans .........................................................7 Premiums .................................................................8 Flexibility of Premiums ..............................................8 Free Look ............................................................8 The Policy ...............................................................8 Ownership Rights .....................................................8 Separate Account .....................................................8 Fixed Account ........................................................8 Accumulation Value ...................................................8 Payment Options ......................................................8 Tax Benefits .........................................................8 Supplemental Benefits and Riders .........................................9 POLICY RISKS .................................................................9 Investment Risk ..........................................................9 Risk of Lapse ............................................................9 Tax Risks ...............................................................10 Partial Surrender and Full Surrender Risks ..............................10 Policy Loan Risks .......................................................10 PORTFOLIO RISKS .............................................................10 TABLES OF CHARGES ...........................................................11 GENERAL INFORMATION .........................................................18 American General Life Insurance Company .................................18 Separate Account VL-R ...................................................18 Additional Information ..................................................18 Communication with AGL ..................................................19 Administrative Center ...............................................19 E-Delivery, E-Service, telephone transactions and written transactions ...........................................19 E-Delivery ......................................................19 E-Service .......................................................19 Telephone transactions and written transactions .................19 Telephone transactions ..............................................20 Variable Investment Options .............................................20 Voting Privileges .......................................................23 Fixed Account ...........................................................23 Our general account .................................................24 How we declare interest .............................................24 Illustrations ...........................................................24 POLICY FEATURES .............................................................24 Age .....................................................................24 Death Benefits ..........................................................25 Your specified amount of insurance ..................................25 Your death benefit ..................................................25 Required minimum death benefit ......................................26 Base coverage and supplemental coverage .............................27 2 Premium Payments ........................................................28 Premium payments ....................................................28 Limits on premium payments ..........................................28 Checks ..............................................................29 Planned periodic premiums ...........................................29 Monthly guarantee premiums ..........................................29 Free look period ....................................................31 Changing Your Investment Option Allocations .............................31 Future premium payments .............................................31 Transfers of existing accumulation value ............................31 Dollar cost averaging ...............................................31 Automatic rebalancing ...............................................32 Market timing .......................................................32 Fund-rejected transfers .............................................33 Changing the Specified Amount of Insurance ..............................33 Increase in coverage ................................................33 Decrease in coverage ................................................34 Changing Death Benefit Options ..........................................34 Change of death benefit option ......................................34 Tax consequences of changes in insurance coverage ...................35 Effect of changes in insurance coverage on guarantee period .............................................................35 Effective Date of Policy and Related Transactions .......................35 Valuation dates, times, and periods .................................35 Fund pricing ........................................................35 Date of receipt .....................................................35 Commencement of insurance coverage ..................................36 Date of issue; Policy months and years ..............................36 Monthly deduction days ..............................................36 Commencement of investment performance ..............................36 Effective date of other premium payments and requests that you make .............................................36 Reports to Policy Owners ................................................37 ADDITIONAL BENEFIT RIDERS ...................................................37 Riders ..................................................................37 Accidental Death Benefit Rider ......................................37 Children's Insurance Benefit Rider ..................................37 Maturity Extension Rider ............................................37 Spouse Term Rider ...................................................39 Terminal Illness Rider ..............................................39 Waiver of Monthly Deduction Rider ...................................39 Tax Consequences of Additional Rider Benefits ...........................39 POLICY TRANSACTIONS .........................................................40 E-Delivery, E-Service, Telephone Transactions and Written Transactions ..............................................40 Withdrawing Policy Investments ..........................................40 Full surrender ......................................................40 Partial surrender ...................................................40 Exchange of Policy in certain states ................................40 Policy loans ........................................................40 Preferred loan interest rate ........................................41 Maturity of your Policy .............................................41 Tax considerations ..................................................42 POLICY PAYMENTS .............................................................42 Payment Options .........................................................42 Change of payment option ............................................42 Tax impact ..........................................................42 The Beneficiary .........................................................43 Assignment of a Policy ..................................................43 Payment of Proceeds .....................................................43 General .............................................................43 Delay of Fixed Account proceeds .....................................43 3 Delay for check clearance ...........................................43 Delay of Separate Account VL-R proceeds .............................43 Delay to challenge coverage .........................................44 Delay required under applicable law .................................44 ADDITIONAL RIGHTS THAT WE HAVE ..............................................44 Underwriting and premium classes ....................................45 Policies purchased through "internal rollovers" .....................45 State law requirements ..............................................45 Variations in expenses or risks .....................................45 CHARGES UNDER THE POLICY ....................................................46 Premium tax charge ..................................................46 Tax charge back .....................................................46 Premium expense charge ..............................................46 Daily charge (mortality and expense risk fee) .......................46 Flat monthly charge .................................................46 Monthly charge per $1,000 of base coverage ..........................46 Monthly insurance charge ............................................47 Monthly charges for additional benefit riders .......................47 Surrender charge ....................................................48 Partial surrender processing fee ....................................49 Transfer fee ........................................................49 Illustrations .......................................................49 Policy loans ........................................................49 Charge for taxes ....................................................49 Allocation of charges ...............................................49 More About Policy Charges ...............................................49 Purpose of our charges ..............................................49 General .............................................................50 ACCUMULATION VALUE ..........................................................50 Your accumulation value .............................................50 Your investment options .............................................50 POLICY LAPSE AND REINSTATEMENT ..............................................51 FEDERAL TAX CONSIDERATIONS ..................................................51 Tax Effects .............................................................51 General .............................................................51 Testing for modified endowment contract status ......................52 Other effects of Policy changes .....................................53 Rider benefits ......................................................53 Taxation of pre-death distributions if your Policy is not a modified endowment contract ..............................53 Taxation of pre-death distributions if your Policy is a modified endowment contract ..................................53 Policy lapses and reinstatements ....................................54 Diversification and investor control ................................54 Estate and generation skipping taxes ................................55 Life insurance in split dollar arrangements .........................55 Pension and profit-sharing plans ....................................56 Other employee benefit programs .....................................56 ERISA ...............................................................56 Our taxes ...........................................................56 When we withhold income taxes .......................................57 Tax changes .........................................................57 LEGAL PROCEEDINGS ...........................................................57 FINANCIAL STATEMENTS ........................................................57 INDEX OF SPECIAL WORDS AND PHRASES ..........................................58 4 - ------------------------------------------------------------------------------------------------------------------------------------ CONTACT INFORMATION - ------------------------------------------------------------------------------------------------------------------------------------ Addresses and telephone numbers: Here is how you can contact us about the Platinum Investor III Policies. ADMINISTRATIVE CENTER: HOME OFFICE: PREMIUM PAYMENTS: (Express Delivery) (U.S. Mail) 2727-A Allen Parkway (Express Delivery) VUL Administration VUL Administration Houston, Texas 77019-2191 Payment Processing Center 2727-A Allen Parkway P. O. Box 4880 1-713-831-3443 #1 Franklin Square Houston, Texas 77019-2191 Houston, Texas 1-800-340-2765 Springfield, IL 62713-0001 1-713-831-3443, 1-800-340-2765 77210-4880 (U.S. Mail) (Hearing Impaired) 1-888-436-5258 Payment Processing Center Fax: 1-713-620-6653 P.O. Box 0842 (Except premium payments) Carol Stream, IL 60132-0842 - ------------------------------------------------------------------------------------------------------------------------------------ ELECTRONIC SERVICES - ------------------------------------------------------------------------------------------------------------------------------------ Now, with E-DELIVERY you can electronically receive certain documents we currently mail, including annual Policy and Fund prospectuses. You can choose E-mail or CD ROM. You can also choose E-SERVICE capabilities to access on-line services for your Policy, such as transferring values among investment options and changing allocations for future premiums. You may select or cancel E-DELIVERY and E-SERVICE at any time. For more information, see page 19 of this prospectus. To request E-DELIVERY or E-SERVICE, take the following action: . For E-DELIVERY, enroll at the time you complete your Policy application, or go to www.aigag.com and enroll for E-Delivery at the same time you enroll for E-Service. . For E-SERVICE, go to www.aigag.com and enroll by completing the information on the introductory page under "Not an E-Service Member?" - ------------------------------------------------------------------------------------------------------------------------------------
5 POLICY BENEFITS/RISKS SUMMARY This summary describes the Policy's important benefits and risks. The sections in this prospectus following this summary discuss the Policy's benefits and other provisions in more detail. POLICY BENEFITS During the insured person's lifetime, you may, within limits, (1) change the amount of insurance, (2) borrow or withdraw amounts you have invested, (3) choose when and how much you invest, (4) choose whether your accumulation value or amount of premiums under your Policy, upon the insured person's death, will be added to the insurance proceeds we otherwise will pay to the beneficiary, and (5) add or delete certain other optional benefits that we make available by rider to your Policy. At the time of purchase, you can decide whether your Policy will be subject to certain tax rules that maximize the cash value or rules that maximize the insurance coverage. You may currently allocate your accumulation value among the 50 variable investment options available under the Policy, each of which invests in an underlying Fund (each available portfolio is referred to in this prospectus as a "Fund," and collectively, the "Funds"), and the Fixed Account, which credits a specified rate of interest. Any Policy owner whose accumulation value as of December 10, 2004 was invested in whole or in part in the investment option funded by the Pioneer Fund VCT Portfolio - Class I shares (formerly Safeco RST Core Equity Portfolio) or the Pioneer Growth Opportunities VCT Portfolio - Class I shares (formerly Safeco RST Growth Opportunities Portfolio) may continue to use that certain investment option for any purpose allowed under the Policy. Any Policy owner who had accumulation value invested in the Goldman Sachs Capital Growth Fund (formerly Ayco Growth Fund) on April 30, 2003, may retain the investment but cannot use the Goldman Sachs Capital Growth Fund for any other purpose except to transfer to another investment option. Your accumulation value will vary based on the investment performance of the variable investment options you choose and interest credited in the Fixed Account. Your Specified Amount In your application to buy a Platinum Investor III Policy, you tell us how much life insurance coverage you want. We call this the "specified amount" of insurance. The Policy is available for specified amounts of $50,000 or more. The specified amount consists of what we refer to as "base coverage" plus any "supplemental coverage" you select. You decide how much base coverage and supplemental coverage you want. Base coverage must be at least 10% of the specified amount. We pay compensation to your insurance agent's broker-dealer for the sale of both base and supplemental coverages. We pay a different level of compensation based on the amounts of base and supplemental coverages you select. See "Base coverage and supplemental coverage" on page 27. Death Benefit .. Death Benefit Proceeds: We pay the death benefit proceeds (reduced by any outstanding Policy loans and increased by any unearned loan interest) to the beneficiary when the insured person dies. We provide a guarantee of a death benefit, contingent upon payment of the required premiums, equal to the 6 specified amount (less any indebtedness) and any applicable benefit riders for a specified period. This guarantee is not applicable if your Policy has lapsed. .. Death Benefit Option 1, Option 2 and Option 3: Owners whose Policies were issued before June 1, 2002 could choose only death benefit Option 1 or death benefit Option 2. You can choose death benefit Option 1 or Option 2 at the time of your application or at any later time before the death of the insured person. You can choose death benefit Option 3 only at the time of your application. You must choose one of the three Options when you apply for your Policy. .. Death Benefit Option 1 is the specified amount on the date of the insured person's death. .. Death Benefit Option 2 is the sum of (a) the specified amount on the date of the insured person's death and (b) the Policy's accumulation value as of the date of death. .. Death Benefit Option 3 is the sum of (a) the death benefit we would pay under Option 1 and (b) the cumulative amount of premiums you paid for the Policy and any riders. The death benefit payable will be reduced by any amounts waived under the Waiver of Monthly Deduction Rider and any partial surrenders. Additional premiums you pay for the Policy and any riders following a partial surrender are not considered part of the "cumulative amount of premiums you paid" until the total value of the premiums paid is equivalent to or greater than the amount surrendered. Federal tax law may require us to increase payment under any of the above death benefit Options. See "Required minimum death benefit" on page 26. Full Surrenders, Partial Surrenders, Transfers, and Policy Loans .. Full Surrenders: At any time while the Policy is in force, you may surrender your Policy in full. If you do, we will pay you the accumulation value, less any Policy loans, plus any unearned loan interest, and less any surrender charge that then applies. We call this amount your "cash surrender value." You cannot reinstate a surrendered Policy. A full surrender may have adverse tax consequences. .. Partial Surrenders: You may, at any time after the first Policy year, make a partial surrender of your Policy's cash surrender value. A partial surrender must be at least $500. We do not allow partial surrenders that would reduce the death benefit below $50,000. A partial surrender may have adverse tax consequences. .. Transfers: Within certain limits, you may make transfers among the variable investment options and the Fixed Account. You may make up to twelve transfers of accumulation value among the variable investment options in each Policy year without charge. We will assess a $25 charge for each transfer after the 12th transfer in a Policy year. There are special limits on transfers involving the Fixed Account. .. Policy Loans: You may take a loan from your Policy at any time. The maximum loan amount you may take is equal to your Policy's cash surrender value less the loan interest that will be payable on your loan to your next Policy anniversary. The minimum loan you may take is $500 or, if less, an amount equal to your Policy's cash surrender value less the loan interest payable to your next Policy anniversary. We 7 charge you interest on your loan at an annual effective rate of 4.75%. We credit interest on loaned amounts; we guarantee an annual effective interest rate of 4.00%. After the tenth Policy year, you may take a preferred loan from your Policy. You may increase your risk of lapse if you take a loan. Loans may have adverse tax consequences. Premiums .. Flexibility of Premiums: After you pay the initial premium, you can pay premiums at any time (prior to the Policy's maturity) and in any amount (but not less than $50). You can select a premium payment plan to pay "planned periodic premiums" monthly, quarterly, semiannually, or annually. You are not required to pay premiums according to the plan. You may also choose to have premiums automatically deducted monthly from your bank account or other source under our automatic payment plan. Under certain circumstances, we may limit the amount of a premium payment or reject a premium payment. .. Free Look: When you receive your Policy, the free look period begins. You may return your Policy during this period and receive a refund. We will refund the greater of (i) any premium payments received by us or (ii) your accumulation value plus any charges that have been deducted prior to allocation to your specified investment options. The free look period generally expires 10 days after you receive the Policy. The Policy .. Ownership Rights: While the insured person is living, you, as the owner of the Policy, may exercise all of the rights and options described in the Policy. These rights include selecting and changing the beneficiary, changing the owner, and assigning the Policy. .. Separate Account: You may direct the money in your Policy to any of the variable investment options of the Separate Account. Each variable investment option invests exclusively in one of the Funds listed in this prospectus. .. Fixed Account: You may place amounts in the Fixed Account where it earns interest at the rate of 4% annually. We may declare higher rates of interest, but are not obligated to do so. .. Accumulation Value: Your accumulation value is the sum of your amounts in the variable investment options and the Fixed Account. Accumulation value varies from day to day, depending on the investment performance of the variable investment options you choose, interest we credit to the Fixed Account, charges we deduct, and any other transactions (e.g., transfers, partial surrenders and loans). .. Payment Options: There are several ways of receiving proceeds under the death benefit, surrender, and maturity provisions of the Policy, other than in a lump sum. More detailed information concerning these payment options is available on request from our Administrative Center shown under "Contact Information" on page 5. .. Tax Benefits: The Policy is designed to afford the tax treatment normally accorded life insurance contracts under federal tax law. Generally, under federal tax law, the death benefit under a qualifying life insurance policy is excludable from the gross income of the beneficiary. This means that under a qualifying life insurance policy, cash value builds up on a tax deferred basis and transfers of cash value among the available investment options under the policy may be made tax free. Under a qualifying life 8 insurance policy that is not a modified endowment contract ("MEC"), the proceeds from Policy loans would not be taxed. If the Policy is not a MEC, distributions after the 15th Policy year generally will be treated first as a return of basis or investment in the Policy and then as taxable income. Moreover, loans will generally not be treated as distributions. Finally, neither distributions nor loans from a Policy that is not a MEC are subject to the 10% penalty tax. Supplemental Benefits and Riders We offer several riders that provide supplemental benefits under the Policy, such as the Accidental Death Benefit Rider, which provides an additional death benefit payable if the insured person dies from bodily injury that results from an accident. For most of the riders that you choose, a charge, which is shown on page 3 of your Policy, will be deducted from your accumulation value on each monthly deduction date. Eligibility for and changes in these benefits are subject to our rules and procedures as in effect from time to time. Not all riders are available in all states. POLICY RISKS Investment Risk The Policy is not suitable as a short-term investment. We designed the Policy to meet long-term financial goals. In the Policy's early years, if the total charges exceed total premiums paid or if your investment choices perform poorly, your Policy may not have any cash surrender value. The surrender charge is large enough in the Policy's early years so that if you fully surrender your Policy you may receive no cash surrender value. If you take multiple partial surrenders, your accumulation value may not cover required charges and your Policy would lapse. If you invest your accumulation value in one or more variable investment options, then you will be subject to the risk that investment performance will be unfavorable. You will also be subject to the risk that the accumulation value will decrease because of the unfavorable performance and the resulting higher insurance charges. You could lose everything you invest. You will also be subject to the risk that the investment performance of the variable investment options you choose may be less favorable than that of other variable investment options, and in order to keep the Policy in force may be required to pay more premiums than originally planned. We do not guarantee a minimum accumulation value. If you allocate net premiums to the Fixed Account, then we credit your accumulation value (in the Fixed Account) with a declared rate of interest, but you assume the risk that the rate may decrease, although it will never be lower than a guaranteed minimum annual effective rate of 4%. Risk of Lapse If your cash surrender value is not enough to pay the charges deducted against your accumulation value each month, your Policy may enter a 61-day grace period. We will notify you that the Policy will lapse (terminate without value) at the end of the grace period unless you make a sufficient payment. Your Policy may also lapse if outstanding Policy loans plus any accrued interest payable exceeds the cash surrender value. While the monthly guarantee provision is applicable to your Policy, if you pay the monthly guarantee premiums your Policy will not lapse and we will provide a death benefit depending on the death benefit Option you chose. 9 Tax Risks We anticipate that the Policy should generally be deemed a life insurance contract under federal tax law. However, due to limited guidance under the Federal tax law, there is some uncertainty about the application of the federal tax law to the Policy, particularly if you pay the full amount of premiums permitted under the Policy. Please consult a tax adviser about these consequences. Depending on the total amount of premiums you pay, the Policy may be treated as a MEC under federal tax laws. If a Policy is treated as a MEC, then surrenders, partial surrenders, and loans under the Policy will be taxable as ordinary income to the extent there are earnings in the Policy. In addition, a 10% penalty tax may be imposed on surrenders, partial surrenders, and loans taken before you reach age 59 1/2. See "Federal Tax Considerations" on page 51. You should consult a qualified tax adviser for assistance in all Policy-related tax matters. Partial Surrender and Full Surrender Risks The surrender charge under the Policy applies for the first 10 Policy years (and for a maximum of the first 10 Policy years after any requested increase in the Policy's specified amount) in the event you surrender the Policy or decrease the specified amount. The surrender charge may be considerable. It is possible that you will receive no cash surrender value if you surrender your Policy in the first few Policy years. Any outstanding loan balance reduces the amount available to you upon a partial or full surrender. Under Death Benefit Option 3, partial surrenders reduce the Policy's death benefit until the total value of the premiums you pay after the partial surrender is equivalent to or greater than the amount surrendered. You should purchase the Policy only if you have the financial ability to keep it in force for a substantial period of time. You should not purchase the Policy if you intend to surrender all or part of the accumulation value in the near future. We designed the Policy to meet long-term financial goals. A partial surrender or full surrender may have adverse tax consequences. Policy Loan Risks A Policy loan, whether or not repaid, will affect accumulation value over time because we subtract the amount of the loan and any accrued interest from the variable investment options and/or Fixed Account as collateral, and this loan collateral does not participate in the investment performance of the variable investment options or receive any excess interest credited to the Fixed Account. We reduce the amount we pay on the insured person's death by the amount of any Policy loan and any accrued interest. Your Policy may lapse (terminate without value) if outstanding Policy loans plus any accrued interest payable reduce the cash surrender value to zero. If you surrender the Policy or allow it to lapse while a Policy loan remains outstanding, the amount of the loan, to the extent it has not been previously taxed, is treated as a distribution from the Policy and may be subject to federal income taxation. PORTFOLIO RISKS A discussion of the risks of each Fund may be found in its prospectus. Please refer to the Funds' prospectuses for more information. You may request a copy of any or all of the Fund prospectuses by contacting your AGL representative or the Administrative Center shown under "Contact Information" on page 5. There is no assurance that any of the Funds will achieve its stated investment objective. 10 TABLES OF CHARGES The following tables describe the fees and expenses that are payable, when buying, owning and surrendering a Policy. No Policy owner will be charged more than the amount we show under the "Maximum Guaranteed Charge" columns. The first table describes the fees and expenses that are payable at the time that you (1) buy a Policy, (2) surrender a Policy during the first 10 Policy years and the first 10 Policy years following an increase in the Policy's base coverage, (3) change a Policy's specified amount, or (4) transfer accumulation value between investment options. - ----------------------------------------------------------------------------------------------------------------------------------- Transaction Fees - ----------------------------------------------------------------------------------------------------------------------------------- Charge When Charge is Deducted Maximum Guaranteed Charge Current Charge - ----------------------------------------------------------------------------------------------------------------------------------- Premium Tax Charge Upon receipt of each 3.5%/1/ of each premium 3.5%/1/ of each premium premium payment payment (tax charge back payment (tax charge if you purchase the back if you purchase Policy in Oregon)/2/ the Policy in Oregon)/2/ - ----------------------------------------------------------------------------------------------------------------------------------- Premium Expense Charge Upon receipt of each 7.5% of the amount of 5% of the amount of premium payment each premium payment each premium payment remaining after deduction remaining after of the premium tax charge deduction of the premium tax charge - -----------------------------------------------------------------------------------------------------------------------------------
- ---------- /1/ Premium tax rates vary by state. For example, the highest premium tax rate, 3.5%, is in the state of Nevada, while the lowest premium tax rate, 0.75%, is in the state of Wyoming. /2/ Instead of a premium tax charge, we assess a tax charge back of 2% of each premium payment for Policy owners residing in Oregon. See "Tax charge back" on page 46. 11 - ----------------------------------------------------------------------------------------------------------------------------------- Transaction Fees - ----------------------------------------------------------------------------------------------------------------------------------- Charge When Charge is Deducted Maximum Guaranteed Charge Current Charge - ----------------------------------------------------------------------------------------------------------------------------------- Surrender Charge/1/ Maximum Charge - for the Upon a partial surrender $49 per $1,000 of base $49 per $1,000 of base first Policy year - for a 60 or a full surrender of coverage coverage year old male, preferred your Policy during the non-tobacco, with a Specified first 10 Policy years and Amount of $360,000, of which during the first 10 Policy $360,000 is base coverage/1/ years following an increase in the Policy's base coverage - ----------------------------------------------------------------------------------------------------------------------------------- Minimum Charge - for the Upon a partial surrender $3 per $1,000 of base coverage $3 per $1,000 of base first Policy year - for a or a full surrender of coverage 6 year old female, juvenile, your Policy during the with a Specified Amount of first 10 Policy years and $360,000 of which $36,000 is during the first 10 Policy base coverage and $324,000 is years following an supplemental coverage increase in the Policy's base coverage - ----------------------------------------------------------------------------------------------------------------------------------- Example Charge - for the Upon a partial surrender $18 per $1,000 of base $18 per $1,000 of base first Policy year - for a or a full surrender of coverage coverage 40 year old male, standard your Policy during the non-tobacco, with a Specified first 10 Policy years and Amount of $360,000 of which during the first 10 Policy $252,000 is base coverage and years following an $108,000 is supplemental increase in the Policy's coverage base coverage - ----------------------------------------------------------------------------------------------------------------------------------- Partial Surrender Processing Fee Upon a partial surrender The lesser of $25 or 2% of $10 of your Policy the partial surrender - ----------------------------------------------------------------------------------------------------------------------------------- Transfer Fee Upon a transfer of $25 for each transfer/2/ $25 for each transfer/2/ accumulation value - ----------------------------------------------------------------------------------------------------------------------------------- Policy Loan Interest Charge Annually (on your Policy 4.75% of the loan balance 4.75% of the loan balance anniversary) - ----------------------------------------------------------------------------------------------------------------------------------- Policy Owner Additional Upon each request for a $25 $0 Illustration Charge Policy illustration after the first in a Policy year - ----------------------------------------------------------------------------------------------------------------------------------- Terminal Illness Rider At time of claim $250 plus interest $150 plus interest Administrative Fee - -----------------------------------------------------------------------------------------------------------------------------------
- ---------- /1/ The Surrender Charge will vary based on the insured person's sex, age, risk class, Policy year and base coverage. See "Base coverage and supplemental coverage" on page 27. The Surrender Charges shown in the table may not be typical of the charges you will pay. Page 27 of your Policy will indicate the maximum guaranteed Surrender Charges applicable to your Policy. More detailed information concerning your Surrender Charge is available free of charge on request from our Administrative Center shown under "Contact Information" on page 5 of this prospectus. /2/ The first 12 transfers in a Policy year are free of charge. 12 The next table describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including Fund fees and expenses. - ----------------------------------------------------------------------------------------------------------------------------------- Periodic Charges (other than Fund fees and expenses) - ----------------------------------------------------------------------------------------------------------------------------------- Charge When Charge is Deducted Maximum Guaranteed Charge Current Charge - ----------------------------------------------------------------------------------------------------------------------------------- Flat Monthly Charge Monthly, at the beginning $6 $6 of each Policy month - ----------------------------------------------------------------------------------------------------------------------------------- Cost of Insurance Charge/1/ - ----------------------------------------------------------------------------------------------------------------------------------- Maximum Charge for the First Monthly, At the Beginning $10.36 Per $1,000 of Net $9.98 Per $1,000 of Net Policy year - for a 90 year of each Policy month amount at risk attributable amount at risk attributable old male, special tobacco, to base coverage; and to base coverage; and with a Specified Amount of $50,000, of which $50,000 is $10.36 per $1,000 of net $6.07 per $1,000 of net base coverage amount at risk attributable amount at risk attributable to supplemental coverage to supplemental coverage - ----------------------------------------------------------------------------------------------------------------------------------- Minimum Charge for the first Monthly, at the beginning $0.06 per $1,000 of net $0.06 per $1,000 of net Policy year - for a 6 year of each Policy month amount at risk/2/ attributable amount at risk attributable old female, juvenile, with a to base coverage; and to base coverage; and Specified Amount of $1,000,000, of which $0.06 per $1,000 of net $0.04 per $1,000 of net $100,000 is base coverage amount at risk attributable amount at risk attributable and $900,000 is supplemental to supplemental coverage to supplemental coverage coverage - ----------------------------------------------------------------------------------------------------------------------------------- Example Charge for the first Monthly, at the beginning $0.25 per $1,000 of net $0.18 per $1,000 of net Policy year - for a 40 year of each Policy month amount at risk attributable amount at risk attributable old male, standard to base coverage; and to base coverage; and non-tobacco, with a Specified Amount of $0.25 per $1,000 of net $0.15 per $1,000 of net $360,000, of which $252,000 amount at risk attributable amount at risk attributable is base coverage and to supplemental coverage to supplemental coverage $108,000 is supplemental coverage - -----------------------------------------------------------------------------------------------------------------------------------
- ---------- /1/ The Cost of Insurance Charge will vary based on the insured person's sex, age, premium class, Policy year, and base and supplemental coverage amounts. See "Base coverage and supplemental coverage" on page 27. The Cost of Insurance Charges shown in the table may not be typical of the charges you will pay. Page 24 of your Policy will indicate the maximum guaranteed Cost of Insurance Charge applicable to your Policy. More detailed information concerning your Cost of Insurance Charge is available on request from our Administrative Center shown under "Contact Information" on page 5 of this prospectus. Also see "Illustrations" on page 24 of this prospectus. /2/ The net amount at risk is the difference between the current death benefit under your Policy and your accumulation value under the Policy. 13 - ----------------------------------------------------------------------------------------------------------------------------------- Periodic Charges (other than Fund fees and expenses) - ----------------------------------------------------------------------------------------------------------------------------------- Charge When Charge is Deducted Maximum Guaranteed Charge Current Charge - ----------------------------------------------------------------------------------------------------------------------------------- Monthly Charge per $1,000 of base coverage/1/ Maximum Charge - for a 90 Monthly, at the beginning $1.46 per $1000 of base $1.46 per $1000 of year old male, special of each Policy month. This coverage base coverage tobacco, with a Specified Charge is imposed during Amount of $360,000, of the first 7 Policy years which $360,000 is base and the first 7 Policy coverage years following an increase in base coverage/2/ - ----------------------------------------------------------------------------------------------------------------------------------- Minimum Charge - for a 1 Monthly, at the beginning $0.03 per $1000 of base $0.03 per $1000 of year old female, of each Policy month. This coverage base coverage juvenile, with a Charge is imposed during Specified Amount of the first 7 Policy years $360,000, of which and the first 7 Policy $36,000 is base coverage years following an increase and $324,000 is in base coverage/2/ supplemental coverage - ----------------------------------------------------------------------------------------------------------------------------------- Example Charge - for a 40 Monthly, at the beginning $0.16 per $1000 of base $0.16 per $1000 of year old male, standard of each Policy month. This coverage base coverage non-tobacco, with a Charge is imposed during Specified Amount of the first 7 Policy years $360,000, of which and the first 7 Policy $252,000 is base coverage years following an increase and $108,000 is in base coverage/2/ supplemental coverage - ----------------------------------------------------------------------------------------------------------------------------------- Daily Charge (mortality and Daily annual effective rate of annual effective expense risk fee) 0.70%/4/ rate of 0.70%/4/ Policy years 1-10 /3/,/4/ - -----------------------------------------------------------------------------------------------------------------------------------
- ---------- /1/ The Monthly Charge per $1,000 of base coverage is applied only against each $1,000 of base coverage, and not against the Policy's supplemental coverage. The Monthly Charge per $1,000 of base coverage will vary based on the amount of base coverage and the insured person's sex, age and premium class. See "Base coverage and supplemental coverage" on page 27. The Monthly Charge per $1,000 of base coverage shown in the table may not be typical of the charges you will pay. Page 3A of your Policy will indicate the initial Monthly Charge per $1,000 of base coverage applicable to your Policy. Your Policy refers to this charge as the "Monthly Expense Charge for First Seven Years." There is no additional charge for illustrations at the time you apply for a Policy which may show various amounts of base coverage and supplemental coverage. When you become a Policy owner, we reserve the right to charge a $25 fee for each illustration after the first in each Policy year. /2/ The charge assessed during the first 7 Policy years following an increase in base coverage is only upon the amount of the increase in base coverage. /3/ After the 10th Policy year, the daily charge will be as follows: Policy years 11-20...........annual effective rate of 0.45% Policy years 21+..............annual effective rate of 0.10% These reductions in the amount of the daily charge are guaranteed. /4/ All percentages are calculated as a percent of accumulation value invested in the variable investment options. 14 The next table describes the fees and expenses that you will pay periodically, if you choose an optional benefit rider during the time that you own the Policy. - ----------------------------------------------------------------------------------------------------------------------------------- Periodic Charges (optional benefit riders only) - ----------------------------------------------------------------------------------------------------------------------------------- Optional Benefit Rider Charges When Charge is Deducted Maximum Guaranteed Charge Current Charge - ----------------------------------------------------------------------------------------------------------------------------------- Accidental Death Benefit/1/ Maximum Charge - for a 65 year Monthly, at the beginning $0.15 per $1,000 of rider $0.15 per $1,000 of rider old of each Policy month coverage coverage - ----------------------------------------------------------------------------------------------------------------------------------- Minimum Charge - for a 29 year Monthly, at the beginning $0.07 per $1,000 of rider $0.07 per $1,000 of rider old of each Policy month coverage coverage - ----------------------------------------------------------------------------------------------------------------------------------- Example Charge - for a 40 year Monthly, at the beginning $0.09 per $1,000 of rider $0.09 per $1,000 of rider old of each Policy month coverage coverage - ----------------------------------------------------------------------------------------------------------------------------------- Children's Insurance Benefit Monthly, at the beginning $0.48 per $1,000 of rider $0.48 per $1,000 of rider of each Policy month coverage coverage - ----------------------------------------------------------------------------------------------------------------------------------- Maturity Extension Accumulation Monthly, at the beginning $10 $0 Value Version of the Policy month which follows your original maturity date - ----------------------------------------------------------------------------------------------------------------------------------- Maturity Extension Death Benefit Version Initial Charge Monthly beginning 9 years $30 per $1,000 of net $5 per $1,000 of net amount before your original amount at risk attributable at risk attributable to the maturity date to the Policy (without any Policy (without any riders) riders) - ----------------------------------------------------------------------------------------------------------------------------------- Administrative Charge Monthly, at the beginning $10 $0 of the Policy month which follows your original maturity date - ----------------------------------------------------------------------------------------------------------------------------------- Spouse Term/2/ Maximum charge - for a 75 year Monthly at the beginning of $5.54 per $1,000 of rider $4.61 per $1,000 of rider old male, standard tobacco each Policy month coverage coverage - ----------------------------------------------------------------------------------------------------------------------------------- Minimum charge - for a 15 year Monthly at the beginning of $0.07 per $1,000 of rider $0.01 per $1,000 of rider old female, standard non-tobacco each Policy month coverage coverage - ----------------------------------------------------------------------------------------------------------------------------------- Example charge - for a 40 year Monthly at the beginning of $0.25 per $1,000 of rider $0.15 per $1,000 of rider old male, standard non-tobacco each Policy month coverage coverage - -----------------------------------------------------------------------------------------------------------------------------------
- ---------- /1/ The charge for the Accidental Death Benefit Rider will vary based on the insured person's age when the Rider is added. /2/ The charge for the Spouse Term Rider will vary based on the Spouse's sex, age and premium class. 15 - ----------------------------------------------------------------------------------------------------------------------------------- Periodic Charges (optional benefit riders only) - ----------------------------------------------------------------------------------------------------------------------------------- Optional Benefit Rider Charges When Charge is Deducted Maximum Guaranteed Charge Current Charge - ----------------------------------------------------------------------------------------------------------------------------------- Waiver of Monthly Deduction/1/ Maximum Charge - for a Monthly, at the $0.40 per $1,000 of net $0.40 per $1,000 of net 59 year old beginning of each Policy amount at risk amount at risk month attributable to the Policy attributable to the Policy - ----------------------------------------------------------------------------------------------------------------------------------- Minimum Charge - for an Monthly, at the $0.02 per $1,000 of net $0.02 per $1,000 of net 18 year old beginning of each Policy amount at risk amount at risk month attributable to the Policy attributable to the Policy - ----------------------------------------------------------------------------------------------------------------------------------- Example Charge - for a Monthly, at the $0.03 per $1,000 of net $0.03 per $1,000 of net 40 year old beginning of each Policy amount at risk amount at risk month attributable to the Policy attributable to the Policy - -----------------------------------------------------------------------------------------------------------------------------------
- ---------- /1/ The charge for the Waiver of Monthly Deduction Rider will vary based on the insured person's age when we assess the charge. 16 The next table describes the Fund fees and expenses that you will pay periodically during the time that you own the Policy. The table shows the maximum and minimum Total Annual Fund Operating Expenses before contractual waiver or reimbursement for any of the Funds for the fiscal year ended December 31, 2004. Current and future expenses for the Funds may be higher or lower than those shown. - -------------------------------------------------------------------------------- Annual Fund Fees and Expenses (expenses that are deducted from the Fund assets) - -------------------------------------------------------------------------------- Charge Maximum Minimum - -------------------------------------------------------------------------------- Total Annual Fund Operating Expenses for all of the Funds (expenses that are deducted from portfolio assets include management fees, distribution (12b-1) 1.43% 0.24% fees, and other expenses)/1/ - -------------------------------------------------------------------------------- Details concerning each Fund's specific fees and expenses are contained in the Funds' prospectuses. - ---------- /1/ Currently 15 of the Funds have contractual reimbursements or fee waivers. These reimbursements or waivers expire on April 30, 2006. The impact of contractual reimbursements or fee waivers is as follows: - -------------------------------------------------------------------------------- Charge Maximum Minimum - -------------------------------------------------------------------------------- Total Annual Fund Operating Expenses for all of the Funds After Contractual Reimbursement or Fee Waiver 1.26% 0.24% - -------------------------------------------------------------------------------- 17 GENERAL INFORMATION American General Life Insurance Company We are American General Life Insurance Company ("AGL"). AGL is a stock life insurance company organized under the laws of Texas. AGL's home office is 2727-A Allen Parkway, Houston, Texas 77019-2191. AGL is a successor in interest to a company originally organized under the laws of Delaware on January 10, 1917. AGL is an indirect, wholly-owned subsidiary of American International Group, Inc. ("AIG"). AIG, a Delaware corporation, is a holding company which through its subsidiaries is primarily engaged in a broad range of insurance and insurance-related activities and financial services in the United States and abroad. AIG American General is a marketing name for AGL and its affiliates. The commitments under the Policies are AGL's, and AIG has no legal obligation to back those commitments. AGL is a member of the Insurance Marketplace Standards Association ("IMSA"). IMSA is a voluntary membership organization created by the life insurance industry to promote ethical market conduct for life insurance and annuity products. AGL's membership in IMSA applies only to AGL and not its products. Separate Account VL-R We hold the Fund shares in which any of your accumulation value is invested in the Separate Account. The Separate Account is registered as a unit investment trust with the SEC under the Investment Company Act of 1940. We created the Separate Account on May 6, 1997 under Texas law. For record keeping and financial reporting purposes, the Separate Account is divided into 63 separate "divisions," 53 of which correspond to the 53 variable "investment options" under the Policy. The remaining 10 divisions, and all of these 53 divisions, represent investment options available under other variable life policies we offer. Three of these 53 divisions are not available to all Policy owners. We hold the Fund shares in which we invest your accumulation value for an investment option in the division that corresponds to that investment option. Income, gains and losses credited to, or charged against, the Separate Account reflect the Separate Account's own investment experience and not the investment experience of the Separate Account's other assets. The assets in the Separate Account are our property. The assets in the Separate Account may not be used to pay any liabilities of AGL other than those arising from the Policies. AGL is obligated to pay all amounts under the Policies due the Policy owners. Additional Information We have filed a Statement of Additional Information (the "SAI") with the SEC which includes more information about your Policy. The back cover page to this prospectus describes how you can obtain a copy of the SAI. 18 Communication with AGL When we refer to "you," we mean the person who is authorized to take any action with respect to a Policy. Generally, this is the owner named in the Policy. Where a Policy has more than one owner, each owner generally must join in any requested action, except for transfers and changes in the allocation of future premiums or changes among the investment options. Administrative Center. The Administrative Center provides service to all Policy owners. See "Contact Information" on page 5 of this prospectus. For applicants, your AGL representative will tell you if you should use an address other than the Administrative Center address. All premium payments, requests, directions and other communications should be directed to the appropriate location. You should mail or express premium payments and loan repayments directly to the appropriate address shown on your billing statement. If you do not receive a billing statement, send your premium directly to the address for premium payments shown under "Contact Information" on page 5. You should communicate notice of the insured person's death, including any related documentation, to our Administrative Center address. E-Delivery, E-Service, telephone transactions and written transactions. There are several different ways to request and receive Policy services. E-Delivery. Instead of receiving paper copies by mail of certain documents we are required to provide to you, including annual Policy and Fund prospectuses, you may select E-Delivery. E-Delivery allows you to receive notification by E-mail when new or updated documents are available that pertain to your Policy. You may then follow the link contained within the E-mail to view these documents on-line. Alternatively, you may choose to receive these documents via CD ROM. You may find electronically received documents easier to review and retain than paper documents. To enroll for E-Delivery, you can complete certain information at the time of your Policy application (with one required extra signature). If you prefer, you can go to www.aigag.com and at the same time you enroll for E-Service, enroll for E-Delivery. You do not have to enroll for E-Service to enroll for E-Delivery unless you enroll on-line. You may select or cancel E-Delivery at any time. There is no charge for E-Delivery. E-Service. You may enroll for E-Service to have access to on-line services for your Policy. These services include transferring values among investment options and changing allocations for future premiums. You can also view Policy statements. If you have elected E-Service, you may choose to handle certain Policy requests by E-Service, in writing or by telephone. We expect to expand the list of available E-Service transactions in the future. To enroll for E-Service, go to www.aigag.com and complete the information on the introductory page under "Not an E-Service Member?" You may select or cancel the use of E-Service at any time. There is no charge for E-Service. Telephone transactions and written transactions. Certain transaction requests currently must be made in writing. You must make the following requests in writing (unless you are permitted to make the requests by E-Service or by telephone. See "Telephone transactions" on page 20). . transfer of accumulation value;* . change of allocation percentages for premium payments; * . change of allocation percentages for Policy deductions; * . telephone transaction privileges; * . loan; 19 . full surrender; . partial surrender; . change of beneficiary or contingent beneficiary; . loan repayments or loan interest payments; . change of death benefit option or manner of death benefit payment; . change in specified amount; . addition or cancellation of, or other action with respect to any benefit riders; . election of a payment option for Policy proceeds; and . tax withholding elections. ---------- * These transactions are permitted by E-Service, by telephone or in writing. We have special forms which should be used for loans, assignments, partial and full surrenders, changes of owner or beneficiary, and all other contractual changes. You will be asked to return your Policy when you request a full surrender. You may obtain these forms from our Administrative Center, shown under "Contact Information" on page 5, or from your AGL representative. Each communication must include your name, Policy number and, if you are not the insured person, that person's name. We cannot process any requested action that does not include all required information. Telephone transactions. If you have a completed telephone authorization form on file with us, you may make transfers, or change the allocation of future premium payments or deduction of charges, by telephone, subject to the terms of the form. We will honor telephone instructions from any person who provides the correct information, so there is a risk of possible loss to you if unauthorized persons use this service in your name. Our current procedure is that only the owner or your AGL representative may make a transfer request by phone. We are not liable for any acts or omissions based upon instructions that we reasonably believe to be genuine. Our procedures include verification of the Policy number, the identity of the caller, both the insured person's and owner's names, and a form of personal identification from the caller. We will promptly mail a written confirmation of the transaction. If (a) many people seek to make telephone requests at or about the same time, or (b) our recording equipment malfunctions, it may be impossible for you to make a telephone request at the time you wish. You should submit a written request if you cannot make a telephone request. Also, if due to malfunction or other circumstances your telephone request is incomplete or not fully comprehensible, we will not process the transaction. The phone number for telephone requests is 1-800-340-2765. Variable Investment Options We divided the Separate Account into variable investment options, each of which invests in shares of a corresponding Fund. Except as noted below, you may invest premium payments in variable investment options investing in the Funds listed in the following table. The name of each Fund or a footnote for the Fund describes its type (for example, money market fund, growth fund, equity fund, etc.). Fund sub-advisers are shown in parenthesis. - ----------------------------------------------------------------------------------------------------------------------------------- Variable Investment Options Investment Adviser (sub-adviser, if applicable) - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. International Growth Fund - Series I Shares A I M Advisors, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund - Series I Shares A I M Advisors, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio - Class O Shares/1/ Fred Alger Management, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- Alger American MidCap Growth Portfolio - Class O Shares Fred Alger Management, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- American Century VP Value Fund American Century Investment Management, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- Credit Suisse Trust Small Cap Growth Portfolio Credit Suisse Asset Management, LLC - -----------------------------------------------------------------------------------------------------------------------------------
20 (See footnotes beginning on page 22.) - ----------------------------------------------------------------------------------------------------------------------------------- Variable Investment Options Investment Adviser (sub-adviser, if applicable) - ----------------------------------------------------------------------------------------------------------------------------------- Dreyfus IP MidCap Stock Portfolio - Initial Shares The Dreyfus Corporation - ----------------------------------------------------------------------------------------------------------------------------------- Dreyfus VIF Developing Leaders Portfolio - Initial Shares/2/ The Dreyfus Corporation - ----------------------------------------------------------------------------------------------------------------------------------- Dreyfus VIF Quality Bond Portfolio - Initial Shares The Dreyfus Corporation - ----------------------------------------------------------------------------------------------------------------------------------- Fidelity(R) VIP Asset ManagerSM Portfolio - Service Class 2/3/ Fidelity Management & Research Company (FMR Co., Inc.) (Fidelity International Investment Advisors) (Fidelity International Investment Advisors (U.K.) Limited) (Fidelity Investments Japan Limited) (Fidelity Investments Money Management, Inc.) (Fidelity Management & Research (Far East) Inc.) (Fidelity Management & Research (U.K.) Inc.) - ----------------------------------------------------------------------------------------------------------------------------------- Fidelity(R) VIP Contrafund(R)Portfolio - Service Class 2/4/ Fidelity Management & Research Company (FMR Co., Inc.) (Fidelity International Investment Advisors) (Fidelity International Investment Advisors (U.K.) Limited) (Fidelity Investments Japan Limited) (Fidelity Management & Research (Far East) Inc.) (Fidelity Management & Research (U.K.) Inc.) - ----------------------------------------------------------------------------------------------------------------------------------- Fidelity(R) VIP Equity-Income Portfolio - Service Class 2 Fidelity Management & Research Company (FMR Co., Inc.) - ----------------------------------------------------------------------------------------------------------------------------------- Fidelity(R) VIP Growth Portfolio - Service Class 2 Fidelity Management & Research Company (FMR Co., Inc.) - ----------------------------------------------------------------------------------------------------------------------------------- Fidelity(R) VIP Mid Cap Portfolio - Service Class 2 Fidelity Management & Research Company (FMR Co., Inc.) (Fidelity International Investment Advisors) (Fidelity International Investment Advisors (U.K.) Limited) (Fidelity Investments Japan Limited) (Fidelity Management & Research (Far East) Inc.) (Fidelity Management & Research (U.K.) Inc.) - ----------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Franklin Small Cap Value Securities Fund - Class 2 Franklin Advisory Services, LLC - ----------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Franklin U.S. Government Fund - Class 2 Franklin Advisers, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Mutual Shares Securities Fund - Class 2/5/ Franklin Mutual Advisers, LLC - ----------------------------------------------------------------------------------------------------------------------------------- Franklin Templeton VIP Templeton Foreign Securities Fund - Class 2 Templeton Investment Counsel, LLC - ----------------------------------------------------------------------------------------------------------------------------------- Goldman Sachs Capital Growth Fund* Goldman Sachs Asset Management, L.P. - ----------------------------------------------------------------------------------------------------------------------------------- Janus Aspen International Growth Portfolio - Service Shares Janus Capital Management LLC - ----------------------------------------------------------------------------------------------------------------------------------- Janus Aspen Mid Cap Growth Portfolio - Service Shares Janus Capital Management LLC - ----------------------------------------------------------------------------------------------------------------------------------- Janus Aspen Worldwide Growth Portfolio - Service Shares Janus Capital Management LLC - ----------------------------------------------------------------------------------------------------------------------------------- JPMorgan ST II Mid Cap Value Portfolio J.P. Morgan Investment Management Inc. - ----------------------------------------------------------------------------------------------------------------------------------- JPMorgan ST II Small Company Portfolio J.P. Morgan Investment Management Inc. - ----------------------------------------------------------------------------------------------------------------------------------- MFS(R)VIT Capital Opportunities Series - Initial Class/6/ Massachusetts Financial Services Company - ----------------------------------------------------------------------------------------------------------------------------------- MFS(R)VIT Emerging Growth Series - Initial Class Massachusetts Financial Services Company - ----------------------------------------------------------------------------------------------------------------------------------- MFS(R)VIT New Discovery Series - Initial Class/7/ Massachusetts Financial Services Company - ----------------------------------------------------------------------------------------------------------------------------------- MFS(R)VIT Research Series - Initial Class/8/ Massachusetts Financial Services Company - ----------------------------------------------------------------------------------------------------------------------------------- Neuberger Berman AMT Mid-Cap Growth Portfolio Neuberger Berman Management Inc. - ----------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Balanced Fund/VA - Non-Service Shares/9/ OppenheimerFunds, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Global Securities Fund/VA - Non-Service Shares OppenheimerFunds, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- PIMCO VIT Real Return Portfolio - Administrative Class/10/ Pacific Investment Management Company LLC - ----------------------------------------------------------------------------------------------------------------------------------- PIMCO VIT Short-Term Portfolio - Administrative Class Pacific Investment Management Company LLC - ----------------------------------------------------------------------------------------------------------------------------------- PIMCO VIT Total Return Portfolio - Administrative Class Pacific Investment Management Company LLC - -----------------------------------------------------------------------------------------------------------------------------------
21 (See footnotes beginning on page 22.) - ----------------------------------------------------------------------------------------------------------------------------------- Variable Investment Options Investment Adviser (sub-adviser, if applicable) - ----------------------------------------------------------------------------------------------------------------------------------- Pioneer Fund VCT Portfolio - Class I Shares/11/, * Pioneer Investment Management, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- Pioneer Growth Opportunities VCT Portfolio - Class I Shares* Pioneer Investment Management, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- Putnam VT Diversified Income Fund - Class IB Putnam Investment Management, LLC - ----------------------------------------------------------------------------------------------------------------------------------- Putnam VT Growth and Income Fund - Class IB Putnam Investment Management, LLC - ----------------------------------------------------------------------------------------------------------------------------------- Putnam VT International Growth and Income Fund - Class IB Putnam Investment Management, LLC - ----------------------------------------------------------------------------------------------------------------------------------- SunAmerica ST Aggressive Growth Portfolio - Class 1 Shares AIG SunAmerica Asset Management Corp. - ----------------------------------------------------------------------------------------------------------------------------------- SunAmerica ST SunAmerica Balanced Portfolio - Class 1 Shares/12/ AIG SunAmerica Asset Management Corp. - ----------------------------------------------------------------------------------------------------------------------------------- UIF Equity Growth Portfolio - Class I Shares Morgan Stanley Investment Management Inc. (d/b/a Van Kampen) - ----------------------------------------------------------------------------------------------------------------------------------- UIF High Yield Portfolio - Class I Shares Morgan Stanley Investment Management Inc. (d/b/a Van Kampen) - ----------------------------------------------------------------------------------------------------------------------------------- VALIC Co. I International Equities Fund VALIC** (AIG Global Investment Corp.) - ----------------------------------------------------------------------------------------------------------------------------------- VALIC Co. I Mid Cap Index Fund VALIC** (AIG Global Investment Corp.) - ----------------------------------------------------------------------------------------------------------------------------------- VALIC Co. I Money Market I Fund VALIC** (AIG SunAmerica Asset Management Corp.) - ----------------------------------------------------------------------------------------------------------------------------------- VALIC Co. I Nasdaq-100(R)Index Fund VALIC** (AIG Global Investment Corp.) - ----------------------------------------------------------------------------------------------------------------------------------- VALIC Co. I Science & Technology Fund/13/ VALIC** (T. Rowe Price Associates, Inc.) - ----------------------------------------------------------------------------------------------------------------------------------- VALIC Co. I Small Cap Index Fund VALIC** (AIG Global Investment Corp.) - ----------------------------------------------------------------------------------------------------------------------------------- VALIC Co. I Stock Index Fund VALIC** (AIG Global Investment Corp.) - ----------------------------------------------------------------------------------------------------------------------------------- Van Kampen LIT Growth and Income Portfolio - Class I Shares Van Kampen Asset Management - ----------------------------------------------------------------------------------------------------------------------------------- Vanguard VIF High Yield Bond Portfolio Wellington Management Company, LLP - ----------------------------------------------------------------------------------------------------------------------------------- Vanguard VIF REIT Index Portfolio The Vanguard Group - -----------------------------------------------------------------------------------------------------------------------------------
- ---------- /1/ The Fund type for Alger American Leveraged AllCap Portfolio - Class O Shares is equity growth. /2/ The Fund type for Dreyfus VIF Developing Leaders Portfolio - Initial shares is small cap. /3/ The Fund type for Fidelity(R) VIP Asset Manager SM Portfolio - Service Class 2 is high return. /4/ The Fund type for Fidelity(R) VIP Contrafund(R)Portfolio - Service Class 2 is capital appreciation. /5/ The Fund type for Franklin Templeton VIP Mutual Shares Securities Fund - Class 2 is capital appreciation. /6/ The Fund type for MFS(R)VIT Capital Opportunities Series - Initial Class is capital appreciation. /7/ The Fund type for MFS(R)VIT New Discovery Series - Initial Class is small cap growth. /8/ The Fund type for MFS(R)VIT Research Series - Initial Class is long-term growth. /9/ The Fund type for Oppenheimer Balanced Fund/VA - Non-Service Shares is total return. /10/ The Fund type for PIMCO VIT Real Return Portfolio - Administrative Class is maximum real return. /11/ The Fund type for Pioneer Fund VCT Portfolio - Class I Shares is income and growth. /12/ The Fund type for SunAmerica ST SunAmerica Balanced Portfolio - Class 1 Shares is capital appreciation. /13/ The Fund type for VALIC Co. I Science & Technology Fund is capital appreciation. This Fund is a sector fund. * This investment option is not available to all Policy owners. See "Policy Benefits" on page 6. ** "VALIC" means The Variable Annuity Life Insurance Company. From time to time, certain Fund names are changed. When we are notified of a name change, we will make changes so that the new name is properly shown. However, until we complete the changes, we may provide you with various forms, reports and confirmations that reflect a Fund's prior name. You can learn more about the Funds, their investment policies, risks, expenses and all other aspects of their operations by reading their prospectuses. You should carefully read the Funds' prospectuses before you select any variable investment option. We do not guarantee that any Fund will achieve its objective. In addition, no single Fund or investment option, by itself, constitutes a balanced investment plan. 22 We have entered into various services agreements with most of the advisers or administrators for the Funds. We receive payments for the administrative services we perform such as proxy mailing and tabulation, mailing of Fund related information and responding to Policy owners' inquiries about the Funds. Currently, these payments range from 0.15% to 0.35% of the market value of the assets invested in the underlying Fund as of a certain date, usually paid at the end of each calendar quarter. From time to time some of these arrangements may be renegotiated so that we receive a greater payment than previously paid depending on our determination that the expenses that we are incurring are greater than we anticipated. These payments do not result in any additional charges under the Policies that are not described under "Charges Under the Policy" on page 46. We have entered into a services agreement with PIMCO Variable Insurance Trust ("PIMCO VIT") under which we receive fees of up to 0.15% of the daily market value of the assets invested in the underlying Fund, paid directly by PIMCO VIT for services we perform. We also receive what is referred to as "12b-1 fees" from some of the Funds themselves. These fees are designed to help pay for our direct and indirect distribution costs for the Policies. These fees are generally equal to 0.25% of the daily market value of the assets invested in the underlying Fund. Voting Privileges We are the legal owner of the Funds' shares held in the Separate Account. However, you may be asked to instruct us how to vote the Fund shares held in the various Funds that are attributable to your Policy at meetings of shareholders of the Funds. The number of votes for which you may give directions will be determined as of the record date for the meeting. The number of votes that you may direct related to a particular Fund is equal to (a) your accumulation value invested in that Fund divided by (b) the net asset value of one share of that Fund. Fractional votes will be recognized. We will vote all shares of each Fund that we hold of record, including any shares we own on our own behalf, in the same proportions as those shares for which we have received instructions from owners participating in that Fund through the Separate Account. If you are asked to give us voting instructions, we will send you the proxy material and a form for providing such instructions. Should we determine that we are no longer required to send the owner such materials, we will vote the shares as we determine in our sole discretion. In certain cases, we may disregard instructions relating to changes in a Fund's investment manager or its investment policies. We will advise you if we do and explain the reasons in our next report to Policy owners. AGL reserves the right to modify these procedures in any manner that the laws in effect from time to time allow. Fixed Account We invest any accumulation value you have allocated to the Fixed Account as part of our general assets. We credit interest on that accumulation value at a rate which we declare from time to time. We guarantee that the interest will be credited at an annual effective rate of at least 4%. Although this interest increases the amount of any accumulation value that you have in the Fixed Account, such accumulation value will also be reduced by any charges that are allocated to this option under the procedures described under "Allocation of charges" on page 49. The "daily charge" described on page 46 and the fees and expenses of the Funds discussed on page 17 do not apply to the Fixed Account. 23 Our general account. Our general account assets are all of our assets that we do not hold in legally segregated separate accounts. Our general account supports our obligations to you under your Policy's Fixed Account. Because of applicable exemptions, no interest in this option has been registered under the Securities Act of 1933, as amended. Neither our general account nor our Fixed Account is an investment company under the Investment Company Act of 1940. We have been advised that the staff of the SEC has not reviewed the disclosures that are included in this prospectus for your information about our general account or our Fixed Account. Those disclosures, however, may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. How we declare interest. Except for amounts held as collateral for loans, we can at any time change the rate of interest we are paying on any accumulation value allocated to our Fixed Account, but it will always be at an annual effective rate of at least 4%. Under these procedures, it is likely that at any time different interest rates will apply to different portions of your accumulation value, depending on when each portion was allocated to our Fixed Account. Any charges, partial surrenders, or loans that we take from any accumulation value that you have in our Fixed Account will be taken from each portion in reverse chronological order based on the date that accumulation value was allocated to this option. Illustrations We may provide you with illustrations for your Policy's death benefit, accumulation value, and cash surrender value based on hypothetical rates of return. Hypothetical illustrations also assume costs of insurance for a hypothetical person. These illustrations are illustrative only and should not be considered a representation of past or future performance. Your actual rates of return and actual charges may be higher or lower than these illustrations. The actual return on your accumulation value will depend on factors such as the amounts you allocate to particular investment options, the amounts deducted for the Policy's fees and charges, the variable investment options' fees and charges, and your Policy loan and partial surrender history. Before you purchase the Policy, we will provide you with what we refer to as a personalized illustration. A personalized illustration shows future benefits under the Policy based upon (1) the proposed insured person's age and premium class and (2) your selection of a death benefit Option, specified amount, planned periodic premiums, riders, and proposed investment options. After you purchase the Policy and upon your request, we will provide a similar personalized illustration that takes into account your Policy's actual values and features as of the date the illustration is prepared. We reserve the right to charge a maximum fee of $25 for personalized illustrations prepared after the Policy is issued if you request us to do so more than once each year. POLICY FEATURES Age Generally, our use of age in your Policy and this prospectus refers to a person who is between six months younger and six months older than the stated age. Sometimes we refer to this as the "attained" age. 24 Death Benefits Your specified amount of insurance. In your application to buy a Platinum Investor III Policy, you tell us how much life insurance coverage you want. We call this the "specified amount" of insurance. The specified amount consists of what we refer to as "base coverage" plus any "supplemental coverage" you select. Base coverage must be at least 10% of the specified amount. We pay a different level of compensation based on the amounts of base and supplemental coverages you select. See "Base coverage and supplemental coverage" on page 27. We also guarantee a death benefit for a specified period provided you have paid the required monthly premiums. The guaranteed death benefit is equal to the specified amount (less any indebtedness) and any benefit riders. We refer to this guarantee in both your Policy and this prospectus as the "guarantee period benefit." We provide more information about the specified amount and the guarantee period benefit under "Monthly guarantee premiums," beginning on page 29. You should read these other discussions carefully because they contain important information about how the choices you make can affect your benefits and the amount of premiums and charges you may have to pay. Investment performance affects the amount of your Policy's accumulation value. We deduct all charges from your accumulation value. The amount of the monthly charges may differ from month to month. However, as long as all applicable charges are paid timely each month, the specified amount of insurance payable under your Policy is unaffected by investment performance. (See "Monthly insurance charge" on page 47.) Your death benefit. You must choose one of three death benefit Options under your Policy at the time it is issued. Owners whose Policies were issued before June 1, 2002 could choose only death benefit Option 1 or death benefit Option 2. You can choose Option 1 or Option 2 at the time of your application or at any later time before the death of the insured person. You can choose death benefit Option 3 only at the time of your application. The death benefit we will pay is reduced by any outstanding Policy loans and increased by any unearned loan interest we may have already charged. Depending on the Option you choose, the death benefit we will pay is . Option 1--The specified amount on the date of the insured person's death. . Option 2--The sum of (a) the specified amount on the date of the insured person's death and (b) the Policy's accumulation value as of the date of death. . Option 3--The sum of (a) the death benefit we would pay under Option 1 and (b) the cumulative amount of premiums you paid for the Policy and any riders. The death benefit payable will be reduced by any amounts waived under the Waiver of Monthly Deduction Rider and any partial surrenders. Additional premiums you pay for the Policy and any riders following a partial surrender are not considered part of the "cumulative amount of premiums you paid" until the total value of the premiums paid is equivalent to or greater than the amount surrendered. See "Partial surrender" on page 40 for more information about the effect of partial surrenders on the amount of the death benefit. 25 Under either Option 2 or Option 3, your death benefit will tend to be higher than under Option 1. However, the monthly insurance charge we deduct will also be higher to compensate us for our additional risk. Because of this, your accumulation value for the same amount of premium will tend to be higher under Option 1 than under either Option 2 or Option 3. Any premiums we receive after the insured person's death will be returned and not included in your accumulation value. Required minimum death benefit. We may be required under federal tax law to pay a larger death benefit than what would be paid under your chosen death benefit Option. We refer to this larger benefit as the "required minimum death benefit" as explained below. Federal tax law requires a minimum death benefit (the required minimum death benefit) in relation to the accumulation value in order for a Policy to qualify as life insurance. We will automatically increase the death benefit of a Policy if necessary to ensure that the Policy will continue to qualify as life insurance. One of two tests under current federal tax law can be used: the "guideline premium test" or the "cash value accumulation test." You must elect one of these tests when you apply for a Policy. After we issue your Policy, the choice may not be changed. If you choose the guideline premium test, total premium payments paid in a Policy year may not exceed the guideline premium payment limitations for life insurance set forth under federal tax law. If you choose the cash value accumulation test, there are no limits on the amount of premium you can pay in a Policy year, so long as the death benefit is large enough compared to the accumulation value to meet the test requirements. The other major difference between the two tax tests involves the Policy's required minimum death benefit. The required minimum death benefit is calculated as shown in the tables that follow. If you selected death benefit Option 1, Option 2 or Option 3 at any time when the required minimum death benefit is more than the death benefit payable under the Option you selected, the death benefit payable would be the required minimum death benefit. Under federal tax law rules, if you selected either death benefit Option 1 or Option 3 and elected the cash value accumulation test, rather than the guideline premium test, the payment of additional premiums may cause your accumulation value to increase to a level where the required minimum death benefit becomes applicable. Therefore, choosing the cash value accumulation test may make it more likely that the required minimum death benefit will apply if you select death benefit Option 1 or Option 3. If you anticipate that your Policy may have a substantial accumulation value in relation to its death benefit, you should be aware that the cash value accumulation test may cause your Policy's death benefit to be higher than if you had chosen the guideline premium test. To the extent that the cash value accumulation test does result in a higher death benefit, the cost of insurance charges deducted from your Policy will also tend to be higher. (This compensates us for the additional risk that we might have to pay the higher required minimum death benefit.) If you have selected the cash value accumulation test, we calculate the required minimum death benefit by multiplying your Policy's accumulation value by a required minimum death benefit 26 percentage that will be set forth on page 25 of your Policy. The required minimum death benefit percentage varies based on the age and sex of the insured person. Below is an example of applicable required minimum death benefit percentages for the cash value accumulation test. The percentages shown are for a male, ages 40 to 99. - ----------------------------------------------------------------------------------------------------------------- APPLICABLE PERCENTAGES UNDER CASH VALUE ACCUMULATION TEST Insured Person's Attained Age 40 45 50 55 60 65 70 75 99 % 344% 293% 252% 218% 191% 169% 152% 140% 104% - -----------------------------------------------------------------------------------------------------------------
If you have selected the guideline premium test, we calculate the required minimum death benefit by multiplying your Policy's accumulation value by an applicable required minimum death benefit percentage. The applicable required minimum death benefit percentage is 250% when the insured person's age is 40 or less, and decreases each year thereafter to 100% when the insured person's age is 95 or older. The applicable required minimum death benefit percentages under the guideline premium test for certain ages between 40 and 95 are set forth in the following table. - ----------------------------------------------------------------------------------------------------------------- APPLICABLE PERCENTAGES UNDER GUIDELINE PREMIUM TEST Insured Person's Attained Age 40 45 50 55 60 65 70 75 95+ % 250% 215% 185% 150% 130% 120% 115% 105% 100% - -----------------------------------------------------------------------------------------------------------------
Your Policy calls the multipliers used for each test the "Death Benefit Corridor Rate." Base coverage and supplemental coverage. When you apply for a Policy, the amount of insurance you select is called the "specified amount." The specified amount may be made up of two types of coverage: base coverage, which will always be present, and supplemental coverage, which may also be included. The total of the two coverages cannot be less than the minimum of $50,000 and at least 10% of the total must be base coverage when you purchase the Policy. Generally, if we assess less than the maximum guaranteed charges under your Policy and if you choose supplemental coverage instead of base coverage, then in the early Policy years you will reduce your total charges and increase your accumulation value and cash surrender value. The more supplemental coverage you elect, the greater will be the amount of the reduction in charges and increase in accumulation value. You should have an understanding of the significant differences between base coverage and supplemental coverage before you complete your application. Here are the features about supplemental coverage that differ from base coverage: . In general, the larger percentage of supplemental coverage you choose when your Policy is issued, the shorter the time the guarantee period benefit will be in force; 27 . We pay a higher level of compensation for the sale of base coverage than for supplemental coverage either when you purchase your Policy or when you pay additional premiums at any time through the tenth Policy year (we do not provide compensation for premiums we receive after the tenth Policy year); . Supplemental coverage has no surrender charges; . The monthly insurance charge for supplemental coverage is always equal to or less than the monthly insurance charge for an equivalent amount of base coverage; and . We do not collect the monthly charge for each $1,000 of specified amount that is attributable to supplemental coverage. You can change the percentage of base coverage when you increase the specified amount, but at least 10% of the total specified amount after the increase must remain as base coverage. There is no charge when you change the percentages of base and supplemental coverages. The percentage that your base and supplemental coverages represent of your specified amount will not change whenever you decrease the specified amount. A partial surrender will reduce the specified amount. In this case, we will deduct any surrender charge that applies to the decrease in base coverage, but not to the decrease in supplemental coverage since supplemental coverage has no surrender charge. You should use the mix of base and supplemental coverage to emphasize your own objectives. For instance, our guarantee of a minimum death benefit (through the guarantee period benefit) may be essential to your planning. If this is the case, you may wish to maximize the percentage amount of base coverage you purchase. Policy owner objectives differ. Therefore, before deciding how much, if any, supplemental coverage you should have, you should discuss with your AGL representative what you believe to be your own objectives. Your representative can provide you with further information and Policy illustrations showing how your selection of base and supplemental coverages can affect your Policy values under different assumptions. Premium Payments Premium payments. We call the payments you make "premiums" or "premium payments." The amount we require as your initial premium varies depending on the specifics of your Policy and the insured person. We can refuse to accept a premium payment that is less than $50. If mandated under applicable law, we may be required to reject a premium payment. Otherwise, with a few exceptions mentioned below, you can make premium payments at any time and in any amount. Premium payments we receive after your free look period, as discussed on page 31, will be allocated upon receipt to the available investment options you have chosen. Limits on premium payments. Federal tax law may limit the amount of premium payments you can make (relative to the amount of your Policy's insurance coverage) and may impose penalties on amounts you take out of your Policy if you do not observe certain additional requirements. These tax law requirements and a discussion of modified endowment contracts are summarized further under "Federal Tax Considerations" beginning on page 51. We will monitor your premium payments, however, to be sure that you do not exceed permitted amounts or inadvertently incur any tax penalties. The tax law limits can vary as a result of changes you make to your Policy. For example, a reduction in the specified amount of your Policy can reduce the amount of premiums you can pay. 28 Also, in certain limited circumstances, additional premiums may cause the death benefit to increase by more than they increase your accumulation value. In such case, we may refuse to accept an additional premium if the insured person does not provide us with satisfactory evidence that our requirements for issuing insurance are still met. This increase in death benefit is on the same terms (including additional charges) as any other specified amount increase you request (as described under "Increase in coverage" on page 33.) Checks. You may pay premiums by check drawn on a U.S. bank in U.S. dollars and made payable to "American General Life Insurance Company," or "AGL." Premiums after the initial premium should be sent directly to the appropriate address shown on your billing statement. If you do not receive a billing statement, send your premium directly to the address for premium payments shown on page 5 of this prospectus. We also accept premium payments by bank draft, wire or by exchange from another insurance company. Premium payments from salary deduction plans may be made only if we agree. You may obtain further information about how to make premium payments by any of these methods from your AGL representative or from our Administrative Center shown under "Contact Information" on page 5. Planned periodic premiums. Page 3 of your Policy will specify a "Planned Periodic Premium." This is the amount that you (within limits) choose to pay. Our current practice is to bill quarterly, semi-annually or annually. However, payment of these or any other specific amounts of premiums is not mandatory. After payment of your initial premium, you need only invest enough to ensure that your Policy's cash surrender value stays above zero or that the guarantee period benefit (described under "Monthly guarantee premiums" on page 29) remains in effect ("Cash surrender value" is explained under "Full surrenders" on page 7.) The less you invest, the more likely it is that your Policy's cash surrender value could fall to zero as a result of the deductions we periodically make from your accumulation value. Monthly guarantee premiums. Page 3 of your Policy will specify a "Monthly Guarantee Premium." If you pay these guarantee premiums, we will provide at least an Option 1 death benefit, even if your policy's cash surrender value has declined to zero. We call this our "guarantee period benefit" and here are its terms and conditions: . On the first day of each Policy month that you are covered by the guarantee period benefit, we determine if the cash surrender value (we use your accumulation value less loans during your first five Policy years) is sufficient to pay the monthly deduction. (Policy months are measured from the "Date of Issue" that will also be shown on page 3 of your Policy.) . If the cash surrender value is insufficient, we determine if the cumulative amount of premiums paid under the Policy, less any partial surrenders and Policy loans, is at least equal to the sum of the monthly guarantee premiums starting with the date of issue, including the current Policy month. . If the monthly guarantee premium requirement is met, the Policy will not lapse. See "Policy Lapse and Reinstatement" on page 51. 29 . We continue to measure your cash surrender value and the sum of monthly guarantee premiums for the length of time you are covered by the guarantee period benefit. The cost of providing the guarantee period benefit is, in part, dependent on the level of the monthly guarantee premium and the duration of the guarantee period. Higher monthly guarantee premiums and shorter guarantee periods both result in lowering our cost to pay for the benefit. The more supplemental coverage you choose, the lower are your overall Policy charges. Because overall Policy charges are lower, you will receive a higher monthly guarantee premium and a shorter guarantee period. The length of time you are covered by the guarantee period benefit varies on account of two things (except in New Jersey, as described in the last paragraph of this section): . the insured person's age at the Policy's date of issue; and . the amounts of base coverage and supplemental coverage you have chosen. The maximum duration for the guarantee period - 10 years - happens in the event you have chosen 100% base coverage and the insured person is no older than age 50 at the Policy's date of issue. We reduce the maximum time for the guarantee period by one year for each year the insured person is older than age 50 at the date of issue. The reductions stop after the insured person is age 55 or older at the date of issue. This means, for instance, that you will have a guarantee period of 5 years if you choose 100% base coverage and the insured person is age 55 at the Policy's date of issue. The least amount of time for the guarantee period to be in effect - 3 years - happens in the event you have chosen the maximum permitted 90% of supplemental coverage and the insured person is older than age 50 at the date of issue. Whenever you increase or decrease your specified amount, change death benefit Options or add or delete a benefit rider, we calculate a new monthly guarantee premium. The amount you must pay to keep the guarantee period benefit in force will increase or decrease. We can calculate your new monthly guarantee premium as a result of a Policy change before you make the change. Please contact either your agent or the Administrative Center shown under "Contact Information" on page 5 for this purpose. . For increases in the specified amount, the new monthly guarantee premium is calculated based on the insured's underwriting characteristics at the time of the increase and the amount of the increase. . For decreases in the specified amount, the monthly guarantee premium is adjusted on a pro-rata basis. For instance, if the specified amount is reduced by one-half, the monthly guarantee premium is reduced by one-half. . For the addition of a benefit rider, the monthly guarantee premium is increased by the amount of the monthly deduction for the rider. . For the deletion of a benefit rider, the monthly guarantee premium will be decreased by the amount of the monthly deduction for the rider. 30 We provide the guarantee period benefit for 5 years for all Policies issued in the State of New Jersey. The period of coverage for New Jersey Policies is unaffected by the insured person's age at the Policy's date of issue or your choice of base coverage and supplemental coverage. Free look period. If for any reason you are not satisfied with your Policy, you may return it to us and we will refund the greater of (i) any premium payments received by us or (ii) your accumulation value plus any charges that have been deducted. To exercise your right to return your Policy, you must mail it directly to the Administrative Center address shown under "Contract Information" on page 5 or return it to the AGL representative through whom you purchased the Policy within 10 days after you receive it. In a few states, this period may be longer. Because you have this right, we will invest your initial net premium payment in the money market investment option from the date your investment performance begins until the first business day that is at least 15 days later. Then we will automatically allocate your investment among the available investment options in the ratios you have chosen. This reallocation will not count against the 12 free transfers that you are permitted to make each year. Any additional premium we receive during the 15-day period will also be invested in the money market investment option and allocated to the investment options at the same time as your initial net premium. Changing Your Investment Option Allocations Future premium payments. You may at any time change the investment options in which future premiums you pay will be invested. Your allocation must, however, be in whole percentages that total 100%. Transfers of existing accumulation value. You may also transfer your existing accumulation value from one investment option under the Policy to another. The first 12 transfers in a Policy year are free of charge. We consider your instruction to transfer from or to more than one investment option at the same time to be one transfer. We will charge you $25 for each additional transfer. You may make transfers from or to the variable investment options at any time. You may make transfers from the Fixed Account only during the 60-day period following each Policy anniversary. The total amount that you can transfer each year from the Fixed Account is limited to the greater of: . 25% of the unloaned accumulation value you have in the Fixed Account as of the Policy anniversary; or . the total amount you transferred or surrendered from the Fixed Account during the previous Policy year. Unless you are transferring the entire amount you have in an investment option, including the Fixed Account, each transfer must be at least $500. See "Additional Rights That We Have" on page 44. Dollar cost averaging. Dollar cost averaging is an investment strategy designed to reduce the risks that result from market fluctuations. The strategy spreads the allocation of your accumulation value among your chosen variable investment options over a period of time. This allows you to reduce the risk of investing most of your funds at a time when prices are high. The success of this strategy depends on market trends and is not guaranteed. You should carefully consider your financial ability to continue the program over a long enough period of time to allocate accumulation value to the variable investment options when their value is low as well as when it is high. 31 Under dollar cost averaging, we automatically make transfers of your accumulation value from the investment option of your choice to one or more of the other variable investment options that you choose. You tell us what day of the month you want these transfers to be made (other than the 29th, 30th or 31st of a month) and whether the transfers on that day should occur monthly, quarterly, semi-annually or annually. We make the transfers at the end of the valuation period containing the day of the month you select. (The term "valuation period" is described on page 35.) You must have at least $5,000 of accumulation value to start dollar cost averaging and each transfer under the program must be at least $100. Dollar cost averaging ceases upon your request, or if your accumulation value in the investment option from which you are making transfers becomes exhausted. You may maintain only one dollar cost averaging instruction with us at a time. You cannot use dollar cost averaging at the same time you are using automatic rebalancing. Dollar cost averaging transfers do not count against the 12 free transfers that you are permitted to make each year. We do not charge you for using this service. Automatic rebalancing. This feature automatically rebalances the proportion of your accumulation value in each variable investment option under your Policy to correspond to your then current premium allocation designation. Automatic rebalancing does not guarantee gains, nor does it assure that you will not have losses. You tell us whether you want us to do the rebalancing quarterly, semi-annually or annually. Automatic rebalancing will occur as of the end of the valuation period that contains the date of the month your Policy was issued. For example, if your Policy is dated January 17, and you have requested automatic rebalancing on a quarterly basis, automatic rebalancing will start on April 17, and will occur quarterly thereafter. You must have a total accumulation value of at least $5,000 to begin automatic rebalancing. Rebalancing ends upon your request. You cannot use automatic rebalancing at the same time you are using dollar cost averaging. Automatic rebalancing transfers do not count against the 12 free transfers that you are permitted to make each year. We do not charge you for using this service. Market timing. The Policies are not designed for professional market timing organizations or other entities or individuals using programmed and frequent transfers involving large amounts. Market timing carries risks with it, including: . dilution in the value of Fund shares underlying investment options of other Policy owners; . interference with the efficient management of the Fund's portfolio; and . increased administrative costs. We have policies and procedures that require us to monitor the Policies to determine if a Policy owner requests: . an exchange out of a variable investment option within two calendar weeks of an earlier exchange into that same variable investment option; or . exchanges into or out of the same variable investment option more than twice in any one calendar quarter. If either of the above transactions occurs, we will suspend such Policy owner's same day or overnight delivery transfer privileges (including website, e-mail and facsimile communications) with 32 prior notice to prevent market timing efforts that could be harmful to other Policy owners or beneficiaries. Such notice of suspension will take the form of either a letter mailed to your last known address, or a telephone call from our Administrative Center to inform you that effective immediately, your same day or overnight delivery transfer privileges have been suspended. The suspension of Policy transfer privileges will last for no more than six months. Transfers under dollar cost averaging, automatic rebalancing or any other automatic transfer arrangements to which we have agreed are not affected by these procedures. The procedures above will be followed in all circumstances and we will treat all Policy owners the same. In addition, Policy owners incur a $25 charge for each transfer in excess of 12 each Policy year. Fund-rejected transfers. Some of the Funds have policies and procedures restricting transfers into the Fund. For this reason or for any other reason the Fund deems necessary, a Fund may reject a Policy owner's transfer request. Please read the Funds' prospectuses and supplements for information about restrictions on transfers. Changing the Specified Amount of Insurance Increase in coverage. At any time while the insured person is living, you may request an increase in the specified amount of coverage under your Policy. You must, however, provide us with satisfactory evidence that the insured person continues to meet our requirements for issuing insurance coverage. We treat an increase in specified amount in many respects as if it were the issuance of a new Policy. For example, the monthly insurance charge for the increase will be based on the age, gender and premium class of the insured person at the time of the increase. Also, a new amount of surrender charge . applies to any amount of the increase that you request as base (rather than supplemental) coverage; . applies as if we were instead issuing the same amount of base coverage as a new Platinum Investor III Policy; and . applies to the amount of the increase for the 10 Policy years following the increase. Whenever you decide to increase your specified amount, you will be subject to a new monthly charge per $1,000 of base coverage. The additional charge will be applied to the increase in your base coverage portion of the increase in the specified amount for the first 7 Policy years following the increase. Increasing the specified amount may increase the amount of premium you would need to pay to avoid a lapse of your Policy. You are not required to increase your specified amount in any specific percentage or ratio that your base and supplemental coverage bear to your specified amount before the increase, with one exception. Base coverage must be at least 10% of the total specified amount after the increase. 33 Decrease in coverage. After the first Policy year, you may request a reduction in the specified amount of coverage, but not below certain minimums. After any decrease, the specified amount cannot be less than the greater of: . $50,000; and . any minimum amount which, in view of the amount of premiums you have paid, is necessary for the Policy to continue to meet the federal tax law definition of life insurance. We will apply a reduction in specified amount proportionately against the specified amount provided under the original application and any specified amount increases. The decrease in specified amount will decrease both your base and supplemental coverage in the same ratio they bear to your specified amount before the decrease. We will deduct from your accumulation value any surrender charge that is due on account of the decrease. If there is not sufficient accumulation value to pay the surrender charge at the time you request a reduction, the decrease will not be allowed. A reduction in specified amount will not reduce the monthly charge per $1,000 of base coverage or the amount of time for which we assess this charge. For instance, if you increase your base coverage and follow it by a decrease in base coverage within 7 years of the increase, we will assess the monthly charge per $1,000 of base coverage against the increase in base coverage for the full 7 years even though you have reduced the amount of base coverage. Changing Death Benefit Options Change of death benefit option. You may at any time before the death of the insured person request us to change your choice of death benefit option from: Option 1 to Option 2; Option 2 to Option 1; or Option 3 to Option 1. No other changes are permitted. A change from Option 3 to Option 1 may be subject to regulatory approval in your state. . If you change from Option 1 to Option 2, we automatically reduce your Policy's specified amount of insurance by the amount of your Policy's accumulation value (but not below zero) at the time of the change. The change will go into effect on the monthly deduction day following the date we receive your request for change. We will take the reduction proportionately from each component of the Policy's specified amount. We will not charge a surrender charge for this reduction in specified amount. The surrender charge schedule will not be reduced on account of the reduction in specified amount. The monthly charge per $1,000 of base coverage will not change. At the time of the change of death benefit Option, Your Policy's monthly insurance charge and surrender value will not change. . If you change from Option 2 to Option 1, then as of the date of the change we automatically increase your Policy's specified amount by the amount of your Policy's accumulation value. We will apply the entire increase in your specified amount to the last 34 coverage added (either base or supplemental) to your Policy, and which has not been removed. For the purpose of this calculation, if base and supplemental coverages were issued on the same date, we will consider the supplemental coverage to have been issued later. The monthly charge per $1000 of base coverage will not change. At the time of the change of death benefit Option, your Policy's monthly insurance charge and surrender value will not change. . If you change from Option 3 to Option 1, your Policy's specified amount will not change. The monthly charge per $1000 of base coverage and the cost of insurance rates will not change. Your Policy's monthly insurance charge will decrease and the surrender value will increase. Tax consequences of changes in insurance coverage. Please read "Tax Effects" starting on page 51 of this prospectus to learn about possible tax consequences of changing your insurance coverage under your Policy. Effect of changes in insurance coverage on guarantee period. A change in coverage does not result in termination of the guarantee period, so that if you pay certain prescribed amounts of premiums, we will pay a death benefit even if your Policy's cash surrender value declines to zero. The details of this guarantee are discussed under "Monthly guarantee premiums," beginning on page 29. Effective Date of Policy and Related Transactions Valuation dates, times, and periods. We compute values under a Policy on each day that the New York Stock Exchange ("NYSE") is open for business. We call each such day a "valuation date" or a "business day." We compute policy values as of the time the NYSE closes on each valuation date, which usually is 3:00 p.m. Central time. We call this our "close of business." We call the time from the close of business on one valuation date to the close of business of the next valuation date a "valuation period." We are closed only on those holidays the NYSE is closed. Fund pricing. Each Fund produces a price per Fund share following each close of the NYSE and provides that price to us. We then determine the Fund value at which you may invest in the particular investment option, which reflects the change in value of each Fund reduced by the daily charge and any other charges that are applicable to your Policy. Date of receipt. Generally we consider that we have received a premium payment or another communication from you on the day we actually receive it in full and proper order at any of the addresses shown on page 5 of this prospectus. If we receive it after the close of business on any valuation date, however, we consider that we have received it on the day following that valuation date. Any premium payments we receive after our close of business are held in our general account until the next business day. If we receive your premiums through payroll allotment, such as salary deduction or salary reduction programs, we consider that we receive your premium on the day we actually receive it, rather than the day the deduction from your payroll occurs. This is important for you to know because your 35 premium receives no interest or earnings for the time between the deduction from your payroll and our receipt of the payment. We currently do not accept military allotment programs. Commencement of insurance coverage. After you apply for a Policy, it can sometimes take up to several weeks for us to gather and evaluate all the information we need to decide whether to issue a Policy to you and, if so, what the insured person's premium class should be. We will not pay a death benefit under a Policy unless (a) it has been delivered to and accepted by the owner and at least the initial premium has been paid, and (b) at the time of such delivery and payment, there have been no adverse developments in the insured person's health or risk of death. However, if you pay at least the minimum first premium payment with your application for a Policy, we will provide temporary coverage of up to $300,000 provided the insured person meets certain medical and risk requirements. The terms and conditions of this coverage are described in our "Limited Temporary Life Insurance Agreement," available to you when you apply for this Policy. Date of issue; Policy months and years. We prepare the Policy only after we approve an application for a Policy and assign the appropriate premium class. The day we begin to deduct charges will appear on page 3 of your Policy and is called the "Date of Issue." Policy months and years are measured from the date of issue. To preserve a younger age at issue for the insured person, we may assign a date of issue to a Policy that is up to 6 months earlier than otherwise would apply. Monthly deduction days. Each charge that we deduct monthly is assessed against your accumulation value at the close of business on the date of issue and at the end of each subsequent valuation period that includes the first day of a Policy month. We call these "monthly deduction days." Commencement of investment performance. We begin to credit an investment return to the accumulation value resulting from your initial premium payment on the later of (a) the date of issue, or (b) the date all requirements needed to place the Policy in force have been satisfied, including underwriting approval and receipt of the necessary premium. In the case of a back-dated Policy, we do not credit an investment return to the accumulation value resulting from your initial premium payment until the date stated in (b) above. Effective date of other premium payments and requests that you make. Premium payments (after the first) and transactions made in response to your requests and elections are generally effected at the end of the valuation period in which we receive the payment, request or election and based on prices and values computed as of that same time. Exceptions to this general rule are as follows: . Increases or decreases you request in the specified amount of insurance, reinstatement of a Policy that has lapsed, and changes in death benefit Option take effect on the Policy's monthly deduction day if your request is approved on that day or on the next monthly deduction day following our approval if we approve your request on any other day of the month; . In most states, we may return premium payments, make a partial surrender or reduce the death benefit if we determine that such premiums would cause your Policy to become a modified endowment contract or to cease to qualify as life insurance under federal income tax law or exceed the maximum net amount at risk; 36 . If you exercise your right to return your Policy described under "Free look period" on page 31 of this prospectus, your coverage will end when you deliver it to your AGL representative, or if you mail it to us, the date it is postmarked; and . If you pay a premium at the same time that you make a Policy request which requires our approval, your payment will be applied when received rather than following the effective date of the requested change, but only if your Policy is in force and the amount paid will not cause you to exceed premium limitations under the Internal Revenue Code of 1986, as amended (the "Code"). If we do not approve your Policy request, your premium payment will still be accepted in full or in part (we will return to you the portion of your premium payment that would be in violation of the maximum premium limitations under the Code). We will not apply this procedure to premiums you pay in connection with reinstatement requests. Reports to Policy Owners Shortly after the end of each Policy year, we will mail you a report that includes information about your Policy's current death benefit, accumulation value, cash surrender value and Policy loans. We will send you notices to confirm premium payments, transfers and certain other Policy transactions. We will mail to you at your last known address of record, these and any other reports and communications required by law. You should give us prompt written notice of any address change. ADDITIONAL BENEFIT RIDERS Riders You can request that your Policy include the additional rider benefits described below. For most of the riders that you choose, a charge, which will be shown on page 3 of your Policy, will be deducted from your accumulation value on each monthly deduction date. Eligibility for and changes in these benefits are subject to our rules and procedures as in effect from time to time. Not all riders are available in all states. More details are included in the form of each rider, which we suggest that you review if you choose any of these benefits. . Accidental Death Benefit Rider. This rider pays an additional death benefit if the insured person dies from certain accidental causes. There is a charge for this rider. You can purchase this rider only at the time we issue your Policy. You may later elect to terminate this rider. If you do so, the charge will cease. . Children's Insurance Benefit Rider. This rider provides term life insurance coverage on the eligible children of the person insured under the Policy. There is a charge for this rider. This rider is convertible into any other insurance (except for term coverage) available for conversions, under our published rules at the time of conversion. You may purchase this rider at the time we issue your Policy or at any time thereafter. You may terminate the rider at any time. If you do so, the charge will cease. . Maturity Extension Rider. This rider gives you the option to extend the Policy's maturity date beyond what it otherwise would be, at any time before the original maturity date. Once you select this rider, if you have not already elected to extend the 37 maturity date, we will notify you of this right 60 days before maturity. If you do not then elect to extend the maturity date before the original maturity date, the rider will terminate and the maturity date will not be extended. You have two versions of this rider from which to choose, the Accumulation Value version and the Death Benefit version. Either or both versions may not be available in your state. The Accumulation Value version provides for a death benefit after your original maturity date that is equal to the accumulation value on the date of the insured person's death. The death benefit will be reduced by any outstanding Policy loan amount. There is no charge for this version until you reach your original maturity date. After your original maturity date, we will charge a monthly fee of no more than $10. The Death Benefit version provides for a death benefit after your original maturity date equal to the death benefit in effect on the day prior to your original maturity date. If the death benefit is based fully, or in part, on the accumulation value, we will adjust the death benefit to reflect future changes in your accumulation value. The death benefit will never be less than the accumulation value. The death benefit will be reduced by any outstanding Policy loan amount. We will charge you the following amounts under the death benefit version . A monthly fee of no more than $30 for each $1000 of the net amount at risk. This fee begins 9 years before your original maturity date and terminates on your original maturity date; and . A monthly fee of no more than $10. This fee begins on your original maturity date if you exercise your right under the rider to extend your original maturity date. Nine years and 60 days before your original maturity date, we will notify you that you will incur these charges if you keep the rider. You will then have until your original maturity date to terminate the rider and with it, your right to extend your original maturity date. If you terminate the rider at any time within this nine year and 60 day period, there will be no further charges and you will have no remaining right to receive a benefit under the rider. Both versions of the rider may be added at any time to an existing Policy up until the same nine year and 60 day period before your original maturity date. In Illinois you may select either version of the rider only after we issue your Policy. There are features common to both riders in addition to the $10 maximum monthly fee. Only the insurance coverage associated with the Policy will be extended beyond your original maturity date. We do not allow additional premium payments, or changes in specified amount after your original maturity date. The only charge we continue to automatically deduct after the original maturity date is the daily charge described on page 46. Once you have exercised your right to extend your original maturity date, you cannot revoke it. The monthly fee will continue. You can, however, surrender your Policy at any time. 38 Extension of the maturity date beyond the insured person's age 100 may result in current taxation of increases in your Policy's accumulation value as a result of interest or investment experience after that time. You should consult a qualified tax adviser before making such an extension. .. Spouse Term Rider. This rider provides term life insurance on the life of the spouse of the Policy's insured person. There is a charge for this rider. This rider terminates no later than the Policy anniversary nearest the spouse's 75th birthday. You can convert this rider into any other insurance, except term, under our published rules at the time of conversion. You can purchase this rider only at the time we issue your Policy. You may later elect to terminate this rider. If you do so, the charge will cease. .. Terminal Illness Rider. This rider provides the Policy owner with the right to request a benefit if the Policy's insured person is diagnosed as having a terminal illness (as defined in the rider) and less than 12 months to live. This rider is not available in all states. There is a charge for this rider. The maximum amount you may receive under this rider before the insured person's death is 50% of the death benefit that would be due under the Policy (excluding any rider benefits), not to exceed $250,000. The amount of benefits paid under the rider, plus an administrative fee (not to exceed $250), plus interest on these amounts to the next Policy anniversary becomes a "lien" against the Policy. A lien is a claim by AGL against all future Policy benefits. We will continue to charge interest in advance on the total amount of the lien and will add any unpaid interest to the total amount of the lien each year. The cash surrender value of the Policy also will be reduced by the amount of the lien. Any time the total lien, plus any other Policy loans, exceeds the Policy's then current death benefit, the Policy will terminate without further value. You can purchase this rider at any time prior to the maturity date. You may terminate this rider at any time. If you do so, the charge will cease. .. Waiver of Monthly Deduction Rider. This rider provides for a waiver of all monthly charges assessed for both your Policy and riders that we otherwise would deduct from your accumulation value, so long as the insured person is totally disabled (as defined in the rider). There is a charge for this rider. While we are paying benefits under this rider we will not permit you to request any increase in the specified amount of your Policy's coverage. When we "pay benefits" under this rider, we pay all monthly charges (except for loan interest) for your Policy when they become due, and then deduct the same charges from your Policy. Therefore, your Policy's accumulation value does not change because of monthly charges. We perform these two transactions at the same time. However, loan interest will not be paid for you under this rider, and the Policy could, under certain circumstances, lapse for nonpayment of loan interest. You can purchase this rider on the life of an insured person who is younger than age 56. You can purchase this rider only at the time we issue your Policy. You may later elect to terminate this rider. If you do so, the charge will cease. Tax Consequences of Additional Rider Benefits. Adding or deleting riders, or increasing or decreasing coverage under existing riders can have tax consequences. See "Tax Effects" starting on page 51. You should consult a qualified tax adviser. 39 POLICY TRANSACTIONS The following transactions may have different effects on the accumulation value, death benefit, specified amount or cost of insurance. You should consider the net effects before requesting a Policy transaction. See "Policy Features" on page 24. Certain transactions also entail charges. For information regarding other charges, see "Charges Under the Policy" on page 46. E-Delivery, E-Service, Telephone Transactions and Written Transactions See page 19 for information regarding E-Delivery, E-Service, telephone transactions and written transactions. Withdrawing Policy Investments Full surrender. You may at any time surrender your Policy in full. If you do, we will pay you the accumulation value, less any Policy loans, plus any unearned loan interest, and less any surrender charge that then applies. We call this amount your "cash surrender value." Because of the surrender charge, it is unlikely that a Platinum Investor III Policy will have any cash surrender value during at least the first year. Partial surrender. You may, at any time after the first Policy year, make a partial surrender of your Policy's cash surrender value. A partial surrender must be at least $500. We will automatically reduce your Policy's accumulation value by the amount of your withdrawal and any related charges. We do not allow partial surrenders that would reduce the death benefit below $50,000. If the Option 1 or Option 3 death benefit is then in effect, we also will reduce your Policy's specified amount by the amount of such withdrawal and charges, but not below $0. We will take any such reduction in specified amount in accordance with the description found under "Changing the Specified Amount of Insurance" on page 33. We also deduct any remaining surrender charge that is associated with any portion of your Policy's base coverage that is canceled. You may choose the investment option or options from which money that you withdraw will be taken. Otherwise, we will allocate the partial surrender in the same proportions as then apply for deducting monthly charges under your Policy or, if that is not possible, in proportion to the amount of accumulation value you then have in each investment option. There is a maximum partial surrender processing fee equal to the lesser of 2% of the amount withdrawn or $25 for each partial surrender you make. This charge currently is $10. Exchange of Policy in certain states. Certain states require that a Policy owner be given the right to exchange the Policy for a fixed benefit life insurance policy, within either 18 or 24 months from the date of issue. This right is subject to various conditions imposed by the states and us. In such states, this right has been more fully described in your Policy or related endorsements to comply with the applicable state requirements. Policy loans. You may at any time borrow from us an amount up to your Policy's cash surrender value less the interest that will be payable on your loan to your next Policy anniversary. The minimum amount you can borrow is $500 or, if less, your Policy's cash surrender value less the loan interest payable to your next Policy anniversary. These rules are not applicable in all states. 40 We remove from your investment options an amount equal to your loan and hold that part of your accumulation value in the Fixed Account as collateral for the loan. We will credit your Policy with interest on this collateral amount at a guaranteed annual effective rate of 4.0% (rather than any amount you could otherwise earn in one of our investment options), and we will charge you interest on your loan at an annual effective rate of 4.75%. Loan interest is payable annually, on the Policy anniversary, in advance, at a rate of 4.54%. Any amount not paid by its due date will automatically be added to the loan balance as an additional loan. Interest you pay on Policy loans will not, in most cases, be deductible on your tax returns. You may choose which of your investment options the loan will be taken from. If you do not so specify, we will allocate the loan in the same way that charges under your Policy are being allocated. If this is not possible, we will make the loan pro-rata from each investment option that you then are using. You may repay all or part (but not less than $100 unless it is the final payment) of your loan at any time before the death of the insured person while the Policy is in force. You must designate any loan repayment as such. Otherwise, we will treat it as a premium payment instead. Any loan repayments go first to repay all loans that were taken from the Fixed Account. We will invest any additional loan repayments you make in the investment options you request. In the absence of such a request we will invest the repayment in the same proportion as you then have selected for premium payments that we receive from you. Any unpaid loan (increased by any unearned loan interest we may have already charged) will be deducted from the proceeds we pay following the insured person's death. Preferred loan interest rate. We will charge a lower interest rate on loans available after the first 10 Policy years. We call these "preferred loans." The maximum amount eligible for preferred loans for any year is: . 10% of your Policy's accumulation value (which includes any loan collateral we are holding for your Policy loans) at the Policy anniversary; or . if less, your Policy's maximum remaining loan value at that Policy anniversary. We will always credit your preferred loan collateral amount at a guaranteed annual effective rate of 4.0%. We intend to set the rate of interest you are paying to the same 4.0% rate we credit to your preferred loan collateral amount, resulting in a zero net cost (0.00%) of borrowing for that amount. We have full discretion to vary the rate we charge you, provided that the rate: . will always be greater than or equal to the guaranteed preferred loan collateral rate of 4.0%, and . will never exceed an annual effective rate of 4.25%. Because we first began offering the Policies in the year 2000, we have not yet declared a preferred loan interest rate. Maturity of your Policy. If the insured person is living on the "Maturity Date" shown on page 3 of your Policy, we will pay you the cash surrender value of the Policy, and the Policy will end. The maturity date can be no later than the Policy anniversary nearest the insured person's 100th birthday, unless you have elected the Maturity Extension Rider. See "Additional Benefit Riders-Riders-Maturity Extension Rider," on page 37. 41 Tax considerations. Please refer to "Federal Tax Considerations" on page 51 for information about the possible tax consequences to you when you receive any loan, surrender or other funds from your Policy. A Policy loan may cause the Policy to lapse which may result in adverse tax consequences. POLICY PAYMENTS Payment Options The beneficiary will receive the full death benefit proceeds from the Policy as a single sum, unless the beneficiary elects another method of payment within 60 days of the insured person's death. Likewise, the Policy owner will receive the full proceeds that become payable upon full surrender or the maturity date, unless the Policy owner elects another method of payment within 60 days of full surrender or the maturity date. The payee can elect that all or part of such proceeds be applied to one or more of the following payment options. If the payee dies before all guaranteed payments are paid, the payee's heirs or estate will be paid the remaining payments. The payee can elect that all or part of such proceeds be applied to one or more of the following payment options: . Option 1--Equal monthly payments for a specified period of time. . Option 2--Equal monthly payments of a selected amount of at least $60 per year for each $1,000 of proceeds until all amounts are paid out. . Option 3--Equal monthly payments for the payee's life, but with payments guaranteed for a specified number of years. These payments are based on annuity rates that are set forth in the Policy or, at the payee's request, the annuity rates that we then are using. . Option 4--Proceeds left to accumulate at an interest rate of 3% compounded annually for any period up to 30 years. At the payee's request we will make payments to the payee monthly, quarterly, semiannually, or annually. The payee can also request a partial withdrawal of any amount of $500 or more. There is no charge for partial withdrawals. Additional payment options may also be available with our consent. We have the right to reject any payment option if the payee is a corporation or other entity. You can read more about each of these options in the Policy and in the separate form of payment contract that we issue when any such option takes effect. Interest rates that we credit under each option will be at least 3%. Change of payment option. The owner may give us written instructions to change any payment option previously elected at any time while the Policy is in force and before the start date of the payment option. Tax impact. If a payment option is chosen, you or your beneficiary may have adverse tax consequences. You should consult with a qualified tax adviser before deciding whether to elect one or more payment options. 42 The Beneficiary You name your beneficiary when you apply for a Policy. The beneficiary is entitled to the insurance benefits of the Policy. You may change the beneficiary during the lifetime of the insured person unless your previous designation of beneficiary provides otherwise. In this case the previous beneficiary must give us permission to change the beneficiary and then we will accept your instructions. We also require the consent of any irrevocably named beneficiary. A new beneficiary designation is effective as of the date you sign it, but will not affect any payments we may make before we receive it. If no beneficiary is living when the insured person dies, we will pay the insurance proceeds to the owner or the owner's estate. Assignment of a Policy You may assign (transfer) your rights in a Policy to someone else as collateral for a loan or for some other reason. We will not be bound by an assignment unless it is received in writing. You must provide us with two copies of the assignment. We are not responsible for any payment we make or any action we take before we receive a complete notice of the assignment in good order. We are also not responsible for the validity of the assignment. An absolute assignment is a change of ownership. Because there may be unfavorable tax consequences, including recognition of taxable income and the loss of income tax-free treatment for any death benefit payable to the beneficiary, you should consult a qualified tax adviser before making an assignment. Payment of Proceeds General. We will pay any death benefit, maturity benefit, cash surrender value or loan proceeds within seven days after we receive the last required form or request (and any other documents that may be required for payment of a death benefit). If we do not have information about the desired manner of payment within 60 days after the date we receive notification of the insured person's death, we will pay the proceeds as a single sum, normally within seven days thereafter. Delay of Fixed Account proceeds. We have the right, however, to defer payment or transfers of amounts out of the Fixed Account for up to six months. If we delay more than 30 days in paying you such amounts, we will pay interest of at least 3% a year from the date we receive all items we require to make the payment. Delay for check clearance. We reserve the right to defer payment of that portion of your accumulation value that is attributable to a payment made by check for a reasonable period of time (not to exceed 15 days) to allow the check to clear the banking system. Delay of Separate Account VL-R proceeds. We reserve the right to defer computation of values and payment of any death benefit, loan or other distribution that comes from that portion of your accumulation value that is allocated to Separate Account VL-R, if: . the NYSE is closed other than weekend and holiday closings; . trading on the NYSE is restricted; 43 . an emergency exists as determined by the SEC or other appropriate regulatory authority such that disposal of securities or determination of the accumulation value is not reasonably practicable; or . the SEC by order so permits for the protection of Policy owners. Transfers and allocations of accumulation value among the investment options may also be postponed under these circumstances. If we need to defer calculation of Separate Account VL-R values for any of the foregoing reasons, all delayed transactions will be processed at the next values that we do compute. Delay to challenge coverage. We may challenge the validity of your insurance Policy based on any material misstatements in your application or any application for a change in coverage. However, . We cannot challenge the Policy after it has been in effect, during the insured person's lifetime, for two years from the date the Policy was issued or restored after termination. (Some states may require that we measure this time in another way. Some states may also require that we calculate the amount we are required to pay in another way.) . We cannot challenge any Policy change that requires evidence of insurability (such as an increase in specified amount) after the change has been in effect for two years during the insured person's lifetime. . We cannot challenge an additional benefit rider that provides benefits if the insured person becomes totally disabled, after two years from the later of the Policy's date of issue or the date the additional benefit rider becomes effective. Delay required under applicable law. We may be required under applicable law to block a request for transfer or payment, including a Policy loan request, under a Policy until we receive instructions from the appropriate regulator. ADDITIONAL RIGHTS THAT WE HAVE We have the right at any time to: . transfer the entire balance in an investment option in accordance with any transfer request you make that would reduce your accumulation value for that option to below $500; . transfer the entire balance in proportion to any other investment options you then are using, if the accumulation value in an investment option is below $500 for any other reason; . end the automatic rebalancing feature if your accumulation value falls below $5,000; . replace the underlying Fund that any investment option uses with another Fund, subject to SEC and other required regulatory approvals; 44 . add, delete or limit investment options, combine two or more investment options, or withdraw assets relating to the Policies from one investment option and put them into another, subject to SEC and other required regulatory approvals; . operate Separate Account VL-R under the direction of a committee or discharge such a committee at any time; . operate Separate Account VL-R, or one or more investment options, in any other form the law allows, including a form that allows us to make direct investments. Separate Account VL-R may be charged an advisory fee if its investments are made directly rather than through another investment company. In that case, we may make any legal investments we wish; or . make other changes in the Policy that in our judgment are necessary or appropriate to ensure that the Policy continues to qualify for tax treatment as life insurance, or that do not reduce any cash surrender value, death benefit, accumulation value, or other accrued rights or benefits. We also have the right to make some variations in the terms and conditions of a Policy. Any variations will be made only in accordance with uniform rules that we establish. Here are the potential variations: Underwriting and premium classes. We currently have nine premium classes we use to decide how much the monthly insurance charges under any particular Policy will be: . Four Non-tobacco classes: preferred plus, preferred, standard and special; . Three Tobacco classes: preferred, standard and special; and . Two Juvenile classes: juvenile and special juvenile. Various factors such as the insured person's age, health history, occupation and history of tobacco use, are used in considering the appropriate premium class for the insured. Premium classes are described in your Policy. Policies issued in New Jersey do not have the juvenile and special juvenile classes. Policies purchased through "internal rollovers". We maintain published rules that describe the procedures necessary to replace life insurance policies we have issued. Not all types of other insurance are eligible to be replaced with a Policy. Our published rules may be changed from time to time, but are evenly applied to all our customers. State law requirements. AGL is subject to the insurance laws and regulations in every jurisdiction in which the Policies are sold. As a result, various time periods and other terms and conditions described in this prospectus may vary depending on where you reside. These variations will be reflected in your Policy and related endorsements. Variations in expenses or risks. AGL may vary the charges and other terms within the limits of the Policy where special circumstances result in sales, administrative or other expenses, mortality risks or other risks that are different from those normally associated with the Policy. 45 You will be notified as required by law if there are any material changes in the underlying investments of an investment option that you are using. We intend to comply with all applicable laws in making any changes and, if necessary, we will seek Policy owner approval and SEC and other regulatory approvals. CHARGES UNDER THE POLICY Premium tax charge. Unless your Policy was issued in Oregon, we deduct from each premium a charge for the tax that is then applicable to us in your state or other jurisdiction. These taxes, if any, currently range in the United States from 0.75% to 3.5%. Please let us know if you move to another jurisdiction, so we can adjust this charge if required. You are not permitted to deduct the amount of these taxes on your income tax return. We use this charge to offset our obligation to pay premium tax on the Policies. Tax charge back. If you are a resident of Oregon at the time you purchase a Policy, there is no premium tax charge. Instead, we will deduct from each premium a tax charge back that is permissible under Oregon law. If you later move from Oregon to a state that has a premium tax, we will not charge you a premium tax. We deduct the tax charge back from each premium you pay, regardless of the state in which you reside at the time you pay the premium. The current tax charge back is 2% of each premium. We may change the tax charge back amount but any change will only apply to new Policies we issue. We use the charge partly to offset our obligation to pay premium taxes on the same Policy if you move to another state. We also use the charge to pay for the cost of additional administrative services we provide under these Policies. Premium expense charge. After we deduct premium tax (or a tax charge back if we issued your Policy in Oregon) from each premium payment, we currently deduct 5.0% from the remaining amount. We may increase this charge for all years, but it will never exceed 7.5%. AGL receives this charge to cover sales expenses, including commissions. Daily charge (mortality and expense risk fee). We will deduct a daily charge at an annual effective rate of 0.70% (7/10 of 1%) of your accumulation value that is then being invested in any of the variable investment options. After a Policy has been in effect for 10 years, however, we will reduce this rate to an annual effective rate of 0.45%, and after 20 years, to an annual effective rate of 0.10%. We guarantee these rate reductions. Since the Policies were first offered only in the year 2000, the reduction has not yet taken effect under any outstanding Policies. AGL receives this charge to pay for our mortality and expense risks. Flat monthly charge. We will deduct $6 from your accumulation value each month. We may lower this charge but it is guaranteed to never exceed $6. The flat monthly charge is the Monthly Administration Fee shown on page 3A of your Policy. AGL receives this charge to pay for the cost of administrative services we provide under the Policies, such as regulatory mailings and responding to Policy owners' requests. Monthly charge per $1,000 of base coverage. We deduct a charge monthly from your accumulation value for the first 7 Policy years. This monthly charge also applies to the amount of any increase in base coverage during the 7 Policy years following the increase. This charge varies according to the age, gender and premium class of the insured person, as well as the amount of coverage. The dollar amount of this charge changes with each increase in your Policy's base coverage. (We describe your base coverage and specified amount under "Your specified amount of insurance" on page 25 and 46 "Base coverage and supplemental coverage" on page 27.) This charge can range from a maximum of $1.46 for each $1000 of the base coverage portion of the specified amount to a minimum of $0.03 for each $1000 of base coverage. The representative charge (referred to as "Example" in the Tables of Charges on page 14) is $0.16 for each $1000 of base coverage. The initial amount of this charge is shown on page 3A of your Policy and is called "Monthly Expense Charge for First Seven Years." Page 4 of your Policy contains a table of the guaranteed rates for this charge. AGL receives this charge to pay for underwriting costs and other costs of issuing the Policies, and also to help pay for the administrative services we provide under the Policies. Monthly insurance charge. Every month we will deduct from your accumulation value a charge based on the cost of insurance rates applicable to your Policy on the date of the deduction and our "net amount at risk" on that date. Our net amount at risk is the difference between (a) the death benefit that would be payable before reduction by policy loans if the insured person died on that date and (b) the then total accumulation value under the Policy. For otherwise identical Policies: . greater amounts at risk result in a higher monthly insurance charge; and . higher cost of insurance rates also result in a higher monthly insurance charge. Keep in mind that investment performance of the investment options in which you have accumulation value will affect the total amount of your accumulation value. Therefore your monthly insurance charge can be greater or less, depending on investment performance. Our cost of insurance rates are guaranteed not to exceed those that will be specified in your Policy. Our current rates are lower than the guaranteed maximum rates for insured persons in most age, gender and premium classes, although we have the right at any time to raise these rates to not more than the guaranteed maximum. In general the longer you own your Policy, the higher the cost of insurance rate will be as the insured person grows older. Also our cost of insurance rates will generally be lower if the insured person is a female than if a male. Similarly, our current cost of insurance rates are generally lower for non-tobacco users than tobacco users, and for persons considered to be in excellent health. On the other hand, insured persons who present particular health, occupational or non-work related risks may require higher cost of insurance rates and other additional charges based on the specified amount of insurance coverage under their Policies. Finally, our current cost of insurance rates for the same insured person differ depending on the specified amount in force on the day the charge is deducted. We have different rates we apply for specified amounts. The highest rates begin with the minimum specified amount. The rates decline on a graduated schedule as the specified amount increases. Your agent can discuss the schedule with you. Our cost of insurance rates are generally higher under a Policy that has been in force for some period of time than they would be under an otherwise identical Policy purchased more recently on the same insured person. AGL receives this charge to fund the death benefits we pay under the Policies. Monthly charges for additional benefit riders. We will deduct charges monthly from your accumulation value, if you select additional benefit riders. The charges for any rider you select will vary by Policy within a range based on either the personal characteristics of the insured person or the specific 47 coverage you choose under the rider. The riders we currently offer are accidental death benefit rider, children's insurance benefit rider, two versions of maturity extension rider, spouse term rider, terminal illness rider and waiver of monthly deduction rider. The riders are described beginning on page 37, under "Additional Benefit Riders." The specific charges for any riders you choose are shown on page 3 of your Policy. AGL receives these charges to pay for the benefits under the riders and to help offset the risks we assume. Surrender charge. The Policies have a surrender charge that applies for a maximum of the first 10 Policy years (and for a maximum of the first 10 Policy years after any increase in the Policy's base coverage). We will apply the surrender charge only to the base coverage portion of the specified amount. The amount of the surrender charge depends on the age and other insurance characteristics of the insured person. Your Policy's surrender charge will be found in the table beginning on page 27 of the Policy. As shown in the Tables of Charges on page 12, the maximum surrender charge is $49 per $1,000 of the base coverage portion of the specified amount (or any increase in the base coverage portion of the specified amount). The minimum surrender charge is $3 per $1,000 of the base coverage (or any increase in the base coverage). The representative surrender charge (referred to as "Example" in the Tables of Charges) is $18 per $1,000 of base coverage (or any increase in the base coverage). The surrender charge decreases on an annual basis beginning in the fourth year of its 10 year period referred to above until, in the eleventh year, it is zero. These decreases are also based on the age and other insurance characteristics of the insured person. The following chart illustrates how the surrender charge declines over the first 10 Policy years. The chart is for a 40 year old male, who is the same person to whom we refer in the Tables of Charges beginning on page 11 under "Example Charge." Surrender charges may differ for other insured persons because the amount of the annual reduction in the surrender charge may differ. - ---------------------------------------------------------------------------------------------------------------------------------- Surrender Charge for a 40 Year Old Male - ---------------------------------------------------------------------------------------------------------------------------------- Policy Year 1 2 3 4 5 6 7 8 9 10 11 - ---------------------------------------------------------------------------------------------------------------------------------- Surrender Charge Per $1,000 of Base $ 18 $ 18 $ 18 $ 16 $ 14 $ 11 $ 9 $ 7 $ 5 $ 2 $ 0 Coverage - ----------------------------------------------------------------------------------------------------------------------------------
We will deduct the entire amount of any then applicable surrender charge from the accumulation value at the time of a full surrender. Upon a requested decrease in a Policy's base coverage portion of the specified amount, we will deduct any remaining amount of the surrender charge that was associated with the base coverage that is canceled. This includes any decrease that results from any requested partial surrender. See "Partial surrender" beginning on page 40 and "Change of death benefit option" beginning on page 34. For those Policies that lapse in the first 10 Policy years, AGL receives surrender charges to help recover sales expenses, which are higher for base coverage than for supplemental coverage. Higher amounts of base coverage result in higher premiums and higher charges, including higher surrender charges. The older and the greater health risk the insured person is when the Policy is issued, the more premium we need to pay for all Policy charges. As a result, we use the insured person's age, sex and 48 premium class to help determine the appropriate rate of surrender charge per $1,000 of base coverage to help us offset these higher sales charges. Partial surrender processing fee. We will charge a maximum fee equal to the lesser of 2% of the amount withdrawn or $25 for each partial surrender you make. This charge is currently $10. AGL receives this charge to help pay for the expense of making a partial surrender. Transfer fee. We will charge a $25 transfer fee for each transfer between investment options that exceeds 12 each Policy Year. This charge will be deducted from the investment options in the same ratio as the requested transfer. AGL receives this charge to help pay for the expense of making the requested transfer. Illustrations. If you request illustrations more than once in any Policy year, we may charge a maximum fee of $25 for the illustration. AGL receives this charge to help pay for the expenses of providing additional illustrations. Policy loans. We will charge you interest on any loan at an annual effective rate of 4.75%. The loan interest charged on a preferred loan (available after the first 10 Policy years) will never exceed an annual effective rate of 4.25%. AGL receives these charges to help pay for the expenses of administering and providing for Policy loans. See "Policy loans" beginning on page 40. Charge for taxes. We can adjust charges in the future on account of taxes we incur or reserves we set aside for taxes in connection with the Policies. This would reduce the investment experience of your accumulation value. In no event will any adjusted charge exceed the maximum guaranteed charge shown in the Tables of Charges on pages 11 - 17. All maximum guaranteed charges also appear in your Policy. For a further discussion regarding these charges we will deduct from your investment in a Policy, see "More About Policy Charges" on page 49. Allocation of charges. You may choose the investment options from which we deduct all monthly charges and any applicable surrender charges. If you do not have enough accumulation value in those investment options, we will deduct these charges in the same ratio the charges bear to the unloaned accumulation value you then have in each investment option. More About Policy Charges Purpose of our charges. The charges under the Policy are designed to cover, in total, our direct and indirect costs of selling, administering and providing benefits under the Policy. They are also designed, in total, to compensate us for the risks we assume and services that we provide under the Policy. These include: . mortality risks (such as the risk that insured persons will, on average, die before we expect, thereby increasing the amount of claims we must pay); . sales risks (such as the risk that the number of Policies we sell and the premiums we receive net of withdrawals, are less than we expect, thereby depriving us of expected economies of scale); 49 . regulatory risks (such as the risk that tax or other regulations may be changed in ways adverse to issuers of variable life insurance policies); and . expense risks (such as the risk that the costs of administrative services that the Policy requires us to provide will exceed what we currently project). The current monthly insurance charge has been designed primarily to provide funds out of which we can make payments of death benefits under the Policy as the insured person dies. General. If the charges that we collect from the Policies exceed our total costs in connection with the Policies, we will earn a profit. Otherwise we will incur a loss. We reserve the right to increase the charges to the maximum amounts on Policies issued in the future. Although the paragraphs above describe the primary purposes for which charges under the Policies have been designed, these purposes are subject to considerable change over the life of a Policy. We can retain or use the revenues from any charge for any purpose. ACCUMULATION VALUE Your accumulation value. From each premium payment you make, we deduct the charges that we describe on page 46 under "Premium tax charge" (or "Tax charge back" if you are a resident of Oregon when you purchase your Policy) and "Other deductions from each premium payment." We invest the rest in one or more of the investment options listed in the chart on page 50 of this prospectus. We call the amount that is at any time invested under your Policy (including any loan collateral we are holding for your Policy loans) your "accumulation value." Your investment options. We invest the accumulation value that you have allocated to any variable investment option in shares of a corresponding Fund. Over time, your accumulation value in any such investment option will increase or decrease in accordance with the investment experience of the Fund. Your accumulation value will also be reduced by Fund charges and certain other charges that we deduct from your Policy. We describe these charges beginning on page 46 under "Charges Under the Policy." You can review other important information about the Funds that you can choose in the separate prospectuses for those Funds. You can request additional free copies of these prospectuses from your AGL representative, from our Home Office or from the Administrative Center. See "Contact Information" on page 5. We invest any accumulation value you have allocated to the Fixed Account as part of our general assets. We credit interest on that accumulation value at a rate which we declare from time to time. We guarantee that the interest will be credited at an annual effective rate of at least 4%. Although this interest increases the amount of any accumulation value that you have in the Fixed Account, such accumulation value will also be reduced by any charges that are allocated to this option under the procedures described under "Allocation of charges" on page 49. The "daily charge" described on page 46 and the fees and expenses of the Funds discussed on page 17 do not apply to the Fixed Account. Policies are "non-participating." You will not be entitled to any dividends from AGL. 50 POLICY LAPSE AND REINSTATEMENT If your Policy's cash surrender value (the Policy's accumulation value less Policy loans and loan interest during the first 5 Policy years) falls to an amount insufficient to cover the monthly charges, we will notify you by letter that you have 61 days from the due date of the premium to pay the necessary charges to avoid lapse of the Policy. You are not required to repay any outstanding Policy loan in order to reinstate your Policy. If the insured person dies during the grace period we will pay the death benefit reduced by the charges that are owed at the time of death. The grace period begins with the first day of the Policy month for which all charges could not be paid. If we do not receive your payment by the end of the grace period, your Policy and all riders will end without value and all coverage under your Policy will cease. Although you can apply to have your Policy "reinstated," you must do this within 5 years (or, if earlier, before the Policy's maturity date), and you must present evidence that the insured person still meets our requirements for issuing coverage. You will find additional information in the Policy about the values and terms of the Policy after it is reinstated. FEDERAL TAX CONSIDERATIONS Generally, the death benefit paid under a Policy is not subject to income tax, and earnings on your accumulation value are not subject to income tax as long as we do not pay them out to you. If we do pay any amount of your Policy's accumulation value upon surrender, partial surrender, or maturity of your Policy, all or part of that distribution may be treated as a return of the premiums you paid, which is not subject to income tax. Amounts you receive as Policy loans are not taxable to you, unless you have paid such a large amount of premiums that your Policy becomes what the tax law calls a "modified endowment contract." In that case, the loan will be taxed as if it were a partial surrender. Furthermore, loans, partial surrenders and other distributions from a modified endowment contract may require you to pay additional taxes and penalties that otherwise would not apply. If your Policy lapses, you may have to pay income tax on a portion of any outstanding loan. Tax Effects This discussion is based on current federal income tax law and interpretations. It assumes that the policy owner is a natural person who is a U.S. citizen and resident. The consequences for corporate taxpayers, non-U.S. residents or non-U.S. citizens, may be different. The following discussion of federal income tax treatment is general in nature and is not intended as tax advice. You should consult with a competent tax adviser to determine the specific federal tax treatment of your Policy based on your individual factual situation. General. The Policy will be treated as "life insurance" for federal income tax purposes (a) if it meets the definition of life insurance under Section 7702 of the Code and (b) for as long as the investments made by the underlying Funds satisfy certain investment diversification requirements under Section 817(h) of the Code. We believe that the Policy will meet these requirements at issue and that: . the death benefit received by the beneficiary under your Policy will generally not be subject to federal income tax; and 51 . increases in your Policy's accumulation value as a result of interest or investment experience will not be subject to federal income tax unless and until there is a distribution from your Policy, such as a surrender or a partial surrender. The federal income tax consequences of a distribution from your Policy can be affected by whether your Policy is determined to be a "modified endowment contract,"as explained in the following discussion. In all cases, however, the character of all income that is described as taxable to the payee will be ordinary income (as opposed to capital gain). Testing for modified endowment contract status. The Code provides for a "seven-pay test." This test determines if your Policy will be a "modified endowment contract." If, at any time during the first seven Policy years: . you have paid a cumulative amount of premiums; . the cumulative amount exceeds the premiums you would have paid by the same time under a similar fixed-benefit life insurance policy; and . the fixed benefit policy was designed (based on certain assumptions mandated under the Code) to provide for paid-up future benefits ("paid-up" means no future premium payments are required) after the payment of seven level annual premiums; then your Policy will be a modified endowment contract. Whenever there is a "material change" under a policy, the policy will generally be (a) treated as a new contract for purposes of determining whether the policy is a modified endowment contract and (b) subjected to a new seven-pay period and a new seven-pay limit. The new seven-pay limit would be determined taking into account, under a prescribed formula, the accumulation value of the policy at the time of such change. A materially changed policy would be considered a modified endowment contract if it failed to satisfy the new seven-pay limit at any time during the new seven-pay period. A "material change" for these purposes could occur as a result of a change in death benefit option. A material change will occur as a result of an increase in your Policy's specified amount, and certain other changes. If your Policy's benefits are reduced during the first seven Policy years (or within seven years after a material change), the calculated seven-pay premium limit will be redetermined based on the reduced level of benefits and applied retroactively for purposes of the seven-pay test. (Such a reduction in benefits could include, for example, a decrease in the specified amount that you request or that results from a partial surrender). If the premiums previously paid are greater than the recalculated seven-payment premium level limit, the Policy will become a modified endowment contract. We will monitor your Policy and attempt to notify you on a timely basis to prevent additional premium payments from causing your Policy to become a modified endowment contract. A life insurance policy that is received in a tax free 1035 exchange for a modified endowment contract will also be considered a modified endowment contract. 52 Other effects of Policy changes. Changes made to your Policy (for example, a decrease in specified amount that you request or that results from a partial surrender that you request) may also have other effects on your Policy. Such effects may include impacting the maximum amount of premiums that can be paid under your Policy, as well as the maximum amount of accumulation value that may be maintained under your Policy. Rider benefits. We believe that premium payments and any death benefits or other benefits to be paid under any rider you may purchase under your Policy will not disqualify your Policy as life insurance for tax purposes. However, the tax law related to rider benefits is complex and some uncertainty exists. You should consult a qualified tax adviser regarding any rider you may purchase. Taxation of pre-death distributions if your Policy is not a modified endowment contract. As long as your Policy remains in force during the insured person's lifetime and not as a modified endowment contract, a Policy loan will be treated as indebtedness, and no part of the loan proceeds will be subject to current federal income tax. Interest on the Policy loan generally will not be tax deductible. After the first 15 Policy years, the proceeds from a partial surrender will not be subject to federal income tax except to the extent such proceeds exceed your "basis" in your Policy. (Your basis generally will equal the premiums you have paid, less the amount of any previous distributions from your Policy that were not taxable.) During the first 15 Policy years, however, the proceeds from a partial surrender could be subject to federal income tax, under a complex formula, to the extent that your accumulation value exceeds your basis in your Policy. On the maturity date or upon full surrender, any excess in the amount of proceeds we pay (including amounts we use to discharge any Policy loan) over your basis in the Policy, will be subject to federal income tax. In addition, if a Policy ends after a grace period while there is a Policy loan, the cancellation of such loan and any accrued loan interest will be treated as a distribution and could be subject to federal income tax under the above rules. Finally, if you make an assignment of rights or benefits under your Policy you may be deemed to have received a distribution from your Policy, all or part of which may be taxable. Taxation of pre-death distributions if your Policy is a modified endowment contract. If your Policy is a modified endowment contract, any distribution from your Policy while the insured person is still living will be taxed on an "income-first" basis. Distributions: . include loans (including any increase in the loan amount to pay interest on an existing loan, or an assignment or pledge to secure a loan) and partial surrenders; . will be considered taxable income to you to the extent your accumulation value exceeds your basis in the Policy; and . have their taxability determined by aggregating all modified endowment contracts issued by the same insurer (or its affiliates) to the same owner (excluding certain qualified plans) during any calendar year. For modified endowment contracts, your basis: . is similar to the basis described above for other policies; and 53 . will be increased by the amount of any prior loan under your Policy that was considered taxable income to you. A 10% penalty tax also will apply to the taxable portion of most distributions from a policy that is a modified endowment contract. The penalty tax will not, however, apply: . to taxpayers 59 1/2 years of age or older; . in the case of a disability (as defined in the Code); or . to distributions received as part of a series of substantially equal periodic annuity payments for the life (or life expectancy) of the taxpayer or the joint lives (or joint life expectancies) of the taxpayer and his or her beneficiary. If your Policy ends after a grace period while there is a Policy loan, the cancellation of the loan will be treated as a distribution to the extent not previously treated as such and could be subject to tax, including the 10% penalty tax, as described above. In addition, on the maturity date or upon a full surrender, any excess of the proceeds we pay (including any amounts we use to discharge any Policy loan) over your basis in the Policy, will be subject to federal income tax and, unless one of the above exceptions applies, the 10% penalty tax. Distributions that occur during a Policy year in which your Policy becomes a modified endowment contract, and during any subsequent Policy years, will be taxed as described in the two preceding paragraphs. In addition, distributions from a policy within two years before it becomes a modified endowment contract also will be subject to tax in this manner. This means that a distribution made from a policy that is not a modified endowment contract could later become taxable as a distribution from a modified endowment contract. Policy lapses and reinstatements. A Policy which has lapsed may have the tax consequences described above, even though you may be able to reinstate that Policy. For tax purposes, some reinstatements may be treated as the purchase of a new insurance contract. Diversification and investor control. Under Section 817(h) of the Code, the Treasury Department has issued regulations that implement investment diversification requirements. Our failure to comply with these regulations would disqualify your Policy as a life insurance policy under Section 7702 of the Code. If this were to occur, you would be subject to federal income tax on the income under the Policy for the period of the disqualification and for subsequent periods. Also, if the insured person died during such period of disqualification or subsequent periods, a portion of the death benefit proceeds would be taxable to the beneficiary. Separate Account VL-R, through the Funds, intends to comply with these requirements. Although we do not have direct control over the investments or activities of the Funds, we will enter into agreements with them requiring the Funds to comply with the diversification requirements of the Section 817(h) Treasury Regulations. The Treasury Department has stated that it anticipates the issuance of guidelines prescribing the circumstances in which the ability of a policy owner to direct his or her investment to particular Funds within Separate Account VL-R may cause the policy owner, rather than the insurance company, to be treated as the owner of the assets in the account. Due to the lack of specific guidance on investor control, there is some uncertainty about when a policy owner is considered the owner of the assets for tax purposes. If you were considered the owner of the assets of Separate Account VL-R, income and 54 gains from the account would be included in your gross income for federal income tax purposes. Under current law, however, we believe that AGL, and not the owner of a Policy, would be considered the owner of the assets of Separate Account VL-R. Estate and generation skipping taxes. If the insured person is the Policy's owner, the death benefit under the Policy will generally be includable in the owner's estate for purposes of federal estate tax. If the owner is not the insured person, under certain conditions, only an amount approximately equal to the cash surrender value of the Policy would be includable. In addition, an unlimited marital deduction may be available for federal estate tax purposes. The federal estate tax is integrated with the federal gift tax under a unified rate schedule. The enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16) (the "2001 Act") brought significant change to the transfer tax system, the most notable being the repeal of the estate and generation-skipping transfer (GST) taxes in 2010. Prior to repeal, a number of modifications are made to the maximum estate tax rate and the estate and gift tax applicable exclusion amounts. The 2001 Act increases the estate tax applicable exclusion amount to $1.5 million for decedents dying in 2005. In order to comply with the Congressional Budget Act of 1974, the 2001 Act provides that all provisions of, and amendments made by, the 2001 Act will not apply to estates of decedents dying, gifts made, or generation-skipping transfers, after December 31, 2010. Unless Congress acts affirmatively in the interim, the Code will thereafter be applied and administered as if these provisions had not been enacted. As a general rule, if a "transfer" is made to a person two or more generations younger than the Policy's owner, a generation skipping tax may be payable at rates similar to the maximum estate tax rate in effect at the time. The generation skipping tax provisions generally apply to "transfers" that would be subject to the gift and estate tax rules. Individuals are generally allowed an aggregate generation skipping tax exemption of $1.5 million in 2005. Because these rules are complex, you should consult with a qualified tax adviser for specific information, especially where benefits are passing to younger generations. The particular situation of each Policy owner, insured person or beneficiary will determine how ownership or receipt of Policy proceeds will be treated for purposes of federal estate and generation skipping taxes, as well as state and local estate, inheritance and other taxes. Life insurance in split dollar arrangements. The IRS and Treasury issued final regulations on split dollar life insurance arrangements September 11, 2003. The final regulations substantially adopted prior proposed regulations. In general, a split dollar insurance arrangement involves two parties agreeing to split the premium and/or benefits of a life insurance policy. These arrangements are often used as a type of employee compensation or for making gifts among family members. The regulations provide two mutually exclusive regimes for taxing split dollar life insurance arrangements: the "economic benefit" regime and the "loan" regime. The economic benefit regime, under which the non-owner of the policy is treated as receiving certain economic benefits from its owner, applies to endorsement arrangements and most non-equity split dollar life insurance arrangements. The loan regime applies to collateral assignment arrangements and other arrangements in which the non-owner could be treated as loaning amounts to the owner. These final regulations apply to any split dollar life insurance arrangement entered into after September 17, 2003. Additionally, these regulations apply to any split dollar life 55 insurance arrangements entered into before September 17, 2003, if the arrangement is materially modified after September 17, 2003. In addition, it should be noted that split dollar arrangements characterized as loans for tax purposes may be affected by the Corporate Responsibility Act of 2002 also referred to as the Sarbanes-Oxley Act of 2002 (the "Act"). The Act prohibits loans from companies publicly traded in the United States to their executives and officers. The status of split dollar arrangement under the Act is uncertain, in part because the SEC may view the tax treatment of such arrangements as instructive. Purchasers of life insurance policies are strongly advised to consult with a qualified tax adviser to determine the tax treatment resulting from a split dollar arrangement. Pension and profit-sharing plans. If a life insurance policy is purchased by a trust or other entity that forms part of a pension or profit-sharing plan qualified under Section 401(a) of the Code for the benefit of participants covered under the plan, the federal income tax treatment of such policies will be somewhat different from that described above. The reasonable net premium cost for such amount of insurance that is purchased as part of a pension or profit-sharing plan is required to be included annually in the plan participant's gross income. This cost (generally referred to as the "P.S. 58" cost) is reported to the participant annually. If the plan participant dies while covered by the plan and the policy proceeds are paid to the participant's beneficiary, then the excess of the death benefit over the policy's accumulation value will not be subject to federal income tax. However, the policy's accumulation value will generally be taxable to the extent it exceeds the participant's cost basis in the policy. The participant's cost basis will generally include the costs of insurance previously reported as income to the participant. Special rules may apply if the participant had borrowed from the policy or was an owner-employee under the plan. The rules for determining "P.S. 58" costs are currently provided under Notice 2002-8, I.R.B. 2002-4. There are limits on the amounts of life insurance that may be purchased on behalf of a participant in a pension or profit-sharing plan. Complex rules, in addition to those discussed above, apply whenever life insurance is purchased by a tax qualified plan. You should consult a qualified tax adviser. Other employee benefit programs. Complex rules may also apply when a policy is held by an employer or a trust, or acquired by an employee, in connection with the provision of other employee benefits. These policy owners must consider whether the policy was applied for by or issued to a person having an insurable interest under applicable state law and with the insured person's consent. The lack of an insurable interest or consent may, among other things, affect the qualification of the policy as life insurance for federal income tax purposes and the right of the beneficiary to receive a death benefit. ERISA. Employers and employer-created trusts may be subject to reporting, disclosure and fiduciary obligations under the Employee Retirement Income Security Act of 1974, as amended. You should consult a qualified legal adviser. Our taxes. We report the operations of Separate Account VL-R in our federal income tax return, but we currently pay no income tax on Separate Account VL-R's investment income and capital gains, because these items are, for tax purposes, reflected in our variable universal life insurance policy reserves. We currently make no charge to any Separate Account VL-R division for taxes. We reserve the right to make a charge in the future for taxes incurred; for example, a charge to Separate Account VL-R for income taxes we incur that are allocable to the Policy. 56 We may have to pay state, local or other taxes in addition to applicable taxes based on premiums. At present, these taxes are not substantial. If they increase, we may make charges for such taxes when they are attributable to Separate Account VL-R or allocable to the Policy. Certain Funds in which your accumulation value is invested may elect to pass through to AGL taxes withheld by foreign taxing jurisdictions on foreign source income. Such an election will result in additional taxable income and income tax to AGL. The amount of additional income tax, however, may be more than offset by credits for the foreign taxes withheld which are also passed through. These credits may provide a benefit to AGL. When we withhold income taxes. Generally, unless you provide us with an election to the contrary before we make the distribution, we are required to withhold income tax from any proceeds we distribute as part of a taxable transaction under your Policy. In some cases, where generation skipping taxes may apply, we may also be required to withhold for such taxes unless we are provided satisfactory written notification that no such taxes are due. In the case of non-resident aliens who own a Policy, the withholding rules may be different. With respect to distributions from modified endowment contracts, non-resident aliens are generally subject to federal income tax withholding at a statutory rate of 30% of the distributed amount. In some cases, the non-resident alien may be subject to lower or even no withholding if the United States has entered into a tax treaty with his or her country of residence. Tax changes. The U.S. Congress frequently considers legislation that, if enacted, could change the tax treatment of life insurance policies. In addition, the Treasury Department may amend existing regulations, issue regulations on the qualification of life insurance and modified endowment contracts, or adopt new interpretations of existing law. State and local tax law or, if you are not a U.S. citizen and resident, foreign tax law, may also affect the tax consequences to you, the insured person or your beneficiary, and are subject to change. Any changes in federal, state, local or foreign tax law or interpretation could have a retroactive effect. We suggest you consult a qualified tax adviser. LEGAL PROCEEDINGS AGL is a party to various lawsuits and proceedings arising in the ordinary course of business. Many of these lawsuits and proceedings arise in jurisdictions that permit damage awards disproportionate to the actual damages incurred. Based upon information presently available, AGL 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 AGL's results of operations and financial position. The principal underwriter and distributor of the Policies, American General Equity Services Corporation ("AGESC"), offered general securities prior to October 1, 2002. As a consequence, AGESC is engaged in certain legal matters related to its previous line of business. AGESC believes that none of these legal matters are of any materiality. More information about AGESC can be found in the SAI. FINANCIAL STATEMENTS The Financial Statements of AGL and the Separate Account can be found in the SAI. Please see the back cover of this prospectus for information on how to obtain a copy of the SAI. 57 INDEX OF SPECIAL WORDS AND PHRASES Page to See in this Defined Term Prospectus - ------------ ---------- accumulation value .................................................... 8 Administrative Center ................................................. 5 automatic rebalancing ................................................. 32 base coverage ......................................................... 27 basis ................................................................. 53 beneficiary ........................................................... 43 cash surrender value .................................................. 7 cash value accumulation test .......................................... 26 close of business ..................................................... 35 Code .................................................................. 37 Contact Information ................................................... 5 cost of insurance rates ............................................... 47 daily charge .......................................................... 46 date of issue ......................................................... 36 death benefit ......................................................... 6 dollar cost averaging ................................................. 31 Fixed Account ......................................................... 23 full surrender ........................................................ 7 Fund, Funds ........................................................... 6 grace period .......................................................... 9 guarantee period, guarantee period benefit ............................ 29 guideline premium test ................................................ 26 insured person ........................................................ 1 investment options .................................................... 50 lapse ................................................................. 9 loan (see "Policy loans" in this Index) ............................... 7 loan interest ......................................................... 40 maturity, maturity date ............................................... 41 modified endowment contract ........................................... 52 monthly deduction days ................................................ 36 monthly guarantee premium ............................................. 29 monthly insurance charge .............................................. 47 net amount at risk .................................................... 13 Option 1, Option 2 and Option 3 ....................................... 7 partial surrender ..................................................... 40 58 INDEX OF SPECIAL WORDS AND PHRASES Page to See in this Defined Term Prospectus - ------------ ---------- payment options ....................................................... 42 planned periodic premiums ............................................. 29 Policy loans .......................................................... 40 Policy month, year .................................................... 36 preferred loans ....................................................... 41 premium class ......................................................... 45 premium payments ...................................................... 28 reinstate, reinstatement .............................................. 51 required minimum death benefit ........................................ 26 required minimum death benefit percentage ............................. 27 Seperate Account VL-R ................................................ 18 seven-pay test ........................................................ 52 specified amount ...................................................... 6 supplemental coverage ................................................. 27 surrender ............................................................. 10 transfers ............................................................. 31 valuation date ........................................................ 35 valuation period ...................................................... 35 variable investment options ........................................... 20 59 THIS DOCUMENT IS NOT PART OF ANY PROSPECTUS. [LOGO] AIG AMERICAN GENERAL Privacy Notice AIG American General knows that your privacy is important. You have received this notice as required by law and because you are now or may be a customer of one of our companies. This notice will advise you of the types of Nonpublic Personal Information we collect, how we use it, and what we do to protect your privacy. "Nonpublic Personal Information" refers to personally identifiable information that is not available to the public. "Employees, Representatives, Agents, and Selected Third Parties" refers to individuals or entities who act on our behalf. . Our Employees, Representatives, Agents, and Selected Third Parties may collect Nonpublic Personal Information about you, including information: . Given to us on applications or other forms; . About transactions with us, our affiliates, or third parties; . From others, such as credit reporting agencies, employers, and federal and state agencies. . The types of Nonpublic Personal Information we collect depends on the products we offer to you and may include your: name; address; Social Security Number; account balances; income; assets; insurance premiums; coverage and beneficiaries; credit reports; marital status; and payment history. We may also collect Nonpublic Personal Health Information, such as medical reports, to underwrite insurance policies, process claims, or for other related functions. . We restrict access to Nonpublic Personal Information to those Employees, Representatives, Agents, or Selected Third Parties who provide products or services to you and who have been trained to handle Nonpublic Personal Information as described in this Notice. . We have policies and procedures that direct our Employees, Representatives, Agents and Selected Third Parties acting for us, on how to protect and use Nonpublic Personal Information. . We have physical, electronic, and procedural safeguards in place that were designed to protect Nonpublic Personal Information. . We do not share Nonpublic Personal Information about you except as allowed by law. . We may disclose all types of Nonpublic Personal Information that we collect, including information regarding your transactions or experiences with us, when needed, to: (i) Affiliated AIG American General companies, including the American International Group Inc. family of companies, and Employees, Representatives, Agents, and Selected Third Parties as permitted by law; or (ii) other organizations with which we have joint marketing agreements as permitted by law. . The types of companies and persons to whom we may disclose Nonpublic Personal Information as permitted by law include: banks; attorneys; trustees; third-party administrators; insurance agents; insurance companies; insurance support organizations; credit reporting agencies; registered broker-dealers; auditors; regulators; and reinsurers. . We do not share your Nonpublic Personal Health Information unless authorized by you or allowed by law. . Our privacy policy applies, to the extent required by law, to our agents and representatives when they are acting on behalf of AIG American General. . You will be notified if our privacy policy changes. . Our privacy policy applies to current and former customers. This Privacy Notice is given to you for your information only. You do not need to call or take any action. This Privacy Notice is provided on behalf of the following companies: AGC Life Insurance Company, AIG Life Insurance Company of Puerto Rico, AIG Life Insurance Company, AIG Life of Bermuda, Ltd., AIG Premier Insurance Company, American General Assurance Company, American General Equity Services Corporation, American General Indemnity Company, American General Life and Accident Insurance Company, American General Life Insurance Company, American General Property Insurance Company of Florida, American General Property Insurance Company, American General Securities Incorporated, American International Life Assurance Company of New York, Delaware American Life Insurance Company, Pacific Union Assurance Company, The United States Life Insurance Company in the City of New York, USLIFE Credit Life Insurance Company of Arizona California, New Mexico and Vermont Residents Only: Following the law of your state, we will not disclose nonpublic personal financial information about you to nonaffiliated third parties (other than as permitted by law) unless you authorize us to make that disclosure. Your authorization must be in writing. If you wish to authorize us to disclose your nonpublic personal financial information to nonaffiliated third parties, you may write to us at: American General Service Center, P.O. Box 4373, Houston, Texas 77210-4373. AGLC0375 REV0305 (C) 2005 American International Group, Inc. All rights reserved. LOGO[AIG AMERICAN GENERAL] For additional information about the Platinum Investor(R) III Policies and the Separate Account, you may request a copy of the Statement of Additional Information (the "SAI"), dated May 2, 2005. We have filed the SAI with the SEC and have incorporated it by reference into this prospectus. You may obtain a free copy of the SAI and the Policy or Fund Prospectuses if you write us at our Administrative Center, which is located at 2727-A Allen Parkway, Houston, Texas 77019 or call us at 1-800-340-2756. You may also obtain the SAI from an insurance representative through which the Policies may be purchased. Additional information about the Platinum Investor III Policies, including personalized illustrations of death benefits, cash surrender values, and accumulation values is available without charge to individuals considering purchasing a Policy, upon request to the same address or phone number printed above. We may charge current Policy owners $25 per illustration if they request more than one personalized illustration in a Policy year. Information about the Separate Account, including the SAI, can also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Inquiries on the operations of the Public Reference Room may be made by calling the SEC at 1-202-942-8090. Reports and other information about the Separate Account are available on the SEC's Internet site at http://www.sec.gov and copies of this information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549-0102. Policies issued by: American General Life Insurance Company A member company of American International Group, Inc. 2727-A Allen Parkway, Houston, TX 77019 Platinum Investor III flexible Premium Variable Life Insurance Policy form Number 00600 Not available in the state of New York Distributed by American General Equity Services Corporation Member NASD A member company of American International Group, Inc. The underwriting risks, financial obligations and support functions associated with the products issued by American General Life Insurance Company ("AGL") are solely its responsibility. AGL is responsible for its own financial condition and contractual obligations. AGL does not solicit business in the state of New York. The Policies are not available in all states. (C)2005 American International Group, Inc. All rights reserved. TEXT BOX [For E-Service and E-Delivery, or to view and print Policy or Fund prospectus visit us at www.aigag.com] TEXT BOX [IMSA LOGO INSURANCE MARKETPLACE STANDARDS ASSOCIATIONS Membership in IMSA applies only to American General Life Insurance Company and not to its products. ICA File No. 811-08561] AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R PLATINUM INVESTOR(R) III FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES ISSUED BY AMERICAN GENERAL LIFE INSURANCE COMPANY VUL ADMINISTRATION DEPARTMENT P.O. BOX 4880, HOUSTON, TEXAS 77210-4880 TELEPHONE: 1-800-340-2765; 1-713-831-3443; HEARING IMPAIRED: 1-888-436-5258 STATEMENT OF ADDITIONAL INFORMATION DATED MAY 2, 2005 This Statement of Additional Information ("SAI") is not a prospectus. It should be read in conjunction with the prospectus for American General Life Insurance Company Separate Account VL-R (the "Separate Account" or "Separate Account VL-R") dated May 2, 2005, describing the Platinum Investor III flexible premium variable life insurance policies (the "Policy" or "Policies"). The Policy prospectus sets forth information that a prospective investor should know before investing. For a copy of the Policy prospectus, and any prospectus supplements, contact American General Life Insurance Company ("AGL") at the address or telephone numbers given above. Terms used in this SAI have the same meanings as are defined in the Policy prospectus. TABLE OF CONTENTS GENERAL INFORMATION .........................................................3 AGL ......................................................................3 Separate Account VL-R ....................................................3 SERVICES ....................................................................3 DISTRIBUTION OF THE POLICIES ................................................4 PERFORMANCE INFORMATION .....................................................5 ADDITIONAL INFORMATION ABOUT THE POLICIES ...................................6 Gender neutral policies ...............................................6 Cost of insurance rates ...............................................6 Certain arrangements ..................................................6 More About the Fixed Account .............................................6 Our general account ...................................................6 How we declare interest ...............................................7 Adjustments to Death Benefit .............................................7 Suicide ...............................................................7 Wrong age or gender ...................................................7 Death during grace period .............................................7 ACTUARIAL EXPERT ............................................................7 MATERIAL CONFLICTS ..........................................................8 FINANCIAL STATEMENTS ........................................................8 Separate Account Financial Statements ....................................8 AGL Financial Statements .................................................9 Index to Financial Statements ............................................9 2 GENERAL INFORMATION AGL We are American General Life Insurance Company ("AGL"). AGL is a stock life insurance company organized under the laws of Texas. AGL is a successor in interest to a company originally organized under the laws of Delaware on January 10, 1917. AGL is an indirect, wholly-owned subsidiary of American International Group, Inc. ("AIG"). AIG, a Delaware corporation, is a holding company which through its subsidiaries is primarily engaged in a broad range of insurance and insurance-related activities and financial services in the United States and abroad. AIG American General is a marketing name of AGL and its affiliates. The commitments under the Policies are AGL's, and AIG has no legal obligation to back those commitments. AGL is a member of the Insurance Marketplace Standards Association ("IMSA"). IMSA is a voluntary membership organization created by the life insurance industry to promote ethical market conduct for life insurance and annuity products. AGL's membership in IMSA applies only to AGL and not its products. Separate Account VL-R We hold the Fund shares in which any of your accumulation value is invested in Separate Account VL-R. Separate Account VL-R is registered as a unit investment trust with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940. We created the Separate Account on May 6, 1997 under Texas law. For record keeping and financial reporting purposes, Separate Account VL-R is divided into 63 separate "divisions," 53 of which are available under the Policies offered by the Policy prospectus as variable "investment options" (three of these 53 investment options are not available to all Policy owners). All of these 53 divisions and the remaining 10 divisions are offered under other AGL policies. We hold the Fund shares in which we invest your accumulation value for an investment option in the division that corresponds to that investment option. The assets in Separate Account VL-R are our property. The assets in the Separate Account may not be used to pay any liabilities of AGL other than those arising from the Policies. AGL is obligated to pay all amounts under the Policies due the Policy owners. We act as custodian for the Separate Account's assets. SERVICES AGL and American General Life Companies, LLC ("AGLC"), are parties to a services agreement. AGL and AGLC are each indirect wholly-owned subsidiaries of AIG and therefore affiliates of one another. AGLC is a Delaware limited liability company established on August 30, 2002. Prior to that date, AGLC was a Delaware business trust. Its address is 2727-A Allen Parkway, Houston, Texas 77019-2191. Under the services agreement, AGLC provides shared services to AGL and certain other life insurance companies under the AIG holding company system at cost. Those 3 services include data processing systems, customer services, product development, actuarial, internal auditing, accounting and legal services. During 2004, 2003 and 2002, AGL paid AGLC for these services $329,659,308, $299,019,857 and $99,267,147, respectively. Services provided in 2003 increased substantially over previous years. We have not designed the Policies for professional market timing organizations or other entities or individuals using programmed and frequent transfers involving large amounts. We currently have no contractual agreements or any other formal or informal arrangements with any entity or individual permitting such transfers and receive no compensation for any such contract or arrangement. DISTRIBUTION OF THE POLICIES American General Equity Services Corporation ("AGESC"), #1 Franklin Square, Springfield, Illinois 62713, a Delaware corporation and a direct wholly-owned subsidiary of AGL, is the principal underwriter and distributor of the Policies for the Separate Account under a Distribution Agreement between AGESC and AGL. AGESC also acts as principal underwriter for AGL's other separate accounts and for the separate accounts of certain AGL affiliates. AGESC is a registered broker-dealer under the Securities Exchange Act of 1934, as amended and a member of the National Association of Securities Dealers, Inc. ("NASD"). AGESC, as the principal underwriter and distributor, is not paid any fees on the Policies. The Policies are offered on a continuous basis. We and AGESC have sales agreements with various broker-dealers and banks under which the Policies will be sold by registered representatives of the broker-dealers or employees of the banks. These registered representatives and employees are also required to be authorized under applicable state regulations as life insurance agents to sell variable life insurance. The broker-dealers are ordinarily required to be registered with the SEC and must be members of the NASD. We pay compensation directly to broker-dealers and banks for promotion and sales of the Policies. The compensation may vary with the sales agreement, but is generally not expected to exceed: . 90% of the premiums received in the first Policy year up to a "target" amount; . 3% of the premiums up to the target amount received in each of Policy years 2 through 10; . 3% of the premiums in excess of the target amount received in each of Policy years 1 through 10; . 0.25% of the Policy's accumulation value (reduced by any outstanding loans) in the investment options in each of Policy years 2 through 20; 4 . 0.15% of the Policy's accumulation value (reduced by any outstanding loans) in the investment options in each Policy year after Policy year 20; and . a comparable amount of compensation to broker-dealers or banks with respect to any increase in the specified amount of coverage that you request. The greater the percentage of supplemental coverage the owner selects when applying for a Policy or on future increases to the specified amount, the less compensation we would pay either for the sale of the Policy or for any additional premiums received during the first 10 Policy years (we do not pay compensation for premiums we receive after the 10th Policy year). We will pay the maximum level of compensation if the owner chooses 100% base coverage. At our discretion, we may pay additional first Policy year commissions to any broker-dealer or bank for sales conducted by a particular registered representative of that broker-dealer or bank. We may pay up to a total of 115% of the premiums we receive in the first Policy year. The target amount is an amount of level annual premium that would be necessary to support the benefits under your Policy, based on certain assumptions that we believe are reasonable. The maximum value of any alternative amounts we may pay for sales of the Policies is expected to be equivalent over time to the amounts described above. For example, we may pay a broker-dealer compensation in a lump sum which will not exceed the aggregate compensation described above. We pay the compensation directly to any selling broker-dealer firm or bank. We pay the compensation from our own resources which does not result in any additional charge to you that is not described in your Policy. Each broker-dealer firm or bank, in turn, may compensate its registered representative or employee who acts as agent in selling you a Policy. We sponsor a non-qualified deferred compensation plan ("Plan") for our insurance agents. Some of our agents are registered representatives of our subsidiary broker-dealer American General Securities Incorporated and sell the Policies. These agents may, subject to regulatory approval, receive benefits under the Plan when they sell the Policies. The benefits are deferred and the Plan terms may result in the agent never receiving the benefits. The Plan provides for a varying amount of benefits annually. We have the right to change the Plan in ways that affect the amount of benefits earned each year. PERFORMANCE INFORMATION From time to time, we may quote performance information for the divisions of Separate Account VL-R in advertisements, sales literature, or reports to owners or prospective investors. We may quote performance information in any manner permitted under applicable law. We may, for example, present such information as a change in a hypothetical owner's cash value or death benefit. We also may present the yield or total return of the division based on a hypothetical 5 investment in a Policy. The performance information shown may cover various periods of time, including periods beginning with the commencement of the operations of the division or the Fund in which it invests. The performance information shown may reflect the deduction of one or more charges, such as the premium charge, and we generally expect to exclude costs of insurance charges because of the individual nature of these charges. We also may present the yield or total return of the investment option in which a division invests. We may compare a division's performance to that of other variable life separate accounts or investment products, as well as to generally accepted indices or analyses, such as those provided by research firms and rating services. In addition, we may use performance ratings that may be reported periodically in financial publications, such as Money Magazine, Forbes, Business Week, Fortune, Financial Planning and The Wall Street Journal. We also may advertise ratings of AGL's financial strength or claims-paying ability as determined by firms that analyze and rate insurance companies and by nationally recognized statistical rating organizations. ADDITIONAL INFORMATION ABOUT THE POLICIES Gender neutral policies. Congress and the legislatures of various states have from time to time considered legislation that would require insurance rates to be the same for males and females of the same age, premium class and tobacco user status. In addition, employers and employee organizations should consider, in consultation with counsel, the impact of Title VII of the Civil Rights Act of 1964 on the purchase of life insurance policies in connection with an employment-related insurance or benefit plan. In a 1983 decision, the United States Supreme Court held that, under Title VII, optional annuity benefits under a deferred compensation plan could not vary on the basis of gender. In general, we do not offer the Policies for sale in situations which, under current law, require gender-neutral premiums or benefits. Cost of insurance rates. Because of specified amount increases, different cost of insurance rates may apply to different increments of specified amount under your Policy. If so, we attribute your accumulation value proportionately to each increment of specified amount to compute our net amount at risk. Certain arrangements. Most of the advisers or administrators of the Funds make certain payments to us, on a quarterly basis, for certain administrative, Policy, and Policy owner support expenses. These amounts will be reasonable for the services performed and are not designed to result in a profit. These amounts will not be paid by the Funds or Policy owners. More About the Fixed Account Our general account. Our general account assets are all of our assets that we do not hold in legally segregated separate accounts. Our general account supports our obligations to you under your Policy's declared Fixed Account. Because of applicable exemptions, no interest in this option has been registered under the Securities Act of 1933, as amended. Neither our general account nor our Fixed Account is an investment company under the Investment Company Act of 1940. We have been advised that the staff of the SEC has not reviewed the disclosures that are included in this 6 prospectus for your information about our general account or our Fixed Account. Those disclosures, however, may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. How we declare interest. Except for amounts held as collateral for loans, we can at any time change the rate of interest we are paying on any accumulation value allocated to our Fixed Account, but it will always be at an effective annual rate of at least 4%. Under these procedures, it is likely that at any time different interest rates will apply to different portions of your accumulation value, depending on when each portion was allocated to our fixed Account. Any charges, partial surrenders, or loans that we take from any accumulation value that you have in our fixed Account will be taken from each portion in reverse chronological order based on the date that accumulation value was allocated to this option. Adjustments to Death Benefit Suicide. If the insured person commits suicide during the first two Policy years, we will limit the proceeds payable to the total of all premiums that have been paid to the time of death minus any outstanding Policy loans (plus credit for any unearned interest) and any partial surrenders. A new two-year period begins if you increase the specified amount. You can increase the specified amount only if the insured person is living at the time of the increase. In this case, if the insured person commits suicide during the first two years following the increase, we will refund the monthly insurance deductions attributable to the increase. The death benefit will then be based on the specified amount in effect before the increase. Wrong age or gender. If the age or gender of the insured person was misstated on your application for a Policy (or for any increase in benefits), we will adjust any death benefit to be what the monthly insurance charge deducted for the current month would have purchased based on the correct information. Death during grace period. We will deduct from the insurance proceeds any monthly charges that remain unpaid because the insured person died during a grace period. ACTUARIAL EXPERT Actuarial matters have been examined by Wayne A. Barnard who is Senior Vice President of AGL. His opinion on actuarial matters is filed as an exhibit to the registration statement we have filed with the SEC in connection with the Policies. 7 MATERIAL CONFLICTS We are required to track events to identify any material conflicts from using investment portfolios for both variable life and variable annuity separate accounts. The boards of the Funds, AGL, and other insurance companies participating in the Funds have this same duty. There may be a material conflict if: . state insurance law or federal income tax law changes; . investment management of an investment portfolio changes; or . voting instructions given by owners of variable life insurance Policies and variable annuity contracts differ. The investment portfolios may sell shares to certain qualified pension and retirement plans qualifying under Code Section 401. These include cash or deferred arrangements under Code Section 401(k). Therefore, there is a possibility that a material conflict may arise between the interests of owners in general, or certain classes of owners, and these retirement plans or participants in these retirement plans. If there is a material conflict, we have the duty to determine appropriate action, including removing the portfolios involved from our variable investment options. We may take other action to protect Policy owners. This could mean delays or interruptions of the variable operations. When state insurance regulatory authorities require us, we may ignore instructions relating to changes in an investment portfolio's adviser or its investment policies. If we do ignore voting instructions, we give you a summary of our actions in the next semi-annual report to owners. Under the Investment Company Act of 1940, we must get your approval for certain actions involving our Separate Account. In this case, you have one vote for every $100 of value you have in the variable investment options. We cast votes credited to amounts in the variable investment options not credited to Policies in the same proportion as votes cast by owners. FINANCIAL STATEMENTS In 2002, due to AIG's acquisition of AGL and its affiliated companies, AGL changed its independent auditor from Ernst & Young LLP located at 1401 McKinney Street, Suite 1200, 5 Houston Center, Houston, Texas 77010 to PricewaterhouseCoopers LLP ("PWC") located at 1201 Louisiana Street, Suite 2900, Houston, Texas 77002-5678. AIG has been using PWC as its corporate-wide auditing firm. Separate Account Financial Statements The statement of net assets as of December 31, 2004 and the related statement of operations for the year then ended and statements of changes in net assets for the two years ended December 31, 2004 8 of the Separate Account, appearing herein, have been audited by PWC, independent registered public accounting firm, on the authority of such firm as experts in accounting and auditing, as set forth in their report appearing elsewhere herein. AGL Financial Statements The consolidated balance sheets of AGL as of December 31, 2004 and 2003 and the related statements of income, shareholder's equity, comprehensive income and cash flows for the three years ended December 31, 2004, appearing herein, have been audited by PWC, independent registered public accounting firm, on the authority of such firm as experts in accounting and auditing, as set forth in their report appearing elsewhere herein. Index to Financial Statements You should consider the financial statements of AGL that we include in this SAI primarily as bearing on the ability of AGL to meet its obligations under the Policies. I. Separate Account VL-R 2004 Financial Statements Page Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm ................................. VL-R - 1 Statement of Net Assets as of December 31, 2004 .................... VL-R - 2 Statement of Operations for the year ended December 31, 2004 ....... VL-R - 4 Statement of Changes in Net Assets for the years ended December 31, 2004 and 2003 (restated)......................... VL-R - 6 Notes to Financial Statements ...................................... VL-R - 23 II. AGL 2004 Consolidated Financial Statements Page Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm ................................. F - 1 Consolidated Balance Sheets as of December 31, 2004 and 2003 ................................................. F - 2 Consolidated Statements of Income for the years ended December 31, 2004, 2003 and 2002 .................................. F - 4 Consolidated Statements of Shareholder's Equity for the years ended December 31, 2004, 2003 and 2002 .................................. F - 5 Consolidated Statements of Comprehensive Income for the years ended December 31, 2004, 2003 and 2002 .................................. F - 6 Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002 .................................. F - 7 Notes to Consolidated Financial Statements ......................... F - 9 9 [LOGO] AIG AMERICAN GENERAL Variable Universal Life Insurance Separate Account VL-R 2004 Annual Report December 31, 2004 American General Life Insurance Company A member company of American International Group, Inc. [LETTERHEAD] PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Suite 2900 1201 Louisiana Houston, TX 77002-5678 Telephone (713) 356-4000 Report of Independent Registered Public Accounting Firm To the Board of Directors of American General Life Insurance Company and Policy Owners of American General Life Insurance Company Separate Account VL-R In our opinion, the accompanying statement of net assets, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of the Divisions listed in Note A of American General Life Insurance Company Separate Account VL-R (the "Separate Account") at December 31, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the three years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2004 by correspondence with the investment companies, provide a reasonable basis for our opinion. The financial highlights as of and for the year ended December 31, 2001 were audited by other independent auditors whose report dated March 7, 2002, expressed an unqualified opinion thereon. As discussed in Note H to the financial statements, the Separate Account has restated net investment income (loss) and capital gain distributions from mutual funds for certain Divisions for the year ended December 31, 2003, and the related investment income ratio for the years ended December 31, 2003 and 2002. PRICEWATERHOUSECOOPERS LLP April 29, 2005 VL-R-1 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF NET ASSETS December 31, 2004
Investment Due from (to) American securities - at General Life Insurance Divisions fair value Company Net Assets - -------------------------------------------------------------------------------------------------------------------------------- AIM V.I. International Growth Fund - Series I $ 7,563,147 $ 6 $ 7,563,153 AIM V.I. Premier Equity Fund - Series I 13,152,254 1 13,152,255 Alger American Leveraged AllCap Portfolio - Class O Shares 545,330 6 545,336 Alger American MidCap Growth Portfolio - Class O Shares 993,231 4 993,235 American Century VP Value Fund - Class I 14,474,643 10 14,474,653 Ayco Growth Fund -- -- -- Credit Suisse Small Cap Growth Portfolio 1,893,798 (5) 1,893,793 Dreyfus IP MidCap Stock Portfolio - Initial shares 3,846,771 (1) 3,846,770 Dreyfus VIF Developing Leaders Portfolio - Initial shares 11,920,104 1 11,920,105 Dreyfus VIF Quality Bond Portfolio - Initial shares 8,065,115 (5) 8,065,110 Fidelity VIP Asset Manager Portfolio - Service Class 2 4,840,496 -- 4,840,496 Fidelity VIP Contrafund Portfolio - Service Class 2 16,620,579 (3) 16,620,576 Fidelity VIP Equity-Income Portfolio - Service Class 2 17,326,174 (5) 17,326,169 Fidelity VIP Growth Portfolio - Service Class 2 11,490,581 1 11,490,582 Fidelity VIP Mid Cap Portfolio - Service Class 2 1,118,796 4 1,118,800 Franklin Templeton - Franklin Small Cap Fund - Class 2 157,374 2 157,376 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 1,175,221 4 1,175,225 Franklin Templeton - Franklin U.S. Government Fund - Class 2 11,474,861 (10) 11,474,851 Franklin Templeton - Mutual Shares Securities Fund - Class 2 7,724,611 4 7,724,615 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 11,266,401 7 11,266,408 Goldman Sachs Capital Growth Fund 8,695,097 8 8,695,105 Janus Aspen Series International Growth Portfolio - Service Shares 3,280,905 (7) 3,280,898 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 2,643,890 -- 2,643,890 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 4,019,074 (1) 4,019,073 JPMorgan Mid Cap Value Portfolio 509,644 5 509,649 JPMorgan Small Company Portfolio 1,785,141 1 1,785,142 MFS VIT Capital Opportunities Series - Initial Class 4,217,754 (4) 4,217,750 MFS VIT Emerging Growth Series - Initial Class 14,668,356 (10) 14,668,346 MFS VIT New Discovery Series - Initial Class 3,452,798 4 3,452,802 MFS VIT Research Series - Initial Class 1,781,804 (16) 1,781,788 MFS VIT Total Return Series - Initial Class 912,933 1 912,934 Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I 2,808,001 (3) 2,807,998 Neuberger Berman AMT Partners Portfolio - Class I 137,641 2 137,643 Oppenheimer Balanced Fund/VA - Non-Service Shares 660,047 5 660,052 Oppenheimer Global Securities Fund/VA - Non-Service Shares 1,085,642 7 1,085,649 Oppenheimer High Income Fund/VA - Non-Service Shares 100,163 -- 100,163 PIMCO VIT Real Return Portfolio - Administrative Class 13,041,675 -- 13,041,675 PIMCO VIT Short-Term Portfolio - Administrative Class 5,997,396 5 5,997,401 PIMCO VIT Total Return Portfolio - Administrative Class 11,861,073 26 11,861,099 Pioneer Fund VCT Portfolio - Class I 3,345,341 -- 3,345,341 Pioneer Growth Opportunities VCT Portfolio - Class I 5,632,694 (1) 5,632,693 Putnam VT Diversified Income Fund - Class IB 7,533,333 5 7,533,338 Putnam VT Growth and Income Fund - Class IB 18,083,616 2 18,083,618 Putnam VT International Growth and Income Fund - Class IB 5,485,413 11 5,485,424 Putnam VT Small Cap Value Fund - Class IB 497,050 10 497,060 Putnam VT Vista Fund - Class IB 84,210 9 84,219 Putnam VT Voyager Fund - Class IB 330,361 2 330,363 Safeco RST Core Equity Portfolio -- -- -- Safeco RST Growth Opportunities Portfolio -- -- -- Scudder International Portfolio -- -- -- Scudder VIT EAFE Equity Index Fund - Class A -- -- --
See accompanying notes. VL-R-2 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF NET ASSETS - CONTINUED December 31, 2004
Investment Due from (to) American securities - at General Life Insurance Divisions fair value Company Net Assets - -------------------------------------------------------------------------------------------------------------------------------- Scudder VIT Equity 500 Index Fund - Class A $ 18,849 $ -- $ 18,849 SunAmerica - Aggressive Growth Portfolio - Class 1 515,184 10 515,194 SunAmerica - SunAmerica Balanced Portfolio - Class 1 734,164 (2) 734,162 UIF Equity Growth Portfolio - Class I 3,715,185 2 3,715,187 UIF High Yield Portfolio - Class I 1,737,699 -- 1,737,699 VALIC Company I - International Equities Fund 1,922,532 7 1,922,539 VALIC Company I - Mid Cap Index Fund 15,462,377 (6) 15,462,371 VALIC Company I - Money Market I Fund 34,546,134 (21) 34,546,113 VALIC Company I - Nasdaq-100 Index Fund 3,660,913 1 3,660,914 VALIC Company I - Science & Technology Fund 1,238,061 11 1,238,072 VALIC Company I - Small Cap Index Fund 4,939,968 1 4,939,969 VALIC Company I - Stock Index Fund 38,879,463 (16) 38,879,447 Van Kampen LIT Emerging Growth Portfolio - Class I 56,966 (2) 56,964 Van Kampen LIT Government Portfolio - Class I 178,102 6 178,108 Van Kampen LIT Growth and Income Portfolio - Class I 5,656,142 2 5,656,144 Vanguard VIF High Yield Bond Portfolio 7,207,387 (9) 7,207,378 Vanguard VIF REIT Index Portfolio 10,602,996 -- 10,602,996
See accompanying notes. VL-R-3 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF OPERATIONS For the Year Ended December 31, 2004
A B A+B=C D E F C+D+E+F --------- -------------- ---------- ------------ ------------- -------------- ------------- Increase Mortality and Net change (decrease) in Dividends expense risk Net Net realized Capital gain in unrealized net assets from and investment gain (loss) distributions appreciation resulting mutual administrative income on from mutual (depreciation) from Divisions funds charges (loss) investments funds of investments operations - --------------------------------- --------- -------------- ---------- ------------ ------------- -------------- ------------- AIM V.I. International Growth Fund - Series I $ 43,867 $(38,730) $ 5,137 $(110,702) $ -- $ 1,457,449 $1,351,884 AIM V.I. Premier Equity Fund - Series I 59,565 (87,464) (27,899) (858,843) -- 1,519,897 633,155 Alger American Leveraged AllCap Portfolio - Class O Shares -- (2,723) (2,723) 945 -- 38,443 36,665 Alger American MidCap Growth Portfolio - Class O Shares -- (4,502) (4,502) 6,725 -- 100,002 102,225 American Century VP Value Fund - Class I 106,239 (82,657) 23,582 135,589 82,411 1,361,242 1,602,824 Ayco Growth Fund -- -- -- -- -- -- -- Credit Suisse Small Cap Growth Portfolio -- (11,815) (11,815) 46,497 -- 117,955 152,637 Dreyfus IP MidCap Stock Portfolio - Initial shares 13,788 (22,781) (8,993) 113,020 88,761 252,274 445,062 Dreyfus VIF Developing Leaders Portfolio - Initial shares 22,759 (76,886) (54,127) 53,386 -- 1,125,190 1,124,449 Dreyfus VIF Quality Bond Portfolio - Initial shares 322,939 (55,822) 267,117 (20,434) -- (46,460) 200,223 Fidelity VIP Asset Manager Portfolio - Service Class 2 96,232 (30,375) 65,857 70,848 -- 62,578 199,283 Fidelity VIP Contrafund Portfolio - Service Class 2 22,639 (89,150) (66,511) 90,445 -- 1,927,155 1,951,089 Fidelity VIP Equity-Income Portfolio - Service Class 2 176,578 (97,992) 78,586 42,557 46,017 1,408,052 1,575,212 Fidelity VIP Growth Portfolio - Service Class 2 12,019 (69,398) (57,379) (58,095) -- 407,041 291,567 Fidelity VIP Mid Cap Portfolio - Service Class 2 -- (4,466) (4,466) 14,660 -- 158,424 168,618 Franklin Templeton - Franklin Small Cap Fund - Class 2 -- (1,064) (1,064) 1,271 -- 14,818 15,025 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 1,180 (4,679) (3,499) 23,931 -- 157,413 177,845 Franklin Templeton - Franklin U.S. Government Fund - Class 2 583,797 (80,785) 503,012 (40,394) -- (151,309) 311,309 Franklin Templeton - Mutual Shares Securities Fund - Class 2 51,702 (47,075) 4,627 102,975 -- 682,712 790,314 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 88,111 (60,364) 27,747 141,983 -- 1,433,732 1,603,462 Goldman Sachs Capital Growth Fund 59,310 (40,493) 18,817 19,744 -- 653,622 692,183 Janus Aspen Series International Growth Portfolio - Service Shares 23,690 (17,948) 5,742 44,263 -- 425,750 475,755 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares -- (15,637) (15,637) 35,873 -- 388,478 408,714 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 34,390 (24,432) 9,958 (27,447) -- 167,748 150,259 JPMorgan Mid Cap Value Portfolio 618 (2,069) (1,451) 4,481 1,064 60,999 65,093 JPMorgan Small Company Portfolio -- (8,288) (8,288) 26,522 -- 294,323 312,557 MFS VIT Capital Opportunities Series - Initial Class 12,438 (24,826) (12,388) (46,987) -- 490,259 430,884 MFS VIT Emerging Growth Series - Initial Class -- (88,123) (88,123) (853,176) -- 2,514,875 1,573,576 MFS VIT New Discovery Series - Initial Class -- (20,846) (20,846) (79) -- 246,557 225,632 MFS VIT Research Series - Initial Class 15,347 (10,265) 5,082 (3,382) -- 222,855 224,555 MFS VIT Total Return Series - Initial Class 13,455 (6,121) 7,334 5,297 -- 72,622 85,253 Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I -- (15,534) (15,534) 5,856 -- 369,446 359,768 Neuberger Berman AMT Partners Portfolio - Class I 14 (918) (904) 667 -- 21,027 20,790 Oppenheimer Balanced Fund/VA - Non-Service Shares 3,402 (3,300) 102 1,569 -- 50,025 51,696 Oppenheimer Global Securities Fund/VA - Non-Service Shares 5,019 (4,422) 597 8,496 -- 139,006 148,099 Oppenheimer High Income Fund/VA - Non-Service Shares 5,245 (665) 4,580 (150) -- 2,560 6,990 PIMCO VIT Real Return Portfolio - Administrative Class 110,503 (73,925) 36,578 173,491 394,221 311,719 916,009 PIMCO VIT Short-Term Portfolio - Administrative Class 70,463 (37,656) 32,807 3,265 13,531 (14,634) 34,969 PIMCO VIT Total Return Portfolio - Administrative Class 213,718 (79,167) 134,551 77,968 170,475 57,924 440,918 Pioneer Fund VCT Portfolio - Class I -- (1,358) (1,358) 501 -- 73,097 72,240 Pioneer Growth Opportunities VCT Portfolio - Class I -- (2,330) (2,330) 976 -- 156,168 154,814 Putnam VT Diversified Income Fund - Class IB 546,294 (29,000) 517,294 26,141 -- (17,044) 526,391 Putnam VT Growth and Income Fund - Class IB 237,545 (94,091) 143,454 (55,906) -- 1,522,181 1,609,729 Putnam VT International Growth and Income Fund - Class IB 64,926 (34,898) 30,028 32,665 -- 857,207 919,900 Putnam VT Small Cap Value Fund - Class IB 1,521 (3,232) (1,711) 10,858 -- 91,048 100,195 Putnam VT Vista Fund - Class IB -- (582) (582) (433) -- 13,691 12,676 Putnam VT Voyager Fund - Class IB 707 (2,322) (1,615) (5,058) -- 19,350 12,677
See accompanying notes. VL-R-4 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF OPERATIONS - CONTINUED For the Year Ended December 31, 2004
A B A+B=C D E F C+D+E+F --------- -------------- ---------- ------------ ------------- -------------- ------------- Increase Mortality and Net change (decrease) in Dividends expense risk Net Net realized Capital gain in unrealized net assets from and investment gain (loss) distributions appreciation resulting mutual administrative income on from mutual (depreciation) from Divisions funds charges (loss) investments funds of investments operations - --------------------------------- --------- -------------- ---------- ------------ ------------- -------------- ------------- Safeco RST Core Equity Portfolio $ 35,542 $ (21,220) $ 14,322 $ 258,706 $ -- $ (128,898) $ 144,130 Safeco RST Growth Opportunities Portfolio -- (35,015) (35,015) 1,154,898 -- (244,287) 875,596 Scudder International Portfolio -- -- -- -- -- -- -- Scudder VIT EAFE Equity Index Fund - Class A -- -- -- -- -- -- -- Scudder VIT Equity 500 Index Fund - Class A 181 (126) 55 (110) -- 1,752 1,697 SunAmerica - Aggressive Growth Portfolio - Class 1 -- (2,504) (2,504) 7,078 -- 59,599 64,173 SunAmerica - SunAmerica Balanced Portfolio - Class 1 9,712 (3,790) 5,922 2,574 -- 30,488 38,984 UIF Equity Growth Portfolio - Class I 6,462 (26,788) (20,326) (366,107) -- 618,080 231,647 UIF High Yield Portfolio - Class I 104,519 (11,862) 92,657 (82,802) -- 133,762 143,617 VALIC Company I - International Equities Fund 23,532 (11,407) 12,125 12,197 -- 260,211 284,533 VALIC Company I - Mid Cap Index Fund 116,137 (97,676) 18,461 63,445 261,970 1,692,164 2,036,040 VALIC Company I - Money Market I Fund 263,686 (226,753) 36,933 -- -- -- 36,933 VALIC Company I - Nasdaq-100 Index Fund 19,308 (22,187) (2,879) 14,891 -- 286,502 298,514 VALIC Company I - Science & Technology Fund -- (7,500) (7,500) (18,283) -- 42,141 16,358 VALIC Company I - Small Cap Index Fund 35,938 (28,965) 6,973 104,457 -- 559,064 670,494 VALIC Company I - Stock Index Fund 639,701 (287,922) 351,779 (1,394,158) 528,082 3,691,151 3,176,854 Van Kampen LIT Emerging Growth Portfolio - Class I -- (434) (434) (2,236) -- 5,913 3,243 Van Kampen LIT Government Portfolio - Class I 8,349 (1,347) 7,002 (866) -- (347) 5,789 Van Kampen LIT Growth and Income Portfolio - Class I 43,919 (33,792) 10,127 51,123 -- 589,542 650,792 Vanguard VIF High Yield Bond Portfolio 321,153 (38,190) 282,963 94,067 -- 70,046 447,076 Vanguard VIF REIT Index Portfolio 202,057 (54,992) 147,065 151,782 133,973 1,752,276 2,185,096
See accompanying notes. VL-R-5 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS
Divisions ---------------------------------------------------------------------------- AIM V.I. Alger American Alger American International AIM V.I. Premier Leveraged AllCap MidCap Growth Growth Fund - Equity Fund - Portfolio - Class O Portfolio - Class O Series I Series I Shares Shares ------------- ---------------- ------------------- ------------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ 5,137 $ (27,899) $ (2,723) $ (4,502) Net realized gain (loss) on investments (110,702) (858,843) 945 6,725 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 1,457,449 1,519,897 38,443 100,002 ---------- ----------- -------- --------- Increase (decrease) in net assets resulting from operations 1,351,884 633,155 36,665 102,225 ---------- ----------- -------- --------- PRINCIPAL TRANSACTIONS: Net premiums 1,107,075 2,566,159 144,802 252,027 Net transfers from (to) other Divisions or fixed rate option 1,625,322 434,945 199,138 448,338 Internal rollovers -- -- -- -- Cost of insurance and other charges (571,652) (1,650,680) (62,421) (103,751) Administrative charges (43,784) (100,743) (5,136) (11,775) Policy loans (130,660) (102,066) (4) 7,362 Terminations and withdrawals (170,236) (593,204) (2,151) (3,827) ---------- ----------- -------- --------- Increase (decrease) in net assets resulting from principal transactions 1,816,065 554,411 274,228 588,374 ---------- ----------- -------- --------- TOTAL INCREASE (DECREASE) IN NET ASSETS 3,167,949 1,187,566 310,893 690,599 NET ASSETS: Beginning of year 4,395,204 11,964,689 234,443 302,636 ---------- ----------- -------- --------- End of year $7,563,153 $13,152,255 $545,336 $ 993,235 ========== =========== ======== ========= For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ (4,839) $ (43,040) $ (41) $ (468) Net realized gain (loss) on investments (593,810) (1,581,995) 74 3,238 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 1,535,463 3,957,612 3,670 23,049 ---------- ----------- -------- --------- Increase (decrease) in net assets resulting from operations 936,814 2,332,577 3,703 25,819 ---------- ----------- -------- --------- PRINCIPAL TRANSACTIONS: Net premiums 993,314 2,893,233 7,670 16,326 Net transfers from (to) other Divisions or fixed rate option (115,158) (269,225) 228,598 270,505 Internal rollovers -- -- -- -- Cost of insurance and other charges (551,493) (1,877,618) (4,623) (9,040) Administrative charges (35,209) (111,346) (353) (816) Policy loans (26,827) (95,683) (552) 185 Terminations and withdrawals (276,223) (742,081) -- (343) ---------- ----------- -------- --------- Increase (decrease) in net assets resulting from principal transactions (11,596) (202,720) 230,740 276,817 ---------- ----------- -------- --------- TOTAL INCREASE (DECREASE) IN NET ASSETS 925,218 2,129,857 234,443 302,636 NET ASSETS: Beginning of year 3,469,986 9,834,832 -- -- ---------- ----------- -------- --------- End of year $4,395,204 $11,964,689 $234,443 $ 302,636 ========== =========== ======== =========
See accompanying notes. VL-R-6 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions ------------------------------------------------------------------------- Credit Suisse Dreyfus IP MidCap American Century VP Ayco Growth Small Cap Stock Portfolio - Value Fund - Class I Fund Growth Portfolio Initial shares -------------------- ----------- ---------------- ----------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ 23,582 $ -- $ (11,815) $ (8,993) Net realized gain (loss) on investments 135,589 -- 46,497 113,020 Capital gain distributions from mutual funds 82,411 -- -- 88,761 Net change in unrealized appreciation (depreciation) of investments 1,361,242 -- 117,955 252,274 ----------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from operations 1,602,824 -- 152,637 445,062 ----------- ----------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 2,598,492 -- 393,255 839,910 Net transfers from (to) other Divisions or fixed rate option 2,418,145 -- 311,653 272,504 Internal rollovers -- -- -- -- Cost of insurance and other charges (1,278,885) -- (181,319) (465,356) Administrative charges (122,898) -- (17,417) (40,252) Policy loans (126,507) -- (18,832) (10,493) Terminations and withdrawals (246,291) -- (15,598) (54,244) ----------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions 3,242,056 -- 471,742 542,069 ----------- ----------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 4,844,880 -- 624,379 987,131 NET ASSETS: Beginning of year 9,629,773 -- 1,269,414 2,859,639 ----------- ----------- ---------- ---------- End of year $14,474,653 $ -- $1,893,793 $3,846,770 =========== =========== ========== ========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 13,308 $ (6,431) $ (5,108) $ (8,098) Net realized gain (loss) on investments (113,748) (1,915,469) 566 15,841 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 2,076,101 3,756,480 298,373 603,728 ----------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from operations 1,975,661 1,834,580 293,831 611,471 ----------- ----------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 1,933,044 43,307 226,793 673,023 Net transfers from (to) other Divisions or fixed rate option 2,411,560 (8,523,709) 440,490 295,454 Internal rollovers -- -- -- -- Cost of insurance and other charges (1,066,847) (566,235) (112,769) (363,758) Administrative charges (91,943) (2,459) (10,793) (32,326) Policy loans (105,937) 272 1,284 (1,791) Terminations and withdrawals (610,640) (8,938) (26,394) (24,024) ----------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions 2,469,237 (9,057,762) 518,611 546,578 ----------- ----------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 4,444,898 (7,223,182) 812,442 1,158,049 NET ASSETS: Beginning of year 5,184,875 7,223,182 456,972 1,701,590 ----------- ----------- ---------- ---------- End of year $ 9,629,773 $ -- $1,269,414 $2,859,639 =========== =========== ========== ==========
See accompanying notes. VL-R-7 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions ---------------------------------------------------------------------------------- Dreyfus VIF Dreyfus VIF Fidelity VIP Developing Leaders Quality Bond Fidelity VIP Asset Contrafund Portfolio - Initial Portfolio - Initial Manager Portfolio - Portfolio - Service shares shares Service Class 2 Class 2 ------------------- ------------------- ------------------- ------------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ (54,127) $ 267,117 $ 65,857 $ (66,511) Net realized gain (loss) on investments 53,386 (20,434) 70,848 90,445 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 1,125,190 (46,460) 62,578 1,927,155 ----------- ----------- ---------- ----------- Increase (decrease) in net assets resulting from operations 1,124,449 200,223 199,283 1,951,089 ----------- ----------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 2,465,860 1,310,857 933,973 3,355,343 Net transfers from (to) other Divisions or fixed rate option 203,359 390,579 559,743 3,791,685 Internal rollovers 262 -- 157,598 837 Cost of insurance and other charges (1,335,731) (936,290) (482,855) (1,402,062) Administrative charges (105,890) (59,692) (45,602) (155,466) Policy loans (194,241) (4,094) 84,463 (42,427) Terminations and withdrawals (388,999) (574,477) (289,998) (172,311) ----------- ----------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions 644,620 126,883 917,322 5,375,599 ----------- ----------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,769,069 327,106 1,116,605 7,326,688 NET ASSETS: Beginning of year 10,151,036 7,738,004 3,723,891 9,293,888 ----------- ----------- ---------- ----------- End of year $11,920,105 $ 8,065,110 $4,840,496 $16,620,576 =========== =========== ========== =========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ (58,484) $ 251,226+ $ 63,609 $ (32,722) Net realized gain (loss) on investments (182,784) 28,230 (8,047) 226,646 Capital gain distributions from mutual funds -- 165,946+ -- -- Net change in unrealized appreciation (depreciation) of investments 2,772,382 (124,635) 419,961 2,022,921 ----------- ----------- ---------- ----------- Increase (decrease) in net assets resulting from operations 2,531,114 320,767 475,523 2,216,845 ----------- ----------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 2,503,579 1,567,678 565,088 2,107,417 Net transfers from (to) other Divisions or fixed rate option 287,248 99,791 974,862 2,236,877 Internal rollovers -- -- -- -- Cost of insurance and other charges (1,243,407) (1,009,427) (387,659) (1,041,103) Administrative charges (106,929) (70,077) (26,659) (101,730) Policy loans (86,656) (225,675) 389,292 (92,869) Terminations and withdrawals (1,409,821) (596,804) (582,833) (2,461,920) ----------- ----------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions (55,986) (234,514) 932,091 646,672 ----------- ----------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 2,475,128 86,253 1,407,614 2,863,517 NET ASSETS: Beginning of year 7,675,908 7,651,751 2,316,277 6,430,371 ----------- ----------- ---------- ----------- End of year $10,151,036 $ 7,738,004 $3,723,891 $ 9,293,888 =========== =========== ========== ===========
See accompanying notes. VL-R-8 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions -------------------------------------------------------------------------------- Fidelity VIP Equity- Fidelity VIP Fidelity VIP Mid Franklin Templeton - Income Portfolio - Growth Portfolio - Cap Portfolio - Franklin Small Cap Service Class 2 Service Class 2 Service Class 2 Fund - Class 2 -------------------- ------------------ ---------------- -------------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ 78,586 $ (57,379) $ (4,466) $ (1,064) Net realized gain (loss) on investments 42,557 (58,095) 14,660 1,271 Capital gain distributions from mutual funds 46,017 -- -- -- Net change in unrealized appreciation (depreciation) of investments 1,408,052 407,041 158,424 14,818 ----------- ----------- ---------- -------- Increase (decrease) in net assets resulting from operations 1,575,212 291,567 168,618 15,025 ----------- ----------- ---------- -------- PRINCIPAL TRANSACTIONS: Net premiums 3,290,771 2,708,198 232,349 5,217 Net transfers from (to) other Divisions or fixed rate option 2,934,950 1,360,141 540,817 13,149 Internal rollovers -- -- -- -- Cost of insurance and other charges (1,457,940) (1,365,721) (89,163) (3,831) Administrative charges (157,801) (129,165) (10,475) -- Policy loans (48,429) (49,004) (42,088) (2,407) Terminations and withdrawals (163,564) (124,273) (6,703) (5,086) ----------- ----------- ---------- -------- Increase (decrease) in net assets resulting from principal transactions 4,397,987 2,400,176 624,737 7,042 ----------- ----------- ---------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS 5,973,199 2,691,743 793,355 22,067 NET ASSETS: Beginning of year 11,352,970 8,798,839 325,445 135,309 ----------- ----------- ---------- -------- End of year $17,326,169 $11,490,582 $1,118,800 $157,376 =========== =========== ========== ======== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 79,664 $ (43,980) $ (438) $ (870) Net realized gain (loss) on investments (172,182) (334,820) 119 (416) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 2,900,788 2,738,235 27,990 35,509 ----------- ----------- ---------- -------- Increase (decrease) in net assets resulting from operations 2,808,270 2,359,435 27,671 34,223 ----------- ----------- ---------- -------- PRINCIPAL TRANSACTIONS: Net premiums 2,363,111 2,194,072 23,093 5,767 Net transfers from (to) other Divisions or fixed rate option 2,127,316 1,244,332 281,977 6,443 Internal rollovers -- -- -- -- Cost of insurance and other charges (1,086,303) (1,020,329) (6,292) (3,612) Administrative charges (114,113) (107,447) (1,004) -- Policy loans 6,155 (9,205) -- (44) Terminations and withdrawals (2,436,613) (2,518,247) -- (124) ----------- ----------- ---------- -------- Increase (decrease) in net assets resulting from principal transactions 859,553 (216,824) 297,774 8,430 ----------- ----------- ---------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS 3,667,823 2,142,611 325,445 42,653 NET ASSETS: Beginning of year 7,685,147 6,656,228 -- 92,656 ----------- ----------- ---------- -------- End of year $11,352,970 $ 8,798,839 $ 325,445 $135,309 =========== =========== ========== ========
See accompanying notes. VL-R-9 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions --------------------------------------------------------------------------- Franklin Franklin Franklin Templeton - Templeton - Templeton - Franklin Templeton Franklin Small Cap Franklin U.S. Mutual Shares - Templeton Value Securities Government Securities Fund - Foreign Securities Fund - Class 2 Fund - Class 2 Class 2 Fund - Class 2 -------------------- -------------- ----------------- ------------------ For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ (3,499) $ 503,012 $ 4,627 $ 27,747 Net realized gain (loss) on investments 23,931 (40,394) 102,975 141,983 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 157,413 (151,309) 682,712 1,433,732 ---------- ----------- ---------- ----------- Increase (decrease) in net assets resulting from operations 177,845 311,309 790,314 1,603,462 ---------- ----------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 308,150 483,812 556,813 785,524 Net transfers from (to) other Divisions or fixed rate option 607,846 (94,845) 1,027,855 3,029,410 Internal rollovers -- -- -- -- Cost of insurance and other charges (97,500) (920,094) (511,405) (576,892) Administrative charges (14,755) (23,307) (26,036) (33,616) Policy loans (46,611) 14,642 (2,740) 13,595 Terminations and withdrawals (3,749) (51,752) (101,897) (64,380) ---------- ----------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions 753,381 (591,544) 942,590 3,153,641 ---------- ----------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 931,226 (280,235) 1,732,904 4,757,103 NET ASSETS: Beginning of year 243,999 11,755,086 5,991,711 6,509,305 ---------- ----------- ---------- ----------- End of year $1,175,225 $11,474,851 $7,724,615 $11,266,408 ========== =========== ========== =========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ (333) $ 409,789 $ 16,569 $ 49,505 Net realized gain (loss) on investments 714 (20,622) 18,441 26,313 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 29,112 (230,914) 1,104,782 1,404,968 ---------- ----------- ---------- ----------- Increase (decrease) in net assets resulting from operations 29,493 158,253 1,139,792 1,480,786 ---------- ----------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 19,349 490,325 248,378 231,810 Net transfers from (to) other Divisions or fixed rate option 201,273 3,185,489 665,193 856,708 Internal rollovers -- -- -- -- Cost of insurance and other charges (4,995) (848,459) (410,405) (397,656) Administrative charges (876) (24,478) (11,828) (9,953) Policy loans (245) (2,967) (644) (4,301) Terminations and withdrawals -- (83,914) (105,409) (5,539) ---------- ----------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions 214,506 2,715,996 385,285 671,069 ---------- ----------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 243,999 2,874,249 1,525,077 2,151,855 NET ASSETS: Beginning of year -- 8,880,837 4,466,634 4,357,450 ---------- ----------- ---------- ----------- End of year $ 243,999 $11,755,086 $5,991,711 $ 6,509,305 ========== =========== ========== ===========
See accompanying notes. VL-R-10 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions --------------------------------------------------------------------------- Janus Aspen Series Janus Aspen Series Janus Aspen Series Goldman International Mid Cap Growth Worldwide Growth Sachs Capital Growth Portfolio - Portfolio - Service Portfolio - Service Growth Fund Service Shares Shares Shares ------------- ------------------ ------------------- ------------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ 18,817 $ 5,742 $ (15,637) $ 9,958 Net realized gain (loss) on investments 19,744 44,263 35,873 (27,447) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 653,622 425,750 388,478 167,748 ---------- ---------- ---------- ---------- Increase (decrease) in net assets resulting from operations 692,183 475,755 408,714 150,259 ---------- ---------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums -- 621,695 684,998 1,027,383 Net transfers from (to) other Divisions or fixed rate option 192 481,455 (63,955) 39,909 Internal rollovers -- -- -- -- Cost of insurance and other charges (493,114) (318,961) (356,957) (495,065) Administrative charges (250) (30,145) (33,627) (50,894) Policy loans (3,400) (45,337) (26,889) (16,897) Terminations and withdrawals (1,688) (43,661) (55,907) (45,697) ---------- ---------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions (498,260) 665,046 147,663 458,739 ---------- ---------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 193,923 1,140,801 556,377 608,998 NET ASSETS: Beginning of year 8,501,182 2,140,097 2,087,513 3,410,075 ---------- ---------- ---------- ---------- End of year $8,695,105 $3,280,898 $2,643,890 $4,019,073 ========== ========== ========== ========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ (1,352) $ 4,644 $ (10,749) $ 4,640 Net realized gain (loss) on investments 269 (50,569) (27,446) (108,229) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 186,155 577,849 504,583 717,239 ---------- ---------- ---------- ---------- Increase (decrease) in net assets resulting from operations 185,072 531,924 466,388 613,650 ---------- ---------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums -- 552,095 685,443 1,034,656 Net transfers from (to) other Divisions or fixed rate option 8,330,325 104,648 259,924 444,690 Internal rollovers -- -- -- -- Cost of insurance and other charges (13,551) (210,933) (324,758) (454,566) Administrative charges (15) (26,519) (33,718) (50,983) Policy loans -- (30,308) (2,492) (6,625) Terminations and withdrawals (649) (45,629) (34,006) (273,289) ---------- ---------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions 8,316,110 343,354 550,393 693,883 ---------- ---------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 8,501,182 875,278 1,016,781 1,307,533 NET ASSETS: Beginning of year -- 1,264,819 1,070,732 2,102,542 ---------- ---------- ---------- ---------- End of year $8,501,182 $2,140,097 $2,087,513 $3,410,075 ========== ========== ========== ==========
See accompanying notes. VL-R-11 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions ----------------------------------------------------------------------- MFS VIT Capital JPMorgan Small Opportunities MFS VIT Emerging JPMorgan Mid Cap Company Series - Initial Growth Series - Value Portfolio Portfolio Class Initial Class ---------------- -------------- ---------------- ---------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ (1,451) $ (8,288) $ (12,388) $ (88,123) Net realized gain (loss) on investments 4,481 26,522 (46,987) (853,176) Capital gain distributions from mutual funds 1,064 -- -- -- Net change in unrealized appreciation (depreciation) of investments 60,999 294,323 490,259 2,514,875 -------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from operations 65,093 312,557 430,884 1,573,576 -------- ---------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 186,753 359,973 1,023,618 3,316,924 Net transfers from (to) other Divisions or fixed rate option 195,630 506,674 149,381 1,069,813 Internal rollovers -- -- 471 -- Cost of insurance and other charges (46,623) (153,582) (567,534) (1,597,659) Administrative charges (8,208) (17,399) (50,372) (135,864) Policy loans (355) (10,883) (17,494) (90,796) Terminations and withdrawals (4,738) (20,485) (46,023) (358,601) -------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions 322,459 664,298 492,047 2,203,817 -------- ---------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 387,552 976,855 922,931 3,777,393 NET ASSETS: Beginning of year 122,097 808,287 3,294,819 10,890,953 -------- ---------- ---------- ----------- End of year $509,649 $1,785,142 $4,217,750 $14,668,346 ======== ========== ========== =========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ (201) $ (3,626) $ (12,512) $ (63,944) Net realized gain (loss) on investments -- 1,128 (76,292) (1,772,200) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 10,159 175,505 748,094 4,119,769 -------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from operations 9,958 173,007 659,290 2,283,625 -------- ---------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 6,420 184,262 978,715 2,882,107 Net transfers from (to) other Divisions or fixed rate option 111,047 242,922 242,910 636,191 Internal rollovers -- -- -- -- Cost of insurance and other charges (4,705) (91,397) (530,646) (1,658,472) Administrative charges (316) (9,053) (48,492) (105,154) Policy loans (307) (2,767) (1,264) (60,579) Terminations and withdrawals -- (9,405) (133,731) (390,492) -------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions 112,139 314,562 507,492 1,303,601 -------- ---------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 122,097 487,569 1,166,782 3,587,226 NET ASSETS: Beginning of year -- 320,718 2,128,037 7,303,727 -------- ---------- ---------- ----------- End of year $122,097 $ 808,287 $3,294,819 $10,890,953 ======== ========== ========== ===========
See accompanying notes. VL-R-12 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions ----------------------------------------------------------------------------- MFS VIT New MFS VIT Research MFS VIT Total Neuberger Berman Discovery Series - Series - Initial Return Series - AMT Mid-Cap Growth Initial Class Class Initial Class Portfolio - Class I ------------------ ---------------- --------------- ------------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ (20,846) $ 5,082 $ 7,334 $ (15,534) Net realized gain (loss) on investments (79) (3,382) 5,297 5,856 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 246,557 222,855 72,622 369,446 ---------- ---------- -------- ---------- Increase (decrease) in net assets resulting from operations 225,632 224,555 85,253 359,768 ---------- ---------- -------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 812,401 493,307 7,022 643,527 Net transfers from (to) other Divisions or fixed rate option 354,915 78,407 134,849 443,552 Internal rollovers 628 -- -- -- Cost of insurance and other charges (436,972) (263,159) (56,987) (338,096) Administrative charges (38,696) (23,442) -- (31,384) Policy loans (6,318) 216 57 (53,163) Terminations and withdrawals (540,934) (13,043) (10,043) (77,549) ---------- ---------- -------- ---------- Increase (decrease) in net assets resulting from principal transactions 145,024 272,286 74,898 586,887 ---------- ---------- -------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 370,656 496,841 160,151 946,655 NET ASSETS: Beginning of year 3,082,146 1,284,947 752,783 1,861,343 ---------- ---------- -------- ---------- End of year $3,452,802 $1,781,788 $912,934 $2,807,998 ========== ========== ======== ========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ (16,667) $ (639) $ 6,275 $ (12,820) Net realized gain (loss) on investments (77,770) (31,868) (5,273) (59,197) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 763,494 260,832 96,968 622,686 ---------- ---------- -------- ---------- Increase (decrease) in net assets resulting from operations 669,057 228,325 97,970 550,669 ---------- ---------- -------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 648,572 425,030 5,366 534,232 Net transfers from (to) other Divisions or fixed rate option 525,864 84,559 90,955 222,849 Internal rollovers -- -- -- -- Cost of insurance and other charges (319,494) (221,546) (51,740) (266,006) Administrative charges (30,969) (21,146) -- (26,362) Policy loans (1,949) (8,345) -- (11,148) Terminations and withdrawals (80,358) (19,454) (54,153) (929,746) ---------- ---------- -------- ---------- Increase (decrease) in net assets resulting from principal transactions 741,666 239,098 (9,572) (476,181) ---------- ---------- -------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,410,723 467,423 88,398 74,488 NET ASSETS: Beginning of year 1,671,423 817,524 664,385 1,786,855 ---------- ---------- -------- ---------- End of year $3,082,146 $1,284,947 $752,783 $1,861,343 ========== ========== ======== ==========
See accompanying notes. VL-R-13 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions ----------------------------------------------------------------------------- Oppenheimer Oppenheimer Oppenheimer High Neuberger Berman Balanced Fund/VA Global Securities Income Fund/VA - AMT Partners - Non-Service Fund/VA - Non- Non-Service Portfolio - Class I Shares Service Shares Shares ------------------- ---------------- ----------------- ---------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ (904) $ 102 $ 597 $ 4,580 Net realized gain (loss) on investments 667 1,569 8,496 (150) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 21,027 50,025 139,006 2,560 -------- --------- ----------- --------- Increase (decrease) in net assets resulting from operations 20,790 51,696 148,099 6,990 -------- --------- ----------- --------- PRINCIPAL TRANSACTIONS: Net premiums 5,473 159,444 269,594 5,599 Net transfers from (to) other Divisions or fixed rate option 3,403 376,838 619,962 23,072 Internal rollovers -- -- -- -- Cost of insurance and other charges (3,270) (37,445) (97,905) (3,399) Administrative charges -- (3,886) (12,984) -- Policy loans -- (387) (16,667) (1,774) Terminations and withdrawals (5,347) (2,591) (2,087) (1,803) -------- --------- ----------- --------- Increase (decrease) in net assets resulting from principal transactions 259 491,973 759,913 21,695 -------- --------- ----------- --------- TOTAL INCREASE (DECREASE) IN NET ASSETS 21,049 543,669 908,012 28,685 NET ASSETS: Beginning of year 116,594 116,383 177,637 71,478 -------- --------- ----------- --------- End of year $137,643 $ 660,052 $ 1,085,649 $ 100,163 ======== ========= =========== ========= For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ (788) $ (91) $ (134) $ 7,742 Net realized gain (loss) on investments (226) 8 659 (8,505) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 30,029 6,321 19,921 17,487 -------- --------- ----------- --------- Increase (decrease) in net assets resulting from operations 29,015 6,238 20,446 16,724 -------- --------- ----------- --------- PRINCIPAL TRANSACTIONS: Net premiums 5,114 3,591 14,355 1,531 Net transfers from (to) other Divisions or fixed rate option 1,183 108,982 147,158 3,074 Internal rollovers -- -- -- -- Cost of insurance and other charges (2,976) (1,950) (3,274) (2,533) Administrative charges -- (171) (741) -- Policy loans -- (307) (307) -- Terminations and withdrawals -- -- -- (57,763) -------- --------- ----------- --------- Increase (decrease) in net assets resulting from principal transactions 3,321 110,145 157,191 (55,691) -------- --------- ----------- --------- TOTAL INCREASE (DECREASE) IN NET ASSETS 32,336 116,383 177,637 (38,967) NET ASSETS: Beginning of year 84,258 -- -- 110,445 -------- --------- ----------- --------- End of year $116,594 $ 116,383 $ 177,637 $ 71,478 ======== ========= =========== =========
See accompanying notes. VL-R-14 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions ------------------------------------------------------------------------ PIMCO VIT Real PIMCO VIT Short PIMCO VIT Total Return Portfolio- -Term Portfolio- Return Portfolio- Pioneer Fund Administrative Administrative Administrative VCT Portfolio- Class Class Class Class I ---------------- ---------------- ----------------- -------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ 36,578 $ 32,807 $ 134,551 $ (1,358) Net realized gain (loss) on investments 173,491 3,265 77,968 501 Capital gain distributions from mutual funds 394,221 13,531 170,475 -- Net change in unrealized appreciation (depreciation) of investments 311,719 (14,634) 57,924 73,097 ----------- ---------- ----------- ---------- Increase (decrease) in net assets resulting from operations 916,009 34,969 440,918 72,240 ----------- ---------- ----------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 2,176,398 981,480 2,333,234 19,619 Net transfers from (to) other Divisions or fixed rate option 3,469,820 1,182,171 (39,015) 3,303,904 Internal rollovers 733 -- -- -- Cost of insurance and other charges (1,664,055) (533,184) (1,319,888) (19,125) Administrative charges (103,711) (44,374) (110,507) (692) Policy loans (55,840) (19,362) 46,506 432 Terminations and withdrawals (214,073) (101,086) (230,772) (31,037) ----------- ---------- ----------- ---------- Increase (decrease) in net assets resulting from principal transactions 3,609,272 1,465,645 679,558 3,273,101 ----------- ---------- ----------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 4,525,281 1,500,614 1,120,476 3,345,341 NET ASSETS: Beginning of year 8,516,394 4,496,787 10,740,623 -- ----------- ---------- ----------- ---------- End of year $13,041,675 $5,997,401 $11,861,099 $3,345,341 =========== ========== =========== ========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 133,974+ $ 37,452 $ 212,092 + $ -- Net realized gain (loss) on investments 304,617 4,733 75,409 -- Capital gain distributions from mutual funds 173,308+ 5,940 83,844 + -- Net change in unrealized appreciation (depreciation) of investments (53,420) 1,466 17,793 -- ----------- ---------- ----------- ---------- Increase (decrease) in net assets resulting from operations 558,479 49,591 389,138 -- ----------- ---------- ----------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 2,271,260 671,086 2,104,538 -- Net transfers from (to) other Divisions or fixed rate option 1,416,476 1,947,753 1,352,598 Internal rollovers -- -- -- -- Cost of insurance and other charges (983,514) (426,413) (1,103,217) -- Administrative charges (106,171) (32,641) (100,344) -- Policy loans (276,152) 11,267 (71,282) -- Terminations and withdrawals (486,420) (167,101) (272,047) -- ----------- ---------- ----------- ---------- Increase (decrease) in net assets resulting from principal transactions 1,835,479 2,003,951 1,910,246 -- ----------- ---------- ----------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 2,393,958 2,053,542 2,299,384 -- NET ASSETS: Beginning of year 6,122,436 2,443,245 8,441,239 -- ----------- ---------- ----------- ---------- End of year $ 8,516,394 $4,496,787 $10,740,623 $ -- =========== ========== =========== ==========
See accompanying notes. VL-R-15 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions ----------------------------------------------------------------------- Putnam VT Putnam VT International Pioneer Growth Diversified Putnam VT Growth Growth and Opportunities VCT Income Fund- and Income Fund- Income Fund - Portfolio - Class I Class IB Class IB Class IB ------------------- ------------ ----------------- -------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ (2,330) $ 517,294 $ 143,454 $ 30,028 Net realized gain (loss) on investments 976 26,141 (55,906) 32,665 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 156,168 (17,044) 1,522,181 857,207 ----------- ----------- ------------ ----------- Increase (decrease) in net assets resulting from operations 154,814 526,391 1,609,729 919,900 ----------- ----------- ------------ ----------- PRINCIPAL TRANSACTIONS: Net premiums 36,164 1,570,258 3,652,809 814,291 Net transfers from (to) other Divisions or fixed rate option 5,532,368 158,434 342,034 (655,262) Internal rollovers -- -- -- 523 Cost of insurance and other charges (30,992) (293,089) (1,469,258) (518,773) Administrative charges (1,381) (123,547) (217,556) (35,336) Policy loans (4,152) (12,670) (111,998) (14,803) Terminations and withdrawals (54,128) (161,734) (243,358) (88,279) ----------- ----------- ------------ ----------- Increase (decrease) in net assets resulting from principal transactions 5,477,879 1,137,652 1,952,673 (497,639) ----------- ----------- ------------ ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 5,632,693 1,664,043 3,562,402 422,261 NET ASSETS: Beginning of year -- 5,869,295 14,521,216 5,063,163 ----------- ----------- ------------ ----------- End of year $ 5,632,693 $ 7,533,338 $ 18,083,618 $ 5,485,424 =========== =========== ============ =========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ -- $ 337,503 $ 126,761 $ 45,773 Net realized gain (loss) on investments -- (10,841) (366,503) 28,250 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments -- 444,180 3,033,842 1,725,291 ----------- ----------- ------------ ----------- Increase (decrease) in net assets resulting from operations -- 770,842 2,794,100 1,799,314 ----------- ----------- ------------ ----------- PRINCIPAL TRANSACTIONS: Net premiums -- 1,658,759 3,872,320 987,946 Net transfers from (to) other Divisions or fixed rate option -- 393,258 763,265 175,916 Internal rollovers -- -- -- -- Cost of insurance and other charges -- (266,249) (1,433,233) (463,675) Administrative charges -- (131,765) (227,454) (42,520) Policy loans -- (57,380) (62,002) (10,928) Terminations and withdrawals -- (84,372) (781,349) (1,825,361) ----------- ----------- ------------ ----------- Increase (decrease) in net assets resulting from principal transactions -- 1,512,251 2,131,547 (1,178,622) ----------- ----------- ------------ ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS -- 2,283,093 4,925,647 620,692 NET ASSETS: Beginning of year -- 3,586,202 9,595,569 4,442,471 ----------- ----------- ------------ ----------- End of year $ -- $ 5,869,295 $ 14,521,216 $ 5,063,163 =========== =========== ============ ===========
See accompanying notes. VL-R-16 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions ------------------------------------------------------------------------ Putnam VT Small Cap Value Fund - Putnam VT Vista Putnam VT Voyager Safeco RST Core Class IB Fund - Class IB Fund - Class IB Equity Portfolio --------------- --------------- ----------------- ---------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ (1,711) $ (582) $ (1,615) $ 14,322 Net realized gain (loss) on investments 10,858 (433) (5,058) 258,706 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 91,048 13,691 19,350 (128,898) -------- ------- --------- ----------- Increase (decrease) in net assets resulting from operations 100,195 12,676 12,677 144,130 -------- ------- --------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 12,736 1,897 6,693 465,219 Net transfers from (to) other Divisions or fixed rate option 3,785 2,751 67,851 (3,365,906) Internal rollovers -- -- -- -- Cost of insurance and other charges (12,817) (1,917) (17,531) (302,345) Administrative charges -- -- -- (17,577) Policy loans (5,980) (3,773) (6,102) (8,834) Terminations and withdrawals (7,874) (501) -- (71,255) -------- ------- --------- ----------- Increase (decrease) in net assets resulting from principal transactions (10,150) (1,543) 50,911 (3,300,698) -------- ------- --------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 90,045 11,133 63,588 (3,156,568) NET ASSETS: Beginning of year 407,015 73,086 266,775 3,156,568 -------- ------- --------- ----------- End of year $497,060 $84,219 $ 330,363 $ -- ======== ======= ========= =========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ (1,469) $ (335) $ (780) $ 6,591 Net realized gain (loss) on investments 1,539 (23) (19,611) (246,197) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 132,063 17,731 63,728 878,719 -------- ------- --------- ----------- Increase (decrease) in net assets resulting from operations 132,133 17,373 43,337 639,113 -------- ------- --------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 7,836 2,517 3,522 758,391 Net transfers from (to) other Divisions or fixed rate option 21,555 2,556 78,006 (190,682) Internal rollovers -- -- -- -- Cost of insurance and other charges (12,245) (1,845) (13,251) (367,928) Administrative charges -- -- -- (26,290) Policy loans (3,983) -- (54) (52,990) Terminations and withdrawals (183) -- (55,887) (416,636) -------- ------- --------- ----------- Increase (decrease) in net assets resulting from principal transactions 12,980 3,228 12,336 (296,135) -------- ------- --------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 145,113 20,601 55,673 342,978 NET ASSETS: Beginning of year 261,902 52,485 211,102 2,813,590 -------- ------- --------- ----------- End of year $407,015 $73,086 $ 266,775 $ 3,156,568 ======== ======= ========= ===========
See accompanying notes. VL-R-17 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions ----------------------------------------------------------------- Safeco RST Scudder VIT Growth Scudder EAFE Equity Scudder VIT Equity Opportunities International Index Fund - 500 Index Fund - Portfolio Portfolio Class A Class A ------------- ------------- ------------ ------------------ For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ (35,015) $-- $-- $ 55 Net realized gain (loss) on investments 1,154,898 -- -- (110) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments (244,287) -- -- 1,752 ----------- --- --- ------- Increase (decrease) in net assets resulting from operations 875,596 -- -- 1,697 ----------- --- --- ------- PRINCIPAL TRANSACTIONS: Net premiums 809,051 -- -- 3,902 Net transfers from (to) other Divisions or fixed rate option (5,863,505) -- -- (1) Internal rollovers -- -- -- -- Cost of insurance and other charges (523,246) -- -- (2,197) Administrative charges (33,179) -- -- -- Policy loans (130,912) -- -- -- Terminations and withdrawals (162,819) -- -- -- ----------- --- --- ------- Increase (decrease) in net assets resulting from principal transactions (5,904,610) -- -- 1,704 ----------- --- --- ------- TOTAL INCREASE (DECREASE) IN NET ASSETS (5,029,014) -- -- 3,401 NET ASSETS: Beginning of year 5,029,014 -- -- 15,448 ----------- --- --- ------- End of year $ -- $-- $-- $18,849 =========== === === ======= For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ (29,697) $-- $-- $ 88 Net realized gain (loss) on investments (419,891) -- -- (117) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 1,933,768 -- -- 3,269 ----------- --- --- ------- Increase (decrease) in net assets resulting from operations 1,484,180 -- -- 3,240 ----------- --- --- ------- PRINCIPAL TRANSACTIONS: Net premiums 1,109,783 -- -- 2,601 Net transfers from (to) other Divisions or fixed rate option (216,155) (3) (2) 1 Internal rollovers -- -- -- -- Cost of insurance and other charges (616,883) -- -- (2,097) Administrative charges (44,183) -- -- -- Policy loans (89,094) -- -- -- Terminations and withdrawals (332,512) -- -- -- ----------- --- --- ------- Increase (decrease) in net assets resulting from principal transactions (189,044) (3) (2) 505 ----------- --- --- ------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,295,136 (3) (2) 3,745 NET ASSETS: Beginning of year 3,733,878 3 2 11,703 ----------- --- --- ------- End of year $ 5,029,014 $-- $-- $15,448 =========== === === =======
See accompanying notes. VL-R-18 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions -------------------------------------------------------------------------------- SunAmerica - SunAmerica - SunAmerica UIF Equity Aggressive Growth Balanced Portfolio - Growth Portfolio UIF High Yield Portfolio - Class 1 Class 1 - Class I Portfolio - Class I ------------------- -------------------- ---------------- ------------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ (2,504) $ 5,922 $ (20,326) $ 92,657 Net realized gain (loss) on investments 7,078 2,574 (366,107) (82,802) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 59,599 30,488 618,080 133,762 -------- --------- ---------- ---------- Increase (decrease) in net assets resulting from operations 64,173 38,984 231,647 143,617 -------- --------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 155,581 315,273 745,909 257,386 Net transfers from (to) other Divisions or fixed rate option 135,233 172,538 (322,697) (178,468) Internal rollovers -- -- -- -- Cost of insurance and other charges (67,546) (122,587) (450,162) (149,087) Administrative charges (7,525) (14,790) (23,465) (10,498) Policy loans (3,259) (4,727) (59,432) (5,135) Terminations and withdrawals (5,419) (11,795) (172,684) (132,288) -------- --------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions 207,065 333,912 (282,531) (218,090) -------- --------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 271,238 372,896 (50,884) (74,473) NET ASSETS: Beginning of year 243,956 361,266 3,766,071 1,812,172 -------- --------- ---------- ---------- End of year $515,194 $ 734,162 $3,715,187 $1,737,699 ======== ========= ========== ========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ (955) $ 4,873 $ (25,672) $ (11,182) Net realized gain (loss) on investments 889 18 (808,862) (71,559) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 30,987 27,522 1,605,587 430,126 -------- --------- ---------- ---------- Increase (decrease) in net assets resulting from operations 30,921 32,413 771,053 347,385 -------- --------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 52,688 127,729 815,440 270,783 Net transfers from (to) other Divisions or fixed rate option 170,242 173,438 (425,787) 89,086 Internal rollovers -- -- -- -- Cost of insurance and other charges (25,036) (58,435) (508,401) (152,488) Administrative charges (2,547) (5,762) (24,928) (9,818) Policy loans (398) (394) (24,477) (25,743) Terminations and withdrawals -- (444) (292,607) (82,763) -------- --------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions 194,949 236,132 (460,760) 89,057 -------- --------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 225,870 268,545 310,293 436,442 NET ASSETS: Beginning of year 18,086 92,721 3,455,778 1,375,730 -------- --------- ---------- ---------- End of year $243,956 $ 361,266 $3,766,071 $1,812,172 ======== ========= ========== ==========
See accompaying notes. VL-R-19 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions ------------------------------------------------------------------------ VALIC Company I - VALIC Company VALIC Company VALIC Company I - International I - Mid Cap I - Money Market Nasdaq-100 Index Equities Fund Index Fund I Fund Fund ----------------- ------------- ---------------- ----------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ 12,125 $ 18,461 $ 36,933 $ (2,879) Net realized gain (loss) on investments 12,197 63,445 -- 14,891 Capital gain distributions from mutual funds -- 261,970 -- -- Net change in unrealized appreciation (depreciation) of investments 260,211 1,692,164 -- 286,502 ---------- ----------- ------------ ---------- Increase (decrease) in net assets resulting from operations 284,533 2,036,040 36,933 298,514 ---------- ----------- ------------ ---------- PRINCIPAL TRANSACTIONS: Net premiums 350,831 2,310,297 30,715,615 717,683 Net transfers from (to) other Divisions or fixed rate option 215,122 241,756 (28,049,796) 189,378 Internal rollovers -- -- 3,612,767 -- Cost of insurance and other charges (167,435) (1,277,626) (5,543,294) (373,262) Administrative charges (14,589) (96,438) (1,337,054) (33,515) Policy loans (10,416) (77,821) 287,668 (38,145) Terminations and withdrawals (589,948) (1,072,007) (1,854,404) (43,092) ---------- ----------- ------------ ---------- Increase (decrease) in net assets resulting from principal transactions (216,435) 28,161 (2,168,498) 419,047 ---------- ----------- ------------ ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 68,098 2,064,201 (2,131,565) 717,561 NET ASSETS: Beginning of year 1,854,441 13,398,170 36,677,678 2,943,353 ---------- ----------- ------------ ---------- End of year $1,922,539 $15,462,371 $ 34,546,113 $3,660,914 ========== =========== ============ ========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 11,779 $ (2,608) $ (39,000) $ (14,653) Net realized gain (loss) on investments (188,763) (420,348) -- (153,402) Capital gain distributions from mutual funds -- 101,586 -- -- Net change in unrealized appreciation (depreciation) of investments 576,934 3,596,532 -- 960,016 ---------- ----------- ------------ ---------- Increase (decrease) in net assets resulting from operations 399,950 3,275,162 (39,000) 791,961 ---------- ----------- ------------ ---------- PRINCIPAL TRANSACTIONS: Net premiums 216,967 2,263,927 36,945,344 636,919 Net transfers from (to) other Divisions or fixed rate option 204,654 860,042 (36,108,365) 634,553 Internal rollovers -- -- 5,128,027 -- Cost of insurance and other charges (145,751) (1,213,346) (6,913,801) (281,546) Administrative charges (9,306) (95,916) (1,579,738) (30,416) Policy loans (4,276) (22,683) 239,468 107 Terminations and withdrawals (138,241) (411,368) (2,937,192) (98,553) ---------- ----------- ------------ ---------- Increase (decrease) in net assets resulting from principal transactions 124,047 1,380,656 (5,226,257) 861,064 ---------- ----------- ------------ ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 523,997 4,655,818 (5,265,257) 1,653,025 NET ASSETS: Beginning of year 1,330,444 8,742,352 41,942,935 1,290,328 ---------- ----------- ------------ ---------- End of year $1,854,441 $13,398,170 $ 36,677,678 $2,943,353 ========== =========== ============ ==========
See accompanying notes. VL-R-20 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions ------------------------------------------------------------------------- VALIC Company I - VALIC Company VALIC Company Van Kampen LIT Science & I - Small Cap I - Stock Index Emerging Growth Technology Fund Index Fund Fund Portfolio - Class I ----------------- ------------- --------------- ------------------- For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ (7,500) $ 6,973 $ 351,779 $ (434) Net realized gain (loss) on investments (18,283) 104,457 (1,394,158) (2,236) Capital gain distributions from mutual funds -- -- 528,082 -- Net change in unrealized appreciation (depreciation) of investments 42,141 559,064 3,691,151 5,913 ---------- ---------- ----------- -------- Increase (decrease) in net assets resulting from operations 16,358 670,494 3,176,854 3,243 ---------- ---------- ----------- -------- PRINCIPAL TRANSACTIONS: Net premiums 258,685 896,293 8,057,419 7,310 Net transfers from (to) other Divisions or fixed rate option 253,735 228,512 (9,837,544) (292) Internal rollovers -- -- -- -- Cost of insurance and other charges (178,049) (340,399) (3,622,858) (2,859) Administrative charges (12,547) (40,272) (346,012) -- Policy loans (11,499) (86,800) (428,055) (8,306) Terminations and withdrawals (15,658) (37,241) (2,087,792) (1,525) ---------- ---------- ----------- -------- Increase (decrease) in net assets resulting from principal transactions 294,667 620,093 (8,264,842) (5,672) ---------- ---------- ----------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS 311,025 1,290,587 (5,087,988) (2,429) NET ASSETS: Beginning of year 927,047 3,649,382 43,967,435 59,393 ---------- ---------- ----------- -------- End of year $1,238,072 $4,939,969 $38,879,447 $ 56,964 ========== ========== =========== ======== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ (4,284) $ (3,188) $ 239,190 + $ (417) Net realized gain (loss) on investments (20,757) (52,742) (2,794,127) (21,092) Capital gain distributions from mutual funds -- -- 143,318 + -- Net change in unrealized appreciation (depreciation) of investments 285,268 1,005,025 11,335,046 34,653 ---------- ---------- ----------- -------- Increase (decrease) in net assets resulting from operations 260,227 949,095 8,923,427 13,144 ---------- ---------- ----------- -------- PRINCIPAL TRANSACTIONS: Net premiums 256,569 485,690 9,618,556 6,192 Net transfers from (to) other Divisions or fixed rate option 129,000 848,960 2,978,412 8,525 Internal rollovers -- -- -- -- Cost of insurance and other charges (109,973) (233,702) (3,775,692) (2,590) Administrative charges (12,409) (23,992) (447,770) -- Policy loans (73) (7,951) (22,463) -- Terminations and withdrawals (17,464) (57,319) (1,925,003) (37,276) ---------- ---------- ----------- -------- Increase (decrease) in net assets resulting from principal transactions 245,650 1,011,686 6,426,040 (25,149) ---------- ---------- ----------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS 505,877 1,960,781 15,349,467 (12,005) NET ASSETS: Beginning of year 421,170 1,688,601 28,617,968 71,398 ---------- ---------- ----------- -------- End of year $ 927,047 $3,649,382 $43,967,435 $ 59,393 ========== ========== =========== ========
See accompanying notes. VL-R-21 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
Divisions -------------------------------------------------------------------------- Van Kampen LIT Van Kampen LIT Vanguard VIF Vanguard VIF Government Growth and Income High Yield Bond REIT Index Portfolio - Class I Portfolio - Class I Portfolio Portfolio ------------------- ------------------- --------------- ------------ For the Year Ended December 31, 2004 OPERATIONS: Net investment income (loss) $ 7,002 $ 10,127 $ 282,963 $ 147,065 Net realized gain (loss) on investments (866) 51,123 94,067 151,782 Capital gain distributions from mutual funds -- -- -- 133,973 Net change in unrealized appreciation (depreciation) of investments (347) 589,542 70,046 1,752,276 -------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from operations 5,789 650,792 447,076 2,185,096 -------- ---------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 5,034 1,172,509 1,796,629 2,016,307 Net transfers from (to) other Divisions or fixed rate option 31,808 854,019 1,437,341 1,385,398 Internal rollovers -- 837 -- 785 Cost of insurance and other charges (25,194) (570,947) (602,432) (818,723) Administrative charges -- (52,766) (88,902) (92,824) Policy loans (1,542) (51,964) 11,314 (62,371) Terminations and withdrawals (1,011) (166,704) (88,179) (108,818) -------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions 9,095 1,184,984 2,465,771 2,319,754 -------- ---------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 14,884 1,835,776 2,912,847 4,504,850 NET ASSETS: Beginning of year 163,224 3,820,368 4,294,531 6,098,146 -------- ---------- ---------- ----------- End of year $178,108 $5,656,144 $7,207,378 $10,602,996 ======== ========== ========== =========== For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 5,142 $ 5,869 $ 154,330 $ 117,989 + Net realized gain (loss) on investments 577 (74,987) 32,404 29,227 Capital gain distributions from mutual funds -- -- -- 115,525 + Net change in unrealized appreciation (depreciation) of investments (4,265) 800,092 288,914 1,118,953 -------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from operations 1,454 730,974 475,648 1,381,694 -------- ---------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 2,634 891,596 725,583 1,247,148 Net transfers from (to) other Divisions or fixed rate option 60,630 811,551 1,395,290 1,224,911 Internal rollovers -- -- -- -- Cost of insurance and other charges (19,519) (424,419) (476,367) (560,979) Administrative charges -- (40,176) (34,883) (60,804) Policy loans -- (45,305) (12,655) (209,742) Terminations and withdrawals (18,177) (209,486) (16,354) (177,062) -------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions 25,568 983,761 1,580,614 1,463,472 -------- ---------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 27,022 1,714,735 2,056,262 2,845,166 NET ASSETS: Beginning of year 136,202 2,105,633 2,238,269 3,252,980 -------- ---------- ---------- ----------- End of year $163,224 $3,820,368 $4,294,531 $ 6,098,146 ======== ========== ========== ===========
+ Net investment income (loss) and capital gain distributions from mutual funds for the respective Divisions have been restated due to a misclassification of short-term capital gains in prior years. See Note H for further disclosure. See accompanying notes. VL-R-22 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS Note A - Organization Separate Account VL-R (the "Separate Account") was established by resolution of the Board of Directors of American General Life Insurance Company (the "Company") on May 6, 1997 to fund variable universal life insurance policies issued by the Company. The following products are included in the Separate Account: AG Legacy Plus, Corporate America, Legacy Plus, Platinum Investor I, Platinum Investor II, Platinum Investor III, Platinum Investor FlexDirector, Platinum Investor PLUS, Platinum Investor Survivor, Platinum Investor Survivor II and The One VUL Solution. Of the products listed, Legacy Plus, Platinum Investor I, Platinum Investor Survivor and The One VUL Solution are no longer offered for sale. The Company is an indirect, wholly-owned subsidiary of American International Group, Inc. The Separate Account is registered with the Securities and Exchange Commission as a unit investment trust pursuant to the provisions of the Investment Company Act of 1940, as amended. The Separate Account is divided into "Divisions", which invest in independently managed mutual fund portfolios ("Funds"). The Funds available to policy owners through the various Divisions are as follows: AIM Variable Insurance Funds ("AIM V.I."): AIM V.I. International Growth Fund - Series I AIM V.I. Premier Equity Fund - Series I The Alger American Fund: Alger American Leveraged AllCap Portfolio - Class O Shares Alger American MidCap Growth Portfolio - Class O Shares American Century Variable Portfolios, Inc. ("American Century VP"): American Century VP Value Fund - Class I Ayco Series Trust: Ayco Growth Fund (1) Credit Suisse Trust ("Credit Suisse"): Credit Suisse Small Cap Growth Portfolio Dreyfus Investment Portfolios ("Dreyfus IP"): Dreyfus IP MidCap Stock Portfolio - Initial shares Dreyfus Variable Investment Fund ("Dreyfus VIF"): Dreyfus VIF Developing Leaders Portfolio - Initial shares Dreyfus VIF Quality Bond Portfolio - Initial shares Fidelity(R) Variable Insurance Products ("Fidelity VIP"): Fidelity(R) VIP Asset Manager(SM) Portfolio - Service Class 2 Fidelity(R) VIP Contrafund(R) Portfolio - Service Class 2 Fidelity(R) VIP Equity-Income Portfolio - Service Class 2 Fidelity(R) VIP Growth Portfolio - Service Class 2 Fidelity(R) VIP Mid Cap Portfolio - Service Class 2 Franklin Templeton Variable Insurance Products Trust ("Franklin Templeton"): Franklin Templeton - Franklin Small Cap Fund - Class 2 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 Franklin Templeton - Franklin U.S. Government Fund - Class 2 Franklin Templeton - Mutual Shares Securities Fund - Class 2 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 Goldman Sachs Variable Insurance Trust: Goldman Sachs Capital Growth Fund (1) Janus Aspen Series: Janus Aspen Series International Growth Portfolio - Service Shares Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Janus Aspen Series Worldwide Growth Portfolio - Service Shares J.P. Morgan Series Trust II: JPMorgan Mid Cap Value Portfolio JPMorgan Small Company Portfolio MFS(R) Variable Insurance Trust(SM) ("MFS(R)VIT"): MFS(R) VIT Capital Opportunities Series - Initial Class MFS(R) VIT Emerging Growth Series - Initial Class MFS(R) VIT New Discovery Series - Initial Class MFS(R) VIT Research Series - Initial Class MFS(R) VIT Total Return Series - Initial Class Neuberger Berman Advisers Management Trust ("Neuberger Berman AMT"): Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Neuberger Berman AMT Partners Portfolio - Class I Oppenheimer Variable Account Funds: Oppenheimer Balanced Fund/VA - Non-Service Shares (2) Oppenheimer Global Securities Fund/VA - Non-Service Shares Oppenheimer High Income Fund/VA - Non-Service Shares PIMCO Variable Insurance Trust ("PIMCO VIT"): PIMCO VIT Real Return Portfolio - Administrative Class PIMCO VIT Short-Term Portfolio - Administrative Class PIMCO VIT Total Return Portfolio - Administrative Class Pioneer Variable Contracts Trust: Pioneer Fund VCT Portfolio - Class I (3) Pioneer Growth Opportunities VCT Portfolio - Class I (3) VL-R-23 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note A - Organization - Continued Putnam Variable Trust ("Putnam VT"): Putnam VT Diversified Income Fund - Class IB Putnam VT Growth and Income Fund - Class IB Putnam VT International Growth and Income Fund - Class IB Putnam VT Small Cap Value Fund - Class IB Putnam VT Vista Fund - Class IB Putnam VT Voyager Fund - Class IB Safeco Resource Series Trust ("Safeco RST"): Safeco RST Core Equity Portfolio (3) Safeco RST Growth Opportunities Portfolio (3) Scudder Investments VIT Funds: Scudder International Portfolio (4) Scudder VIT EAFE(R) Equity Index Fund - Class A Scudder VIT Equity 500 Index Fund - Class A SunAmerica Series Trust ("SunAmerica"): SunAmerica - Aggressive Growth Portfolio - Class 1 SunAmerica - SunAmerica Balanced Portfolio - Class 1 The Universal Institutional Funds, Inc. ("UIF"): UIF Equity Growth Portfolio - Class I UIF High Yield Portfolio - Class I VALIC Company I: VALIC Company I - International Equities Fund VALIC Company I - Mid Cap Index Fund VALIC Company I - Money Market I Fund VALIC Company I - Nasdaq-100(R) Index Fund VALIC Company I - Science & Technology Fund VALIC Company I - Small Cap Index Fund VALIC Company I - Stock Index Fund Van Kampen Life Investment Trust ("Van Kampen LIT"): Van Kampen LIT Emerging Growth Portfolio - Class I Van Kampen LIT Government Portfolio - Class I Van Kampen LIT Growth and Income Portfolio - Class I Vanguard(R) Variable Insurance Fund ("Vanguard VIF"): Vanguard(R) VIF High Yield Bond Portfolio Vanguard(R) VIF REIT Index Portfolio (1) Effective December 19, 2003, Ayco Growth Fund (which was not available for new investments as of May 1, 2003) was reorganized into Goldman Sachs Capital Growth Fund. Goldman Sachs Capital Growth Fund is not available for new investments. (2) Effective May 1, 2004, Oppenheimer Multiple Strategies Fund/VA changed its name to Oppenheimer Balanced Fund/VA. (3) Effective December 10, 2004, Safeco RST Core Equity Portfolio and Safeco RST Growth Opportunities Portfolio were reorganized into Pioneer Fund VCT Portfolio - Class I and Pioneer Growth Opportunities VCT Portfolio - Class I, respectively. Policy owners invested in either of the Pioneer portfolios on December 10, 2004 are the only ones who may continue to use these portfolios. (4) Scudder International Portfolio is no longer an investment option. AIG SunAmerica Asset Management Corp., an affiliate of the Company, serves as the investment advisor to SunAmerica Series Trust. The Variable Annuity Life Insurance Company, an affiliate of the Company, serves as the investment advisor to VALIC Company I. In addition to the Divisions above, policy owners may allocate funds to a fixed account that is part of the Company's general account. Policy owners should refer to the prospectus and prospectus supplements for a complete description of the available Funds and the fixed account. The assets of the Separate Account are segregated from the Company's other assets. The operations of the Separate Account are part of the Company. Net premiums from the policies are allocated to the Divisions and invested in the Funds in accordance with policy owner instructions. The premiums are recorded as principal transactions in the Statement of Changes in Net Assets. VL-R-24 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note B - Summary of Significant Accounting Policies and Basis of Presentation The accompanying financial statements of the Separate Account have been prepared on the basis of accounting principles generally accepted in the United States of America ("GAAP"). The accounting principles followed by the Separate Account and the methods of applying those principles are presented below. Use of estimates - The preparation of financial statements in conformity with 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 year. Actual results could differ from those estimates. Security valuation - The investments in shares of the Funds are stated at the net asset value of the respective portfolio as determined by the fund, which value their securities at fair value. Security transactions and related investment income - Security transactions which represent purchases and sales of investments are accounted for on the trade date at fair value. Realized gains and losses from security transactions are determined on the basis of first-in first-out. Dividend income and distributions of capital gains are recorded on the ex-dividend date and reinvested upon receipt. Policy loans - When a policy loan is made, the loan amount is transferred to the Company from the policy owner's selected investment Division(s), and held as collateral. Interest on this collateral amount is credited to the policy. Loan repayments are invested in the policy owner's selected investment Division(s), after they are first used to repay all loans taken from the declared fixed interest account option. 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. Accumulation unit - This is a measuring unit used to calculate the policy owner's interest. Such units are valued daily to reflect investment performance and the prorated daily deduction for mortality and expense risk charges. Note C - Policy Charges Deductions from premium payments - Certain jurisdictions require that a deduction be made from each premium payment for premium taxes. The amount of such deduction currently ranges from 0% to 3.5%. For Corporate America policies, the Company deducts from each premium payment a charge to cover costs associated with the issuance of the policy, administrative services the Company performs and a premium tax that is applicable to the Company in the state or other jurisdiction of the policy owner. The amount the Company deducts in policy year 1 through 7 is 9% up to the "target premium" and 5% on any premium amounts in excess of the target premium. The amount the Company deducts in year 8 and thereafter is 5% of all premium payments. The target premium is an amount of premium that is approximately equal to the seven-pay premium, which is the maximum amount of premium that may be paid without the policy becoming a modified endowment contract. For other policies offered through the Separate Account (except for Corporate America, AG Legacy Plus, and Legacy Plus), the following premium expense charge may be deducted from each after-tax premium payment, prior to allocation to the Separate Account. VL-R-25 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note C - Policy Charges - Continued - -------------------------------------------------------------------------------- Current Policies Premium Expense - -------------------------------------------------------------------------------- Platinum Investor I and II 2.50% - -------------------------------------------------------------------------------- Platinum Investor III 5.00% - -------------------------------------------------------------------------------- Platinum Investor FlexDirector 5.00% - -------------------------------------------------------------------------------- Platinum Investor PLUS 5.00% - -------------------------------------------------------------------------------- Platinum Investor Survivor 6.50% - -------------------------------------------------------------------------------- Platinum Investor Survivor II 5.00% - -------------------------------------------------------------------------------- Separate Account charges - Currently, charges are assessed through the daily unit value calculation at the following annual rates from the daily net asset value of the Divisions and 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. A summary of these charges by policy follows:
- ------------------------------------------------------------------------------------------------------------------------------ Expense Risk First Reduction in After Second Reduction Current Annual Mortality and Policy in Mortality and After Policy Policies Rate Expense Risk Rate Year Expense Risk Rate Year - ------------------------------------------------------------------------------------------------------------------------------ AG Legacy Plus 0.75% 0.10% 10 0.25% 20 - ------------------------------------------------------------------------------------------------------------------------------ Corporate America 0.35% 0.10% 10 0.10% 20 - ------------------------------------------------------------------------------------------------------------------------------ Corporate America (reduced surrender charge) 0.65% 0.25% 10 0.25% 20 - ------------------------------------------------------------------------------------------------------------------------------ Legacy Plus 0.75% 0.25% 10 0.25% 20 - ------------------------------------------------------------------------------------------------------------------------------ Platinum Investor I and II 0.75% 0.25% 10 0.25% 20 - ------------------------------------------------------------------------------------------------------------------------------ Platinum Investor III 0.70% 0.25% 10 0.35% 20 - ------------------------------------------------------------------------------------------------------------------------------ Platinum Investor FlexDirector 0.70% 0.25% 10 0.35% 20 - ------------------------------------------------------------------------------------------------------------------------------ Platinum Investor PLUS 0.70% 0.25% 10 0.35% 20 - ------------------------------------------------------------------------------------------------------------------------------ Platinum Investor Survivor 0.40% 0.20% 10 0.10% 30 - ------------------------------------------------------------------------------------------------------------------------------ Platinum Investor Survivor II 0.75% 0.25% 15 0.35% 30 - ------------------------------------------------------------------------------------------------------------------------------
Other charges paid to the Company by redemption of units outstanding include the deductions for the maintenance charges, cost of insurance, additional benefit riders, transfer fees and surrender charges. Monthly maintenance charges are paid to the Company for the cost of administrative services we provide under current policies. 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. Monthly charges are deducted, if the policy owner selects additional benefit riders for certain policies. The charges for any rider selected will vary by policy within a range based on either the personal characteristics of the insured person or the specific coverage chosen under the rider. The Company reserves the right to charge a $25 transfer fee for each transfer in excess of 12 during the policy year. Transfer requests are subject to the Company's published rules concerning market timing. A policy owner who violates these rules will for a period of time (typically six months), have certain restrictions placed on transfers. A surrender charge may be applicable to certain withdrawal amounts and is payable to the Company. The amount of the surrender charge depends on the age and other insurance characteristics of the insured person. For partial surrender, the Company may charge a maximum transaction fee per policy equal to the lesser of 2% of the amount withdrawn or $25. Currently, a $10 transaction fee per policy is charged for each partial surrender. A loan may be requested against the policy while the policy has a net cash surrender value. The daily interest charge on the loan is paid to the Company for the expenses of administering and providing policy loans. The interest charge is collected through any loan repayment from the policyholder. VL-R-26 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note D - Security Purchases and Sales For the year ended December 31, 2004, the aggregate cost of purchases and proceeds from the sales of investments were:
Cost of Proceeds from Divisions Purchases Sales - ---------------------------------------------------------------------------------------------------- AIM V.I. International Growth Fund - Series I $2,634,667 $ 813,389 AIM V.I. Premier Equity Fund - Series I 2,035,612 1,508,801 Alger American Leveraged AllCap Portfolio - Class O Shares 298,449 26,942 Alger American MidCap Growth Portfolio - Class O Shares 691,971 108,094 American Century VP Value Fund - Class I 4,455,830 1,107,575 Credit Suisse Small Cap Growth Portfolio 706,678 246,708 Dreyfus IP MidCap Stock Portfolio - Initial shares 1,111,169 489,261 Dreyfus VIF Developing Leaders Portfolio - Initial shares 1,840,998 1,250,277 Dreyfus VIF Quality Bond Portfolio - Initial shares 1,623,010 1,228,899 Fidelity VIP Asset Manager Portfolio - Service Class 2 1,625,144 641,906 Fidelity VIP Contrafund Portfolio - Service Class 2 5,830,439 521,071 Fidelity VIP Equity-Income Portfolio - Service Class 2 5,219,416 696,594 Fidelity VIP Growth Portfolio - Service Class 2 3,208,948 865,955 Fidelity VIP Mid Cap Portfolio - Service Class 2 696,689 76,413 Franklin Templeton - Franklin Small Cap Fund - Class 2 19,536 13,555 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 883,850 133,962 Franklin Templeton - Franklin U.S. Government Fund - Class 2 1,065,403 1,153,664 Franklin Templeton - Mutual Shares Securities Fund - Class 2 1,414,833 467,467 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 3,722,235 540,662 Goldman Sachs Capital Growth Fund 61,644 540,976 Janus Aspen Series International Growth Portfolio - Service Shares 1,182,099 511,277 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 801,586 669,511 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 1,141,735 672,979 JPMorgan Mid Cap Value Portfolio 353,074 31,002 JPMorgan Small Company Portfolio 769,964 113,927 MFS VIT Capital Opportunities Series - Initial Class 881,644 401,891 MFS VIT Emerging Growth Series - Initial Class 3,401,976 1,286,127 MFS VIT New Discovery Series - Initial Class 1,105,456 981,207 MFS VIT Research Series - Initial Class 382,111 104,691 MFS VIT Total Return Series - Initial Class 150,567 68,320 Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I 911,226 339,828 Neuberger Berman AMT Partners Portfolio - Class I 9,056 9,699 Oppenheimer Balanced Fund/VA - Non-Service Shares 517,818 25,746 Oppenheimer Global Securities Fund/VA - Non-Service Shares 823,115 62,606 Oppenheimer High Income Fund/VA - Non-Service Shares 30,914 4,639 PIMCO VIT Real Return Portfolio - Administrative Class 5,330,556 1,290,105 PIMCO VIT Short-Term Portfolio - Administrative Class 2,288,700 776,693 PIMCO VIT Total Return Portfolio - Administrative Class 3,287,456 2,302,628 Pioneer Fund VCT Portfolio - Class I 3,311,359 39,616 Pioneer Growth Opportunities VCT Portfolio - Class I 5,571,057 95,506 Putnam VT Diversified Income Fund - Class IB 2,363,801 708,895 Putnam VT Growth and Income Fund - Class IB 3,450,439 1,354,071 Putnam VT International Growth and Income Fund - Class IB 650,245 1,117,844 Putnam VT Small Cap Value Fund - Class IB 19,928 31,783 Putnam VT Vista Fund - Class IB 4,839 6,963 Putnam VT Voyager Fund - Class IB 90,138 40,837 Safeco RST Core Equity Portfolio 314,509 3,600,917 Safeco RST Growth Opportunities Portfolio 430,020 6,369,626 Scudder VIT Equity 500 Index Fund - Class A 3,501 1,760 SunAmerica - Aggressive Growth Portfolio - Class 1 237,636 33,073
VL-R-27 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note D - Security Purchases and Sales - Continued For the year ended December 31, 2004, the aggregate cost of purchases and proceeds from the sales of investments were:
Cost of Proceeds from Divisions Purchases Sales - ---------------------------------------------------------------------------------------------------- SunAmerica - SunAmerica Balanced Portfolio - Class 1 $ 380,119 $ 40,223 UIF Equity Growth Portfolio - Class I 524,983 827,809 UIF High Yield Portfolio - Class I 442,261 567,777 VALIC Company I - International Equities Fund 556,905 761,026 VALIC Company I - Mid Cap Index Fund 2,871,211 2,562,294 VALIC Company I - Money Market I Fund 28,173,647 30,304,391 VALIC Company I - Nasdaq-100 Index Fund 860,844 444,573 VALIC Company I - Science & Technology Fund 446,915 159,766 VALIC Company I - Small Cap Index Fund 1,488,481 861,311 VALIC Company I - Stock Index Fund 9,103,972 16,487,890 Van Kampen LIT Emerging Growth Portfolio - Class I 6,283 12,386 Van Kampen LIT Government Portfolio - Class I 43,123 27,021 Van Kampen LIT Growth and Income Portfolio - Class I 1,792,353 597,128 Vanguard VIF High Yield Bond Portfolio 5,442,603 2,693,793 Vanguard VIF REIT Index Portfolio 3,702,224 1,101,275
VL-R-28 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note E - Investments The following is a summary of fund shares owned as of December 31, 2004.
Net Asset Value of Shares Cost of Shares Divisions Shares Value at Fair Value Held - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. International Growth Fund - Series I 382,557 $19.77 $ 7,563,147 $ 6,020,580 AIM V.I. Premier Equity Fund - Series I 617,477 21.30 13,152,254 13,501,940 Alger American Leveraged AllCap Portfolio - Class O Shares 17,944 30.39 545,330 503,216 Alger American MidCap Growth Portfolio - Class O Shares 47,751 20.80 993,231 870,180 American Century VP Value Fund - Class I 1,654,245 8.75 14,474,643 11,589,658 Credit Suisse Small Cap Growth Portfolio 123,778 15.30 1,893,798 1,578,705 Dreyfus IP MidCap Stock Portfolio - Initial shares 218,318 17.62 3,846,771 3,104,155 Dreyfus VIF Developing Leaders Portfolio - Initial shares 286,886 41.55 11,920,104 9,889,476 Dreyfus VIF Quality Bond Portfolio - Initial shares 706,846 11.41 8,065,115 8,120,836 Fidelity VIP Asset Manager Portfolio - Service Class 2 330,635 14.64 4,840,496 4,432,425 Fidelity VIP Contrafund Portfolio - Service Class 2 630,762 26.35 16,620,579 13,220,459 Fidelity VIP Equity-Income Portfolio - Service Class 2 690,561 25.09 17,326,174 14,460,889 Fidelity VIP Growth Portfolio - Service Class 2 363,166 31.64 11,490,581 10,365,912 Fidelity VIP Mid Cap Portfolio - Service Class 2 37,443 29.88 1,118,796 932,381 Franklin Templeton - Franklin Small Cap Fund - Class 2 8,100 19.43 157,374 134,468 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 75,094 15.65 1,175,221 988,696 Franklin Templeton - Franklin U.S. Government Fund - Class 2 893,681 12.84 11,474,861 11,704,592 Franklin Templeton - Mutual Shares Securities Fund - Class 2 464,219 16.64 7,724,611 5,866,910 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 785,115 14.35 11,266,401 8,327,486 Goldman Sachs Capital Growth Fund 836,872 10.39 8,695,097 7,855,320 Janus Aspen Series International Growth Portfolio - Service Shares 121,786 26.94 3,280,905 2,577,675 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 104,254 25.36 2,643,890 1,958,672 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 150,979 26.62 4,019,074 3,541,737 JPMorgan Mid Cap Value Portfolio 19,662 25.92 509,644 438,487 JPMorgan Small Company Portfolio 99,840 17.88 1,785,141 1,370,351 MFS VIT Capital Opportunities Series - Initial Class 310,815 13.57 4,217,754 3,595,382 MFS VIT Emerging Growth Series - Initial Class 837,235 17.52 14,668,356 13,624,093 MFS VIT New Discovery Series - Initial Class 232,199 14.87 3,452,798 2,944,070 MFS VIT Research Series - Initial Class 116,458 15.30 1,781,804 1,478,105 MFS VIT Total Return Series - Initial Class 42,601 21.43 912,933 782,409 Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I 157,487 17.83 2,808,001 2,303,479 Neuberger Berman AMT Partners Portfolio - Class I 7,513 18.32 137,641 109,927 Oppenheimer Balanced Fund/VA - Non-Service Shares 38,043 17.35 660,047 603,700 Oppenheimer Global Securities Fund/VA - Non-Service Shares 36,789 29.51 1,085,642 926,716 Oppenheimer High Income Fund/VA - Non-Service Shares 11,382 8.80 100,163 90,771 PIMCO VIT Real Return Portfolio - Administrative Class 1,009,418 12.92 13,041,675 12,365,825 PIMCO VIT Short-Term Portfolio - Administrative Class 594,980 10.08 5,997,396 6,003,174 PIMCO VIT Total Return Portfolio - Administrative Class 1,128,551 10.51 11,861,073 11,631,199 Pioneer Fund VCT Portfolio - Class I 162,632 20.57 3,345,341 3,272,244 Pioneer Growth Opportunities VCT Portfolio - Class I 236,867 23.78 5,632,694 5,476,527 Putnam VT Diversified Income Fund - Class IB 821,519 9.17 7,533,333 7,138,085 Putnam VT Growth and Income Fund - Class IB 710,834 25.44 18,083,616 15,640,091 Putnam VT International Growth and Income Fund - Class IB 406,026 13.51 5,485,413 3,890,006 Putnam VT Small Cap Value Fund - Class IB 21,810 22.79 497,050 316,861 Putnam VT Vista Fund - Class IB 6,775 12.43 84,210 69,025 Putnam VT Voyager Fund - Class IB 12,146 27.20 330,361 302,749 Scudder VIT Equity 500 Index Fund - Class A 1,481 12.73 18,849 17,598 SunAmerica - Aggressive Growth Portfolio - Class 1 50,559 10.19 515,184 425,156 SunAmerica - SunAmerica Balanced Portfolio - Class 1 52,455 14.00 734,164 678,535
VL-R-29 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note E - Investments The following is a summary of fund shares owned as of December 31, 2004.
Net Asset Value of Shares Cost of Shares Divisions Shares Value at Fair Value Held - ----------------------------------------------------------------------------------------------------------------------------------- UIF Equity Growth Portfolio - Class I 270,195 $13.75 $ 3,715,185 $ 3,593,545 UIF High Yield Portfolio - Class I 238,695 7.28 1,737,699 1,585,683 VALIC Company I - International Equities Fund 244,597 7.86 1,922,532 1,525,868 VALIC Company I - Mid Cap Index Fund 725,933 21.30 15,462,377 12,445,450 VALIC Company I - Money Market I Fund 34,546,134 1.00 34,546,134 34,546,134 VALIC Company I - Nasdaq-100 Index Fund 811,732 4.51 3,660,913 2,791,295 VALIC Company I - Science & Technology Fund 108,412 11.42 1,238,061 1,088,071 VALIC Company I - Small Cap Index Fund 307,978 16.04 4,939,968 3,804,437 VALIC Company I - Stock Index Fund 1,186,435 32.77 38,879,463 34,175,164 Van Kampen LIT Emerging Growth Portfolio - Class I 2,189 26.02 56,966 48,229 Van Kampen LIT Government Portfolio - Class I 18,787 9.48 178,102 179,552 Van Kampen LIT Growth and Income Portfolio - Class I 292,761 19.32 5,656,142 4,525,281 Vanguard VIF High Yield Bond Portfolio 799,045 9.02 7,207,387 6,804,057 Vanguard VIF REIT Index Portfolio 527,775 20.09 10,602,996 7,805,370
VL-R-30 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units Summary of Changes in Units for the year ended December 31, 2004.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ---------------------------------------------------------------------------------------------------------------------- AIM V.I. International Growth Fund - Series I AG Legacy Plus 8,359 (1,179) 7,180 Corporate America 600 (229) 371 Corporate America (reduced surrender charge) 680 (1) 679 Platinum Investor I & II 49,192 (55,963) (6,771) Platinum Investor III 211,190 (29,025) 182,165 Platinum Investor PLUS 7,344 (1,271) 6,073 Platinum Investor Survivor 27,183 (5,899) 21,284 Platinum Investor Survivor II 15,918 (218) 15,700 AIM V.I. Premier Equity Fund - Series I Corporate America 78 (236) (158) Platinum Investor I & II 146,834 (152,515) (5,681) Platinum Investor III 160,395 (94,147) 66,248 Platinum Investor FlexDirector 205 (1) 204 Platinum Investor PLUS 10,275 (2,475) 7,800 Platinum Investor Survivor 24,355 (17,775) 6,580 Platinum Investor Survivor II 4,256 (1,177) 3,079 Alger American Leveraged AllCap Portfolio - Class O Shares Platinum Investor I & II 141 (43) 98 Platinum Investor III 19,000 (4,298) 14,702 Platinum Investor PLUS 8,707 (879) 7,828 Platinum Investor Survivor 163 (151) 12 Platinum Investor Survivor II 37 (12) 25 Alger American MidCap Growth Portfolio - Class O Shares Platinum Investor I & II 9,145 (266) 8,879 Platinum Investor III 31,988 (6,373) 25,615 Platinum Investor FlexDirector 5,715 (28) 5,687 Platinum Investor PLUS 6,929 (1,158) 5,771 Platinum Investor Survivor -- (1,929) (1,929) Platinum Investor Survivor II 726 (139) 587 American Century VP Value Fund - Class I AG Legacy Plus 5,289 (1,997) 3,292 Corporate America -- (1,685) (1,685) Platinum Investor I & II 49,139 (27,229) 21,910 Platinum Investor III 221,222 (63,883) 157,339 Platinum Investor FlexDirector 34 (3) 31 Platinum Investor PLUS 26,107 (6,885) 19,222 Platinum Investor Survivor 12,134 (5,109) 7,025 Platinum Investor Survivor II 40,828 (7,494) 33,334 Credit Suisse Small Cap Growth Portfolio Platinum Investor I & II 27,987 (4,094) 23,893 Platinum Investor III 45,006 (19,750) 25,256 Platinum Investor FlexDirector 4,748 (25) 4,723 Platinum Investor PLUS 6,102 (1,515) 4,587 Platinum Investor Survivor 402 (2,133) (1,731) Platinum Investor Survivor II 697 (171) 526 Dreyfus IP MidCap Stock Portfolio - Initial shares Platinum Investor I & II 8,668 (8,177) 491 Platinum Investor III 75,184 (32,259) 42,925 Platinum Investor FlexDirector 3 (2) 1 Platinum Investor PLUS 8,283 (2,677) 5,606 Platinum Investor Survivor 3,020 (3,958) (938) Platinum Investor Survivor II 2,006 (717) 1,289
VL-R-31 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the year ended December 31, 2004.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ---------------------------------------------------------------------------------------------------------------------- Dreyfus VIF Developing Leaders Portfolio - Initial shares Corporate America 468 (1,604) (1,136) Platinum Investor I & II 54,050 (83,708) (29,658) Platinum Investor III 146,301 (78,420) 67,881 Platinum Investor PLUS 17,107 (4,983) 12,124 Platinum Investor Survivor 12,265 (7,038) 5,227 Platinum Investor Survivor II 20,505 (5,012) 15,493 Dreyfus VIF Quality Bond Portfolio - Initial shares Corporate America 24 (203) (179) Platinum Investor I & II 21,635 (62,172) (40,537) Platinum Investor III 91,238 (48,132) 43,106 Platinum Investor PLUS 10,901 (5,630) 5,271 Platinum Investor Survivor 6,629 (3,817) 2,812 Platinum Investor Survivor II 3,327 (1,063) 2,264 Fidelity VIP Asset Manager Portfolio - Service Class 2 AG Legacy Plus 7,329 (595) 6,734 Platinum Investor I & II 47,912 (38,617) 9,295 Platinum Investor III 95,379 (33,406) 61,973 Platinum Investor PLUS 13,302 (3,053) 10,249 Platinum Investor Survivor 1,454 (934) 520 Platinum Investor Survivor II 4,038 (1,253) 2,785 Fidelity VIP Contrafund Portfolio - Service Class 2 AG Legacy Plus 6,210 (1,554) 4,656 Corporate America 453 (1,743) (1,290) Platinum Investor I & II 128,641 (24,241) 104,400 Platinum Investor III 439,390 (111,853) 327,537 Platinum Investor FlexDirector 327 (6) 321 Platinum Investor PLUS 54,739 (11,102) 43,637 Platinum Investor Survivor 45,650 (6,646) 39,004 Platinum Investor Survivor II 24,415 (1,801) 22,614 Fidelity VIP Equity-Income Portfolio - Service Class 2 AG Legacy Plus 14,306 (3,762) 10,544 Corporate America 1,851 (1,696) 155 Corporate America (reduced surrender charge) 716 (2) 714 Platinum Investor I & II 92,724 (23,135) 69,589 Platinum Investor III 366,492 (107,400) 259,092 Platinum Investor FlexDirector 631 (11) 620 Platinum Investor PLUS 33,742 (8,632) 25,110 Platinum Investor Survivor 51,525 (9,991) 41,534 Platinum Investor Survivor II 21,676 (4,040) 17,636 Fidelity VIP Growth Portfolio - Service Class 2 AG Legacy Plus 4,814 (1,430) 3,384 Corporate America -- (112) (112) Corporate America (reduced surrender charge) 254 (1) 253 Platinum Investor I & II 73,632 (29,373) 44,259 Platinum Investor III 397,150 (163,927) 233,223 Platinum Investor FlexDirector 7,441 (37) 7,404 Platinum Investor PLUS 59,607 (12,115) 47,492 Platinum Investor Survivor 9,347 (17,977) (8,630) Platinum Investor Survivor II 9,417 (3,959) 5,458 Fidelity VIP Mid Cap Portfolio - Service Class 2 Platinum Investor I & II 3,529 (715) 2,814 Platinum Investor III 35,382 (4,501) 30,881
VL-R-32 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the year ended December 31, 2004.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ---------------------------------------------------------------------------------------------------------------------- Fidelity VIP Mid Cap Portfolio - Service Class 2 - Continued Platinum Investor FlexDirector 290 (2) 288 Platinum Investor PLUS 6,300 (1,038) 5,262 Platinum Investor Survivor 1,844 (28) 1,816 Platinum Investor Survivor II 399 (56) 343 Franklin Templeton - Franklin Small Cap Fund - Class 2 AG Legacy Plus 2,485 (1,391) 1,094 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 Corporate America (reduced surrender charge) 464 (1) 463 Platinum Investor I & II 12,041 (359) 11,682 Platinum Investor III 31,683 (4,692) 26,991 Platinum Investor FlexDirector 185 (10) 175 Platinum Investor PLUS 11,724 (1,567) 10,157 Platinum Investor Survivor 4,580 (301) 4,279 Platinum Investor Survivor II 437 (342) 95 Franklin Templeton - Franklin U.S. Government Fund - Class 2 Platinum Investor I & II 1,491 (14,608) (13,117) Platinum Investor III 29,741 (77,166) (47,425) Platinum Investor PLUS 10,411 (4,384) 6,027 Platinum Investor Survivor 338 (12) 326 Platinum Investor Survivor II 3,449 (2,022) 1,427 Franklin Templeton - Mutual Shares Securities Fund - Class 2 Platinum Investor I & II 38,458 (8,120) 30,338 Platinum Investor III 81,677 (40,862) 40,815 Platinum Investor FlexDirector 317 (5) 312 Platinum Investor PLUS 14,479 (3,887) 10,592 Platinum Investor Survivor 428 (1,103) (675) Platinum Investor Survivor II 4,287 (1,398) 2,889 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 AG Legacy Plus 6,490 (1,168) 5,322 Platinum Investor I & II 78,175 (8,968) 69,207 Platinum Investor III 211,466 (40,525) 170,941 Platinum Investor FlexDirector 441 (4) 437 Platinum Investor PLUS 12,149 (2,478) 9,671 Platinum Investor Survivor 16,008 (2,411) 13,597 Platinum Investor Survivor II 24,828 (2,596) 22,232 Goldman Sachs Capital Growth Fund Platinum Investor I & II -- (867) (867) Platinum Investor III -- (1,846) (1,846) Platinum Investor PLUS -- (2) (2) Platinum Investor Survivor -- (36,264) (36,264) Platinum Investor Survivor II -- (17,089) (17,089) Janus Aspen Series International Growth Portfolio - Service Shares Corporate America -- (30) (30) Platinum Investor I & II 42,750 (11,601) 31,149 Platinum Investor III 77,373 (32,460) 44,913 Platinum Investor FlexDirector 12,854 (70) 12,784 Platinum Investor PLUS 5,291 (1,325) 3,966 Platinum Investor Survivor 10,189 (13,854) (3,665) Platinum Investor Survivor II 866 (782) 84 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Corporate America -- (1,858) (1,858) Platinum Investor I & II 7,609 (7,789) (180)
VL-R-33 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the year ended December 31, 2004.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ---------------------------------------------------------------------------------------------- Janus Aspen Series Mid Cap Growth Portfolio - Service Shares - Continued Platinum Investor III 120,674 (95,407) 25,267 Platinum Investor PLUS 3,912 (1,441) 2,471 Platinum Investor Survivor 4,546 (7,662) (3,116) Platinum Investor Survivor II 958 (166) 792 Janus Aspen Series Worldwide Growth Portfolio - Service Shares Corporate America 591 (1,990) (1,399) Platinum Investor I & II 7,808 (11,429) (3,621) Platinum Investor III 114,343 (61,554) 52,789 Platinum Investor PLUS 6,624 (2,480) 4,144 Platinum Investor Survivor 7,099 (6,713) 386 Platinum Investor Survivor II 16,801 (3,939) 12,862 JPMorgan Mid Cap Value Portfolio Platinum Investor I & II 2,011 (74) 1,937 Platinum Investor III 20,807 (3,070) 17,737 Platinum Investor PLUS 4,946 (552) 4,394 Platinum Investor Survivor 245 (38) 207 Platinum Investor Survivor II 200 (74) 126 JPMorgan Small Company Portfolio Platinum Investor I & II 18,310 (2,141) 16,169 Platinum Investor III 55,923 (13,980) 41,943 Platinum Investor PLUS 5,376 (992) 4,384 Platinum Investor Survivor 1,248 (514) 734 Platinum Investor Survivor II 2,774 (97) 2,677 MFS VIT Capital Opportunities Series - Initial Class Corporate America -- (3,396) (3,396) Platinum Investor I & II 6,040 (15,921) (9,881) Platinum Investor III 136,038 (72,326) 63,712 Platinum Investor FlexDirector 173 -- 173 Platinum Investor PLUS 24,398 (4,467) 19,931 Platinum Investor Survivor 7,259 (12,843) (5,584) Platinum Investor Survivor II 1,246 (534) 712 MFS VIT Emerging Growth Series - Initial Class AG Legacy Plus 845 (942) (97) Corporate America -- (232) (232) Corporate America (reduced surrender charge) 922 (2) 920 Platinum Investor I & II 132,247 (133,405) (1,158) Platinum Investor III 441,801 (127,638) 314,163 Platinum Investor FlexDirector 207 (10) 197 Platinum Investor PLUS 23,594 (4,912) 18,682 Platinum Investor Survivor 64,099 (23,781) 40,318 Platinum Investor Survivor II 30,736 (607) 30,129 MFS VIT New Discovery Series - Initial Class AG Legacy Plus 5,396 (1,056) 4,340 Corporate America -- (1,449) (1,449) Platinum Investor I & II 41,557 (71,031) (29,474) Platinum Investor III 96,661 (39,991) 56,670 Platinum Investor FlexDirector 262 (6) 256 Platinum Investor PLUS 11,611 (2,679) 8,932 Platinum Investor Survivor 4,788 (7,198) (2,410) Platinum Investor Survivor II 1,002 (12,978) (11,976) MFS VIT Research Series - Initial Class Corporate America -- (39) (39)
VL-R-34 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the year ended December 31, 2004.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ---------------------------------------------------------------------------------------------- MFS VIT Research Series - Initial Class - Continued Platinum Investor I & II 9,479 (6,756) 2,723 Platinum Investor III 60,663 (29,059) 31,604 Platinum Investor FlexDirector 106 -- 106 Platinum Investor PLUS 3,785 (963) 2,822 Platinum Investor Survivor 2,449 (2,900) (451) Platinum Investor Survivor II 2,114 (630) 1,484 MFS VIT Total Return Series - Initial Class AG Legacy Plus 24,630 (11,595) 13,035 Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Corporate America 788 -- 788 Corporate America (reduced surrender charge) 233 -- 233 Platinum Investor I & II 16,311 (7,773) 8,538 Platinum Investor III 90,413 (48,788) 41,625 Platinum Investor FlexDirector 166 -- 166 Platinum Investor PLUS 23,788 (4,275) 19,513 Platinum Investor Survivor 20,342 (6,966) 13,376 Platinum Investor Survivor II 3,008 (1,449) 1,559 Neuberger Berman AMT Partners Portfolio - Class I AG Legacy Plus 867 (870) (3) Oppenheimer Balanced Fund/VA - Non-Service Shares Platinum Investor I & II 2,533 (140) 2,393 Platinum Investor III 27,006 (2,991) 24,015 Platinum Investor PLUS 14,666 (718) 13,948 Platinum Investor Survivor -- -- -- Platinum Investor Survivor II 802 (129) 673 Oppenheimer Global Securities Fund/VA - Non-Service Shares Platinum Investor I & II 2,120 (3) 2,117 Platinum Investor III 49,013 (5,649) 43,364 Platinum Investor FlexDirector 4 (2) 2 Platinum Investor PLUS 6,285 (926) 5,359 Platinum Investor Survivor 1,214 (110) 1,104 Platinum Investor Survivor II 328 (266) 62 Oppenheimer High Income Fund/VA - Non-Service Shares AG Legacy Plus 2,267 (440) 1,827 PIMCO VIT Real Return Portfolio - Administrative Class AG Legacy Plus 4,782 (3,606) 1,176 Corporate America -- (88) (88) Corporate America (reduced surrender charge) 754 (1) 753 Platinum Investor I & II 22,076 (17,998) 4,078 Platinum Investor III 298,192 (93,486) 204,706 Platinum Investor FlexDirector 305 (7) 298 Platinum Investor PLUS 18,544 (7,623) 10,921 Platinum Investor Survivor 14,284 (4,508) 9,776 Platinum Investor Survivor II 27,071 (3,206) 23,865 PIMCO VIT Short-Term Portfolio - Administrative Class Corporate America 9,348 (3,303) 6,045 Platinum Investor I & II 46,142 (24,793) 21,349 Platinum Investor III 99,222 (24,830) 74,392 Platinum Investor FlexDirector 4,080 (21) 4,059 Platinum Investor PLUS 10,935 (1,838) 9,097 Platinum Investor Survivor 20,906 (3,262) 17,644 Platinum Investor Survivor II 3,316 (2,712) 604
VL-R-35 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the year ended December 31, 2004.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ---------------------------------------------------------------------------------------------- PIMCO VIT Total Return Portfolio - Administrative Class AG Legacy Plus 5,160 (2,003) 3,157 Corporate America 2,167 (132) 2,035 Platinum Investor I & II 24,815 (34,860) (10,045) Platinum Investor III 132,133 (100,920) 31,213 Platinum Investor FlexDirector 6,336 (41) 6,295 Platinum Investor PLUS 30,649 (8,015) 22,634 Platinum Investor Survivor 2,284 (6,870) (4,586) Platinum Investor Survivor II 9,997 (4,158) 5,839 Pioneer Fund VCT Portfolio - Class I Platinum Investor I & II 246,612 (4,263) 242,349 Platinum Investor III 55,941 (498) 55,443 Platinum Investor PLUS 1,005 (7) 998 Platinum Investor Survivor 28,357 (185) 28,172 Platinum Investor Survivor II 392 (4) 388 Pioneer Growth Opportunities VCT Portfolio - Class I Corporate America 3,482 (8) 3,474 Platinum Investor I & II 354,695 (6,863) 347,832 Platinum Investor III 139,194 (1,261) 137,933 Platinum Investor PLUS 5,023 (44) 4,979 Platinum Investor Survivor 14,562 (243) 14,319 Platinum Investor Survivor II 39,332 (6) 39,326 Putnam VT Diversified Income Fund - Class IB AG Legacy Plus 4,542 (434) 4,108 Corporate America 105,949 (4,451) 101,498 Platinum Investor I & II 5,981 (35,410) (29,429) Platinum Investor III 18,349 (13,628) 4,721 Platinum Investor FlexDirector 65 -- 65 Platinum Investor PLUS 3,002 (1,082) 1,920 Platinum Investor Survivor 270 (3,345) (3,075) Platinum Investor Survivor II 1,417 (202) 1,215 Putnam VT Growth and Income Fund - Class IB Corporate America 134,475 (6,520) 127,955 Platinum Investor I & II 56,218 (73,889) (17,671) Platinum Investor III 146,421 (89,431) 56,990 Platinum Investor FlexDirector 9,193 (45) 9,148 Platinum Investor PLUS 18,714 (5,059) 13,655 Platinum Investor Survivor 15,931 (20,215) (4,284) Platinum Investor Survivor II 1,590 (1,201) 389 Putnam VT International Growth and Income Fund - Class IB Corporate America 960 (1) 959 Platinum Investor I & II 22,238 (57,145) (34,907) Platinum Investor III 40,988 (48,322) (7,334) Platinum Investor FlexDirector 114 (2) 112 Platinum Investor PLUS 5,982 (1,774) 4,208 Platinum Investor Survivor 5,195 (10,780) (5,585) Platinum Investor Survivor II 1,346 (6,192) (4,846) Putnam VT Small Cap Value Fund - Class IB AG Legacy Plus 712 (1,359) (647) Putnam VT Vista Fund - Class IB AG Legacy Plus 386 (713) (327) Putnam VT Voyager Fund - Class IB AG Legacy Plus 12,280 (3,201) 9,079
VL-R-36 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the year ended December 31, 2004.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------------------------- Safeco RST Core Equity Portfolio Platinum Investor I & II 29,337 (305,514) (276,177) Platinum Investor III 16,668 (80,604) (63,936) Platinum Investor PLUS 203 (1,041) (838) Platinum Investor Survivor 6,952 (39,189) (32,237) Platinum Investor Survivor II 274 (461) (187) Safeco RST Growth Opportunities Portfolio Corporate America 31 (3,402) (3,371) Platinum Investor I & II 33,254 (429,745) (396,491) Platinum Investor III 31,627 (152,584) (120,957) Platinum Investor PLUS 1,137 (4,704) (3,567) Platinum Investor Survivor 2,113 (19,131) (17,018) Platinum Investor Survivor II 11,326 (34,569) (23,243) Scudder VIT Equity 500 Index Fund - Class A Legacy Plus 419 (232) 187 SunAmerica - Aggressive Growth Portfolio - Class 1 Platinum Investor I & II 337 (643) (306) Platinum Investor III 19,952 (5,233) 14,719 Platinum Investor PLUS 5,224 (1,000) 4,224 Platinum Investor Survivor 1,065 (46) 1,019 Platinum Investor Survivor II 189 (70) 119 SunAmerica - SunAmerica Balanced Portfolio - Class 1 Platinum Investor I & II 223 (171) 52 Platinum Investor III 34,706 (10,404) 24,302 Platinum Investor PLUS 9,680 (2,392) 7,288 Platinum Investor Survivor II 1,009 (166) 843 UIF Equity Growth Portfolio - Class I Platinum Investor I & II 56,887 (94,152) (37,265) Platinum Investor III 27,185 (14,533) 12,652 Platinum Investor PLUS 2,823 (643) 2,180 Platinum Investor Survivor 4,070 (10,690) (6,620) Platinum Investor Survivor II 99 (21) 78 UIF High Yield Portfolio - Class I Platinum Investor I & II 10,395 (42,991) (32,596) Platinum Investor FlexDirector 1,743 (8) 1,735 Platinum Investor III 13,057 (5,364) 7,693 Platinum Investor PLUS 2,069 (307) 1,762 Platinum Investor Survivor 3,093 (3,719) (626) Platinum Investor Survivor II 1,483 (932) 551 VALIC Company I - International Equities Fund AG Legacy Plus 6,548 (804) 5,744 Platinum Investor I & II 15,764 (67,617) (51,853) Platinum Investor III 31,840 (12,819) 19,021 Platinum Investor FlexDirector 359 (10) 349 Platinum Investor PLUS 5,046 (738) 4,308 Platinum Investor Survivor 3,192 (1,798) 1,394 Platinum Investor Survivor II 1,290 (330) 960 VALIC Company I - Mid Cap Index Fund AG Legacy Plus 5,627 (931) 4,696 Corporate America 48 (1,030) (982) Corporate America (reduced surrender charge) 705 (1) 704 Platinum Investor I & II 40,325 (118,088) (77,763) Platinum Investor III 131,262 (55,612) 75,650
VL-R-37 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the year ended December 31, 2004.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------------------------- VALIC Company I - Mid Cap Index Fund - Continued Platinum Investor PLUS 26,921 (4,209) 22,712 Platinum Investor Survivor 11,171 (8,306) 2,865 Platinum Investor Survivor II 16,206 (3,972) 12,234 VALIC Company I - Money Market I Fund AG Legacy Plus 100,017 (102,487) (2,470) Corporate America 64,846 (63,733) 1,113 Corporate America (reduced surrender charge) 32,328 (5,241) 27,087 Legacy Plus 190 (107) 83 Platinum Investor I & II 278,917 (518,582) (239,665) Platinum Investor III 1,940,255 (1,875,974) 64,281 Platinum Investor FlexDirector 62,864 (57,978) 4,886 Platinum Investor PLUS 448,303 (438,160) 10,143 Platinum Investor Survivor 63,233 (87,075) (23,842) Platinum Investor Survivor II 162,859 (184,079) (21,220) VALIC Company I - Nasdaq-100 Index Fund Platinum Investor I & II 33,616 (13,320) 20,296 Platinum Investor III 105,366 (83,209) 22,157 Platinum Investor FlexDirector 51 (3) 48 Platinum Investor PLUS 7,518 (1,658) 5,860 Platinum Investor Survivor 12,152 (2,977) 9,175 Platinum Investor Survivor II 11,245 (74) 11,171 VALIC Company I - Science & Technology Fund Platinum Investor I & II 60,602 (17,466) 43,136 Platinum Investor III 58,249 (29,890) 28,359 Platinum Investor FlexDirector 55 (4) 51 Platinum Investor PLUS 2,112 (1,007) 1,105 Platinum Investor Survivor 4,225 (1,398) 2,827 Platinum Investor Survivor II 572 (193) 379 VALIC Company I - Small Cap Index Fund Corporate America -- (507) (507) Platinum Investor I & II 8,079 (32,964) (24,885) Platinum Investor III 86,323 (21,958) 64,365 Platinum Investor FlexDirector 34 (2) 32 Platinum Investor PLUS 18,047 (2,261) 15,786 Platinum Investor Survivor 2,854 (8,362) (5,508) Platinum Investor Survivor II 1,893 (499) 1,394 VALIC Company I - Stock Index Fund AG Legacy Plus 33,622 (3,730) 29,892 Corporate America 78 (354) (276) Platinum Investor I & II 189,803 (383,612) (193,809) Platinum Investor III 539,017 (1,016,672) (477,655) Platinum Investor FlexDirector 87 -- 87 Platinum Investor PLUS 27,769 (6,712) 21,057 Platinum Investor Survivor 45,262 (293,260) (247,998) Platinum Investor Survivor II 54,155 (185,824) (131,669) Van Kampen LIT Emerging Growth Portfolio - Class I AG Legacy Plus 1,652 (2,943) (1,291) Van Kampen LIT Government Portfolio - Class I AG Legacy Plus 2,796 (2,071) 725 Van Kampen LIT Growth and Income Portfolio - Class I Platinum Investor I & II 38,086 (24,886) 13,200 Platinum Investor III 119,619 (32,697) 86,922
VL-R-38 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the year ended December 31, 2004.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------------------------- Van Kampen LIT Growth and Income Portfolio - Class I - Continued Platinum Investor FlexDirector 34 (2) 32 Platinum Investor PLUS 9,642 (3,075) 6,567 Platinum Investor Survivor 7,296 (5,764) 1,532 Platinum Investor Survivor II 2,936 (1,055) 1,881 Vanguard VIF High Yield Bond Portfolio Platinum Investor I & II 36,007 (9,450) 26,557 Platinum Investor III 161,594 (34,787) 126,807 Platinum Investor FlexDirector 34 (2) 32 Platinum Investor PLUS 16,258 (3,487) 12,771 Platinum Investor Survivor 22,712 (7,868) 14,844 Platinum Investor Survivor II 21,213 (909) 20,304 Vanguard VIF REIT Index Portfolio Corporate America -- (3,135) (3,135) Platinum Investor I & II 28,989 (8,935) 20,054 Platinum Investor III 98,189 (34,459) 63,730 Platinum Investor FlexDirector 3,872 (23) 3,849 Platinum Investor PLUS 31,592 (5,804) 25,788 Platinum Investor Survivor 11,750 (2,148) 9,602 Platinum Investor Survivor II 15,521 (1,475) 14,046
VL-R-39 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the year ended December 31, 2003.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ---------------------------------------------------------------------------------------------------------- AIM V.I. International Growth Fund - Series I AG Legacy Plus 6,274 (11,281) (5,007) Corporate America 1,186 (256) 930 Platinum Investor I & II 76,995 (116,962) (39,967) Platinum Investor III 65,980 (22,903) 43,077 Platinum Investor PLUS 3,953 (620) 3,333 Platinum Investor Survivor 8,299 (11,973) (3,674) Platinum Investor Survivor II 135 (308) (173) AIM V.I. Premier Equity Fund - Series I Corporate America 85 (228) (143) Legacy Plus -- (1) (1) Platinum Investor I & II 173,672 (274,866) (101,194) Platinum Investor III 183,281 (97,216) 86,065 Platinum Investor PLUS 8,508 (1,310) 7,198 Platinum Investor Survivor 37,635 (33,390) 4,245 Platinum Investor Survivor II 1,853 (1,142) 711 Alger American Leveraged AllCap Portfolio - Class O Shares Platinum Investor III 18,270 (263) 18,007 Platinum Investor PLUS 1,275 (69) 1,206 Platinum Investor Survivor 190 (52) 138 Platinum Investor Survivor II 104 (1) 103 Alger American MidCap Growth Portfolio - Class O Shares Platinum Investor III 19,295 (510) 18,785 Platinum Investor PLUS 1,063 (78) 985 Platinum Investor Survivor 2,294 (120) 2,174 Platinum Investor Survivor II 355 (12) 343 American Century VP Value Fund - Class I AG Legacy Plus 4,709 (6,085) (1,376) Corporate America 703 (1,159) (456) Platinum Investor I & II 90,261 (59,760) 30,501 Platinum Investor III 209,686 (61,824) 147,862 Platinum Investor PLUS 19,264 (3,542) 15,722 Platinum Investor Survivor 18,947 (6,047) 12,900 Platinum Investor Survivor II 31,849 (7,441) 24,408 Ayco Growth Fund Platinum Investor I & II 151 (29,217) (29,066) Platinum Investor III 5,914 (36,062) (30,148) Platinum Investor PLUS 26 (27) (1) Platinum Investor Survivor -- (789,598) (789,598) Platinum Investor Survivor II -- (222,735) (222,735) Credit Suisse Small Cap Growth Portfolio Platinum Investor I & II 18,634 (7,048) 11,586 Platinum Investor III 77,055 (13,952) 63,103 Platinum Investor PLUS 3,551 (585) 2,966 Platinum Investor Survivor 2,739 (1,575) 1,164 Platinum Investor Survivor II 721 (96) 625 Dreyfus IP MidCap Stock Portfolio - Initial shares Platinum Investor I & II 16,562 (6,547) 10,015 Platinum Investor III 71,478 (31,070) 40,408 Platinum Investor PLUS 9,409 (1,374) 8,035 Platinum Investor Survivor 2,359 (4,035) (1,676) Platinum Investor Survivor II 3,173 (634) 2,539
VL-R-40 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the Year Ended December 31, 2003.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ---------------------------------------------------------------------------------------------------------- Dreyfus VIF Developing Leaders Portfolio - Initial shares Corporate America 3,022 (790) 2,232 Platinum Investor I & II 76,960 (97,790) (20,830) Platinum Investor III 180,173 (73,729) 106,444 Platinum Investor PLUS 13,861 (3,210) 10,651 Platinum Investor Survivor 13,161 (115,971) (102,810) Platinum Investor Survivor II 28,864 (4,922) 23,942 Dreyfus VIF Quality Bond Portfolio - Initial shares Corporate America 25 (176) (151) Platinum Investor I & II 24,238 (106,898) (82,660) Platinum Investor III 102,634 (45,402) 57,232 Platinum Investor PLUS 11,577 (4,000) 7,577 Platinum Investor Survivor 7,219 (4,159) 3,060 Platinum Investor Survivor II 2,068 (644) 1,424 Fidelity VIP Asset Manager Portfolio - Service Class 2 AG Legacy Plus 5,803 (384) 5,419 Platinum Investor I & II 96,784 (76,390) 20,394 Platinum Investor III 93,269 (25,955) 67,314 Platinum Investor PLUS 6,980 (1,227) 5,753 Platinum Investor Survivor 2,490 (2,092) 398 Platinum Investor Survivor II 4,796 (982) 3,814 Fidelity VIP Contrafund Portfolio - Service Class 2 AG Legacy Plus 12,725 (1,041) 11,684 Corporate America 1,303 (984) 319 Platinum Investor I & II 81,721 (50,361) 31,360 Platinum Investor III 371,144 (94,138) 277,006 Platinum Investor PLUS 28,044 (3,874) 24,170 Platinum Investor Survivor 8,069 (242,684) (234,615) Platinum Investor Survivor II 6,563 (1,572) 4,991 Fidelity VIP Equity-Income Portfolio - Service Class 2 AG Legacy Plus 15,655 (2,344) 13,311 Corporate America 3,103 (1,155) 1,948 Platinum Investor I & II 82,850 (45,650) 37,200 Platinum Investor III 358,761 (98,918) 259,843 Platinum Investor PLUS 26,542 (4,475) 22,067 Platinum Investor Survivor 17,519 (214,156) (196,637) Platinum Investor Survivor II 7,414 (4,125) 3,289 Fidelity VIP Growth Portfolio - Service Class 2 AG Legacy Plus 5,164 (1,480) 3,684 Corporate America 1,277 (107) 1,170 Platinum Investor I & II 50,769 (54,295) (3,526) Platinum Investor III 423,033 (144,998) 278,035 Platinum Investor PLUS 33,584 (4,617) 28,967 Platinum Investor Survivor 32,144 (351,681) (319,537) Platinum Investor Survivor II 7,150 (4,205) 2,945 Fidelity VIP Mid Cap Portfolio - Service Class 2 Platinum Investor I & II 14,015 (85) 13,930 Platinum Investor III 7,829 (239) 7,590 Platinum Investor PLUS 1,215 (132) 1,083 Platinum Investor Survivor II 648 (2) 646 Franklin Templeton - Franklin Small Cap Fund - Class 2 AG Legacy Plus 2,125 (690) 1,435
VL-R-41 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the Year Ended December 31, 2003.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ----------------------------------------------------------------------------------------------------------------------- Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 Platinum Investor I & II 827 (4) 823 Platinum Investor III 14,291 (371) 13,920 Platinum Investor PLUS 2,335 (61) 2,274 Platinum Investor Survivor 954 - 954 Platinum Investor Survivor II 410 (3) 407 Franklin Templeton - Franklin U.S. Government Fund - Class 2 Platinum Investor I & II 17,746 (7,146) 10,600 Platinum Investor III 298,886 (71,552) 227,334 Platinum Investor PLUS 33,379 (2,565) 30,814 Platinum Investor Survivor 9,864 (34,612) (24,748) Platinum Investor Survivor II 5,006 (938) 4,068 Franklin Templeton - Mutual Shares Securities Fund - Class 2 Platinum Investor I & II 24,039 (12,173) 11,866 Platinum Investor III 52,285 (39,157) 13,128 Platinum Investor PLUS 7,694 (1,441) 6,253 Platinum Investor Survivor 1,493 (109) 1,384 Platinum Investor Survivor II 9,312 (1,349) 7,963 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 AG Legacy Plus 7,261 (401) 6,860 Platinum Investor I & II 50,792 (3,608) 47,184 Platinum Investor III 35,180 (38,586) (3,406) Platinum Investor PLUS 4,181 (675) 3,506 Platinum Investor Survivor 6,322 (962) 5,360 Platinum Investor Survivor II 18,548 (1,884) 16,664 Goldman Sachs Capital Growth Fund Platinum Investor I & II 14,862 (1) 14,861 Platinum Investor III 16,345 (121) 16,224 Platinum Investor PLUS 115 - 115 Platinum Investor Survivor 740,046 (8) 740,038 Platinum Investor Survivor II 203,960 (1,450) 202,510 Janus Aspen Series International Growth Portfolio - Service Shares Corporate America 1,379 (33) 1,346 Platinum Investor I & II 16,648 (9,377) 7,271 Platinum Investor III 87,331 (33,171) 54,160 Platinum Investor PLUS 3,395 (805) 2,590 Platinum Investor Survivor 15,434 (5,554) 9,880 Platinum Investor Survivor II - (5,923) (5,923) Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Corporate America 951 (742) 209 Platinum Investor I & II 13,052 (11,566) 1,486 Platinum Investor III 198,336 (78,828) 119,508 Platinum Investor PLUS 5,512 (919) 4,593 Platinum Investor Survivor 21,349 (6,331) 15,018 Platinum Investor Survivor II 1,031 (35) 996 Janus Aspen Series Worldwide Growth Portfolio - Service Shares Corporate America 3,676 (977) 2,699 Platinum Investor I & II 32,338 (57,763) (25,425) Platinum Investor III 167,354 (58,998) 108,356 Platinum Investor PLUS 8,615 (1,421) 7,194 Platinum Investor Survivor 20,463 (5,284) 15,179 Platinum Investor Survivor II 18,111 (4,402) 13,709
VL-R-42 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the Year Ended December 31, 2003. Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - -------------------------------------------------------------------------------- JPMorgan Mid Cap Value Portfolio Platinum Investor I & II 45 (6) 39 Platinum Investor III 9,715 (383) 9,332 Platinum Investor PLUS 177 (38) 139 Platinum Investor Survivor II 378 (19) 359 JPMorgan Small Company Portfolio Platinum Investor I & II 12,196 (1,758) 10,438 Platinum Investor III 40,853 (10,824) 30,029 Platinum Investor PLUS 1,835 (373) 1,462 Platinum Investor Survivor 390 (1,093) (703) Platinum Investor Survivor II 376 (23) 353 MFS VIT Capital Opportunities Series - Initial Class Corporate America 1,425 (1,058) 367 Platinum Investor I & II 19,736 (34,270) (14,534) Platinum Investor III 169,426 (79,215) 90,211 Platinum Investor PLUS 12,954 (1,681) 11,273 Platinum Investor Survivor 16,183 (12,148) 4,035 Platinum Investor Survivor II 910 (450) 460 MFS VIT Emerging Growth Series - Initial Class AG Legacy Plus 2,675 (495) 2,180 Corporate America -- (199) (199) Platinum Investor I & II 193,938 (220,645) (26,707) Platinum Investor III 430,275 (126,793) 303,482 Platinum Investor PLUS 11,349 (1,779) 9,570 Platinum Investor Survivor 44,672 (28,380) 16,292 Platinum Investor Survivor II 1,583 (480) 1,103 MFS VIT New Discovery Series - Initial Class AG Legacy Plus 4,697 (376) 4,321 Corporate America 956 (627) 329 Platinum Investor I & II 24,131 (15,701) 8,430 Platinum Investor III 116,943 (35,732) 81,211 Platinum Investor PLUS 6,773 (1,248) 5,525 Platinum Investor Survivor 8,502 (2,059) 6,443 Platinum Investor Survivor II 4,111 (2,036) 2,075 MFS VIT Research Series - Initial Class Corporate America 1,235 (40) 1,195 Platinum Investor I & II 7,453 (5,841) 1,612 Platinum Investor III 63,584 (31,790) 31,794 Platinum Investor PLUS 3,315 (433) 2,882 Platinum Investor Survivor 4,536 (3,991) 545 Platinum Investor Survivor II 2,230 (709) 1,521 MFS VIT Total Return Series - Initial Class AG Legacy Plus 18,728 (21,260) (2,532) Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Corporate America 1,001 -- 1,001 Platinum Investor I & II 6,196 (12,872) (6,676) Platinum Investor III 121,148 (46,044) 75,104 Platinum Investor PLUS 9,131 (1,367) 7,764 Platinum Investor Survivor 5,537 (166,619) (161,082) Platinum Investor Survivor II 4,511 (1,083) 3,428 Neuberger Berman AMT Partners Portfolio - Class I AG Legacy Plus 745 (368) 377 VL-R-43 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the Year Ended December 31, 2003. Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - -------------------------------------------------------------------------------- Oppenheimer Global Securities Fund/VA - Non-Service Shares Platinum Investor I & II 2,681 -- 2,681 Platinum Investor III 8,184 (220) 7,964 Platinum Investor PLUS 305 (51) 254 Platinum Investor Survivor 1,282 (11) 1,271 Platinum Investor Survivor II 316 -- 316 Oppenheimer High Income Fund/VA - Non-Service Shares AG Legacy Plus 385 (5,952) (5,567) Oppenheimer Balanced Fund/VA - Non - Service Shares Platinum Investor I & II 2 -- 2 Platinum Investor III 5,806 (131) 5,675 Platinum Investor PLUS 516 (25) 491 Platinum Investor Survivor 433 -- 433 Platinum Investor Survivor II 3,205 (8) 3,197 PIMCO VIT Real Return Portfolio - Administrative Class AG Legacy Plus 16,602 (2,635) 13,967 Corporate America -- (611) (611) Platinum Investor I & II 16,412 (90,663) (74,251) Platinum Investor III 233,810 (51,006) 182,804 Platinum Investor PLUS 19,578 (5,144) 14,434 Platinum Investor Survivor 2,239 (7,254) (5,015) Platinum Investor Survivor II 8,856 (2,022) 6,834 PIMCO VIT Short-Term Portfolio - Administrative Class Corporate America 10,598 (1,405) 9,193 Platinum Investor I & II 143,781 (25,585) 118,196 Platinum Investor III 70,718 (20,485) 50,233 Platinum Investor PLUS 5,191 (686) 4,505 Platinum Investor Survivor 8,661 (3,200) 5,461 Platinum Investor Survivor II 517 (5,514) (4,997) PIMCO VIT Total Return Portfolio - Administrative Class AG Legacy Plus 11,616 (1,278) 10,338 Corporate America 2,197 (117) 2,080 Platinum Investor I & II 21,369 (38,960) (17,591) Platinum Investor III 194,268 (59,111) 135,157 Platinum Investor PLUS 23,717 (4,211) 19,506 Platinum Investor Survivor 4,035 (4,271) (236) Platinum Investor Survivor II 18,599 (9,935) 8,664 Putnam VT Diversified Income Fund - Class IB AG Legacy Plus 4,575 (3,626) 949 Corporate America 108,853 (4,426) 104,427 Platinum Investor I & II 11,663 (21,868) (10,205) Platinum Investor III 32,744 (9,086) 23,658 Platinum Investor PLUS 4,722 (738) 3,984 Platinum Investor Survivor 673 (1,075) (402) Platinum Investor Survivor II 169 (47) 122 Putnam VT Growth and Income Fund - Class IB Corporate America 145,817 (8,235) 137,582 Platinum Investor I & II 98,870 (146,149) (47,279) Platinum Investor III 226,325 (85,716) 140,609 Platinum Investor PLUS 12,291 (2,934) 9,357 Platinum Investor Survivor 23,293 (21,645) 1,648 Platinum Investor Survivor II 2,668 (816) 1,852 VL-R-44 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the Year Ended December 31, 2003. Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - -------------------------------------------------------------------------------- Putnam VT International Growth and Income Fund - Class IB Corporate America 1,334 -- 1,334 Platinum Investor I & II 37,885 (33,704) 4,181 Platinum Investor III 89,392 (26,550) 62,842 Platinum Investor PLUS 4,877 (1,030) 3,847 Platinum Investor Survivor 11,217 (198,788) (187,571) Platinum Investor Survivor II 1,769 (1,385) 384 Putnam VT Small Cap Value Fund - Class IB AG Legacy Plus 2,146 (1,007) 1,139 Putnam VT Vista Fund - Class IB AG Legacy Plus 1,222 (436) 786 Putnam VT Voyager Fund - Class IB AG Legacy Plus 15,918 (15,002) 916 Safeco RST Core Equity Portfolio Platinum Investor I & II 64,154 (120,454) (56,300) Platinum Investor III 28,556 (12,632) 15,924 Platinum Investor PLUS 760 (213) 547 Platinum Investor Survivor 8,890 (3,839) 5,051 Platinum Investor Survivor II 108 (66) 42 Safeco RST Growth Opportunities Portfolio Corporate America 40 (114) (74) Platinum Investor I & II 68,084 (117,012) (48,928) Platinum Investor III 60,372 (45,033) 15,339 Platinum Investor PLUS 2,604 (780) 1,824 Platinum Investor Survivor 4,534 (17,533) (12,999) Platinum Investor Survivor II 14,123 (3,527) 10,596 Scudder VIT Equity 500 Index Fund - Class A Legacy Plus 319 (259) 60 SunAmerica - Aggressive Growth Portfolio - Class 1 Platinum Investor I & II 7,929 (462) 7,467 Platinum Investor III 14,465 (2,117) 12,348 Platinum Investor PLUS 2,091 (241) 1,850 Platinum Investor Survivor II 377 (48) 329 SunAmerica - SunAmerica Balanced Portfolio - Class 1 Platinum Investor I & II 293 (114) 179 Platinum Investor III 24,791 (4,748) 20,043 Platinum Investor PLUS 5,774 (1,323) 4,451 Platinum Investor Survivor II 414 (7) 407 UIF Equity Growth Portfolio - Class I Platinum Investor I & II 77,426 (133,018) (55,592) Platinum Investor III 25,800 (8,754) 17,046 Platinum Investor PLUS 2,115 (273) 1,842 Platinum Investor Survivor 4,492 (23,372) (18,880) Platinum Investor Survivor II 62 (20) 42 UIF High Yield Portfolio - Class I Platinum Investor I & II 18,326 (20,554) (2,228) Platinum Investor III 10,378 (2,877) 7,501 Platinum Investor PLUS 486 (54) 432 Platinum Investor Survivor 3,592 (2,026) 1,566 Platinum Investor Survivor II 1,940 (452) 1,488 VL-R-45 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the Year Ended December 31, 2003.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ---------------------------------------------------------------------------------------------------------- VALIC Company I - International Equities Fund AG Legacy Plus 3,721 (379) 3,342 Platinum Investor I & II 14,055 (25,193) (11,138) Platinum Investor III 34,202 (9,794) 24,408 Platinum Investor PLUS 3,992 (325) 3,667 Platinum Investor Survivor 4,488 (5,823) (1,335) Platinum Investor Survivor II 186 (119) 67 VALIC Company I - Mid Cap Index Fund AG Legacy Plus 3,410 (920) 2,490 Corporate America 57 (594) (537) Platinum Investor I & II 63,297 (68,946) (5,649) Platinum Investor III 181,298 (55,897) 125,401 Platinum Investor PLUS 15,086 (2,512) 12,574 Platinum Investor Survivor 14,035 (9,553) 4,482 Platinum Investor Survivor II 19,634 (4,657) 14,977 VALIC Company I - Money Market I Fund AG Legacy Plus 114,388 (107,298) 7,090 Corporate America 8,810 (32,489) (23,679) Legacy Plus 126 (100) 26 Platinum Investor I & II 493,219 (882,514) (389,295) Platinum Investor III 2,571,974 (2,662,921) (90,947) Platinum Investor PLUS 409,481 (326,086) 83,395 Platinum Investor Survivor 62,134 (93,379) (31,245) Platinum Investor Survivor II 180,009 (187,843) (7,834) VALIC Company I - Nasdaq-100 Index Fund Platinum Investor I & II 106,295 (18,873) 87,422 Platinum Investor III 203,983 (82,688) 121,295 Platinum Investor PLUS 6,092 (700) 5,392 Platinum Investor Survivor 13,066 (3,056) 10,010 Platinum Investor Survivor II 168 (6) 162 VALIC Company I - Science & Technology Fund Platinum Investor I & II 21,955 (6,346) 15,609 Platinum Investor III 76,376 (31,248) 45,128 Platinum Investor PLUS 2,679 (335) 2,344 Platinum Investor Survivor 7,504 (1,215) 6,289 Platinum Investor Survivor II 350 (154) 196 VALIC Company I - Small Cap Index Fund Corporate America 1,669 (271) 1,398 Platinum Investor I & II 35,176 (4,858) 30,318 Platinum Investor III 84,471 (23,419) 61,052 Platinum Investor PLUS 7,613 (1,030) 6,583 Platinum Investor Survivor 8,774 (2,773) 6,001 Platinum Investor Survivor II 1,118 (466) 652 VALIC Company I - Stock Index Fund AG Legacy Plus 1,453 (13,055) (11,602) Corporate America 2,288 (356) 1,932 Platinum Investor I & II 241,252 (353,492) (112,240) Platinum Investor III 1,118,995 (294,247) 824,748 Platinum Investor PLUS 45,208 (4,939) 40,269 Platinum Investor Survivor 174,452 (53,637) 120,815 Platinum Investor Survivor II 113,720 (22,458) 91,262
VL-R-46 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS Note F - Summary of Changes in Units - Continued Summary of Changes in Units for the Year Ended December 31, 2003.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ---------------------------------------------------------------------------------------------------------- Van Kampen LIT Emerging Growth Portfolio - Class I AG Legacy Plus 3,986 (10,885) (6,899) Van Kampen LIT Government Portfolio - Class I AG Legacy Plus 5,096 (3,038) 2,058 Van Kampen LIT Growth and Income Portfolio - Class I Platinum Investor I & II 57,649 (33,657) 23,992 Platinum Investor III 105,186 (27,683) 77,503 Platinum Investor PLUS 9,332 (1,497) 7,835 Platinum Investor Survivor 2,602 (7,379) (4,777) Platinum Investor Survivor II 4,472 (429) 4,043 Vanguard VIF High Yield Bond Portfolio Platinum Investor I & II 34,333 (6,396) 27,937 Platinum Investor III 120,919 (27,695) 93,224 Platinum Investor PLUS 8,946 (1,634) 7,312 Platinum Investor Survivor 20,196 (7,959) 12,237 Platinum Investor Survivor II 2,427 (620) 1,807 Vanguard VIF REIT Index Portfolio Corporate America 455 (1,097) (642) Platinum Investor I & II 23,225 (14,530) 8,695 Platinum Investor III 112,032 (30,244) 81,788 Platinum Investor PLUS 11,806 (3,363) 8,443 Platinum Investor Survivor 5,293 (2,330) 2,963 Platinum Investor Survivor II 5,156 (1,266) 3,890
VL-R-47 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------------ 2004 AIM V.I. International Growth Fund - Series I AG Legacy Plus 24,949 $ 8.04 $ 200,562 0.74% 0.75% 23.08% Corporate America 7,229 7.78 56,259 0.70% 0.35% 23.57% Corporate America (reduced surrender charge) 679 11.67 7,918 0.70% 0.65% 16.65% Platinum Investor I & II 322,093 11.13 3,583,368 0.64% 0.75% 23.08% Platinum Investor III 303,164 9.34 2,832,247 0.86% 0.70% 23.14% Platinum Investor PLUS 9,886 12.93 127,771 0.84% 0.70% 23.14% Platinum Investor Survivor 67,704 7.77 526,286 0.75% 0.40% 23.51% Platinum Investor Survivor II 16,895 13.54 228,742 1.10% 0.75% 23.08% AIM V.I. Premier Equity Fund - Series I Corporate America 5,835 6.24 36,396 0.46% 0.35% 5.40% Platinum Investor I & II 850,688 9.94 8,454,221 0.46% 0.75% 4.98% Platinum Investor III 499,376 7.39 3,690,457 0.49% 0.70% 5.03% Platinum Investor FlexDirector 204 10.20 2,077 0.01% 0.70% 1.98% Platinum Investor PLUS 16,704 10.72 179,141 0.59% 0.70% 5.03% Platinum Investor Survivor 116,072 6.23 723,141 0.47% 0.40% 5.35% Platinum Investor Survivor II 7,228 9.24 66,822 0.59% 0.75% 4.98% Alger American Leveraged AllCap Portfolio - Class O Shares Platinum Investor I & II 98 12.94 1,274 0.00% 0.75% 7.38% Platinum Investor III 32,709 12.95 423,493 0.00% 0.70% 7.43% Platinum Investor PLUS 9,034 12.95 116,963 0.00% 0.70% 7.43% Platinum Investor Survivor 150 13.01 1,949 0.00% 0.40% 7.76% Platinum Investor Survivor II 128 12.94 1,657 0.00% 0.75% 7.38% Alger American MidCap Growth Portfolio - Class O Shares Platinum Investor I & II 8,879 15.23 135,202 0.00% 0.75% 12.20% Platinum Investor III 44,400 15.24 676,660 0.00% 0.70% 12.25% Platinum Investor FlexDirector 5,687 10.64 60,491 0.00% 0.70% 6.37% Platinum Investor PLUS 6,756 15.24 102,960 0.00% 0.70% 12.25% Platinum Investor Survivor 245 15.32 3,755 0.00% 0.40% 12.59% Platinum Investor Survivor II 930 15.23 14,167 0.00% 0.75% 12.20% American Century VP Value Fund - Class I AG Legacy Plus 34,128 16.83 574,449 0.90% 0.75% 13.48% Corporate America 2,990 15.46 46,225 1.19% 0.35% 13.93% Platinum Investor I & II 232,577 15.21 3,536,470 0.95% 0.75% 13.48% Platinum Investor III 526,802 15.12 7,963,343 0.86% 0.70% 13.54% Platinum Investor FlexDirector 31 10.82 339 0.00% 0.70% 8.25% Platinum Investor PLUS 39,732 12.81 508,822 0.74% 0.70% 13.54% Platinum Investor Survivor 32,550 15.43 502,214 0.97% 0.40% 13.88% Platinum Investor Survivor II 100,250 13.39 1,342,791 0.80% 0.75% 13.48% Credit Suisse Small Cap Growth Portfolio Platinum Investor I & II 70,710 8.18 578,349 0.00% 0.75% 10.04% Platinum Investor III 139,946 8.01 1,121,164 0.00% 0.70% 10.10% Platinum Investor FlexDirector 4,723 10.13 47,865 0.00% 0.70% 1.34% Platinum Investor PLUS 8,424 12.79 107,735 0.00% 0.70% 10.10% Platinum Investor Survivor 2,799 8.30 23,229 0.00% 0.40% 10.43% Platinum Investor Survivor II 1,275 12.12 15,451 0.00% 0.75% 10.04%
VL-R-48 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------------------- 2004 - Continued Dreyfus IP MidCap Stock Portfolio - Initial shares Platinum Investor I & II 73,512 $12.16 $ 893,684 0.38% 0.75% 13.62% Platinum Investor III 204,536 11.96 2,445,717 0.42% 0.70% 13.68% Platinum Investor FlexDirector 1 10.87 16 0.63% 0.70% 8.66% Platinum Investor PLUS 16,660 12.56 209,222 0.45% 0.70% 13.68% Platinum Investor Survivor 17,825 12.34 219,877 0.38% 0.40% 14.02% Platinum Investor Survivor II 5,689 13.76 78,254 0.43% 0.75% 13.62% Dreyfus VIF Developing Leaders Portfolio - Initial shares Corporate America 11,224 11.52 129,279 0.19% 0.35% 10.95% Platinum Investor I & II 375,824 13.92 5,230,135 0.20% 0.75% 10.51% Platinum Investor III 445,399 10.72 4,775,432 0.21% 0.70% 10.56% Platinum Investor PLUS 27,075 11.57 313,377 0.25% 0.70% 10.56% Platinum Investor Survivor 63,847 11.50 734,526 0.21% 0.40% 10.90% Platinum Investor Survivor II 58,627 12.58 737,356 0.23% 0.75% 10.51% Dreyfus VIF Quality Bond Portfolio - Initial shares Corporate America 6,905 13.36 92,230 4.03% 0.35% 3.01% Platinum Investor I & II 311,327 13.33 4,150,241 4.03% 0.75% 2.60% Platinum Investor III 253,777 12.63 3,204,132 4.15% 0.70% 2.65% Platinum Investor PLUS 17,726 11.19 198,410 4.24% 0.70% 2.65% Platinum Investor Survivor 25,471 13.34 339,808 4.25% 0.40% 2.96% Platinum Investor Survivor II 7,145 11.24 80,289 4.21% 0.75% 2.60% Fidelity VIP Asset Manager Portfolio - Service Class 2 AG Legacy Plus 20,658 10.69 220,876 2.06% 0.75% 4.39% Platinum Investor I & II 203,845 10.18 2,074,624 2.45% 0.75% 4.39% Platinum Investor III 208,895 10.16 2,121,544 2.09% 0.70% 4.44% Platinum Investor PLUS 17,720 11.61 205,736 1.51% 0.70% 4.44% Platinum Investor Survivor 9,381 10.33 96,879 2.46% 0.40% 4.76% Platinum Investor Survivor II 10,659 11.34 120,837 2.09% 0.75% 4.39% Fidelity VIP Contrafund Portfolio - Service Class 2 AG Legacy Plus 42,128 12.40 522,390 0.19% 0.75% 14.30% Corporate America 3,812 11.05 42,136 0.23% 0.35% 14.76% Platinum Investor I & II 379,667 10.87 4,127,445 0.18% 0.75% 14.30% Platinum Investor III 906,499 10.73 9,726,130 0.18% 0.70% 14.36% Platinum Investor FlexDirector 321 10.95 3,516 0.00% 0.70% 9.52% Platinum Investor PLUS 71,987 12.84 924,266 0.13% 0.70% 14.36% Platinum Investor Survivor 76,772 11.03 846,864 0.16% 0.40% 14.70% Platinum Investor Survivor II 31,607 13.54 427,829 0.10% 0.75% 14.30% Fidelity VIP Equity-Income Portfolio - Service Class 2 AG Legacy Plus 63,754 11.02 702,770 1.29% 0.75% 10.40% Corporate America 19,433 11.33 220,183 1.33% 0.35% 10.84% Corporate America (reduced surrender charge) 714 10.81 7,720 1.33% 0.65% 8.09% Platinum Investor I & II 370,900 11.14 4,133,032 1.26% 0.75% 10.40% Platinum Investor III 877,982 11.16 9,797,110 1.24% 0.70% 10.46% Platinum Investor FlexDirector 620 10.62 6,583 0.00% 0.70% 6.24% Platinum Investor PLUS 53,918 12.02 647,840 1.03% 0.70% 10.46% Platinum Investor Survivor 107,323 11.31 1,213,488 1.21% 0.40% 10.79% Platinum Investor Survivor II 49,011 12.19 597,443 1.07% 0.75% 10.40%
VL-R-49 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------------ 2004 - Continued Fidelity VIP Growth Portfolio - Service Class 2 AG Legacy Plus 28,730 $ 8.12 $ 233,262 0.12% 0.75% 2.35% Corporate America 5,424 6.91 37,464 0.13% 0.35% 2.76% Corporate America (reduced surrender charge) 253 10.71 2,709 0.13% 0.65% 7.06% Platinum Investor I & II 345,944 6.79 2,349,941 0.13% 0.75% 2.35% Platinum Investor III 1,039,582 6.73 6,997,775 0.12% 0.70% 2.40% Platinum Investor FlexDirector 7,404 9.75 72,173 0.00% 0.70% -2.52% Platinum Investor PLUS 82,830 10.83 897,299 0.08% 0.70% 2.40% Platinum Investor Survivor 76,126 6.89 524,713 0.12% 0.40% 2.71% Platinum Investor Survivor II 38,957 9.63 375,246 0.12% 0.75% 2.35% Fidelity VIP Mid Cap Portfolio - Service Class 2 Platinum Investor I & II 16,744 17.32 289,966 0.00% 0.75% 23.73% Platinum Investor III 38,471 17.33 666,778 0.00% 0.70% 23.79% Platinum Investor FlexDirector 288 11.59 3,338 0.00% 0.70% 15.86% Platinum Investor PLUS 6,345 17.33 109,964 0.00% 0.70% 23.79% Platinum Investor Survivor 1,816 17.42 31,630 0.00% 0.40% 24.16% Platinum Investor Survivor II 989 17.32 17,124 0.00% 0.75% 23.73% Franklin Templeton - Franklin Small Cap Fund - Class 2 AG Legacy Plus 22,445 7.01 157,376 0.00% 0.75% 10.64% Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 Corporate America (reduced surrender charge) 463 11.29 5,231 0.00% 0.65% 12.87% Platinum Investor I & II 12,505 16.30 203,817 0.24% 0.75% 22.82% Platinum Investor III 40,911 16.31 667,374 0.17% 0.70% 22.88% Platinum Investor FlexDirector 175 11.66 2,046 0.00% 0.70% 16.59% Platinum Investor PLUS 12,431 16.31 202,794 0.12% 0.70% 22.88% Platinum Investor Survivor 5,233 16.39 85,788 0.09% 0.40% 23.25% Platinum Investor Survivor II 502 16.30 8,175 0.18% 0.75% 22.82% Franklin Templeton - Franklin U.S. Government Fund - Class 2 Platinum Investor I & II 16,861 11.39 191,999 3.63% 0.75% 2.70% Platinum Investor III 945,822 11.40 10,786,424 5.06% 0.70% 2.75% Platinum Investor PLUS 38,284 11.03 422,331 5.20% 0.70% 2.75% Platinum Investor Survivor 633 11.51 7,288 0.00% 0.40% 3.06% Platinum Investor Survivor II 5,867 11.39 66,809 4.55% 0.75% 2.70% Franklin Templeton - Mutual Shares Securities Fund - Class 2 Platinum Investor I & II 54,608 12.16 664,214 0.92% 0.75% 11.79% Platinum Investor III 539,268 12.18 6,569,138 0.74% 0.70% 11.85% Platinum Investor FlexDirector 312 10.73 3,345 0.00% 0.70% 7.29% Platinum Investor PLUS 19,639 11.98 235,235 0.70% 0.70% 11.85% Platinum Investor Survivor 1,777 12.29 21,841 0.87% 0.40% 12.18% Platinum Investor Survivor II 18,978 12.16 230,842 0.74% 0.75% 11.79% Franklin Templeton - Templeton Foreign Securities Fund - Class 2 AG Legacy Plus 18,777 9.92 186,284 1.11% 0.75% 17.64% Platinum Investor I & II 123,981 12.42 1,539,261 1.04% 0.75% 17.64% Platinum Investor III 685,074 12.43 8,518,121 1.00% 0.70% 17.70% Platinum Investor FlexDirector 437 11.10 4,852 0.00% 0.70% 11.04% Platinum Investor PLUS 14,282 12.02 171,694 0.97% 0.70% 17.70% Platinum Investor Survivor 19,552 12.55 245,299 0.68% 0.40% 18.06% Platinum Investor Survivor II 48,400 12.42 600,897 0.90% 0.75% 17.64%
VL-R-50 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------------------- 2004 - Continued Goldman Sachs Capital Growth Fund Platinum Investor I & II 13,994 $ 9.26 $ 129,523 0.69% 0.75% 8.27% Platinum Investor III 14,378 9.27 133,348 0.67% 0.70% 8.33% Platinum Investor PLUS 113 11.33 1,284 0.70% 0.70% 8.33% Platinum Investor Survivor 703,774 9.39 6,607,533 0.69% 0.40% 8.65% Platinum Investor Survivor II 185,421 9.83 1,823,417 0.68% 0.75% 8.27% Janus Aspen Series International Growth Portfolio - Service Shares Corporate America 3,189 8.02 25,585 0.82% 0.35% 18.27% Platinum Investor I & II 115,724 7.89 913,122 0.96% 0.75% 17.80% Platinum Investor III 229,457 7.84 1,798,205 0.86% 0.70% 17.86% Platinum Investor FlexDirector 12,784 10.87 139,004 0.67% 0.70% 8.73% Platinum Investor PLUS 7,613 12.56 95,613 0.87% 0.70% 17.86% Platinum Investor Survivor 31,781 8.01 254,455 0.78% 0.40% 18.21% Platinum Investor Survivor II 4,427 12.40 54,914 0.83% 0.75% 17.80% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Corporate America 486 5.40 2,624 0.00% 0.35% 20.05% Platinum Investor I & II 52,125 5.31 276,772 0.00% 0.75% 19.58% Platinum Investor III 402,410 5.18 2,084,632 0.00% 0.70% 19.63% Platinum Investor PLUS 8,596 13.54 116,353 0.00% 0.70% 19.63% Platinum Investor Survivor 26,338 5.39 141,904 0.00% 0.40% 19.99% Platinum Investor Survivor II 1,788 12.08 21,605 0.00% 0.75% 19.58% Janus Aspen Series Worldwide Growth Portfolio - Service Shares Corporate America 9,360 6.60 61,819 0.90% 0.35% 4.16% Platinum Investor I & II 125,130 6.50 812,781 0.89% 0.75% 3.75% Platinum Investor III 367,344 6.44 2,365,764 0.94% 0.70% 3.80% Platinum Investor PLUS 12,476 10.28 128,308 1.00% 0.70% 3.80% Platinum Investor Survivor 37,089 6.59 244,452 0.87% 0.40% 4.11% Platinum Investor Survivor II 41,215 9.85 405,949 0.92% 0.75% 3.75% JPMorgan Mid Cap Value Portfolio Platinum Investor I & II 1,976 14.86 29,370 0.28% 0.75% 20.15% Platinum Investor III 27,069 14.87 402,580 0.21% 0.70% 20.22% Platinum Investor PLUS 4,533 14.87 67,410 0.07% 0.70% 20.22% Platinum Investor Survivor 207 14.95 3,088 0.00% 0.40% 20.58% Platinum Investor Survivor II 485 14.86 7,201 0.24% 0.75% 20.15% JPMorgan Small Company Portfolio Platinum Investor I & II 40,867 11.41 466,324 0.00% 0.75% 26.22% Platinum Investor III 104,066 11.23 1,168,558 0.00% 0.70% 26.28% Platinum Investor PLUS 5,929 13.98 82,890 0.00% 0.70% 26.28% Platinum Investor Survivor 1,835 11.58 21,241 0.00% 0.40% 26.66% Platinum Investor Survivor II 3,146 14.66 46,129 0.00% 0.75% 26.22% MFS VIT Capital Opportunities Series - Initial Class Corporate America -- 6.79 -- 0.72% 0.35% 12.07% Platinum Investor I & II 113,938 6.67 760,376 0.35% 0.75% 11.62% Platinum Investor III 415,444 6.74 2,798,020 0.33% 0.70% 11.68% Platinum Investor FlexDirector 173 10.58 1,832 0.00% 0.70% 5.78% Platinum Investor PLUS 33,139 11.34 375,934 0.28% 0.70% 11.68% Platinum Investor Survivor 36,766 6.77 248,968 0.32% 0.40% 12.01% Platinum Investor Survivor II 3,156 10.33 32,620 0.39% 0.75% 11.62%
VL-R-51 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ---------------------------------------------------------------------------------------------------------------------------------- 2004 - Continued MFS VIT Emerging Growth Series - Initial Class AG Legacy Plus 9,619 $10.72 $ 103,163 0.00% 0.75% 12.12% Corporate America 1,040 4.95 5,148 0.00% 0.35% 12.56% Corporate America (reduced surrender charge) 920 11.38 10,472 0.00% 0.65% 13.78% Platinum Investor I & II 706,671 10.44 7,378,706 0.00% 0.75% 12.12% Platinum Investor III 1,024,961 5.53 5,666,609 0.00% 0.70% 12.17% Platinum Investor FlexDirector 197 10.52 2,070 0.00% 0.70% 5.25% Platinum Investor PLUS 29,670 11.64 345,413 0.00% 0.70% 12.17% Platinum Investor Survivor 168,768 4.94 834,232 0.00% 0.40% 12.51% Platinum Investor Survivor II 32,210 10.01 322,533 0.00% 0.75% 12.12% MFS VIT New Discovery Series - Initial Class AG Legacy Plus 16,207 7.83 126,844 0.00% 0.75% 5.72% Corporate America 2,716 8.52 23,152 0.00% 0.35% 6.15% Platinum Investor I & II 88,892 8.38 745,230 0.00% 0.75% 5.72% Platinum Investor III 266,177 8.21 2,185,903 0.00% 0.70% 5.78% Platinum Investor FlexDirector 256 9.96 2,551 0.00% 0.70% -0.45% Platinum Investor PLUS 16,920 11.16 188,768 0.00% 0.70% 5.78% Platinum Investor Survivor 10,480 8.51 89,153 0.00% 0.40% 6.09% Platinum Investor Survivor II 8,483 10.75 91,201 0.00% 0.75% 5.72% MFS VIT Research Series - Initial Class Corporate America 3,158 7.62 24,069 1.02% 0.35% 15.45% Platinum Investor I & II 48,222 7.50 361,482 1.09% 0.75% 14.98% Platinum Investor III 159,378 7.47 1,190,107 0.98% 0.70% 15.04% Platinum Investor FlexDirector 106 10.76 1,145 0.00% 0.70% 7.60% Platinum Investor PLUS 6,148 11.80 72,553 0.87% 0.70% 15.04% Platinum Investor Survivor 9,692 7.61 73,719 1.08% 0.40% 15.39% Platinum Investor Survivor II 5,340 10.99 58,713 0.86% 0.75% 14.98% MFS VIT Total Return Series - Initial Class AG Legacy Plus 146,574 6.23 912,934 1.62% 0.75% 10.49% Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Corporate America 1,789 6.50 11,630 0.00% 0.35% 15.90% Corporate America (reduced surrender charge) 233 11.35 2,641 0.00% 0.65% 13.51% Platinum Investor I & II 59,627 6.39 381,211 0.00% 0.75% 15.44% Platinum Investor III 288,190 6.29 1,811,647 0.00% 0.70% 15.50% Platinum Investor FlexDirector 166 11.06 1,834 0.00% 0.70% 10.58% Platinum Investor PLUS 28,648 11.72 335,784 0.00% 0.70% 15.50% Platinum Investor Survivor 27,565 6.49 178,820 0.00% 0.40% 15.84% Platinum Investor Survivor II 7,849 10.76 84,431 0.00% 0.75% 15.44% Neuberger Berman AMT Partners Portfolio - Class I AG Legacy Plus 12,141 11.34 137,643 0.01% 0.75% 18.09% Oppenheimer Balanced Fund/VA - Non-Service Shares** Platinum Investor I & II 2,395 12.98 31,076 1.98% 0.75% 9.28% Platinum Investor III 29,690 12.99 385,585 0.45% 0.70% 9.33% Platinum Investor PLUS 14,439 12.99 187,517 1.68% 0.70% 9.33% Platinum Investor Survivor 433 13.05 5,656 0.99% 0.40% 9.66% Platinum Investor Survivor II 3,870 12.98 50,218 0.90% 0.75% 9.28%
VL-R-52 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------------------------- 2004 - Continued Oppenheimer Global Securities Fund/VA - Non-Service Shares Platinum Investor I & II 4,798 $16.82 $ 80,687 0.83% 0.75% 18.27% Platinum Investor III 51,328 16.83 863,930 0.82% 0.70% 18.33% Platinum Investor FlexDirector 2 11.17 24 0.00% 0.70% 11.74% Platinum Investor PLUS 5,613 16.83 94,470 0.18% 0.70% 18.33% Platinum Investor Survivor 2,375 16.92 40,174 1.20% 0.40% 18.69% Platinum Investor Survivor II 378 16.82 6,364 1.49% 0.75% 18.27% Oppenheimer High Income Fund/VA - Non-Service Shares AG Legacy Plus 8,004 12.51 100,163 6.11% 0.75% 8.15% PIMCO VIT Real Return Portfolio - Administrative Class AG Legacy Plus 47,824 14.00 669,702 0.99% 0.75% 8.11% Corporate America 2,327 15.51 36,096 0.91% 0.35% 8.54% Corporate America (reduced surrender charge) 753 10.31 7,759 0.91% 0.65% 3.11% Platinum Investor I & II 119,851 15.25 1,828,190 0.99% 0.75% 8.11% Platinum Investor III 561,931 15.32 8,607,213 1.05% 0.70% 8.16% Platinum Investor FlexDirector 298 10.38 3,095 1.06% 0.70% 3.79% Platinum Investor PLUS 30,515 12.93 394,609 1.02% 0.70% 8.16% Platinum Investor Survivor 65,768 15.48 1,017,948 0.99% 0.40% 8.48% Platinum Investor Survivor II 36,406 13.10 477,063 0.96% 0.75% 8.11% PIMCO VIT Short-Term Portfolio - Administrative Class Corporate America 21,965 11.30 248,233 1.37% 0.35% 0.95% Platinum Investor I & II 220,025 11.11 2,445,451 1.30% 0.75% 0.54% Platinum Investor III 210,849 11.13 2,346,366 1.34% 0.70% 0.60% Platinum Investor FlexDirector 4,059 10.04 40,769 1.29% 0.70% 0.44% Platinum Investor PLUS 14,162 10.36 146,681 1.31% 0.70% 0.60% Platinum Investor Survivor 40,126 11.28 452,530 1.70% 0.40% 0.90% Platinum Investor Survivor II 30,365 10.45 317,371 1.25% 0.75% 0.54% PIMCO VIT Total Return Portfolio - Administrative Class AG Legacy Plus 38,594 12.43 479,631 1.93% 0.75% 4.11% Corporate America 8,965 13.24 118,722 1.93% 0.35% 4.53% Platinum Investor I & II 248,730 13.02 3,239,319 1.90% 0.75% 4.11% Platinum Investor III 468,339 13.09 6,132,293 1.91% 0.70% 4.16% Platinum Investor FlexDirector 6,295 10.24 64,463 1.65% 0.70% 2.40% Platinum Investor PLUS 47,130 11.41 537,919 1.83% 0.70% 4.16% Platinum Investor Survivor 46,766 13.21 617,992 1.77% 0.40% 4.47% Platinum Investor Survivor II 58,228 11.52 670,760 1.81% 0.75% 4.11% Pioneer Fund VCT Portfolio - Class I Platinum Investor I & II 242,349 10.22 2,476,631 0.00% 0.75% 2.19% Platinum Investor III 55,443 10.22 566,601 0.00% 0.70% 2.20% Platinum Investor PLUS 998 10.22 10,195 0.00% 0.70% 2.20% Platinum Investor Survivor 28,172 10.22 287,951 0.00% 0.40% 2.21% Platinum Investor Survivor II 388 10.22 3,963 0.00% 0.75% 2.19% Pioneer Growth Opportunities VCT Portfolio - Class I Corporate America 3,474 10.28 35,720 0.00% 0.35% 2.83% Platinum Investor I & II 347,832 10.28 3,576,078 0.00% 0.75% 2.81% Platinum Investor III 137,933 10.28 1,418,142 0.00% 0.70% 2.81% Platinum Investor PLUS 4,979 10.28 51,195 0.00% 0.70% 2.81% Platinum Investor Survivor 14,319 10.28 147,243 0.00% 0.40% 2.83%
VL-R-53 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Unit Income Expense Total Divisions Units Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------ 2004 - Continued Pioneer Growth Opportunities VCT Portfolio - Class I - Continued Platinum Investor Survivor II 39,326 $10.28 $ 404,315 0.00% 0.75% 2.81% Putnam VT Diversified Income Fund - Class IB AG Legacy Plus 12,958 13.72 177,740 8.10% 0.75% 8.39% Corporate America 396,103 14.01 5,549,288 8.00% 0.35% 8.82% Platinum Investor I & II 60,463 13.25 801,033 8.55% 0.75% 8.39% Platinum Investor III 62,541 14.19 887,670 8.73% 0.70% 8.44% Platinum Investor FlexDirector 65 10.63 689 0.00% 0.70% 6.27% Platinum Investor PLUS 6,150 13.15 80,902 7.70% 0.70% 8.44% Platinum Investor Survivor 1,282 13.99 17,943 4.60% 0.40% 8.77% Platinum Investor Survivor II 1,337 13.51 18,073 11.52% 0.75% 8.39% Putnam VT Growth and Income Fund - Class IB Corporate America 499,841 11.25 5,623,805 1.35% 0.35% 10.72% Platinum Investor I & II 491,902 11.66 5,734,037 1.53% 0.75% 10.28% Platinum Investor III 524,351 10.53 5,520,350 1.50% 0.70% 10.34% Platinum Investor FlexDirector 9,148 10.55 96,528 0.00% 0.70% 5.52% Platinum Investor PLUS 26,657 11.78 314,093 1.26% 0.70% 10.34% Platinum Investor Survivor 66,114 11.24 743,001 1.40% 0.40% 10.67% Platinum Investor Survivor II 4,481 11.56 51,804 1.48% 0.75% 10.28% Putnam VT International Growth and Income Fund - Class IB Corporate America 2,293 11.09 25,426 0.85% 0.35% 20.56% Platinum Investor I & II 204,673 12.88 2,635,270 1.20% 0.75% 20.08% Platinum Investor III 191,264 11.40 2,179,999 1.28% 0.70% 20.14% Platinum Investor FlexDirector 112 11.31 1,269 0.00% 0.70% 13.08% Platinum Investor PLUS 8,737 13.39 117,028 0.86% 0.70% 20.14% Platinum Investor Survivor 37,612 11.07 416,520 1.18% 0.40% 20.50% Platinum Investor Survivor II 7,551 14.56 109,912 1.49% 0.75% 20.08% Putnam VT Small Cap Value Fund - Class IB AG Legacy Plus 25,092 19.81 497,060 0.34% 0.75% 25.27% Putnam VT Vista Fund - Class IB AG Legacy Plus 15,137 5.56 84,219 0.00% 0.75% 17.72% Putnam VT Voyager Fund - Class IB AG Legacy Plus 57,401 5.76 330,363 0.24% 0.75% 4.25% Safeco RST Core Equity Portfolio Platinum Investor I & II -- 9.17 -- 2.18% 0.75% 4.59% Platinum Investor III -- 8.00 -- 2.43% 0.70% 4.64% Platinum Investor PLUS -- 10.96 -- 2.43% 0.70% 4.64% Platinum Investor Survivor -- 7.68 -- 2.59% 0.40% 4.94% Platinum Investor Survivor II -- 9.67 -- 4.87% 0.75% 4.59% Safeco RST Growth Opportunities Portfolio Corporate America -- 10.51 -- 0.00% 0.35% 18.54% Platinum Investor I & II -- 10.26 -- 0.00% 0.75% 18.09% Platinum Investor III -- 10.98 -- 0.00% 0.70% 18.15% Platinum Investor PLUS -- 11.86 -- 0.00% 0.70% 18.15% Platinum Investor Survivor -- 10.50 -- 0.00% 0.40% 18.48% Platinum Investor Survivor II -- 12.30 -- 0.00% 0.75% 18.09% Scudder VIT EAFE Equity Index Fund - Class A Legacy Plus -- 9.81 -- 0.00% 0.75% 18.18%
VL-R-54 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Unit Income Expense Total Divisions Units Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------------------- 2004 - Continued Scudder VIT Equity 500 Index Fund - Class A Legacy Plus 1,857 $10.15 $ 18,849 1.05% 0.75% 9.77% SunAmerica - Aggressive Growth Portfolio - Class 1 Platinum Investor I & II 7,269 11.57 84,137 0.00% 0.75% 15.91% Platinum Investor III 29,137 11.59 337,687 0.00% 0.70% 15.97% Platinum Investor PLUS 6,198 12.31 76,281 0.00% 0.70% 15.97% Platinum Investor Survivor 1,019 11.68 11,899 0.00% 0.40% 16.32% Platinum Investor Survivor II 448 11.57 5,190 0.00% 0.75% 15.91% SunAmerica - SunAmerica Balanced Portfolio - Class 1 Platinum Investor I & II 247 10.72 2,648 1.65% 0.75% 5.98% Platinum Investor III 52,736 10.73 565,994 1.80% 0.70% 6.03% Platinum Investor PLUS 13,740 11.07 152,117 1.70% 0.70% 6.03% Platinum Investor Survivor II 1,250 10.72 13,403 1.57% 0.75% 5.98% UIF Equity Growth Portfolio - Class I Platinum Investor I & II 288,941 10.27 2,966,331 0.17% 0.75% 6.97% Platinum Investor III 79,302 6.89 546,540 0.18% 0.70% 7.02% Platinum Investor PLUS 4,155 10.98 45,596 0.19% 0.70% 7.02% Platinum Investor Survivor 23,521 6.57 154,598 0.17% 0.40% 7.34% Platinum Investor Survivor II 219 9.69 2,122 0.12% 0.75% 6.97% UIF High Yield Portfolio - Class I Platinum Investor I & II 93,804 11.14 1,044,759 5.86% 0.75% 8.67% Platinum Investor III 28,634 11.55 330,711 6.14% 0.70% 8.72% Platinum Investor FlexDirector 1,735 10.79 18,729 0.00% 0.70% 7.94% Platinum Investor PLUS 2,194 12.90 28,302 5.96% 0.70% 8.72% Platinum Investor Survivor 24,176 10.83 261,899 6.03% 0.40% 9.05% Platinum Investor Survivor II 4,234 12.59 53,299 5.42% 0.75% 8.67% VALIC Company I - International Equities Fund AG Legacy Plus 20,142 8.21 165,429 1.50% 0.75% 16.98% Platinum Investor I & II 70,577 10.54 743,609 1.09% 0.75% 16.98% Platinum Investor III 86,492 9.11 788,095 1.37% 0.70% 17.03% Platinum Investor FlexDirector 349 11.20 3,911 0.09% 0.70% 12.00% Platinum Investor PLUS 8,032 11.93 95,823 1.49% 0.70% 17.03% Platinum Investor Survivor 13,559 8.07 109,465 1.43% 0.40% 17.39% Platinum Investor Survivor II 1,307 12.40 16,207 1.14% 0.75% 16.98% VALIC Company I - Mid Cap Index Fund AG Legacy Plus 24,611 12.87 316,673 0.81% 0.75% 15.18% Corporate America 6,003 13.98 83,891 0.79% 0.35% 15.64% Corporate America (reduced surrender charge) 704 11.26 7,926 0.79% 0.65% 12.64% Platinum Investor I & II 396,205 19.08 7,558,938 0.79% 0.75% 15.18% Platinum Investor III 430,957 12.53 5,400,920 0.82% 0.70% 15.24% Platinum Investor PLUS 37,895 12.90 488,950 0.92% 0.70% 15.24% Platinum Investor Survivor 67,872 13.96 947,463 0.83% 0.40% 15.58% Platinum Investor Survivor II 46,722 14.07 657,610 0.73% 0.75% 15.18% VALIC Company I - Money Market I Fund AG Legacy Plus 51,953 10.52 546,390 0.80% 0.75% 0.05% Corporate America 6,349 10.94 69,436 0.34% 0.35% 0.45% Corporate America (reduced surrender charge) 27,087 10.02 271,377 0.34% 0.65% 0.19% Legacy Plus 1,086 11.08 12,032 0.81% 0.75% 0.05%
VL-R-55 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Unit Income Expense Total Divisions Units Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------------- 2004 - Continued VALIC Company I - Money Market I Fund - Continued Platinum Investor I & II 947,402 $11.59 $10,981,940 0.74% 0.75% 0.05% Platinum Investor III 1,222,031 10.44 12,755,775 0.72% 0.70% 0.10% Platinum Investor FlexDirector 4,886 10.01 48,931 0.86% 0.70% 0.14% Platinum Investor PLUS 108,353 10.03 1,086,673 0.58% 0.70% 0.10% Platinum Investor Survivor 356,356 10.92 3,892,926 0.76% 0.40% 0.40% Platinum Investor Survivor II 485,564 10.05 4,880,633 0.82% 0.75% 0.05% VALIC Company I - Nasdaq-100 Index Fund Platinum Investor I & II 195,759 4.85 949,081 0.58% 0.75% 9.23% Platinum Investor III 480,541 4.76 2,289,462 0.56% 0.70% 9.28% Platinum Investor FlexDirector 48 10.78 516 1.00% 0.70% 7.84% Platinum Investor PLUS 11,709 13.66 159,943 0.73% 0.70% 9.28% Platinum Investor Survivor 29,567 4.92 145,457 0.65% 0.40% 9.61% Platinum Investor Survivor II 11,333 10.28 116,455 1.05% 0.75% 9.23% VALIC Company I - Science & Technology Fund Platinum Investor I & II 92,336 3.95 364,650 0.00% 0.75% 0.04% Platinum Investor III 193,053 3.92 756,120 0.00% 0.70% 0.09% Platinum Investor FlexDirector 51 9.96 507 0.00% 0.70% -0.41% Platinum Investor PLUS 3,497 12.14 42,443 0.00% 0.70% 0.09% Platinum Investor Survivor 16,097 4.01 64,505 0.00% 0.40% 0.39% Platinum Investor Survivor II 1,081 9.11 9,847 0.00% 0.75% 0.04% VALIC Company I - Small Cap Index Fund Corporate America 4,416 13.46 59,441 0.82% 0.35% 17.48% Platinum Investor I & II 107,394 13.24 1,421,650 0.84% 0.75% 17.01% Platinum Investor III 215,034 13.03 2,802,678 0.82% 0.70% 17.07% Platinum Investor FlexDirector 32 10.97 349 0.46% 0.70% 9.69% Platinum Investor PLUS 23,667 13.79 326,254 0.98% 0.70% 17.07% Platinum Investor Survivor 20,859 13.43 280,186 0.85% 0.40% 17.42% Platinum Investor Survivor II 3,333 14.83 49,411 0.84% 0.75% 17.01% VALIC Company I - Stock Index Fund AG Legacy Plus 70,818 8.35 591,082 1.57% 0.75% 9.68% Corporate America 14,690 8.36 122,821 1.54% 0.35% 10.12% Platinum Investor I & II 1,406,720 11.44 16,087,376 1.55% 0.75% 9.68% Platinum Investor III 1,990,719 8.65 17,228,974 1.55% 0.70% 9.74% Platinum Investor FlexDirector 87 10.55 916 0.00% 0.70% 5.46% Platinum Investor PLUS 63,224 11.86 749,828 1.64% 0.70% 9.74% Platinum Investor Survivor 437,170 8.35 3,650,823 1.50% 0.40% 10.07% Platinum Investor Survivor II 40,549 11.04 447,627 1.55% 0.75% 9.68% Van Kampen LIT Emerging Growth Portfolio - Class I AG Legacy Plus 11,991 4.75 56,964 0.00% 0.75% 6.23% Van Kampen LIT Government Portfolio - Class I AG Legacy Plus 13,807 12.90 178,108 4.89% 0.75% 3.39% Van Kampen LIT Growth and Income Portfolio - Class I Platinum Investor I & II 191,703 11.93 2,287,879 0.96% 0.75% 13.52% Platinum Investor III 242,172 11.95 2,894,060 0.90% 0.70% 13.58% Platinum Investor FlexDirector 32 10.83 343 0.00% 0.70% 8.26% Platinum Investor PLUS 16,160 12.18 196,763 0.82% 0.70% 13.58% Platinum Investor Survivor 16,686 12.05 201,015 1.03% 0.40% 13.92%
VL-R-56 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------------ 2004 - Continued Van Kampen LIT Growth and Income Portfolio - Class I - Continued Platinum Investor Survivor II 6,375 $11.93 $ 76,084 0.94% 0.75% 13.52% Vanguard VIF High Yield Bond Portfolio Platinum Investor I & II 100,018 12.76 1,276,287 7.19% 0.75% 7.71% Platinum Investor III 330,232 12.86 4,246,662 6.58% 0.70% 7.77% Platinum Investor FlexDirector 32 10.66 337 0.00% 0.70% 6.58% Platinum Investor PLUS 22,057 12.37 272,761 4.95% 0.70% 7.77% Platinum Investor Survivor 86,078 12.95 1,114,534 1.13% 0.40% 8.09% Platinum Investor Survivor II 23,456 12.65 296,797 2.45% 0.75% 7.71% Vanguard VIF REIT Index Portfolio Corporate America 708 22.10 15,640 4.59% 0.35% 30.06% Platinum Investor I & II 99,576 21.74 2,164,676 2.49% 0.75% 29.54% Platinum Investor III 303,258 21.75 6,594,879 2.48% 0.70% 29.60% Platinum Investor FlexDirector 3,849 12.10 46,590 0.00% 0.70% 21.03% Platinum Investor PLUS 40,045 16.36 655,114 2.42% 0.70% 29.60% Platinum Investor Survivor 30,818 22.06 679,778 2.05% 0.40% 29.99% Platinum Investor Survivor II 23,561 18.94 446,319 1.46% 0.75% 29.54% 2003 AIM V.I. International Growth Fund - Series I AG Legacy Plus 17,769 6.53 116,061 0.48% 0.75% 28.10% Corporate America 6,858 6.30 43,188 0.57% 0.35% 28.61% Platinum Investor I & II 328,864 9.04 2,972,642 0.51% 0.75% 28.10% Platinum Investor III 120,999 7.59 917,986 0.60% 0.70% 28.16% Platinum Investor PLUS 3,813 10.50 40,027 0.82% 0.70% 28.16% Platinum Investor Survivor 46,420 6.29 292,156 0.52% 0.40% 28.55% Platinum Investor Survivor II 1,195 11.00 13,144 0.51% 0.75% 28.10% AIM V.I. Premier Equity Fund - Series I Corporate America 5,993 5.92 35,462 0.30% 0.35% 24.64% Legacy Plus -- 6.34 -- 0.00% 0.75% 20.44% Platinum Investor I & II 856,369 9.47 8,106,816 0.29% 0.75% 24.15% Platinum Investor III 433,128 7.04 3,047,453 0.33% 0.70% 24.21% Platinum Investor PLUS 8,904 10.21 90,916 0.46% 0.70% 24.21% Platinum Investor Survivor 109,492 5.91 647,508 0.31% 0.40% 24.58% Platinum Investor Survivor II 4,149 8.81 36,534 0.33% 0.75% 24.15% Alger American Leveraged AllCap Portfolio - Class O Shares Platinum Investor III 18,007 12.05 217,007 0.00% 0.70% 20.51% Platinum Investor PLUS 1,206 12.05 14,534 0.00% 0.70% 20.51% Platinum Investor Survivor 138 12.08 1,666 0.00% 0.40% 20.75% Platinum Investor Survivor II 103 12.05 1,236 0.00% 0.75% 20.47% Alger American MidCap Growth Portfolio - Class O Shares Platinum Investor III 18,785 13.58 255,035 0.00% 0.70% 35.76% Platinum Investor PLUS 985 13.58 13,374 0.00% 0.70% 35.76% Platinum Investor Survivor 2,174 13.60 29,576 0.00% 0.40% 36.03% Platinum Investor Survivor II 343 13.57 4,651 0.00% 0.75% 35.72% American Century VP Value Fund - Class I AG Legacy Plus 30,836 14.83 457,376 1.07% 0.75% 28.00% Corporate America 4,675 13.57 63,443 1.07% 0.35% 28.51%
VL-R-57 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------------- 2003 - Continued American Century VP Value Fund - Class I - Continued Platinum Investor I & II 210,667 $13.40 $2,822,824 0.96% 0.75% 28.00% Platinum Investor III 369,463 13.31 4,919,113 0.80% 0.70% 28.06% Platinum Investor PLUS 20,510 11.28 231,350 0.69% 0.70% 28.06% Platinum Investor Survivor 25,525 13.55 345,829 0.72% 0.40% 28.44% Platinum Investor Survivor II 66,916 11.80 789,838 0.79% 0.75% 28.00% Ayco Growth Fund Platinum Investor I & II -- 8.36 -- 0.47% 0.75% 26.35% Platinum Investor III -- 8.38 -- 0.52% 0.70% 26.41% Platinum Investor PLUS -- 10.23 -- 120.86% 0.70% 26.41% Platinum Investor Survivor -- 8.45 -- 0.86% 0.40% 26.78% Platinum Investor Survivor II -- 8.89 -- 0.83% 0.75% 26.35% Credit Suisse Small Cap Growth Portfolio Platinum Investor I & II 46,817 7.43 347,984 0.00% 0.75% 47.44% Platinum Investor III 114,690 7.28 834,569 0.00% 0.70% 47.51% Platinum Investor PLUS 3,837 11.62 44,567 0.00% 0.70% 47.51% Platinum Investor Survivor 4,530 7.52 34,045 0.00% 0.40% 47.95% Platinum Investor Survivor II 749 11.01 8,249 0.00% 0.75% 47.44% Dreyfus IP MidCap Stock Portfolio - Initial shares Platinum Investor I & II 73,021 10.70 781,298 0.29% 0.75% 30.74% Platinum Investor III 161,611 10.52 1,699,951 0.30% 0.70% 30.80% Platinum Investor PLUS 11,054 11.05 122,113 0.39% 0.70% 30.80% Platinum Investor Survivor 18,763 10.82 202,999 0.27% 0.40% 31.20% Platinum Investor Survivor II 4,400 12.11 53,278 0.36% 0.75% 30.74% Dreyfus VIF Developing Leaders Portfolio - Initial shares Corporate America 12,360 10.38 128,308 0.03% 0.35% 31.23% Platinum Investor I & II 405,482 12.59 5,106,276 0.03% 0.75% 30.71% Platinum Investor III 377,518 9.70 3,660,894 0.03% 0.70% 30.77% Platinum Investor PLUS 14,951 10.47 156,515 0.04% 0.70% 30.77% Platinum Investor Survivor 58,620 10.37 608,130 0.04% 0.40% 31.16% Platinum Investor Survivor II 43,134 11.38 490,913 0.04% 0.75% 30.71% Dreyfus VIF Quality Bond Portfolio - Initial shares Corporate America 7,084 12.97 91,852 4.08%+ 0.35% 4.58% Platinum Investor I & II 351,864 12.99 4,571,955 3.97%+ 0.75% 4.16% Platinum Investor III 210,671 12.30 2,591,291 4.04%+ 0.70% 4.21% Platinum Investor PLUS 12,455 10.90 135,822 4.16%+ 0.70% 4.21% Platinum Investor Survivor 22,659 12.96 293,621 4.08%+ 0.40% 4.52% Platinum Investor Survivor II 4,881 10.95 53,463 4.05%+ 0.75% 4.16% Fidelity VIP Asset Manager Portfolio - Service Class 2 AG Legacy Plus 13,924 10.24 142,609 2.47% 0.75% 16.78% Platinum Investor I & II 194,550 9.75 1,896,730 3.14% 0.75% 16.78% Platinum Investor III 146,922 9.72 1,428,653 2.37% 0.70% 16.84% Platinum Investor PLUS 7,471 11.12 83,043 1.34% 0.70% 16.84% Platinum Investor Survivor 8,861 9.86 87,351 3.52% 0.40% 17.19% Platinum Investor Survivor II 7,874 10.86 85,505 2.22% 0.75% 16.78% Fidelity VIP Contrafund Portfolio - Service Class 2 AG Legacy Plus 37,472 10.85 406,531 0.24% 0.75% 27.24% Corporate America 5,102 9.63 49,147 0.29% 0.35% 27.75%
VL-R-58 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Unit Income Expense Total Divisions Units Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------------------------- 2003 - Continued Fidelity VIP Contrafund Portfolio - Service Class 2 - Continued Platinum Investor I & II 275,267 $ 9.51 $ 2,618,131 0.26% 0.75% 27.24% Platinum Investor III 578,962 9.38 5,432,050 0.23% 0.70% 27.30% Platinum Investor PLUS 28,350 11.23 318,302 0.09% 0.70% 27.30% Platinum Investor Survivor 37,768 9.62 363,221 0.54% 0.40% 27.68% Platinum Investor Survivor II 8,993 11.84 106,506 0.19% 0.75% 27.24% Fidelity VIP Equity-Income Portfolio - Service Class 2 AG Legacy Plus 53,210 9.98 531,275 1.36% 0.75% 29.06% Corporate America 19,278 10.22 197,063 1.46% 0.35% 29.57% Platinum Investor I & II 301,311 10.09 3,041,231 1.46% 0.75% 29.06% Platinum Investor III 618,890 10.10 6,252,170 1.23% 0.70% 29.12% Platinum Investor PLUS 28,808 10.88 313,370 0.72% 0.70% 29.12% Platinum Investor Survivor 65,789 10.21 671,430 2.70% 0.40% 29.51% Platinum Investor Survivor II 31,375 11.04 346,431 1.49% 0.75% 29.06% Fidelity VIP Growth Portfolio - Service Class 2 AG Legacy Plus 25,346 7.93 201,055 0.10% 0.75% 31.55% Corporate America 5,536 6.72 37,208 0.10% 0.35% 32.08% Platinum Investor I & II 301,685 6.64 2,002,210 0.10% 0.75% 31.55% Platinum Investor III 806,359 6.57 5,300,495 0.09% 0.70% 31.62% Platinum Investor PLUS 35,338 10.58 373,837 0.03% 0.70% 31.62% Platinum Investor Survivor 84,756 6.71 568,779 0.20% 0.40% 32.01% Platinum Investor Survivor II 33,499 9.41 315,255 0.11% 0.75% 31.55% Fidelity VIP Mid Cap Portfolio - Service Class 2 Platinum Investor I & II 13,930 14.00 194,978 0.00% 0.75% 39.97% Platinum Investor III 7,590 14.00 106,267 0.00% 0.70% 40.01% Platinum Investor PLUS 1,083 14.00 15,161 0.00% 0.70% 40.01% Platinum Investor Survivor II 646 14.00 9,039 0.00% 0.75% 39.97% Franklin Templeton - Franklin Small Cap Fund - Class 2 AG Legacy Plus 21,351 6.34 135,309 0.00% 0.75% 36.22% Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 Platinum Investor I & II 823 13.27 10,925 0.00% 0.75% 32.71% Platinum Investor III 13,920 13.28 184,793 0.01% 0.70% 32.75% Platinum Investor PLUS 2,274 13.28 30,194 0.00% 0.70% 32.75% Platinum Investor Survivor 954 13.30 12,687 0.00% 0.40% 33.02% Platinum Investor Survivor II 407 13.27 5,400 0.00% 0.75% 32.71% Franklin Templeton - Franklin U.S. Government Fund - Class 2 Platinum Investor I & II 29,978 11.09 332,384 4.44% 0.75% 1.45% Platinum Investor III 993,247 11.10 11,023,739 4.48% 0.70% 1.50% Platinum Investor PLUS 32,257 10.74 346,310 8.97% 0.70% 1.50% Platinum Investor Survivor 307 11.17 3,422 9.35% 0.40% 1.81% Platinum Investor Survivor II 4,440 11.09 49,231 2.42% 0.75% 1.45% Franklin Templeton - Mutual Shares Securities Fund - Class 2 Platinum Investor I & II 24,270 10.88 264,074 0.65% 0.75% 24.21% Platinum Investor III 498,453 10.89 5,428,832 1.01% 0.70% 24.28% Platinum Investor PLUS 9,047 10.71 96,887 0.81% 0.70% 24.28% Platinum Investor Survivor 2,452 10.96 26,861 0.59% 0.40% 24.65% Platinum Investor Survivor II 16,089 10.88 175,057 0.99% 0.75% 24.21%
VL-R-59 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Unit Income Expense Total Divisions Units Value Net Assets Ratio (a) Ratio (b) Return (c) - ---------------------------------------------------------------------------------------------------------------------------------- 2003 - Continued Franklin Templeton - Templeton Foreign Securities Fund - Class 2 AG Legacy Plus 13,455 $ 8.43 $ 113,465 1.09% 0.75% 31.23% Platinum Investor I & II 54,774 10.55 578,054 1.04% 0.75% 31.23% Platinum Investor III 514,133 10.56 5,431,242 1.63% 0.70% 31.29% Platinum Investor PLUS 4,611 10.21 47,094 0.83% 0.70% 31.29% Platinum Investor Survivor 5,955 10.63 63,285 0.15% 0.40% 31.69% Platinum Investor Survivor II 26,168 10.55 276,165 1.34% 0.75% 31.23% Goldman Sachs Capital Growth Fund Platinum Investor I & II 14,861 8.55 127,035 0.00% 0.75% 2.21% Platinum Investor III 16,224 8.56 138,901 0.00% 0.70% 2.22% Platinum Investor PLUS 115 10.46 1,202 0.00% 0.70% 2.22% Platinum Investor Survivor 740,038 8.64 6,394,727 0.00% 0.40% 2.23% Platinum Investor Survivor II 202,510 9.08 1,839,317 0.00% 0.75% 2.21% Janus Aspen Series International Growth Portfolio - Service Shares Corporate America 3,219 6.78 21,839 1.12% 0.35% 34.06% Platinum Investor I & II 84,575 6.70 566,508 0.97% 0.75% 33.53% Platinum Investor III 184,544 6.65 1,227,085 0.93% 0.70% 33.60% Platinum Investor PLUS 3,647 10.66 38,856 0.94% 0.70% 33.60% Platinum Investor Survivor 35,446 6.77 240,071 1.09% 0.40% 34.00% Platinum Investor Survivor II 4,343 10.53 45,738 1.20% 0.75% 33.53% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Corporate America 2,344 4.50 10,540 0.00% 0.35% 34.29% Platinum Investor I & II 52,305 4.44 232,264 0.00% 0.75% 33.76% Platinum Investor III 377,143 4.33 1,633,083 0.00% 0.70% 33.82% Platinum Investor PLUS 6,125 11.31 69,306 0.00% 0.70% 33.82% Platinum Investor Survivor 29,454 4.49 132,254 0.00% 0.40% 34.23% Platinum Investor Survivor II 996 10.11 10,066 0.00% 0.75% 33.76% Janus Aspen Series Worldwide Growth Portfolio - Service Shares Corporate America 10,759 6.34 68,223 0.91% 0.35% 23.25% Platinum Investor I & II 128,751 6.26 806,098 0.94% 0.75% 22.76% Platinum Investor III 314,555 6.20 1,951,654 0.84% 0.70% 22.82% Platinum Investor PLUS 8,332 9.91 82,556 0.88% 0.70% 22.82% Platinum Investor Survivor 36,703 6.33 232,358 0.94% 0.40% 23.19% Platinum Investor Survivor II 28,353 9.49 269,186 0.61% 0.75% 22.76% JPMorgan Mid Cap Value Portfolio Platinum Investor I & II 39 12.37 482 0.00% 0.75% 23.67% Platinum Investor III 9,332 12.37 115,457 0.00% 0.70% 23.72% Platinum Investor PLUS 139 12.37 1,723 0.00% 0.70% 23.72% Platinum Investor Survivor II 359 12.37 4,435 0.00% 0.75% 23.67% JPMorgan Small Company Portfolio Platinum Investor I & II 24,698 9.04 223,279 0.00% 0.75% 34.96% Platinum Investor III 62,123 8.89 552,395 0.00% 0.70% 35.03% Platinum Investor PLUS 1,545 11.07 17,103 0.00% 0.70% 35.03% Platinum Investor Survivor 1,101 9.14 10,060 0.00% 0.40% 35.43% Platinum Investor Survivor II 469 11.62 5,450 0.00% 0.75% 34.96% MFS VIT Capital Opportunities Series - Initial Class Corporate America 3,396 6.05 20,562 0.21% 0.35% 26.94% Platinum Investor I & II 123,819 5.98 740,269 0.26% 0.75% 26.44%
VL-R-60 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Unit Income Expense Total Divisions Units Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------------------------- 2003 - Continued MFS VIT Capital Opportunities Series - Initial Class - Continued Platinum Investor III 351,732 $ 6.03 $2,121,183 0.22% 0.70% 26.50% Platinum Investor PLUS 13,208 10.16 134,162 0.13% 0.70% 26.50% Platinum Investor Survivor 42,350 6.05 256,019 0.22% 0.40% 26.88% Platinum Investor Survivor II 2,444 9.26 22,624 0.23% 0.75% 26.44% MFS VIT Emerging Growth Series - Initial Class AG Legacy Plus 9,716 9.57 92,944 0.00% 0.75% 29.25% Corporate America 1,272 4.40 5,594 0.00% 0.35% 29.77% Platinum Investor I & II 707,829 9.31 6,592,132 0.00% 0.75% 29.25% Platinum Investor III 710,798 4.93 3,503,311 0.00% 0.70% 29.32% Platinum Investor PLUS 10,988 10.38 114,037 0.00% 0.70% 29.32% Platinum Investor Survivor 128,450 4.39 564,347 0.00% 0.40% 29.71% Platinum Investor Survivor II 2,081 8.93 18,588 0.00% 0.75% 29.25% MFS VIT New Discovery Series - Initial Class AG Legacy Plus 11,867 7.40 87,852 0.00% 0.75% 32.72% Corporate America 4,165 8.03 33,449 0.00% 0.35% 33.25% Platinum Investor I & II 118,366 7.93 938,613 0.00% 0.75% 32.72% Platinum Investor III 209,507 7.76 1,626,577 0.00% 0.70% 32.79% Platinum Investor PLUS 7,988 10.55 84,253 0.00% 0.70% 32.79% Platinum Investor Survivor 12,890 8.02 103,356 0.00% 0.40% 33.18% Platinum Investor Survivor II 20,459 10.17 208,046 0.00% 0.75% 32.72% MFS VIT Research Series - Initial Class Corporate America 3,197 6.60 21,110 0.49% 0.35% 24.27% Platinum Investor I & II 45,499 6.52 296,621 0.62% 0.75% 23.77% Platinum Investor III 127,774 6.49 829,360 0.60% 0.70% 23.84% Platinum Investor PLUS 3,326 10.26 34,120 0.32% 0.70% 23.84% Platinum Investor Survivor 10,143 6.59 66,864 0.69% 0.40% 24.21% Platinum Investor Survivor II 3,856 9.56 36,872 0.50% 0.75% 23.77% MFS VIT Total Return Series - Initial Class AG Legacy Plus 133,539 5.64 752,783 1.61% 0.75% 15.45% Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Corporate America 1,001 5.61 5,612 0.00% 0.35% 27.62% Platinum Investor I & II 51,089 5.54 282,942 0.00% 0.75% 27.11% Platinum Investor III 246,565 5.44 1,342,011 0.00% 0.70% 27.18% Platinum Investor PLUS 9,135 10.15 92,709 0.00% 0.70% 27.18% Platinum Investor Survivor 14,189 5.60 79,457 0.00% 0.40% 27.56% Platinum Investor Survivor II 6,290 9.32 58,612 0.00% 0.75% 27.11% Neuberger Berman AMT Partners Portfolio - Class I AG Legacy Plus 12,144 9.60 116,594 0.00% 0.75% 34.08% Oppenheimer Balanced Fund/VA - Non-Service Shares Platinum Investor I & II 2 11.87 18 0.00% 0.75% 18.74% Platinum Investor III 5,675 11.88 67,413 0.00% 0.70% 18.78% Platinum Investor PLUS 491 11.88 5,829 0.00% 0.70% 18.78% Platinum Investor Survivor 433 11.90 5,158 0.00% 0.40% 19.02% Platinum Investor Survivor II 3,197 11.87 37,965 0.00% 0.75% 18.74% Oppenheimer Global Securities Fund/VA - Non-Service Shares Platinum Investor I & II 2,681 14.22 38,121 0.00% 0.75% 42.19% Platinum Investor III 7,964 14.22 113,286 0.00% 0.70% 42.24%
VL-R-61 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Unit Income Expense Total Divisions Units Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------------------------- 2003 - Continued Oppenheimer Global Securities Fund/VA - Non-Service Shares - Continued Platinum Investor PLUS 254 $14.22 $ 3,614 0.00% 0.70% 42.24% Platinum Investor Survivor 1,271 14.25 18,122 0.00% 0.40% 42.53% Platinum Investor Survivor II 316 14.22 4,494 0.00% 0.75% 42.19% Oppenheimer High Income Fund/VA - Non-Service Shares AG Legacy Plus 6,177 11.57 71,478 9.13% 0.75% 23.03% PIMCO VIT Real Return Portfolio - Administrative Class AG Legacy Plus 46,648 12.95 604,251 2.34% + 0.75% 8.04% Corporate America 2,415 14.29 34,504 2.87% + 0.35% 8.47% Platinum Investor I & II 115,773 14.11 1,633,587 2.41% + 0.75% 8.04% Platinum Investor III 357,225 14.16 5,058,921 2.55% + 0.70% 8.10% Platinum Investor PLUS 19,594 11.96 234,262 2.38% + 0.70% 8.10% Platinum Investor Survivor 55,992 14.27 798,850 2.66% + 0.40% 8.42% Platinum Investor Survivor II 12,541 12.12 152,019 2.32% + 0.75% 8.04% PIMCO VIT Short-Term Portfolio - Administrative Class Corporate America 15,920 11.19 178,227 1.65% 0.35% 1.69% Platinum Investor I & II 198,676 11.05 2,196,210 2.23% 0.75% 1.29% Platinum Investor III 136,457 11.06 1,509,539 1.59% 0.70% 1.34% Platinum Investor PLUS 5,065 10.30 52,148 1.40% 0.70% 1.34% Platinum Investor Survivor 22,482 11.18 251,288 1.66% 0.40% 1.64% Platinum Investor Survivor II 29,761 10.40 309,375 1.79% 0.75% 1.29% PIMCO VIT Total Return Portfolio - Administrative Class AG Legacy Plus 35,437 11.94 423,015 2.68% + 0.75% 4.26% Corporate America 6,930 12.67 87,796 3.00% + 0.35% 4.68% Platinum Investor I & II 258,775 12.51 3,237,164 2.85% + 0.75% 4.26% Platinum Investor III 437,126 12.57 5,495,000 2.98% + 0.70% 4.31% Platinum Investor PLUS 24,496 10.96 268,413 2.72% + 0.70% 4.31% Platinum Investor Survivor 51,352 12.65 649,546 2.80% + 0.40% 4.63% Platinum Investor Survivor II 52,389 11.07 579,689 3.31% + 0.75% 4.26% Putnam VT Diversified Income Fund - Class IB AG Legacy Plus 8,850 12.66 112,000 8.11% 0.75% 19.15% Corporate America 294,605 12.87 3,792,813 7.25% 0.35% 19.63% Platinum Investor I & II 89,892 12.22 1,098,789 9.11% 0.75% 19.15% Platinum Investor III 57,820 13.09 756,793 6.90% 0.70% 19.21% Platinum Investor PLUS 4,230 12.13 51,314 3.90% 0.70% 19.21% Platinum Investor Survivor 4,357 12.87 56,062 8.28% 0.40% 19.57% Platinum Investor Survivor II 122 12.47 1,524 0.00% 0.75% 19.15% Putnam VT Growth and Income Fund - Class IB Corporate America 371,886 10.16 3,778,936 1.40% 0.35% 26.94% Platinum Investor I & II 509,573 10.57 5,386,247 1.85% 0.75% 26.43% Platinum Investor III 467,361 9.54 4,459,408 1.57% 0.70% 26.49% Platinum Investor PLUS 13,002 10.68 138,850 1.12% 0.70% 26.49% Platinum Investor Survivor 70,398 10.15 714,878 1.73% 0.40% 26.87% Platinum Investor Survivor II 4,092 10.48 42,897 1.32% 0.75% 26.43% Putnam VT International Growth and Income Fund - Class IB Corporate America 1,334 9.20 12,264 0.00% 0.35% 37.37% Platinum Investor I & II 239,580 10.72 2,568,951 1.40% 0.75% 36.82% Platinum Investor III 198,598 9.49 1,884,181 1.43% 0.70% 36.89%
VL-R-62 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------ 2003 - Continued Putnam VT International Growth and Income Fund - Class IB - Continued Platinum Investor PLUS 4,529 $11.15 $ 50,500 0.85% 0.70% 36.89% Platinum Investor Survivor 43,197 9.19 396,996 2.62% 0.40% 37.30% Platinum Investor Survivor II 12,397 12.12 150,271 1.33% 0.75% 36.82% Putnam VT Small Cap Value Fund - Class IB AG Legacy Plus 25,739 15.81 407,015 0.33% 0.75% 48.53% Putnam VT Vista Fund - Class IB AG Legacy Plus 15,464 4.73 73,086 0.00% 0.75% 32.17% Putnam VT Voyager Fund - Class IB AG Legacy Plus 48,322 5.52 266,775 0.37% 0.75% 23.98% Safeco RST Core Equity Portfolio Platinum Investor I & II 276,177 8.77 2,421,492 0.89% 0.75% 23.85% Platinum Investor III 63,936 7.64 488,773 1.08% 0.70% 23.91% Platinum Investor PLUS 838 10.47 8,774 1.36% 0.70% 23.91% Platinum Investor Survivor 32,237 7.31 235,796 1.04% 0.40% 24.28% Platinum Investor Survivor II 187 9.24 1,733 1.11% 0.75% 23.85% Safeco RST Growth Opportunities Portfolio Corporate America 3,371 8.87 29,895 0.00% 0.35% 42.44% Platinum Investor I & II 396,491 8.69 3,446,391 0.00% 0.75% 41.87% Platinum Investor III 120,957 9.29 1,124,048 0.00% 0.70% 41.95% Platinum Investor PLUS 3,567 10.04 35,811 0.00% 0.70% 41.95% Platinum Investor Survivor 17,018 8.86 150,834 0.00% 0.40% 42.37% Platinum Investor Survivor II 23,243 10.41 242,035 0.00% 0.75% 41.87% Scudder VIT EAFE Equity Index Fund - Class A Legacy Plus -- 8.30 -- 0.00% 0.75% 32.36% Scudder VIT Equity 500 Index Fund - Class A Legacy Plus 1,670 9.25 15,448 1.15% 0.75% 27.20% SunAmerica - Aggressive Growth Portfolio - Class 1 Platinum Investor I & II 7,575 9.99 75,636 0.00% 0.75% 27.50% Platinum Investor III 14,418 9.99 144,087 0.00% 0.70% 27.56% Platinum Investor PLUS 1,974 10.61 20,949 0.00% 0.70% 27.56% Platinum Investor Survivor II 329 9.99 3,284 0.00% 0.75% 27.50% SunAmerica - SunAmerica Balanced Portfolio - Class 1 Platinum Investor I & II 195 10.11 1,968 2.38% 0.75% 14.26% Platinum Investor III 28,434 10.12 287,813 2.66% 0.70% 14.31% Platinum Investor PLUS 6,452 10.44 67,366 3.13% 0.70% 14.31% Platinum Investor Survivor II 407 10.11 4,119 0.00% 0.75% 14.26% UIF Equity Growth Portfolio - Class I Platinum Investor I & II 326,206 9.60 3,130,767 0.00% 0.75% 23.99% Platinum Investor III 66,650 6.44 429,207 0.00% 0.70% 24.06% Platinum Investor PLUS 1,975 10.26 20,256 0.00% 0.70% 24.06% Platinum Investor Survivor 30,141 6.12 184,561 0.00% 0.40% 24.43% Platinum Investor Survivor II 141 9.06 1,280 0.00% 0.75% 23.99% UIF High Yield Portfolio - Class I Platinum Investor I & II 126,400 10.25 1,295,523 0.00% 0.75% 24.77% Platinum Investor III 20,941 10.62 222,461 0.00% 0.70% 24.83% Platinum Investor PLUS 432 11.86 5,121 0.00% 0.70% 24.83% Platinum Investor Survivor 24,802 9.93 246,395 0.00% 0.40% 25.21%
VL-R-63 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------------------- 2003 - Continued UIF High Yield Portfolio - Class I - Continued Platinum Investor Survivor II 3,683 $11.58 $ 42,672 0.00% 0.75% 24.77% VALIC Company I - International Equities Fund AG Legacy Plus 14,398 7.02 101,091 1.46% 0.75% 28.67% Platinum Investor I & II 122,430 9.01 1,102,745 1.35% 0.75% 28.67% Platinum Investor III 67,471 7.79 525,299 1.44% 0.70% 28.73% Platinum Investor PLUS 3,724 10.19 37,962 2.18% 0.70% 28.73% Platinum Investor Survivor 12,165 6.88 83,664 1.61% 0.40% 29.12% Platinum Investor Survivor II 347 10.60 3,680 1.13% 0.75% 28.67% VALIC Company I - Mid Cap Index Fund AG Legacy Plus 19,915 11.17 222,472 0.66% 0.75% 34.11% Corporate America 6,985 12.09 84,411 0.67% 0.35% 34.65% Platinum Investor I & II 473,968 16.56 7,850,709 0.65% 0.75% 34.11% Platinum Investor III 355,307 10.88 3,864,025 0.67% 0.70% 34.18% Platinum Investor PLUS 15,183 11.20 169,998 0.77% 0.70% 34.18% Platinum Investor Survivor 65,007 12.08 785,117 0.67% 0.40% 34.58% Platinum Investor Survivor II 34,488 12.22 421,438 0.63% 0.75% 34.11% VALIC Company I - Money Market I Fund AG Legacy Plus 54,423 10.51 572,075 0.59% 0.75% -0.15% Corporate America 5,236 10.89 57,007 0.20% 0.35% 0.25% Legacy Plus 1,003 11.07 11,107 0.60% 0.75% -0.15% Platinum Investor I & II 1,187,067 11.59 13,752,956 0.59% 0.75% -0.15% Platinum Investor III 1,157,750 10.43 12,072,544 0.64% 0.70% -0.10% Platinum Investor PLUS 98,210 10.02 983,952 0.77% 0.70% -0.10% Platinum Investor Survivor 380,198 10.88 4,136,738 0.58% 0.40% 0.20% Platinum Investor Survivor II 506,784 10.05 5,091,299 0.62% 0.75% -0.15% VALIC Company I - Nasdaq-100 Index Fund Platinum Investor I & II 175,463 4.44 778,806 0.00% 0.75% 48.16% Platinum Investor III 458,384 4.36 1,998,388 0.00% 0.70% 48.24% Platinum Investor PLUS 5,849 12.50 73,115 0.00% 0.70% 48.24% Platinum Investor Survivor 20,392 4.49 91,524 0.00% 0.40% 48.68% Platinum Investor Survivor II 162 9.41 1,520 0.00% 0.75% 48.16% VALIC Company I - Science & Technology Fund Platinum Investor I & II 49,200 3.95 194,220 0.00% 0.75% 50.34% Platinum Investor III 164,694 3.91 644,460 0.00% 0.70% 50.42% Platinum Investor PLUS 2,392 12.13 29,006 0.00% 0.70% 50.42% Platinum Investor Survivor 13,270 3.99 52,968 0.00% 0.40% 50.87% Platinum Investor Survivor II 702 9.11 6,393 0.00% 0.75% 50.34% VALIC Company I - Small Cap Index Fund Corporate America 4,923 11.46 56,403 0.54% 0.35% 45.95% Platinum Investor I & II 132,279 11.31 1,496,516 0.51% 0.75% 45.37% Platinum Investor III 150,669 11.13 1,677,464 0.50% 0.70% 45.44% Platinum Investor PLUS 7,881 11.78 92,804 0.50% 0.70% 45.44% Platinum Investor Survivor 26,367 11.44 301,623 0.51% 0.40% 45.88% Platinum Investor Survivor II 1,939 12.67 24,572 0.55% 0.75% 45.37% VALIC Company I - Stock Index Fund AG Legacy Plus 40,926 7.61 311,432 1.31% + 0.75% 27.24% Corporate America 14,966 7.59 113,624 1.35% + 0.35% 27.75%
VL-R-64 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------------------- 2003 - Continued VALIC Company I - Stock Index Fund - Continued Platinum Investor I & II 1,600,529 $10.43 $16,687,793 1.31% + 0.75% 27.24% Platinum Investor III 2,468,374 7.89 19,467,096 1.39% + 0.70% 27.31% Platinum Investor PLUS 42,167 10.81 455,713 1.42% + 0.70% 27.31% Platinum Investor Survivor 685,168 7.59 5,198,479 1.33% + 0.40% 27.69% Platinum Investor Survivor II 172,218 10.06 1,733,298 1.28% + 0.75% 27.24% Van Kampen LIT Emerging Growth Portfolio - Class I AG Legacy Plus 13,282 4.47 59,393 0.00% 0.75% 26.39% Van Kampen LIT Government Portfolio - Class I AG Legacy Plus 13,082 12.48 163,224 4.12% 0.75% 0.99% Van Kampen LIT Growth and Income Portfolio - Class I Platinum Investor I & II 178,503 10.51 1,876,564 0.86% 0.75% 27.07% Platinum Investor III 155,250 10.52 1,633,472 0.92% 0.70% 27.14% Platinum Investor PLUS 9,593 10.72 102,840 0.39% 0.70% 27.14% Platinum Investor Survivor 15,154 10.57 160,247 1.05% 0.40% 27.52% Platinum Investor Survivor II 4,494 10.51 47,245 0.19% 0.75% 27.07% Vanguard VIF High Yield Bond Portfolio Platinum Investor I & II 73,461 11.85 870,269 5.46% 0.75% 16.00% Platinum Investor III 203,425 11.93 2,427,400 4.89% 0.70% 16.05% Platinum Investor PLUS 9,286 11.47 106,560 3.50% 0.70% 16.05% Platinum Investor Survivor 71,234 11.98 853,280 6.64% 0.40% 16.40% Platinum Investor Survivor II 3,152 11.75 37,022 4.95% 0.75% 16.00% Vanguard VIF REIT Index Portfolio Corporate America 3,843 17.00 65,316 4.03% + 0.35% 35.01% Platinum Investor I & II 79,522 16.78 1,334,528 3.21% + 0.75% 34.47% Platinum Investor III 239,528 16.78 4,019,190 3.13% + 0.70% 34.54% Platinum Investor PLUS 14,257 12.62 179,968 3.25% + 0.70% 34.54% Platinum Investor Survivor 21,216 16.97 360,003 3.42% + 0.40% 34.94% Platinum Investor Survivor II 9,515 14.62 139,141 2.95% + 0.75% 34.47% 2002 AIM V.I. Capital Appreciation Fund - Series I The One VUL Solution -- 4.77 -- 0.00% 0.75% -24.92% AIM V.I. International Growth Fund - Series I AG Legacy Plus 22,776 5.10 116,132 0.77% 0.75% -16.30% Corporate America 5,928 4.90 29,029 0.16% 0.35% -15.97% Platinum Investor I & II 368,831 7.06 2,602,616 0.60% 0.75% -16.30% Platinum Investor III 77,922 5.92 461,268 0.76% 0.70% -16.26% Platinum Investor PLUS 480 8.19 3,927 0.81% 0.70% 0.00% Platinum Investor Survivor 50,094 4.90 245,264 0.63% 0.40% -16.01% Platinum Investor Survivor II 1,368 8.59 11,750 1.20% 0.75% 0.00% The One VUL Solution -- 4.65 -- 1.13% 0.75% -16.31% AIM V.I. Premier Equity Fund - Series I Corporate America 6,136 4.75 29,131 0.07% 0.35% -30.50% Legacy Plus 1 5.27 3 0.00% 0.75% -30.78% Platinum Investor I & II 957,563 7.63 7,301,703 0.32% 0.75% -30.78% Platinum Investor III 347,063 5.66 1,965,988 0.44% 0.70% -30.75% Platinum Investor PLUS 1,706 8.22 14,024 0.81% 0.70% 0.00%
VL-R-65 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------ 2002 - Continued AIM V.I. Premier Equity Fund - Series I - Continued Platinum Investor Survivor 105,247 $ 4.75 $ 499,599 0.34% 0.40% -30.54% Platinum Investor Survivor II 3,438 7.09 24,384 0.80% 0.75% 0.00% American Century VP Value Fund - Class I AG Legacy Plus 32,212 11.59 373,282 0.85% + 0.75% -13.27% Corporate America 5,131 10.56 54,184 0.56% + 0.35% -12.93% Platinum Investor I & II 180,166 10.47 1,886,100 0.79% + 0.75% -13.27% Platinum Investor III 221,601 10.40 2,303,966 0.59% + 0.70% -13.23% Platinum Investor PLUS 4,788 8.81 42,174 0.00% 0.70% 0.00% Platinum Investor Survivor 12,625 10.55 133,175 0.91% + 0.40% -12.97% Platinum Investor Survivor II 42,508 9.22 391,994 0.01% + 0.75% 0.00% Ayco Growth Fund Platinum Investor I & II 29,066 6.62 192,386 0.35% 0.75% -29.83% Platinum Investor III 30,148 6.63 199,755 0.39% 0.70% -29.80% Platinum Investor PLUS 1 8.10 7 0.00% 0.70% 0.00% Platinum Investor Survivor 789,598 6.67 5,264,612 0.32% 0.40% -29.58% Platinum Investor Survivor II 222,735 7.03 1,566,422 0.72% 0.75% 0.00% Credit Suisse Small Cap Growth Portfolio Platinum Investor I & II 35,231 5.04 177,610 0.00% 0.75% -34.19% Platinum Investor III 51,587 4.93 254,477 0.00% 0.70% -34.15% Platinum Investor PLUS 871 7.87 6,859 0.00% 0.70% 0.00% Platinum Investor Survivor 3,366 5.08 17,097 0.00% 0.40% -33.96% Platinum Investor Survivor II 124 7.47 929 0.00% 0.75% 0.00% Dreyfus IP MidCap Stock Portfolio - Initial shares Platinum Investor I & II 63,006 8.18 515,639 0.34% 0.75% -13.15% Platinum Investor III 121,203 8.04 974,668 0.41% 0.70% -13.10% Platinum Investor PLUS 3,019 8.45 25,502 0.58% 0.70% 0.00% Platinum Investor Survivor 20,439 8.25 168,544 0.34% 0.40% -12.84% Platinum Investor Survivor II 1,861 9.26 17,237 0.63% 0.75% 0.00% Dreyfus VIF Developing Leaders Portfolio - Initial shares Corporate America 10,128 7.91 80,120 0.05% 0.35% -19.41% Platinum Investor I & II 426,312 9.63 4,107,348 0.05% 0.75% -19.73% Platinum Investor III 271,074 7.42 2,010,122 0.05% 0.70% -19.69% Platinum Investor PLUS 4,300 8.01 34,423 0.03% 0.70% 0.00% Platinum Investor Survivor 161,430 7.91 1,276,781 0.07% 0.40% -19.45% Platinum Investor Survivor II 19,192 8.71 167,114 0.05% 0.75% 0.00% Dreyfus VIF Quality Bond Portfolio - Initial shares Corporate America 7,235 12.40 89,712 4.91% 0.35% 7.39% Platinum Investor I & II 434,524 12.47 5,420,598 4.83% 0.75% 6.96% Platinum Investor III 153,439 11.80 1,811,076 5.31% 0.70% 7.01% Platinum Investor PLUS 4,878 10.46 51,041 1.39% 0.70% 0.00% Platinum Investor Survivor 19,599 12.40 242,975 5.20% 0.40% 7.33% Platinum Investor Survivor II 3,457 10.52 36,349 4.29% 0.75% 0.00% Fidelity VIP Asset Manager Portfolio - Service Class 2 AG Legacy Plus 8,505 8.77 74,595 3.64% 0.75% -9.71% Platinum Investor I & II 174,156 8.35 1,453,875 0.54% 0.75% -9.71% Platinum Investor III 79,608 8.32 662,518 2.09% 0.70% -9.66%
VL-R-66 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------ 2002 - Continued Fidelity VIP Asset Manager Portfolio - Service Class 2 - Continued Platinum Investor PLUS 1,718 $ 9.51 $ 16,348 0.00% 0.70% 0.00% Platinum Investor Survivor 8,463 8.41 71,189 2.40% 0.40% -9.39% Platinum Investor Survivor II 4,060 9.30 37,752 0.00% 0.75% 0.00% Fidelity VIP Contrafund Portfolio - Service Class 2 AG Legacy Plus 25,788 8.53 219,877 0.37% 0.75% -10.28% Corporate America 4,783 7.54 36,062 0.48% 0.35% -9.92% Platinum Investor I & II 243,910 7.48 1,823,252 0.62% 0.75% -10.28% Platinum Investor III 301,956 7.37 2,225,469 0.41% 0.70% -10.24% Platinum Investor PLUS 4,180 8.82 36,867 0.00% 0.70% 0.00% Platinum Investor Survivor 272,383 7.53 2,051,592 0.66% 0.40% -9.97% Platinum Investor Survivor II 4,002 9.31 37,252 0.00% 0.75% 0.00% Fidelity VIP Equity-Income Portfolio - Service Class 2 AG Legacy Plus 39,899 7.74 308,675 1.20% + 0.75% -17.77% Corporate America 17,330 7.89 136,717 0.96% + 0.35% -17.44% Platinum Investor I & II 264,111 7.82 2,065,557 1.52% + 0.75% -17.77% Platinum Investor III 359,047 7.82 2,809,110 1.23% + 0.70% -17.73% Platinum Investor PLUS 6,741 8.42 56,792 0.00% 0.70% 0.00% Platinum Investor Survivor 262,426 7.88 2,068,007 1.54% + 0.40% -17.48% Platinum Investor Survivor II 28,086 8.56 240,289 0.10% 0.75% 0.00% Fidelity VIP Growth Portfolio - Service Class 2 AG Legacy Plus 21,662 6.03 130,618 0.19% 0.75% -30.82% Corporate America 4,366 5.09 22,219 0.10% 0.35% -30.54% Platinum Investor I & II 305,211 5.04 1,539,790 0.12% 0.75% -30.82% Platinum Investor III 528,324 4.99 2,638,612 0.10% 0.70% -30.78% Platinum Investor PLUS 6,371 8.04 51,207 0.00% 0.70% 0.00% Platinum Investor Survivor 404,293 5.08 2,055,203 0.29% 0.40% -30.57% Platinum Investor Survivor II 30,554 7.15 218,579 0.00% 0.75% 0.00% Franklin Templeton - Franklin Small Cap Fund - Class 2 AG Legacy Plus 19,916 4.65 92,656 0.37% 0.75% -29.22% The One VUL Solution -- 4.23 -- 0.30% 0.75% -29.22% Franklin Templeton - Franklin U.S. Government Fund - Class 2 Platinum Investor I & II 19,378 10.93 211,781 0.20% 0.75% 0.00% Platinum Investor III 765,913 10.93 8,374,946 22.84% 0.70% 0.00% Platinum Investor PLUS 1,443 10.58 15,262 0.00% 0.70% 0.00% Platinum Investor Survivor 25,055 10.97 274,784 0.00% 0.40% 0.00% Platinum Investor Survivor II 372 10.93 4,064 0.00% 0.75% 0.00% Franklin Templeton - Mutual Shares Securities Fund - Class 2 Platinum Investor I & II 12,404 8.76 108,650 1.85% + 0.75% 0.00% Platinum Investor III 485,325 8.76 4,253,340 0.00% 0.70% 0.00% Platinum Investor PLUS 2,794 8.62 24,079 0.00% 0.70% 0.00% Platinum Investor Survivor 1,068 8.79 9,384 0.00% 0.40% 0.00% Platinum Investor Survivor II 8,126 8.76 71,181 0.76% + 0.75% 0.00% Franklin Templeton - Templeton Developing Markets Securities Fund - Class 2 The One VUL Solution -- 6.18 -- 2.91% 0.75% -0.89% Franklin Templeton - Templeton Foreign Securities Fund - Class 2 AG Legacy Plus 6,595 6.43 42,380 2.31% 0.75% -19.17% Platinum Investor I & II 7,590 8.04 61,042 0.76% 0.75% 0.00%
VL-R-67 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------ 2002 - Continued Franklin Templeton - Templeton Foreign Securities Fund - Class 2 - Continued Platinum Investor III 517,539 $8.05 $4,164,199 0.01% 0.70% 0.00% Platinum Investor PLUS 1,105 7.78 8,596 0.00% 0.70% 0.00% Platinum Investor Survivor 595 8.07 4,799 0.00% 0.40% 0.00% Platinum Investor Survivor II 9,504 8.04 76,434 1.64% 0.75% 0.00% Janus Aspen Series International Growth Portfolio - Service Shares Corporate America 1,873 5.06 9,478 0.94% 0.35% -26.02% Platinum Investor I & II 77,304 5.02 387,785 0.72% 0.75% -26.31% Platinum Investor III 130,384 4.98 648,942 0.79% 0.70% -26.28% Platinum Investor PLUS 1,057 7.98 8,431 0.62% 0.70% 0.00% Platinum Investor Survivor 25,566 5.05 129,225 0.79% 0.40% -26.05% Platinum Investor Survivor II 10,266 7.89 80,958 1.54% 0.75% 0.00% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Corporate America 2,135 3.35 7,151 0.00% 0.35% -28.37% Platinum Investor I & II 50,819 3.32 168,710 0.00% 0.75% -28.66% Platinum Investor III 257,635 3.24 833,628 0.00% 0.70% -28.62% Platinum Investor PLUS 1,532 8.45 12,952 0.00% 0.70% 0.00% Platinum Investor Survivor 14,436 3.35 48,291 0.00% 0.40% -28.41% Janus Aspen Series Worldwide Growth Portfolio - Service Shares Corporate America 8,060 5.14 41,468 0.79% 0.35% -25.97% Platinum Investor I & II 154,176 5.10 786,343 0.86% 0.75% -26.26% Platinum Investor III 206,199 5.05 1,041,675 0.76% 0.70% -26.23% Platinum Investor PLUS 1,138 8.07 9,184 0.70% 0.70% 0.00% Platinum Investor Survivor 21,524 5.14 110,615 0.71% 0.40% -26.00% Platinum Investor Survivor II 14,644 7.73 113,257 0.83% 0.75% 0.00% JPMorgan Small Company Portfolio Platinum Investor I & II 14,260 6.70 95,522 0.21% 0.75% -22.24% Platinum Investor III 32,094 6.59 211,344 0.17% 0.70% -22.20% Platinum Investor PLUS 83 8.20 678 0.00% 0.70% 0.00% Platinum Investor Survivor 1,804 6.75 12,176 0.26% 0.40% -21.96% Platinum Investor Survivor II 116 8.61 998 0.00% 0.75% 0.00% MFS VIT Capital Opportunities Series - Initial Class Corporate America 3,029 4.77 14,449 0.05% 0.35% -29.94% Platinum Investor I & II 138,353 4.73 654,212 0.04% 0.75% -30.22% Platinum Investor III 261,521 4.77 1,246,756 0.05% 0.70% -30.18% Platinum Investor PLUS 1,935 8.03 15,536 0.00% 0.70% 0.00% Platinum Investor Survivor 38,315 4.76 182,558 0.06% 0.40% -29.97% Platinum Investor Survivor II 1,984 7.32 14,526 0.01% 0.75% 0.00% MFS VIT Emerging Growth Series - Initial Class AG Legacy Plus 7,536 7.40 55,771 3.14% 0.75% -32.52% Corporate America 1,471 3.39 4,984 0.00% 0.35% -33.99% Platinum Investor I & II 734,536 7.21 5,292,534 0.00% 0.75% -34.26% Platinum Investor III 407,316 3.81 1,552,389 0.00% 0.70% -34.22% Platinum Investor PLUS 1,418 8.03 11,383 0.00% 0.70% 0.00% Platinum Investor Survivor 112,158 3.39 379,908 0.00% 0.40% -34.02% Platinum Investor Survivor II 978 6.91 6,758 0.00% 0.75% 0.00% MFS VIT Investors Trust Series - Initial Class The One VUL Solution -- 6.78 -- 0.75% 0.75% -21.56%
VL-R-68 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Unit Income Expense Total Divisions Units Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------ 2002 - Continued MFS VIT New Discovery Series - Initial Class AG Legacy Plus 7,546 $ 5.58 $ 42,092 0.00% 0.75% -32.14% Corporate America 3,836 6.03 23,116 0.00% 0.35% -31.87% Platinum Investor I & II 109,936 5.97 656,847 0.00% 0.75% -32.14% Platinum Investor III 128,296 5.85 750,133 0.00% 0.70% -32.11% Platinum Investor PLUS 2,463 7.94 19,562 0.00% 0.70% 0.00% Platinum Investor Survivor 6,447 6.02 38,816 0.00% 0.40% -31.90% Platinum Investor Survivor II 18,384 7.66 140,857 0.00% 0.75% 0.00% MFS VIT Research Series - Initial Class Corporate America 2,002 5.31 10,636 0.19% 0.35% -24.80% Platinum Investor I & II 43,887 5.27 231,157 0.25% 0.75% -25.10% Platinum Investor III 95,980 5.24 503,077 0.25% 0.70% -25.06% Platinum Investor PLUS 444 8.28 3,676 0.00% 0.70% 0.00% Platinum Investor Survivor 9,598 5.31 50,938 0.31% 0.40% -24.84% Platinum Investor Survivor II 2,335 7.73 18,040 0.64% 0.75% 0.00% MFS VIT Total Return Series - Initial Class AG Legacy Plus 136,071 4.88 664,385 1.55%+ 0.75% -8.30% Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Platinum Investor I & II 57,765 4.36 251,677 0.00% 0.75% -29.87% Platinum Investor III 171,461 4.28 733,802 0.00% 0.70% -29.83% Platinum Investor PLUS 1,371 7.98 10,937 0.00% 0.70% 0.00% Platinum Investor Survivor 175,271 4.39 769,462 0.00% 0.40% -29.62% Platinum Investor Survivor II 2,862 7.33 20,977 0.00% 0.75% 0.00% Neuberger Berman AMT Partners Portfolio - Class I AG Legacy Plus 11,767 7.16 84,258 0.73% 0.75% -24.71% One Group Investment Trust Equity Index Portfolio The One VUL Solution -- 6.19 -- 0.00% 0.75% -23.06% One Group Investment Trust Large Cap Growth Portfolio The One VUL Solution -- 4.33 -- 0.00% 0.75% -29.01% One Group Investment Trust Mid Cap Growth Portfolio The One VUL Solution -- 6.71 -- 0.00% 0.75% -20.73% Oppenheimer High Income Fund/VA - Non-Service Shares AG Legacy Plus 11,744 9.40 110,445 9.93% 0.75% -3.12% The One VUL Solution -- 8.41 -- 20.28% 0.75% -3.13% PIMCO VIT Real Return Portfolio - Administrative Class AG Legacy Plus 32,681 11.99 391,822 4.15%+ 0.75% 16.92% Corporate America 3,026 13.17 39,867 4.70%+ 0.35% 0.00% Platinum Investor I & II 190,024 13.06 2,481,720 5.95%+ 0.75% 16.92% Platinum Investor III 174,421 13.10 2,285,113 4.20%+ 0.70% 16.98% Platinum Investor PLUS 5,160 11.06 57,074 0.74%+ 0.70% 0.00% Platinum Investor Survivor 61,007 13.16 802,807 4.30%+ 0.40% 17.33% Platinum Investor Survivor II 5,707 11.22 64,033 4.48%+ 0.75% 0.00% PIMCO VIT Short-Term Portfolio - Administrative Class Corporate America 6,727 11.01 74,053 2.92%+ 0.35% 2.66% Platinum Investor I & II 80,480 10.91 878,341 2.93%+ 0.75% 2.25% Platinum Investor III 86,224 10.92 941,253 2.89%+ 0.70% 2.30% Platinum Investor PLUS 560 10.16 5,689 0.71%+ 0.70% 0.00% Platinum Investor Survivor 17,021 11.00 187,177 2.44%+ 0.40% 2.61% Platinum Investor Survivor II 34,758 10.26 356,732 3.78%+ 0.75% 0.00%
VL-R-69 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Unit Income Expense Total Divisions Units Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------ 2002 - Continued PIMCO VIT Total Return Portfolio - Administrative Class AG Legacy Plus 25,099 $11.45 $ 287,373 4.25%+ 0.75% 8.27% Corporate America 4,850 12.10 58,703 4.47%+ 0.35% 8.71% Platinum Investor I & II 276,366 12.00 3,315,961 4.25%+ 0.75% 8.27% Platinum Investor III 301,969 12.05 3,639,057 4.27%+ 0.70% 8.33% Platinum Investor PLUS 4,990 10.50 52,417 1.45%+ 0.70% 0.00% Platinum Investor Survivor 51,588 12.09 623,682 3.98%+ 0.40% 8.65% Platinum Investor Survivor II 43,725 10.61 464,046 5.29%+ 0.75% 0.00% Putnam VT Diversified Income Fund - Class IB AG Legacy Plus 7,901 10.62 83,918 8.29% 0.75% 5.11% Corporate America 190,178 10.76 2,046,636 5.68% 0.35% 5.53% Platinum Investor I & II 100,097 10.26 1,026,852 9.81% 0.75% 5.11% Platinum Investor III 34,162 10.98 375,082 7.36% 0.70% 5.17% Platinum Investor PLUS 246 10.18 2,502 0.00% 0.70% 0.00% Platinum Investor Survivor 4,759 10.76 51,212 8.76% 0.40% 5.48% Putnam VT Growth and Income Fund - Class IB Corporate America 234,304 8.01 1,875,663 1.01%+ 0.35% -19.27% Platinum Investor I & II 556,852 8.36 4,655,525 1.65%+ 0.75% -19.59% Platinum Investor III 326,752 7.54 2,464,769 1.35%+ 0.70% -19.55% Platinum Investor PLUS 3,645 8.44 30,768 0.00% 0.70% 0.00% Platinum Investor Survivor 68,750 8.00 550,273 1.54%+ 0.40% -19.31% Platinum Investor Survivor II 2,240 8.29 18,571 0.00% 0.75% 0.00% Putnam VT International Growth and Income Fund - Class IB Platinum Investor I & II 235,399 7.84 1,844,874 0.53% 0.75% -14.41% Platinum Investor III 135,756 6.93 940,907 0.51% 0.70% -14.37% Platinum Investor PLUS 682 8.15 5,553 0.00% 0.70% 0.00% Platinum Investor Survivor 230,768 6.69 1,544,705 0.76% 0.40% -14.11% Platinum Investor Survivor II 12,013 8.86 106,432 0.53% 0.75% 0.00% Putnam VT Small Cap Value Fund - Class IB AG Legacy Plus 24,600 10.65 261,902 0.23%+ 0.75% -18.88% Putnam VT Vista Fund - Class IB AG Legacy Plus 14,678 3.58 52,485 0.00% 0.75% -31.12% The One VUL Solution -- 3.97 -- 0.00% 0.75% -31.12% Putnam VT Voyager Fund - Class IB AG Legacy Plus 47,406 4.45 211,102 0.59% 0.75% -27.08% Safeco RST Core Equity Portfolio Platinum Investor I & II 332,477 7.08 2,353,833 0.83% 0.75% -26.46% Platinum Investor III 48,012 6.17 296,218 1.53% 0.70% -26.43% Platinum Investor PLUS 291 8.45 2,455 1.58% 0.70% 0.00% Platinum Investor Survivor 27,186 5.89 160,003 1.28% 0.40% -26.20% Platinum Investor Survivor II 145 7.46 1,081 2.53% 0.75% 0.00% Safeco RST Growth Opportunities Portfolio Corporate America 3,445 6.23 21,447 0.00% 0.35% -37.89% Platinum Investor I & II 445,419 6.13 2,728,943 0.00% 0.75% -38.14% Platinum Investor III 105,618 6.55 691,469 0.00% 0.70% -38.11% Platinum Investor PLUS 1,743 7.07 12,330 0.00% 0.70% 0.00% Platinum Investor Survivor 30,017 6.23 186,867 0.00% 0.40% -37.92% Platinum Investor Survivor II 12,647 7.34 92,822 0.00% 0.75% 0.00%
VL-R - 70 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Unit Income Expense Total Divisions Units Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------ 2002 - Continued Scudder International Portfolio The One VUL Solution -- $ 5.42 $ -- 0.87% 0.75% -14.13% Scudder Small Cap Value Portfolio The One VUL Solution -- 10.75 -- 0.79% 0.75% -12.01% Scudder VIT EAFE Equity Index Fund - Class A Legacy Plus -- 6.27 -- 0.00% 0.75% -22.13% Scudder VIT Equity 500 Index Fund - Class A Legacy Plus 1,610 7.27 11,703 0.15% 0.75% -22.86% SunAmerica - Aggressive Growth Portfolio - Class 1 Platinum Investor I & II 108 7.83 842 0.00% 0.75% 0.00% Platinum Investor III 2,070 7.83 16,214 0.24% 0.70% 0.00% Platinum Investor PLUS 124 8.32 1,030 0.00% 0.70% 0.00% SunAmerica - SunAmerica Balanced Portfolio - Class 1 Platinum Investor I & II 16 8.85 143 0.00% 0.75% 0.00% Platinum Investor III 8,391 8.85 74,301 2.13% 0.70% 0.00% Platinum Investor PLUS 2,001 9.13 18,277 0.00% 0.70% 0.00% UIF Equity Growth Portfolio - Class I Legacy Plus -- 7.69 -- 0.00% 0.75% -28.40% Platinum Investor I & II 381,798 7.74 2,955,218 0.15% 0.75% -28.40% Platinum Investor III 49,604 5.19 257,495 0.22% 0.70% -28.37% Platinum Investor PLUS 133 8.27 1,099 0.36% 0.70% 0.00% Platinum Investor Survivor 49,021 4.92 241,240 0.17% 0.40% -28.15% Platinum Investor Survivor II 99 7.31 726 0.00% 0.75% 0.00% UIF High Yield Portfolio - Class I Platinum Investor I & II 128,628 8.21 1,056,625 7.67% 0.75% -7.96% Platinum Investor III 13,440 8.51 114,370 10.10% 0.70% -7.92% Platinum Investor PLUS 0 9.50 1 0.00% 0.70% 0.00% Platinum Investor Survivor 23,236 7.93 184,358 8.91% 0.40% -7.64% Platinum Investor Survivor II 2,195 9.28 20,376 19.91% 0.75% 0.00% VALIC Company I - International Equities Fund AG Legacy Plus 11,056 5.46 60,328 0.64% 0.75% -19.40% Platinum Investor I & II 133,568 7.00 935,013 0.36% 0.75% -19.40% Platinum Investor III 43,063 6.05 260,439 0.40% 0.70% -19.36% Platinum Investor PLUS 57 7.92 453 0.00% 0.70% 0.00% Platinum Investor Survivor 13,500 5.33 71,906 0.42% 0.40% -19.11% Platinum Investor Survivor II 280 8.24 2,305 0.93% 0.75% 0.00% VALIC Company I - Mid Cap Index Fund AG Legacy Plus 17,425 8.33 145,149 0.99% 0.75% -15.54% Corporate America 7,522 8.98 67,512 0.64% 0.35% -15.20% Platinum Investor I & II 479,617 12.35 5,923,609 0.70% 0.75% -15.54% Platinum Investor III 229,906 8.10 1,863,384 0.72% 0.70% -15.50% Platinum Investor PLUS 2,609 8.34 21,775 0.27% 0.70% 0.00% Platinum Investor Survivor 60,525 8.97 543,149 0.73% 0.40% -15.24% Platinum Investor Survivor II 19,511 9.11 177,774 0.87% 0.75% 0.00% VALIC Company I - Money Market I Fund AG Legacy Plus 47,333 10.53 498,304 1.45% 0.75% 0.49% Corporate America 28,915 10.86 314,038 0.40% 0.35% 0.89% Legacy Plus 977 11.09 10,830 0.61% 0.75% 0.49% Platinum Investor I & II 1,576,362 11.60 18,291,099 1.32% 0.75% 0.49%
VL-R-71 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expenses Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------------------- 2002 - Continued VALIC Company I - Money Market I Fund - Continued Platinum Investor III 1,248,697 $10.44 $13,034,287 1.00% 0.70% 0.54% Platinum Investor PLUS 14,815 10.03 148,586 0.65% 0.70% 0.00% Platinum Investor Survivor 411,443 10.86 4,467,881 1.33% 0.40% 0.84% Platinum Investor Survivor II 514,618 10.06 5,177,910 1.05% 0.75% 0.49% The One VUL Solution -- 10.82 -- 0.00% 0.75% 0.49% VALIC Company I - Nasdaq-100 Index Fund Platinum Investor I & II 88,041 3.00 263,750 0.00% 0.75% -38.72% Platinum Investor III 337,089 2.94 991,382 0.00% 0.70% -38.69% Platinum Investor PLUS 457 8.43 3,855 0.00% 0.70% 0.00% Platinum Investor Survivor 10,382 3.02 31,341 0.00% 0.40% -38.50% VALIC Company I - Science & Technology Fund Platinum Investor I & II 33,591 2.63 88,200 0.00% 0.75% -40.66% Platinum Investor III 119,566 2.60 311,051 0.00% 0.70% -40.63% Platinum Investor PLUS 48 8.06 387 0.00% 0.70% 0.00% Platinum Investor Survivor 6,981 2.65 18,470 0.00% 0.40% -40.45% Platinum Investor Survivor II 506 6.06 3,062 0.00% 0.75% 0.00% VALIC Company I - Small Cap Index Fund Corporate America 3,525 7.85 27,671 1.27% 0.35% -21.10% Platinum Investor I & II 101,961 7.78 793,503 1.37% 0.75% -21.41% Platinum Investor III 89,617 7.65 686,001 0.98% 0.70% -21.37% Platinum Investor PLUS 1,298 8.10 10,508 0.65% 0.70% 0.00% Platinum Investor Survivor 20,366 7.84 159,702 1.03% 0.40% -21.14% Platinum Investor Survivor II 1,287 8.72 11,216 0.91% 0.75% 0.00% VALIC Company I - Stock Index Fund AG Legacy Plus 52,528 5.98 314,131 1.85% 0.75% -23.01% Corporate America 13,034 5.94 77,457 1.03% 0.35% -22.70% Platinum Investor I & II 1,712,769 8.19 14,034,484 1.18% 0.75% -23.01% Platinum Investor III 1,643,626 6.19 10,182,125 1.35% 0.70% -22.98% Platinum Investor PLUS 1,898 8.49 16,117 0.56% 0.70% 0.00% Platinum Investor Survivor 564,353 5.94 3,353,318 1.24% 0.40% -22.74% Platinum Investor Survivor II 80,956 7.91 640,336 2.27% 0.75% 0.00% Van Kampen LIT Emerging Growth Portfolio - Class I AG Legacy Plus 20,181 3.54 71,398 0.31% 0.75% -32.99% The One VUL Solution -- 3.49 -- 0.40% 0.75% -32.99% Van Kampen LIT Government Portfolio - Class I AG Legacy Plus 11,024 12.36 136,202 2.14% 0.75% 8.80% Van Kampen LIT Growth and Income Portfolio - Class I Platinum Investor I & II 154,511 8.27 1,278,271 2.59% 0.75% 0.00% Platinum Investor III 77,747 8.28 643,529 1.74% 0.70% 0.00% Platinum Investor PLUS 1,758 8.43 14,822 0.00% 0.70% 0.00% Platinum Investor Survivor 19,931 8.29 165,277 2.74% 0.40% 0.00% Platinum Investor Survivor II 451 8.27 3,734 0.00% 0.75% 0.00% Vanguard VIF High Yield Bond Portfolio Platinum Investor I & II 45,524 10.21 464,933 4.37% 0.75% 0.78% Platinum Investor III 110,201 10.28 1,133,078 5.72% 0.70% 0.84% Platinum Investor PLUS 1,974 9.89 19,522 0.00% 0.70% 0.00% Platinum Investor Survivor 58,997 10.29 607,114 8.53% 0.40% 1.14% Platinum Investor Survivor II 1,345 10.13 13,622 0.00% 0.75% 0.00%
VL-R-72 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expenses Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------------ 2002 - Continued Vanguard VIF REIT Index Portfolio Corporate America 4,485 $12.59 $ 56,465 2.61%+ 0.35% 3.17% Platinum Investor I & II 70,827 12.48 883,918 1.54%+ 0.75% 2.76% Platinum Investor III 157,740 12.47 1,967,344 3.53%+ 0.70% 2.81% Platinum Investor PLUS 5,814 9.38 54,551 0.00% 0.70% 0.00% Platinum Investor Survivor 18,253 12.57 229,533 3.64%+ 0.40% 3.12% Platinum Investor Survivor II 5,625 10.87 61,169 0.00% 0.75% 0.00% 2001 AIM V.I. Capital Appreciation Fund - Series I The One VUL Solution 766 6.36 4,870 0.00% 0.75% -23.86% AIM V.I. International Growth Fund - Series I AG Legacy Plus 13,238 6.09 80,644 0.60% 0.75% -24.11% Corporate America 36,330 5.83 211,710 0.42% 0.35% -21.33% Platinum Investor I & II 356,170 8.43 3,002,893 0.30% 0.75% -24.11% Platinum Investor III 43,539 7.07 307,788 0.62% 0.70% -22.63% Platinum Investor Survivor 52,572 5.83 306,461 0.34% 0.40% -23.84% The One VUL Solution 174 5.56 966 0.41% 0.75% -24.11% AIM V.I. Premier Equity Fund - Series I Corporate America 47,372 6.83 323,619 0.17% 0.35% -12.02% Legacy Plus 15,448 7.61 117,549 0.13% 0.75% -3.49% Platinum Investor I & II 983,406 11.02 10,833,308 0.12% 0.75% -13.22% Platinum Investor III 179,841 8.18 1,471,008 0.25% 0.70% -12.13% Platinum Investor Survivor 104,033 6.83 710,934 0.15% 0.40% -12.91% American Century VP Value Fund - Class I AG Legacy Plus 19,195 13.36 256,488 0.11% 0.75% 11.97% Corporate America 2,361 12.13 28,631 0.00% 0.35% 7.59% Platinum Investor I & II 111,235 12.07 1,342,709 0.04% 0.75% 12.85% Platinum Investor III 53,553 11.98 641,684 0.04% 0.70% 13.41% Platinum Investor Survivor 7,351 12.12 89,101 0.00% 0.40% 12.40% Ayco Growth Fund Platinum Investor I & II 21,904 9.43 206,620 0.64% 0.75% -2.99% Platinum Investor III 17,986 9.44 169,749 0.64% 0.70% -0.51% Platinum Investor Survivor 689,142 9.47 6,525,212 0.31% 0.40% -14.80% Credit Suisse Small Cap Growth Portfolio Platinum Investor I & II 27,893 7.66 213,657 0.00% 0.75% -3.32% Platinum Investor III 26,246 7.49 196,626 0.00% 0.70% -14.59% Platinum Investor Survivor 5,976 7.69 45,963 0.00% 0.40% -16.35% Dreyfus IP MidCap Stock Portfolio - Initial shares Platinum Investor I & II 40,853 9.42 384,960 0.31% 0.75% -3.99% Platinum Investor III 47,522 9.25 439,789 0.30% 0.70% 2.31% Platinum Investor Survivor 10,698 9.46 101,217 0.32% 0.40% -3.65% Dreyfus VIF Developing Leaders Portfolio - Initial shares Corporate America 39,148 9.82 384,247 0.45% 0.35% -0.64% Platinum Investor I & II 503,048 12.00 6,037,816 0.43% 0.75% -6.82% Platinum Investor III 131,447 9.23 1,213,678 0.49% 0.70% -7.14% Platinum Investor Survivor 58,732 9.82 576,659 0.51% 0.40% -6.49% Dreyfus VIF Quality Bond Portfolio - Initial shares Corporate America 22,578 11.55 260,682 5.11% 0.35% 4.85%
VL-R-73 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expenses Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------------------- 2001 - Continued Dreyfus VIF Quality Bond Portfolio - Initial shares - Continued Platinum Investor I & II 660,282 $11.66 $7,700,907 6.17% 0.75% 5.89% Platinum Investor III 76,533 11.03 844,136 5.11% 0.70% 3.67% Platinum Investor Survivor 21,483 11.55 248,130 4.94% 0.40% 6.26% Fidelity VIP Asset Manager Portfolio - Service Class 2 AG Legacy Plus 1,530 9.71 14,862 0.00% 0.75% 7.29% Platinum Investor I & II 12,000 9.25 110,946 0.00% 0.75% 2.78% Platinum Investor III 22,872 9.21 210,711 1.26% 0.70% -4.25% Platinum Investor Survivor 3,038 9.28 28,207 0.41% 0.40% -4.77% Fidelity VIP Contrafund Portfolio - Service Class 2 AG Legacy Plus 6,070 9.50 57,689 0.00% 0.75% 7.01% Corporate America 2,132 8.37 17,848 0.00% 0.35% -4.15% Platinum Investor I & II 94,909 8.33 790,743 0.09% 0.75% -10.27% Platinum Investor III 89,776 8.21 737,107 0.01% 0.70% -8.21% Platinum Investor Survivor 274,354 8.37 2,295,149 0.01% 0.40% -12.82% Fidelity VIP Equity-Income Portfolio - Service Class 2 AG Legacy Plus 16,085 9.41 151,336 0.00% 0.75% -2.82% Corporate America 6,677 9.56 63,802 0.00% 0.35% -6.16% Platinum Investor I & II 181,214 9.51 1,723,532 0.03% 0.75% -5.94% Platinum Investor III 153,352 9.51 1,458,364 0.08% 0.70% -4.21% Platinum Investor Survivor 260,014 9.55 2,483,113 0.03% 0.40% -5.61% Fidelity VIP Growth Portfolio - Service Class 2 AG Legacy Plus 8,893 8.72 77,514 0.00% 0.75% 15.79% Corporate America 2,078 7.33 15,225 0.00% 0.35% -10.33% Platinum Investor I & II 193,357 7.29 1,410,013 0.01% 0.75% -18.48% Platinum Investor III 221,929 7.22 1,601,302 0.00% 0.70% -14.92% Platinum Investor Survivor 40,690 7.32 297,940 0.01% 0.40% -18.20% Franklin Templeton - Franklin Small Cap Fund - Class 2 AG Legacy Plus 6,998 6.57 45,997 0.33% 0.75% -15.89% The One VUL Solution 909 5.97 5,427 0.40% 0.75% -15.89% Franklin Templeton - Templeton Developing Markets Securities Fund - Class 2 The One VUL Solution 335 6.24 2,088 1.14% 0.75% -8.77% Franklin Templeton - Templeton Foreign Securities Fund - Class 2 AG Legacy Plus 1,036 7.95 8,238 5.44% 0.75% -16.63% Janus Aspen Series International Growth Portfolio - Service Shares Corporate America 835 6.84 5,714 0.69% 0.35% -14.91% Platinum Investor I & II 63,776 6.81 434,164 1.01% 0.75% -24.01% Platinum Investor III 66,264 6.75 447,356 0.79% 0.70% -23.85% Platinum Investor Survivor 24,722 6.84 168,986 1.20% 0.40% -23.74% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Corporate America 2,288 4.68 10,698 0.00% 0.35% -19.52% Platinum Investor I & II 32,312 4.65 150,356 0.00% 0.75% -40.04% Platinum Investor III 129,640 4.53 587,668 0.00% 0.70% -35.87% Platinum Investor Survivor 13,411 4.67 62,664 0.00% 0.40% -39.83% Janus Aspen Series Worldwide Growth Portfolio - Service Shares Corporate America 4,448 6.95 30,911 0.26% 0.35% -14.84% Platinum Investor I & II 51,950 6.92 359,328 0.51% 0.75% -23.20% Platinum Investor III 89,664 6.85 613,987 0.31% 0.70% -22.64% Platinum Investor Survivor 13,910 6.95 96,604 0.29% 0.40% -22.93%
VL-R-74 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------- 2001 - Continued JPMorgan Small Company Portfolio Platinum Investor I & II 12,062 $ 8.61 $ 103,902 0.01% 0.75% -8.72% Platinum Investor III 9,804 8.46 82,981 0.01% 0.70% -8.11% Platinum Investor Survivor 1,956 8.65 16,915 0.03% 0.40% -8.40% MFS VIT Capital Opportunities Series - Initial Class Corporate America 3,218 6.81 21,907 0.01% 0.35% -6.96% Platinum Investor I & II 90,744 6.78 614,880 0.01% 0.75% -24.06% Platinum Investor III 121,140 6.83 827,153 0.00% 0.70% -22.19% Platinum Investor Survivor 18,664 6.80 126,985 0.00% 0.40% -23.79% MFS VIT Emerging Growth Series - Initial Class AG Legacy Plus 4,501 10.97 49,365 1.78% 0.75% -0.51% Corporate America 1,597 5.13 8,196 0.00% 0.35% -14.85% Platinum Investor I & II 718,589 10.96 7,875,453 0.00% 0.75% -33.99% Platinum Investor III 239,529 5.79 1,387,886 0.00% 0.70% -28.03% Platinum Investor Survivor 117,741 5.13 604,496 0.00% 0.40% -33.75% MFS VIT Investors Trust Series - Initial Class The One VUL Solution 593 8.64 5,122 0.61% 0.75% -16.59% MFS VIT New Discovery Series - Initial Class AG Legacy Plus 1,314 8.22 10,801 0.00% 0.75% 1.95% Corporate America 1,712 8.85 15,146 0.00% 0.35% 13.77% Platinum Investor I & II 81,569 8.81 718,214 0.00% 0.75% -5.74% Platinum Investor III 47,211 8.61 406,590 0.00% 0.70% 0.95% Platinum Investor Survivor 5,448 8.84 48,169 0.00% 0.40% -5.41% MFS VIT Research Series - Initial Class Corporate America 997 7.07 7,047 0.00% 0.35% -12.40% Platinum Investor I & II 46,683 7.03 328,283 0.01% 0.75% -21.84% Platinum Investor III 47,757 6.99 334,043 0.01% 0.70% -24.62% Platinum Investor Survivor 11,015 7.06 77,779 0.01% 0.40% -21.57% MFS VIT Total Return Series - Initial Class AG Legacy Plus 67,578 5.32 359,828 0.00% 0.75% -6.20% Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Platinum Investor I & II 40,478 6.21 251,465 0.00% 0.75% -25.21% Platinum Investor III 59,965 6.10 365,744 0.00% 0.70% -26.67% Platinum Investor Survivor 5,636 6.24 35,155 0.00% 0.40% -24.95% Neuberger Berman AMT Partners Portfolio - Class I AG Legacy Plus 5,132 9.51 48,812 0.00% 0.75% 3.17% One Group Investment Trust Equity Index Portfolio The One VUL Solution 1,456 8.04 11,713 1.05% 0.75% -13.00% One Group Investment Trust Large Cap Growth Portfolio The One VUL Solution 421 6.10 2,566 0.00% 0.75% -20.88% One Group Investment Trust Mid Cap Growth Portfolio The One VUL Solution 319 8.46 2,700 0.00% 0.75% -11.32% Oppenheimer High Income Fund/VA - Non-Service Shares AG Legacy Plus 7,783 9.71 75,555 0.00% 0.75% 6.15% The One VUL Solution 296 8.68 2,567 11.72% 0.75% 1.20% PIMCO VIT Real Return Portfolio - Administrative Class AG Legacy Plus 12,784 10.25 131,088 0.86% 0.75% -2.03% Platinum Investor I & II 87,766 11.17 980,348 6.95% 0.75% 8.83% Platinum Investor III 53,040 11.20 594,024 3.55% 0.70% 5.56%
VL-R-75 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ---------------------------------------------------------------------------------------------------------------------------- 2001 - Continued PIMCO VIT Real Return Portfolio - Administrative Class - Continued Platinum Investor Survivor 15,384 $11.22 $ 172,540 8.44% 0.40% 6.84% PIMCO VIT Short-Term Portfolio - Administrative Class Corporate America 5,271 10.72 56,523 3.04% 0.35% 4.35% Platinum Investor I & II 27,482 10.67 293,345 5.19% 0.75% 5.98% Platinum Investor III 57,361 10.67 612,107 2.63% 0.70% 5.62% Platinum Investor Survivor 8,618 10.72 92,365 4.87% 0.40% 4.96% PIMCO VIT Total Return Portfolio - Administrative Class AG Legacy Plus 10,974 10.57 116,044 0.84% 0.75% 0.45% Corporate America 2,554 11.13 28,440 2.87% 0.35% 6.13% Platinum Investor I & II 131,290 11.08 1,454,930 2.82% 0.75% 7.58% Platinum Investor III 126,029 11.12 1,402,056 3.72% 0.70% 7.45% Platinum Investor Survivor 40,582 11.13 451,552 2.94% 0.40% 8.38% Putnam VT Diversified Income Fund - Class IB AG Legacy Plus 4,788 10.10 48,381 0.00% 0.75% 1.10% Corporate America 99,029 10.20 1,009,835 4.85% 0.35% 1.71% Platinum Investor I & II 133,179 9.76 1,299,777 7.31% 0.75% 2.73% Platinum Investor III 17,175 10.44 179,305 0.93% 0.70% -0.90% Platinum Investor Survivor 5,402 10.20 55,105 0.76% 0.40% 3.10% Putnam VT Growth and Income Fund - Class IB Corporate America 110,489 9.92 1,095,612 1.68% 0.35% -5.20% Platinum Investor I & II 541,025 10.40 5,625,378 2.61% 0.75% -7.10% Platinum Investor III 144,948 9.38 1,359,119 0.84% 0.70% -5.78% Platinum Investor Survivor 48,762 9.92 483,692 2.84% 0.40% -6.77% Putnam VT International Growth and Income Fund - Class IB Platinum Investor I & II 212,113 9.16 1,942,305 5.80% 0.75% -21.40% Platinum Investor III 93,038 8.09 753,038 3.50% 0.70% -19.27% Platinum Investor Survivor 96,186 7.79 749,630 3.50% 0.40% -21.13% Putnam VT Small Cap Value Fund - Class IB AG Legacy Plus 8,198 13.12 107,603 0.11% 0.75% 12.25% Putnam VT Vista Fund - Class IB AG Legacy Plus 9,574 5.19 49,700 3.48% 0.75% -25.32% The One VUL Solution 474 5.76 2,733 9.45% 0.75% -34.00% Putnam VT Voyager Fund - Class IB AG Legacy Plus 26,218 6.11 160,112 5.39% 0.75% -22.99% Safeco RST Core Equity Portfolio Platinum Investor I & II 495,182 9.63 4,767,218 0.68% 0.75% -10.07% Platinum Investor III 22,815 8.39 191,314 1.43% 0.70% -11.82% Platinum Investor Survivor 19,841 7.98 158,237 1.08% 0.40% -9.76% Safeco RST Growth Opportunities Portfolio Corporate America 26,516 10.02 265,808 0.00% 0.35% 20.27% Platinum Investor I & II 413,839 9.90 4,098,507 0.00% 0.75% 18.25% Platinum Investor III 37,394 10.58 395,539 0.00% 0.70% 11.63% Platinum Investor Survivor 34,864 10.03 349,608 0.00% 0.40% 18.66% Scudder International Portfolio The One VUL Solution 401 6.31 2,530 0.78% 0.75% -25.00% Scudder Small Cap Value Portfolio The One VUL Solution 228 12.22 2,784 0.00% 0.75% 16.78%
VL-R-76 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------------------- 2001 - Continued Scudder VIT EAFE Equity Index Fund - Class A Legacy Plus 5,923 $ 8.06 $ 47,720 0.00% 0.75% -25.25% Scudder VIT Equity 500 Index Fund - Class A Legacy Plus 18,704 9.43 176,303 0.63% 0.75% -12.84% UIF Equity Growth Portfolio - Class I Legacy Plus 7,382 10.75 79,326 0.00% 0.75% -15.75% Platinum Investor I & II 438,623 10.81 4,741,984 0.00% 0.75% -15.75% Platinum Investor III 28,056 7.25 203,316 0.00% 0.70% -16.43% Platinum Investor Survivor 50,760 6.85 347,677 0.00% 0.40% -15.45% UIF High Yield Portfolio - Class I Platinum Investor I & II 183,821 8.93 1,640,658 11.27% 0.75% -5.19% Platinum Investor III 11,481 9.24 106,103 22.46% 0.70% -11.85% Platinum Investor Survivor 25,702 8.59 220,794 11.50% 0.40% -4.86% VALIC Company I - International Equities Fund AG Legacy Plus 1,710 6.77 11,582 3.61% 0.75% -8.95% Platinum Investor I & II 152,030 8.68 1,320,380 1.71% 0.75% -22.56% Platinum Investor III 21,685 7.50 162,625 2.31% 0.70% -21.61% Platinum Investor Survivor 12,156 6.59 80,045 1.60% 0.40% -22.29% VALIC Company I - Mid Cap Index Fund AG Legacy Plus 4,237 9.86 41,782 0.78% 0.75% -1.68% Corporate America 45,379 10.58 480,286 0.61% 0.35% 4.52% Platinum Investor I & II 457,875 14.62 6,695,315 0.74% 0.75% -1.68% Platinum Investor III 115,708 9.59 1,109,764 0.72% 0.70% 4.22% Platinum Investor Survivor 41,967 10.59 444,325 0.75% 0.40% -1.34% VALIC Company I - Money Market I Fund AG Legacy Plus 57,185 10.48 599,077 1.89% 0.75% 2.91% Corporate America 2,212 10.76 23,807 0.42% 0.35% 3.32% Legacy Plus 5,564 11.03 61,395 0.66% 0.75% 2.91% Platinum Investor I & II 2,030,596 11.55 23,446,471 2.93% 0.75% 2.91% Platinum Investor III 1,416,986 10.38 14,711,205 1.97% 0.70% 2.96% Platinum Investor Survivor 461,849 10.77 4,973,259 2.62% 0.40% 3.27% Platinum Investor Survivor II 925,288 10.01 9,264,381 0.00% 0.75% 0.00% The One VUL Solution -- 10.77 -- 0.07% 0.75% 2.91% VALIC Company I - Nasdaq-100 Index Fund Platinum Investor I & II 44,914 4.89 219,563 0.10% 0.75% -32.99% Platinum Investor III 207,478 4.80 995,213 0.02% 0.70% -31.28% Platinum Investor Survivor 84,435 4.91 414,455 0.00% 0.40% -40.69% VALIC Company I - Science & Technology Fund Platinum Investor I & II 29,457 4.42 130,333 0.00% 0.75% -41.62% Platinum Investor III 58,814 4.38 257,697 0.00% 0.70% -45.69% Platinum Investor Survivor 3,006 4.44 13,356 0.00% 0.40% -49.92% VALIC Company I - Small Cap Index Fund Corporate America 1,347 9.95 13,400 0.71% 0.35% 0.01% Platinum Investor I & II 46,053 9.90 456,049 0.96% 0.75% 1.23% Platinum Investor III 44,444 9.74 432,683 0.85% 0.70% -1.61% Platinum Investor Survivor 13,430 9.94 133,536 1.80% 0.40% 1.59% VALIC Company I - Stock Index Fund AG Legacy Plus 9,606 7.77 74,618 0.99% 0.75% -13.25% Corporate America 59,072 7.69 454,174 0.76% 0.35% -11.20%
VL-R-77 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total returns for the years ended December 31, 2004, 2003, 2002 and 2001, are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------------------- 2001 - Continued VALIC Company I - Stock Index Fund - Continued Platinum Investor I & II 1,590,799 $10.64 $16,931,644 0.96% 0.75% -12.86% Platinum Investor III 266,322 8.04 2,141,961 0.73% 0.70% -13.22% Platinum Investor Survivor 426,976 7.69 3,283,914 1.04% 0.40% -12.55% Van Kampen LIT Emerging Growth Portfolio - Class I AG Legacy Plus 14,444 5.28 76,262 0.16% 0.75% -32.01% The One VUL Solution 1,936 5.20 10,077 0.11% 0.75% -32.01% Van Kampen LIT Government Portfolio - Class I AG Legacy Plus 3,341 11.36 37,946 0.00% 0.75% -0.61% Van Kampen LIT Growth and Income Portfolio - Class I Platinum Investor I & II 21,837 10.72 234,031 1.36% 0.70% 1.08% Platinum Investor III 15,021 11.38 170,935 2.00% 0.40% 0.68% Platinum Investor Survivor 116,654 11.35 1,324,028 1.90% 0.75% 0.32% Vanguard VIF High Yield Bond Portfolio Platinum Investor I & II 25,137 10.13 254,726 0.05% 0.75% 2.55% Platinum Investor III 66,089 10.20 673,900 0.10% 0.70% -2.38% Platinum Investor Survivor 6,513 10.17 66,273 0.40% 0.40% -2.99% Vanguard VIF REIT Index Portfolio Corporate America 2,407 12.20 29,373 0.00% 0.35% 9.62% Platinum Investor I & II 15,235 12.14 185,034 0.81% 0.75% 11.29% Platinum Investor III 28,648 12.13 347,535 0.08% 0.70% 14.22% Platinum Investor Survivor 9,356 12.19 114,091 2.22% 0.40% 11.49%
(a) These amounts represent the dividends, excluding capital gain distributions from mutual funds, received by the Division from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense risk charges, that result in direct reduction in the unit value. The recognition of investment income by the Division is affected by the timing of the declaration of dividends by the underlying fund in which the Divisions invest. (b) These amounts represent the annualized policy expenses of the Separate Account, consisting primarily of mortality and expense risk charges, for each year indicated. These ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to policy owner accounts through the redemption of units and expenses of the underlying fund have been excluded. (c) These amounts represent the total return for the years indicated, including changes in the value of the underlying Division, and reflect deductions for those expenses that result in a direct reduction to unit values. The total return does not include policy charges deducted directly from account values. For the years ended December 31, 2002 and 2001, no total return was calculated if the Division became an available investment option during the year. For the years ended December 31, 2004 and 2003, a total return was calculated using the initial unit value for the Division if the Division became an available investment option during the year and the underlying Fund was not available at the beginning of the year. + The investment income ratio has been restated due to a misclassification in prior years of short-term capital gains between dividends from mutual funds and capital gain distributions from mutual funds. See Note H for further disclosure. ** Formerly Oppenheimer Multiple Strategies Fund/VA. VL-R-78 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note H - Restatement During the preparation of these 2004 financial statements, the Company identified certain misclassifications of short-term capital gains within several Divisions. Specifically, for the years ended December 31, 2003 and 2002, the Company classified short-term capital gains as dividends from mutual funds. GAAP requires short-term capital gains to be classified as capital gain distributions from mutual funds. Accordingly, for the effected Divisions, the Company restated net investment income (loss) and capital gain distributions from mutual funds for the year ended December 31, 2003. The related investment income ratio was also restated for the years ended December 31, 2003 and 2002, to be comparative. The restated balances for net investment income (loss) and capital gain distribution from mutual funds have been identified in the Statement of Changes in Net Assets and the related investment income ratio amounts have been disclosed in Note G - Financial Highlights. The adjustments described above had no impact on the Company's net assets or the increase (decrease) in net assets resulting from operations for any period. A summary of the adjustments made and their effect on the financial statements is presented below:
For the Year Ended December 31, 2003 -------------------------------------------------- Net Investment Capital Gain Distributions Income (Loss) from Mutual Funds --------------------- -------------------------- Originally Originally Divisions stated Restated stated Restated - ------------------------------------------------------------------------------------------------------------ Dreyfus VIF Quality Bond Portfolio - Initial shares $399,831 $251,226 $ 17,341 $165,946 PIMCO VIT Real Return Portfolio - Administrative Class 254,395 133,974 52,887 173,308 PIMCO VIT Total Return Portfolio - Administrative Class 251,217 212,092 44,719 83,844 VALIC Company I - Stock Index Fund 261,822 239,190 120,686 143,318 Vanguard VIF REIT Index Portfolio 120,645 117,989 112,869 115,525
Investment Income Ratio --------------------------------------------- For the Year Ended For the Year Ended December 31, 2003 December 31, 2002 --------------------- --------------------- Originally Originally Divisions stated Restated stated Restated - ------------------------------------------------------------------------------------------------------------ American Century VP Value Fund - Class I AG Legacy Plus n/a n/a 6.03% 0.85% Corporate America n/a n/a 3.98% 0.56% Platinum Investor I & II n/a n/a 5.62% 0.79% Platinum Investor III n/a n/a 4.19% 0.59% Platinum Investor Survivor n/a n/a 6.45% 0.91% Platinum Investor Survivor II n/a n/a 0.07% 0.01% Dreyfus VIF Quality Bond Portfolio - Initial shares Corporate America 6.03% 4.08% n/a n/a Platinum Investor I & II 5.73% 3.97% n/a n/a Platinum Investor III 6.30% 4.04% n/a n/a Platinum Investor PLUS 6.92% 4.16% n/a n/a Platinum Investor Survivor 6.18% 4.08% n/a n/a Platinum Investor Survivor II 6.36% 4.05% n/a n/a Fidelity VIP Equity-Income Portfolio - Service Class 2 AG Legacy Plus n/a n/a 1.30% 1.20% Corporate America n/a n/a 1.05% 0.96% Platinum Investor I & II n/a n/a 1.65% 1.52% Platinum Investor III n/a n/a 1.33% 1.23% Platinum Investor Survivor n/a n/a 1.67% 1.54% Franklin Templeton - Mutual Shares Securities Fund - Class 2 Platinum Investor I & II n/a n/a 2.37% 1.85% Platinum Investor Survivor II n/a n/a 0.97% 0.76%
VL-R-79 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note H - Restatement - Continued
Investment Income Ratio --------------------------------------------- For the Year Ended For the Year Ended December 31, 2003 December 31, 2002 --------------------- --------------------- Originally Originally Divisions stated Restated stated Restated - ------------------------------------------------------------------------------------------------------- MFS VIT Total Return Series - Initial Class AG Legacy Plus n/a n/a 0.00% 1.55% PIMCO VIT Real Return Portfolio - Administrative Class AG Legacy Plus 4.06% 2.34% 4.35% 4.15% Corporate America 4.19% 2.87% 4.98% 1.70% Platinum Investor I & II 3.56% 2.41% 6.14% 5.95% Platinum Investor III 4.48% 2.55% 4.42% 4.20% Platinum Investor PLUS 4.60% 2.38% 0.91% 0.74% Platinum Investor Survivor 4.08% 2.66% 4.53% 4.30% Platinum Investor Survivor II 4.25% 2.32% 4.75% 4.48% PIMCO VIT Short-Term Portfolio - Administrative Class Corporate America n/a n/a 3.01% 2.92% Platinum Investor I & II n/a n/a 3.04% 2.93% Platinum Investor III n/a n/a 2.98% 2.89% Platinum Investor PLUS n/a n/a 0.84% 0.71% Platinum Investor Survivor n/a n/a 2.54% 2.44% Platinum Investor Survivor II n/a n/a 3.93% 3.78% PIMCO VIT Total Return Portfolio - Administrative Class AG Legacy Plus 3.11% 2.68% 5.62% 4.25% Corporate America 3.44% 3.00% 5.80% 4.47% Platinum Investor I & II 3.21% 2.85% 5.57% 4.25% Platinum Investor III 3.42% 2.98% 5.65% 4.27% Platinum Investor PLUS 3.30% 2.72% 3.01% 1.45% Platinum Investor Survivor 3.18% 2.80% 5.08% 3.98% Platinum Investor Survivor II 3.72% 3.31% 7.26% 5.29% Putnam VT Growth and Income Fund - Class IB Corporate America n/a n/a 1.39% 1.01% Platinum Investor I & II n/a n/a 2.26% 1.65% Platinum Investor III n/a n/a 1.86% 1.35% Platinum Investor Survivor n/a n/a 2.12% 1.54% Putnam VT Small Cap Value Fund - Class IB AG Legacy Plus n/a n/a 1.33% 0.23% VALIC Company I - Stock Index Fund AG Legacy Plus 1.36% 1.31% n/a n/a Corporate America 1.41% 1.35% n/a n/a Platinum Investor I & II 1.37% 1.31% n/a n/a Platinum Investor III 1.46% 1.39% n/a n/a Platinum Investor PLUS 1.52% 1.42% n/a n/a Platinum Investor Survivor 1.39% 1.33% n/a n/a Platinum Investor Survivor II 1.35% 1.28% n/a n/a Vanguard VIF REIT Index Portfolio Corporate America 4.11% 4.03% 2.71% 2.61% Platinum Investor I & II 3.27% 3.21% 1.60% 1.54% Platinum Investor III 3.19% 3.13% 3.68% 3.53% Platinum Investor PLUS 3.31% 3.25% n/a n/a Platinum Investor Survivor 3.49% 3.42% 3.78% 3.64% Platinum Investor Survivor II 3.01% 2.95% n/a n/a
n/a The investment income ratio did not change. VL-R-80 [LOGO] PricewaterhouseCoopers - -------------------------------------------------------------------------------- PricewaterhouseCoopers LLP Suite 2900 1201 Louisiana St. Houston TX 77002-5678 Telephone (713) 356 4000 Report of Independent Registered Public Accounting Firm To the Shareholder and Board of Directors American General Life Insurance Company: In our opinion, the accompanying consolidated balance sheets as of December 31, 2004 and 2003 and the related consolidated statements of income, shareholder's equity, comprehensive income, and of cash flows present fairly, in all material respects, the financial position of American General Life Insurance Company and subsidiaries (an indirect wholly-owned subsidiary of American International Group, Inc.) at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with the standards of the Public Company Accounting Oversight Board (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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting and reporting for certain non-traditional long-duration contracts in 2004. PRICEWATERHOUSECOOPERS LLP Houston, Texas April 29, 2005 F-1 American General Life Insurance Company Consolidated Balance Sheets
December 31 ------------------------- 2004 2003 ----------- ----------- (In Thousands) Assets Investments: Fixed maturity securities, available for sale, at fair value (amortized cost - $46,646,227 - 2004; $43,133,011 - 2003) $49,436,433 $45,349,130 Fixed maturity securities, trading, at fair value (amortized cost - $8,946 - 2004; $52,000 - 2003) 11,512 58,953 Equity securities, at fair value (cost - $48,038 - 2004; $93,182 - 2003) 70,294 98,523 Equity securities, trading, at fair value (cost - $1,638 - 2004; $7,000 - 2003) 6,374 10,000 Mortgage loans on real estate, net of allowance ($4,964 - 2004; $7,124 - 2003) 3,324,940 2,953,495 Policy loans 1,730,819 1,705,891 Investment real estate 37,730 44,543 Partnerships 2,091,739 1,895,974 Separate account seed money (cost - $39,758 - 2004; $90,670 - 2003) 41,488 91,670 Securities lending collateral 9,286,117 4,451,135 Short-term investments 62,913 112,440 Derivatives assets 11,077 9,560 ----------- ----------- Total investments 66,111,436 56,781,314 Cash 257,224 297,209 Restricted Cash 18,647 88,781 Investment in ultimate Parent Company (cost - $8,597 in 2004 and 2003) 53,203 53,697 Notes receivable from affiliates 598,045 537,241 Indebtedness from affiliates 37,019 19,756 Accrued investment income 705,590 651,815 Accounts receivable 1,108,251 1,023,451 Deferred policy acquisition costs/cost of insurance purchased 3,617,153 3,250,287 Other assets 272,270 376,578 Assets held in separate accounts 25,537,215 22,930,750 ----------- ----------- Total assets $98,316,053 $86,010,879 =========== ===========
See accompanying notes to consolidated financial statements. F-2 American General Life Insurance Company Consolidated Balance Sheets
December 31 ------------------------- 2004 2003 ----------- ----------- (In Thousands) Liabilities, Minority Interest and Shareholder's Equity Liabilities: Future policy benefits $ 9,156,261 $ 7,898,915 Policyholder contract deposits 38,438,523 36,559,454 Other policy claims and benefits payable 198,769 273,008 Other policyholders' funds 2,513,561 2,204,767 Federal income taxes 1,442,907 1,104,182 Indebtedness to affiliates 258,953 362,749 Securities lending payable 9,286,117 4,451,135 Other liabilities 1,256,335 1,240,035 Derivative liabilities 57,647 27,165 Liabilities related to separate accounts 25,537,215 22,930,750 ----------- ----------- Total liabilities 88,146,288 77,052,160 Minority interest 102,150 96,741 Shareholder's equity: Preferred stock, $100 par value, 8,500 shares authorized, issued and outstanding 850 850 Common stock, $10 par value, 600,000 shares authorized, issued and outstanding 6,000 6,000 Additional paid-in capital 3,623,797 3,507,238 Accumulated other comprehensive income 1,398,625 1,097,788 Retained earnings 5,038,343 4,250,102 ----------- ----------- Total shareholder's equity 10,067,615 8,861,978 ----------- ----------- Total liabilities, minority interest and shareholder's equity $98,316,053 $86,010,879 =========== ===========
See accompanying notes to consolidated financial statements. F-3 American General Life Insurance Company Consolidated Statements of Income
2004 2003 2002 ---------- ---------- ---------- (In Thousands) Revenues: Premiums and other considerations $2,540,322 $2,403,951 $2,138,833 Net investment income 3,557,160 3,288,686 3,054,530 Net realized investment losses (158,288) (56,779) (295,344) Other 289,140 175,663 175,528 ---------- ---------- ---------- Total revenues 6,228,334 5,811,521 5,073,547 ---------- ---------- ---------- Benefits and expenses: Policyholders' benefits 1,625,671 1,544,535 1,284,087 Interest credited 2,063,646 2,039,015 2,051,698 Operating costs and expenses 1,034,525 939,785 753,033 ---------- ---------- ---------- Total benefits and expenses 4,723,842 4,523,335 4,088,818 ---------- ---------- ---------- Income before income tax expense 1,504,492 1,288,186 984,729 ---------- ---------- ---------- Income tax expense: Current 126,112 250,906 107,502 Deferred 272,600 75,649 64,917 ---------- ---------- ---------- Total income tax expense 398,712 326,555 172,419 ---------- ---------- ---------- Net income before cumulative effect of accounting change 1,105,780 961,631 812,310 Cumulative effect of accounting change, net of tax (16,859) -- -- ---------- ---------- ---------- Net income $1,088,921 $ 961,631 $ 812,310 ========== ========== ==========
See accompanying notes to consolidated financial statements. F-4 American General Life Insurance Company Consolidated Statements of Shareholder's Equity
Year ended December 31 ------------------------------------- 2004 2003 2002 ----------- ---------- ---------- (In Thousands) Preferred stock: Balance at beginning and end of year $ 850 $ 850 $ 850 ----------- ---------- ---------- Common stock: Balance at beginning and end of year 6,000 6,000 6,000 ----------- ---------- ---------- Additional paid-in capital: Balance at beginning of year 3,507,238 3,167,462 2,691,492 Capital contribution from Parent Company 116,559 339,776 475,970 ----------- ---------- ---------- Balance at end of year 3,623,797 3,507,238 3,167,462 Accumulated other comprehensive income: Balance at beginning of year 1,097,788 736,299 175,507 Other comprehensive income 300,837 361,489 560,792 ----------- ---------- ---------- Balance at end of year 1,398,625 1,097,788 736,299 Retained earnings: Balance at beginning of year 4,250,102 3,289,151 2,922,422 Net income 1,088,921 961,631 812,310 Dividends paid (300,680) (680) (445,581) ----------- ---------- ---------- Balance at end of year 5,038,343 4,250,102 3,289,151 ----------- ---------- ---------- Total shareholder's equity $10,067,615 $8,861,978 $7,199,762 =========== ========== ==========
See accompanying notes to consolidated financial statements. F-5 American General Life Insurance Company Consolidated Statements of Comprehensive Income
2004 2003 2002 ---------- ---------- ---------- (In Thousands) Net income $1,088,921 $ 961,631 $ 812,310 Other comprehensive income: Gross change in unrealized gains (losses) on securities, after tax (pretax: 2004 - $453,261; 2003 - $549,834; 2002 - $720,641) 294,620 357,392 468,416 Hedging activities (pretax: 2004 - $(31,877); 2003 - $(68,391); 2002 - $5,025) (20,720) (44,454) 3,267 Reclassification adjustment for losses included in net income 26,937 48,551 89,109 ---------- ---------- ---------- Other comprehensive income 300,837 361,489 560,792 ---------- ---------- ---------- Comprehensive income $1,389,758 $1,323,120 $1,373,102 ========== ========== ==========
See accompanying notes to consolidated financial statements. F-6 American General Life Insurance Company Consolidated Statements of Cash Flows
2004 2003 2002 ------------ ------------ ------------ (In Thousands) Operating activities Net income $ 1,088,921 $ 961,631 $ 812,310 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of accounting change, net of tax 16,859 -- -- Interest credited on policyholder contracts 2,063,646 2,039,015 2,051,698 Change in accounts receivable (84,800) (155,662) (3,438) Change in future policy benefits and other policy claims (1,018,480) 216,269 1,096,583 Amortization of policy acquisition costs and cost of insurance purchased 311,214 311,029 165,269 Policy acquisition costs deferred (757,710) (583,939) (466,779) Change in other policyholders' funds 308,794 339,326 62,893 Provision for deferred income tax expense 255,872 267,645 357,510 Depreciation and amortization, including premiums and discounts 193,670 170,474 150,310 Change in indebtedness to (from) affiliates (181,863) 320,652 68,133 Change in amounts payable to brokers (72,843) (614,174) 384,634 Change in trading securities 51,067 (68,953) -- Change in restricted cash 70,134 (88,781) -- Realized investments losses 158,288 315,144 422,536 Other, net (9,928) 522,312 35,272 ------------ ------------ ------------ Net cash provided by operating activities 2,392,841 3,951,988 5,136,931 Investing activities Purchases of: Fixed maturity and equity securities (27,374,134) (34,541,457) (34,652,736) Mortgages (691,747) (443,541) (286,385) Other long-term investments (18,188,518) (14,902,823) (17,511,338) Sales of: Fixed maturity and equity securities 27,001,768 29,702,380 29,957,705 Mortgages 307,711 291,851 236,727 Other long-term investments 12,915,557 13,862,846 15,080,395 Redemptions and maturities of fixed maturity and equity securities 1,735,026 1,792,981 2,197,983 Sales and purchases of property, equipment, and software, net 9,648 (1,056,323) (23,816) ------------ ------------ ------------ Net cash used in investing activities (4,284,689) (5,294,086) (5,001,465)
See accompanying notes to consolidated financial statements. F-7 American General Life Insurance Company Consolidated Statements of Cash Flows (continued)
2004 2003 2002 ----------- ----------- ----------- (In Thousands) Financing activities Net policyholder account deposits 7,332,833 6,780,518 3,324,162 Net policyholder account withdrawals (5,296,849) (5,574,250) (3,046,859) Dividends paid (300,680) (680) (445,581) Capital contribution from parent 116,559 339,776 28,000 Other -- -- (1,289) ----------- ----------- ----------- Net cash provided by (used in) financing activities 1,851,863 1,545,364 (141,567) ----------- ----------- ----------- Increase (decrease) in cash (39,985) 203,266 (6,101) Cash at beginning of year 297,209 93,943 100,044 ----------- ----------- ----------- Cash at end of year $ 257,224 $ 297,209 $ 93,943 =========== =========== ===========
Interest paid amounted to approximately $47,709,000, $2,117,000 and $2,315,000 in 2004, 2003 and 2002, respectively. Income taxes paid amounted to approximately $208,397,000, $240,802,000 and $127,376,000 in 2004, 2003 and 2002, respectively. See accompanying notes to consolidated financial statements. F-8 American General Life Insurance Company Notes to Consolidated Financial Statements December 31, 2004 1. Nature of Operations American General Life Insurance Company ("AGL" or the "Company") is a wholly owned subsidiary of AGC Life Insurance Company ("Parent Company"), and its ultimate parent is American International Group, Inc. ("AIG"). Effective December 31, 2002, AGL merged with certain affiliated entities, including The Franklin Life Insurance Company ("The Franklin") and its subsidiary, The American Franklin Life Insurance Company ("AMFLIC"), and All American Life Insurance Company ("All American") and became the surviving entity. Effective March 31, 2003, AGL merged with it's affiliate Old Line Life Insurance Company ("Old Line") and became the surviving entity. Effective December 31, 2002, AGL's wholly owned life insurance subsidiary, American General Life Insurance Company of New York ("AGNY") was merged with The United States Life Insurance Company in the City of New York, an affiliated entity. These mergers have been accounted for at historical cost in a manner similar to a pooling of interests business combination. Accordingly, the accompanying consolidated financial statements include the financial position, operating results, and cash flows of The Franklin, AMFLIC, All American, Old Line and exclude AGNY. Effective December 20, 2004, AGL merged with its wholly owned subsidiary, American General International Investments, Inc. ("AGII"), and became the surviving entity. The financial position, operating results and cash flows of AGII have historically been included in the consolidated financial statements of AGL. The Company operates through two divisions: Life Insurance and Retirement Services. The Life Insurance Division offers a complete portfolio of the standard forms of universal life, variable universal life, whole life, term life, accident and health, structured settlements, and fixed and variable annuities throughout the United States of America. This Division serves the estate planning needs of middle- and upper-income households and the life insurance needs of small- to medium-sized businesses. The Life Insurance Division, through its subsidiaries American General Life Companies ("AGLC") and American General Enterprise Services ("AGES"), and AGES's wholly owned broker-dealer subsidiary American General Securities Incorporated ("AGSI"), also provides support services to certain affiliated insurance companies. The Retirement Services Division includes the results of the Variable Annuity Life Insurance Company ("VALIC"), a wholly owned subsidiary. 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 of America. F-9 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies 2.1 Preparation of Financial Statements The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("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. On September 23, 2003, the Company purchased 68 percent of the non-voting preferred equity issued by Castle 2003-1 Trust ("Castle Trust") for $182.3 million. The remaining non-voting preferred equity and 100 percent of the voting equity of Castle Trust are held by affiliates of the Company. Castle Trust is a Delaware statutory trust established on July 31, 2003. The business of Castle Trust and its wholly owned subsidiaries is limited to buying, owning, leasing and selling a portfolio of commercial jets. In December 2003, the FASB issued a "Revision to Interpretation No. 46, Consolidation of Variable Interest Entities" ("FIN46R") (See Note 2.14). In accordance with FIN46R, Castle Trust has been consolidated in the Company's consolidated financial statements for the years ending December 31, 2004 and 2003. 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. These estimates and assumptions are particularly significant with respect to investments, deferred acquisition costs, and policyholder benefits. Ultimate results could differ from those estimates. Certain prior year amounts have been reclassified to conform with the current year presentation. 2.2 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 capital and surplus at December 31, 2004. F-10 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.2 Statutory Accounting (continued) Statutory net income and capital and surplus of the Company at December 31 is as follows: 2004 2003 2002 ---------- ---------- ---------- (In Thousands) Statutory net income $ 567,253 $ 134,370 $ 536,099 Statutory capital and surplus $4,705,497 $4,066,448 $3,007,515 For statutory reporting purposes, the merger of AGII into AGL in 2004 was accounted for as a statutory merger. In accordance with statutory merger accounting requirements, statutory net income and capital and surplus for the prior years of 2003 and 2002 were restated to show comparative data. 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) certain assets (principally agents' debit balances, computer software, and certain other receivables) are reported as assets rather than being charged to retained earnings; (d) acquisitions are accounted for using the purchase method of accounting rather than being accounted for as equity investments; and (e) fixed maturity investments are carried at fair value rather than amortized cost. In addition, statutory accounting principles require life insurance companies to establish an asset valuation reserve ("AVR") and an interest maintenance reserve ("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. F-11 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.3 Insurance Contracts The insurance contracts accounted for in these financial statements include primarily long-duration contracts. Long-duration contracts include traditional whole life, limited payment, endowment, guaranteed renewable term life, universal life, 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. 2.4 Investments Fixed Maturity and Equity Securities Fixed maturity and equity securities classified as available-for-sale are recorded at fair value at December 31, 2004 and 2003. Unrealized gains (losses), net of deferred taxes, are recorded in accumulated other comprehensive income (loss), within shareholder's 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 estimated fair value, and the reduction is recorded as a realized loss. Fixed maturity and equity securities classified as trading securities are carried at market value, as it is the Company's intention to sell these securities in the near future. Unrealized gains and losses are reflected in income currently. Mortgage Loans Mortgage loans are reported at the unpaid principal balance, 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 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-12 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.4 Investments (continued) Policy Loans Policy loans are reported at the aggregate unpaid principal balance. There is no allowance for policy loans as these loans serve to reduce the death benefits paid when the death claim is made and the balances are effectively collateralized by the cash surrender value of the policy. 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. Partnerships Partnerships consist of equity partnerships and other partnerships not classified elsewhere herein. The equity partnerships in which the Company holds less than a five percent interest are carried at fair value and the change in fair value is recognized as a component of other comprehensive income. Partnerships in which the Company holds a five percent or more interest are also carried at fair value and the change in fair value is recorded to investment income, consistent with the equity method of accounting. Included in partnerships are preferred equity investments in partially owned companies. Generally, the equity method of accounting is used for the Company's investment in companies in which the Company's ownership interest approximates 20 percent but is not greater than 50 percent. As part of the consolidation of Castle Trust (see Note 2.1), included in partnerships is an investment in commercial aircraft totaling $983.4 million, net of accumulated depreciation of $65.2 million. These aircraft are recorded at cost and depreciated on a straight-line basis over their estimated lives of 25 years from the date of manufacture, to a residual value that is 15 percent of the Castle Trust cost. Total depreciation expense for the years ended December 31, 2004 and 2003 were $51.3 million and $13.9 million, respectively. F-13 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.4 Investments (continued) Securities Lending Collateral and Securities Lending Payable The Company loans securities through a securities lending agreement with an affiliated lending agent, which authorizes the agent to lend securities held in the Company's portfolio to a list of authorized borrowers. The Company receives primarily cash collateral in an amount in excess of the market value of the securities loaned. The affiliated lending agent monitors the daily market value of securities loaned with respect to the collateral value and obtains additional collateral when necessary to ensure that collateral is maintained at a minimum of 102 percent of the value of the loaned securities. Such collateral is not available for the general use of the Company. Income earned on the collateral, net of interest paid on the securities lending agreements and the related management fees paid to administer the program, is recorded as investment income in the consolidated statement of income and comprehensive income. Dollar Roll Agreements Throughout the year, the Company enters into dollar roll repurchase agreements, which involve the sale (delivery) of mortgage-backed securities ("MBS") and the repurchase of substantially the same pool of securities at a specific price in the future. Such transactions typically involve highly-rated government agency securities and are short-term in nature, typically with a period of 30 days. The dollar roll agreements are utilized by the Company as a financing strategy to enhance the return on its MBS portfolio. At December 31, 2004 and 2003, the Company had no dollar roll agreements outstanding as the Company has historically closed out all dollar roll agreements at year-end. 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. Premiums and discounts on investments are amortized to investment income by using the interest method over the contractual lives or expected payment period of the investments. Interest on delinquent mortgage loans is recorded as income when received. Dividends are recorded as income on ex-dividend dates. F-14 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.4 Investments (continued) Realized Investment Results Realized capital gains and losses are determined principally by specific identification. The Company evaluates its investments for impairment. As a matter of policy, the determination that a security has incurred an other-than-temporary decline in value and the amount of any loss recognition requires the judgement of the Company's management and a continual review of its investment. In general, a security is considered a candidate for impairment if it meets any of the following criteria: Trading at a significant (25 percent or more) discount to par, amortized cost (if lower) or cost for an extended period of time (nine months or longer); The occurrence of a discrete credit event resulting in (i) the issuer defaulting on a material outstanding obligation; or (ii) the issuer seeking protection from creditors under the bankruptcy laws or any similar laws intended for the court supervised reorganization of insolvent enterprises; or (iii) the issuer proposing a voluntary reorganization pursuant to which creditors are asked to exchange their claims for cash or securities having a fair value substantially lower than par value of their claims; or in the opinion of the Companies management, it is possible that the Company may not realize a full recovery on its investment, irrespective of the occurrence of one of the foregoing events. Once a security has been identified as impaired, the amount of such impairment is determined by reference to that security's contemporaneous market price, and recorded as a realized capital loss. 2.5 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, except to the extent of minimum guarantees made by the Company with respect to certain accounts. 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. The Company receives administrative fees for managing the funds and other fees for assuming mortality and certain expense risks. Such fees are included in premiums and other considerations in the consolidated statements of income. F-15 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.6 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. The cost assigned to certain insurance contracts in force at January 31, 1995, the date of American General Corporation's ("AGC") acquisition of The Franklin, is reported as CIP. DPAC and CIP associated with interest-sensitive life contracts, insurance investment contracts, and participating life insurance contracts are 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 are 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 3.00 percent to 8.25 percent. With respect to the Company's variable annuity contracts, the assumption for the long-term annual growth of the separate and variable account assets used by the Company in the determination of DPAC amortization is approximately 10 percent (the "long-term growth rate assumption"). The Company uses a "reversion to the mean" methodology which allows the Company to maintain this 10 percent long-term growth rate assumption, while also giving consideration to the effect of short-term swings in the equity markets. For example, if performance were 15 percent during the first year following the introduction of a product, the DPAC model would assume that market returns for the following five years (the "short-term growth rate assumption") would approximate 9 percent, resulting in an average annual growth rate of 10 percent during the life of the product. Similarly, following periods of below 10 percent performance, the model will assume a short-term growth rate higher than 10 percent. An adjustment to DPAC will occur if management considers the short-term growth rate (i.e., the growth rate required to revert to the mean 10 percent growth rate over a five-year period) to be unachievable. The use of a reversion to the mean assumption is common within the industry; however, the parameters used in the methodology are subject to judgment and vary among companies. With respect to the Company's variable life products, the assumption for the long-term growth of the separate and variable account assets used by the Company in the determination of DPAC amortization is approximately 9 percent, but no reversion to the mean adjustment is applied. F-16 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.6 Deferred Policy Acquisition Costs ("DPAC") and Cost of Insurance Purchased ("CIP") (continued) DPAC and CIP related to interest-sensitive products 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, net of deferred taxes, is included in unrealized investment gains (losses) in accumulated other comprehensive income within shareholder's equity. The Company reviews the carrying amounts 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. 2.7 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. Future policy benefits and policyholder contract deposits liabilities were as follows at December 31:
2004 2003 ----------- ----------- (In Thousands) Future policy benefits: Ordinary life 4,555,887 4,337,180 Group life 26,346 29,797 Life contingent group annuities 89,228 93,072 Life contingent annuities 3,746,198 2,799,407 Terminal funding 401,444 414,630 Accident and health 337,158 224,829 ----------- ----------- Total $ 9,156,261 $ 7,898,915 =========== =========== Policyholder contract deposits: Annuities $32,463,764 $30,891,794 Corporate-owned life insurance 376,478 439,088 Universal life 5,598,281 5,228,572 ----------- ----------- Total $38,438,523 $36,559,454 =========== ===========
F-17 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.7 Policy and Contract Claims Reserves (continued) 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. Interest, mortality, and surrender assumptions vary by product and are generally based upon actual experience at the time of issue. Interest assumptions used to compute individual life reserves ranged from 1 percent to 11 percent. The liability for policyholder contract deposits has been established based on various assumptions. Interest rates credited for deferred annuities vary by year of issuance and range from 3.0 percent to 5.70 percent. Current declared interest rates are generally guaranteed to remain in effect for a period of one year, though some are guaranteed for longer periods. Withdrawal charges generally range from 0.0 percent to 17.0 percent, grading to zero over a period of 0 to 20 years. Interest rates on corporate-owned life insurance are guaranteed at 3.0 percent and the weighted average rate credited in 2004 was 5.22 percent. 2.8 Guaranteed Minimum Death Benefits A majority of the Company's variable annuity products are issued with a death benefit feature which provides that, upon the death of a contract holder, the contract holder's beneficiary will receive the greater of (1) the contract holder's account value, or (2) a guaranteed minimum death benefit that varies by product ("the GMDB"). Depending on the product, the GMDB may equal the principal invested, adjusted for withdrawals; or the principal invested, adjusted for withdrawals, accumulated with interest at rates up to 3 percent per annum (subject to certain caps). The GMDB has issue age and other restrictions to reduce mortality risk exposure. The Company bears the risk that death claims following a decline in the financial markets may exceed contract holder account balances, and that the fees collected under the contract are insufficient to cover the costs of the benefit to be provided. Prior to January 1, 2004, the Company expensed GMDB-related benefits in the period incurred, and therefore did not provide reserves for future benefits. Effective January 1, 2004, the Company provides reserves for future GMDB-related benefits pursuant to the adoption of Statement of Position 03-01, "Accounting and Reporting by Insurance Enterprises for Certain Non-traditional Long-Duration Contracts and for Separate Accounts" ("SOP 03-01"). The GMDB liability is determined each period end by estimating the expected value of death benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. Changes in liabilities for minimum guarantees are included in guaranteed minimum death benefits in the consolidated statement of income and comprehensive income. F-18 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.8 Guaranteed Minimum Death Benefits (continued) The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to guaranteed minimum death benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. 2.9 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. Premiums for traditional life insurance products are recognized when due. For limited-payment contracts, net premiums are recorded as revenue. The difference between the gross received and the net premium is deferred and recognized in a constant relationship to insurance in force for life insurance contracts and to the amount of expected future benefit payments for annuity contracts. Variable annuity fees, asset management fees and surrender charges are recorded as income when earned. Net retained broker dealer commissions are recognized as income on a trade date basis. 2.10 Reinsurance The Company generally limits its exposure to loss on any single insured to $2.5 million by ceding additional risks through reinsurance contracts with other insurers. On an exception basis, the Company can increase its exposure to loss on any single insured up to $5.0 million. 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. Total reinsurance recoverables on ceded reinsurance contracts are included in accounts receivable. 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. F-19 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.11 Participating Policy Contracts Participating life insurance accounted for approximately 3 percent of life insurance in force at December 31, 2004. 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 $60.8 million, $67.9 million and $76.1 million in 2004, 2003 and 2002, respectively, and were included in policyholders' benefits. 2.12 Income Taxes For the tax years ending December 31, 2004, 2003 and 2002, the Company will join in the filing of a consolidated federal income tax return with AGC Life Insurance Company and its life insurance company subsidiaries. The Company has a written agreement with AGC Life Insurance Company setting forth the manner in which the total consolidated federal income tax is allocated to each entity that joins in the consolidation. Under this agreement, AGC Life Insurance Company agrees not to charge the Company a greater portion of the consolidated tax liability than would have been paid by the Company had it filed a separate federal income tax return. In addition, AGC Life Insurance Company agrees to reimburse the Company for the tax benefits from net losses and tax credits, if any, within a reasonable period of time after the filing of the consolidated federal income tax return for the year in which the losses are used. 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. F-20 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.13 Derivatives The Company takes positions from time to time in certain derivative financial instruments in order to mitigate or hedge the impact of changes in interest rates, foreign currencies and equity markets on cash flows investment income, policyholder liabilities and equity. The Company does not engage in the use of derivative instruments for speculative purposes and is neither a dealer or trader in derivative instruments. Financial instruments used by the Company for such purposes include interest rate swaps, foreign currency swaps, S&P 500 index options (long and short positions) and futures options (short positions on U.S. treasury notes and U.S. long bonds). The Company recognizes all derivatives in the consolidated balance sheet at fair value and utilizes hedge accounting. This means that, to the extent the hedge is deemed to be effective, the accounting for the derivative mirrors the accounting for the financial instruments being hedged. On the date the derivative contract is entered into, the Company designates the derivative as a fair value hedge or cash flow hedge. It is a fair value hedge if it hedges subsequent changes in the fair value of a recognized asset or liability. It is a cash flow hedge if it hedges the variability of cash flows to be received or paid related to a recognized asset or liability. The gain or loss in the fair value of a derivative that is designated, qualifies and is highly effective as a fair value hedge is recorded in current period earnings to the extent the losses or gains of the hedged asset or liability are so recorded. Certain derivative gains or losses on fair value and cash flow hedges are recorded in other comprehensive income until such point that earnings are affected by the fair value changes and cash flows of the hedged asset or liability. The Company documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. The process includes linking all derivatives that are designated as hedged to specific assets or liabilities on the balance sheet. The Company also assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in fair values and cash flows of hedged items. On a quarterly basis the Company evaluates and assesses ongoing compliance with regulatory limits on derivative holdings. F-21 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.13 Derivatives (continued) During 2004, there were no hedges discontinued or otherwise no longer qualified as hedges. Any gain or loss resulting from such early terminations would be deferred and amortized into income over the remaining term of the hedged instrument. Were such hedged instrument subsequently extinguished or sold, any related gain or loss deferred from the swap would be recognized immediately into income. 2.14 Recently Issued Accounting Standards In January 2003, FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN46"). FIN46 changes the method of determining whether certain entities should be consolidated in the Company's consolidated financial statements. An entity is subject to FIN46 and is called a Variable Interest Entity ("VIE") if it has (i) equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (ii) equity investors that cannot make significant decisions about the entity's operations, or do not absorb the expected losses or receive the expected returns of the entity. All other entities are evaluated for consolidation under existing guidance. A VIE is consolidated by its primary beneficiary, which is the party that has a majority of the expected losses or a majority of the expected residual returns of the VIE, or both. In December 2003, the FASB issued FIN46R. The provisions of FIN46R are to be applied immediately to VIEs created after January 31, 2003, and to VIEs in which the Company obtains an interest after that date. For VIEs in which the Company holds a variable interest that is acquired before February 1, 2003, FIN46R was applied as of December 31, 2003. For any VIEs that must be consolidated under FIN46R that were created before February 1, 2003, the assets, liabilities and noncontrolling interest of the VIE would be initially measured at their carrying amounts with any difference between the net amount added to the balance sheet and any previously recognized interest being recognized as the cumulative effect of an accounting change. F-22 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.14 Recently Issued Accounting Standards (continued) The following VIE activities are not consolidated by the Company under FIN46R: i. The Company manages collateralized bond and loan obligation trusts (collectively, collateralized debt obligation trust or CDO trust). As asset manager, the Company receives fees for management of the assets held in the CDO trust, which support the issuance of securities sold by the CDO trust. The Company may take minority equity and/or fixed-income security interest in the CDO trust. The Company has entered into such arrangements to expand its asset management activities. Third-party investors have recourse only to the CDO trust, and have no recourse to the Company. The Company does not consolidate these CDO trusts, pursuant to FIN46R. ii. The Company also invests in assets of VIEs. These VIEs are established by unrelated third parties. Investments include collateralized mortgage backed securities and similar securities backed by pools of mortgages, consumer receivables or other assets. The investment in these VIEs allows the Company to purchase assets permitted by insurance regulations while maximizing their return on these assets. These VIEs are not consolidated by the Company, pursuant to FIN46R. In July 2003, the American Institute of Certified Public Accountants ("AICPA") issued SOP 03-01. This statement was effective as of January 1, 2004 and requires the Company to recognize a liability for GMDB, as discussed above, related to its variable annuity and variable life contracts and modifies certain disclosures and financial statement presentations for these products. The Company reported a one-time cumulative accounting charge upon adoption of $16.9 million to reflect the guaranteed minimum death benefit liability as of January 1, 2004. In addition, under SOP 03-01, variable annuity assets held in separate accounts will continue to be measured at fair value and reported in summary total on the Company's financial statements, with an equivalent summary total reported for related liabilities, if the separate account arrangement meets certain specified conditions. Assets underlying the Company's interest in a separate account ("separate account seed money") do not qualify for separate account accounting and reporting. The Company was required to "look through" the separate account for the purposes of accounting for its interest therein, and account for and classify separate account seed money based on its nature as if the assets of the separate account underlying the Company's interest were held directly by the general account rather than through the separate account structure. The adoption of SOP 03-01 did not have a material impact on the Company's separate accounts or separate account seed money. F-23 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.14 Recently Issued Accounting Standards (continued) In December 2004, the FASB issued Statement No. 123 (revised 2004) ("FAS 123R"), "Share-Based Payment." FAS 123R replaces FASB Statement No. 123 ("FAS 123"), "Accounting for Stock-based Compensation," and superseded APB Opinion No. 25, "Accounting for Stock Issued to Employees." FAS 123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. On January 1, 2003, AIG adopted the recognition provisions of FAS 123. The effect of the compensation costs, as determined consistent with FAS 123, was not computed on a subsidiary basis, but rather on a consolidated basis for all subsidiaries of AIG and, therefore, are not presented herein. FAS 123R is effective for the annual periods beginning after June 15, 2005. AIG and the Company are currently assessing the impact of FAS 123R and believes the impact will not be material to AIG's or the Company's results of operations. In June 2004, the FASB issued FSP No. 97-1, "Situations in Which Paragraphs 17(b) and 20 of FASB Statement No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments, Permit or Require Accrual of an Unearned Revenue Liability." FSP 97-1 clarifies the accounting for unearned revenue liabilities of certain universal-life type contracts under SOP 03-01. The Company's adoption of FSP 97-1 on July 1, 2004 did not change the accounting for unearned revenue liabilities and, therefore, had no impact on the Company's consolidated financial position or results of operations. In September 2004, the AICPA SOP 03-01 Implementation Task Force issued a Technical Practice Aid ("TPA") to clarify certain aspects of SOP 03-01. The Company is currently evaluating the effect of the implementation of this TPA in its operations on the Company's consolidated financial position or results of operations. In March 2004, the EITF of the FASB reached a final consensus on Issue 03-01, "Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments." This Issue establishes impairment models for determining whether to record impairment losses associated with investments in certain equity and debt securities. It also requires income to be accrued on a level-yield basis following an impairment of debt securities, where reasonable estimates of the timing and amount of future cash flows can be made. The Company's policy is generally to record income only as cash is received following an impairment of a debt security. In September 2004, the FASB issued Staff Position ("FSP") EITF 03-01-1, which defers the effective date of a substantial portion of EITF 03-01, from the third quarter of 2004, as originally required by the EITF, until such time as FASB issues further implementation guidance, which is expected sometime in 2005. The Company will continue to monitor developments concerning this Issue and is currently unable to estimate the potential effects of implementing EITF 03-01 on the Company's consolidated financial position or results of operations. F-24 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments 3.1 Investment Income Investment income by type of investment was as follows for the years ended December 31: 2004 2003 2002 ---------- ----------- ---------- (In Thousands) Investment income: Fixed maturities $3,165,313 $2,983,484 $2,789,590 Equity securities 8,070 13,148 2,199 Mortgage loans on real estate 235,321 240,745 226,329 Investment real estate 10,265 8,229 15,303 Policy loans 99,421 105,214 102,479 Other long-term investments 85,650 (35,388) (69,064) Short-term investments 16,697 18,431 23,078 ---------- ---------- ---------- Gross investment income 3,620,737 3,333,863 3,089,914 Investment expenses 63,577 45,177 35,384 ---------- ---------- ---------- Net investment income $3,557,160 $3,288,686 $3,054,530 ========== ========== ========== The carrying value of investments that produced no investment income during 2004 was less than 0.3 percent 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 2004, 2003 and 2002. During 2004, 2003 and 2002, investment income from other long-term investments is primarily related to gains or losses associated with various partnership interests. F-25 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.2 Net Realized Investment Gains (Losses) Realized gains (losses) by type of investment were as follows for the years ended December 31: 2004 2003 2002 --------- --------- --------- (In Thousands) Fixed maturities: Gross gains $ 198,777 $ 357,694 $ 398,239 Gross losses (270,129) (400,061) (697,068) --------- --------- --------- Total fixed maturities (71,352) (42,367) (298,829) Equity securities 7,041 2,099 (191) Partnerships (60,101) (9,424) (6,145) Other (33,876) (7,087) 9,821 --------- --------- --------- Net realized investment losses before tax (158,288) (56,779) (295,344) Income tax benefit (58,523) (19,873) (103,370) --------- --------- --------- Net realized investment losses after tax $ (99,765) $ (36,906) $(191,974) ========= ========= ========= During 2004, 2003 and 2002, the Company's realized losses included write-downs of $65 million, $274 million and $317 million, respectively, for certain available for sale fixed maturity investments that experienced declines deemed other than temporary. The determination that a security has incurred an other than temporary decline in value and the amount of loss recognition requires the judgement of the Company's management and a continual review of its investments. F-26 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.3 Fixed Maturity and Equity Securities The following table summarizes the Company's gross unrealized losses and estimated fair values on fixed maturity securities available for sale and equity securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2004:
Less than 12 Months 12 Months or More Total ----------------------- ----------------------- ----------------------- (In Thousands) Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses ---------- ---------- ---------- ---------- ---------- ---------- Fixed maturity securities $4,902,790 $ 99,579 $1,518,651 $78,317 $6,421,441 $177,896 Equity securities 8,754 2,497 101 23 8,855 2,520 ---------- -------- ---------- ------- ---------- -------- Total $4,911,544 $102,076 $1,518,752 $78,340 $6,430,296 $180,416 ========== ======== ========== ======= ========== ========
F-27 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.3 Fixed Maturity and Equity Securities (continued) Fixed maturity and equity securities classified as available-for-sale are reported at fair value. Amortized cost and fair value at December 31, 2004 and 2003 were as follows:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value ----------- ---------- ---------- ----------- (In Thousands) December 31, 2004 Fixed maturity securities: Corporate securities: Investment-grade $27,206,453 $2,139,206 $ (65,676) $29,279,983 Below investment-grade 2,990,210 209,999 (42,729) 3,157,480 Mortgage-backed securities 12,523,571 347,005 (40,439) 12,830,137 U.S. government obligations 214,984 31,887 (834) 246,037 Foreign governments 411,263 46,495 (207) 457,551 State and political subdivisions 3,188,957 184,295 (24,610) 3,348,642 Collateralized bonds 59,077 160 (2,798) 56,439 Redeemable preferred stocks 51,712 9,055 (603) 60,164 ----------- ---------- --------- ----------- Total fixed maturity securities $46,646,227 $2,968,102 $(177,896) $49,436,433 =========== ========== ========= =========== Equity securities $ 48,038 $ 24,776 $ (2,520) $ 70,294 =========== ========== ========= =========== Separate account seed money $ 39,758 $ 1,735 $ (5) $ 41,488 =========== ========== ========= =========== Investment in ultimate Parent Company $ 8,597 $ 44,606 $ -- $ 53,203 =========== ========== ========= ===========
F-28 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.3 Fixed Maturity and Equity Securities (continued)
Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value ----------- ---------- ---------- ----------- (In Thousands) December 31, 2003 Fixed maturity securities: Corporate securities: Investment-grade $22,652,679 $1,790,509 $ (81,969) $24,361,219 Below investment-grade 4,292,052 240,752 (174,159) 4,358,645 Mortgage-backed securities 12,549,589 322,479 (109,018) 12,763,050 U.S. government obligations 285,458 33,931 (1,932) 317,457 Foreign governments 336,692 37,805 (255) 374,242 State and political subdivisions 2,955,362 173,207 (17,100) 3,111,469 Collateralized bonds 33,233 306 (489) 33,050 Redeemable preferred stocks 27,946 2,871 (819) 29,998 ----------- ---------- --------- ----------- Total fixed maturity securities $43,133,011 $2,601,860 $(385,741) $45,349,130 =========== ========== ========= =========== Equity securities $ 93,182 $ 13,866 $ (8,525) $ 98,523 =========== ========== ========= =========== Separate account seed money $ 90,670 $ 6,000 $ (5,000) $ 91,670 =========== ========== ========= =========== Investment in ultimate Parent Company $ 8,597 $ 45,100 $ -- $ 53,697 =========== ========== ========= ===========
F-29 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.3 Fixed Maturity and Equity Securities (continued) Net unrealized gains (losses) on securities included in accumulated other comprehensive income in shareholder's equity at December 31 were as follows: 2004 2003 2002 ---------- ---------- ---------- (In Thousands) Gross unrealized gains $3,039,219 $2,666,826 $2,513,951 Gross unrealized losses (180,421) (399,266) (943,681) DPAC and other fair value adjustments (635,113) (544,476) (456,081) Deferred federal income taxes (788,071) (609,027) (406,075) ---------- ---------- ---------- Net unrealized gains on securities $1,435,614 $1,114,057 $ 708,114 ========== ========== ========== The contractual maturities of fixed maturity securities at December 31 were as follows: 2004 ------------------------- Amortized Market Cost Value ----------- ----------- (In Thousands) Fixed maturity securities, excluding mortgage- backed securities: Due in one year or less $ 696,275 $ 714,466 Due after one year through five years 4,183,308 4,499,727 Due after five years through ten years 11,166,777 11,917,222 Due after ten years 18,076,296 19,474,881 Mortgage-backed securities 12,523,571 12,830,137 ----------- ----------- Total fixed maturity securities $46,646,227 $49,436,433 =========== =========== 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 $28.7 billion, $31.5 billion and $30.5 billion, during 2004, 2003 and 2002, respectively. At December 31, 2004, $46.9 million of bonds, at amortized cost, were on deposit with regulatory authorities in accordance with statutory requirements. F-30 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.4 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 percent or less, based on management's credit assessment of the borrower. The mortgage loan portfolio was distributed as follows at December 31, 2004 and 2003: Outstanding Percent of Percent Amount Total Nonperforming ------------- ---------- ------------- (In Millions) December 31, 2004 Geographic distribution: South Atlantic $ 741 22.3% 0.0% Pacific 572 17.2 0.0 Mid-Atlantic 681 20.5 2.1 East North Central 388 11.7 7.5 Mountain 174 5.2 0.0 West South Central 226 6.8 0.0 East South Central 246 7.4 0.0 West North Central 104 3.1 10.4 New England 170 5.1 0.0 Canada 23 0.7 0.0 Allowance for losses (0) (0.0) 0.0 ------ ----- ---- Total $3,325 100.0% 1.6% ====== ===== ==== Property type: Office $1,290 38.8% 3.5% Retail 952 28.6 0.0 Industrial 419 12.6 0.0 Apartments 425 12.8 0.0 Hotel/motel 54 1.6 15.4 Other 185 5.6 0.0 Allowance for losses (0) (0.0) 0.0 ------ ----- ---- Total $3,325 100.0% 1.6% ====== ===== ==== F-31 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.4 Mortgage Loans on Real Estate (continued) Outstanding Percent of Percent Amount Total Nonperforming ------------- ---------- ------------- (In Millions) December 31, 2003 Geographic distribution: South Atlantic $ 711 24.1% 0.0% Pacific 506 17.1 0.0 Mid-Atlantic 506 17.1 0.0 East North Central 459 15.5 0.0 Mountain 70 2.4 0.0 West South Central 197 6.7 0.0 East South Central 251 8.5 0.0 West North Central 121 4.1 0.8 New England 139 4.7 0.0 Allowance for losses (7) (0.2) 0.0 ------ ----- Total $2,953 100.0% 0.0% ====== ===== Property type: Office $1,261 42.7% 0.0% Retail 844 28.5 0.1 Industrial 386 13.1 0.0 Apartments 312 10.6 0.0 Hotel/motel 55 1.9 0.0 Other 102 3.4 0.0 Allowance for losses (7) (0.2) 0.0 ------ ----- Total $2,953 100.0% 0.0% ====== ===== Impaired mortgage loans on real estate and related interest income is not material. F-32 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 4. Deferred Policy Acquisition Costs and Cost of Insurance Purchased The following reflects deferred policy acquisition costs (commissions, direct solicitation and other costs) which will be amortized against future income and the related current amortization charges to income, excluding certain amounts deferred and amortized in the same period:
2004 2003 2002 ---------- ---------- ---------- (In Thousands) Balance at January 1 $2,911,767 $2,777,562 $2,752,571 Capitalization 754,087 578,665 460,253 Accretion of interest/amortization (280,898) (326,641) (196,028) Effect of unrealized gains on securities (89,827) (108,572) (280,942) Effect of realized losses (gains) on securities (2,896) (9,247) 41,708 ---------- ---------- ---------- Balance at December 31 $3,292,233 $2,911,767 $2,777,562 ========== ========== ==========
The Company adjusts DAC amortization ("a DAC unlocking") when estimates of current or future gross profits to be realized are revised. In 2002, DAC amortization was reduced by $46.5 million to reflect a change in the amortization period and reduced by $56 million due to improved persistency, offset by a $56 million increase to reflect lower earnings for equity markets. A roll forward of the cost of insurance purchased ("CIP") for the years ended December 31, were as follows:
2004 2003 2002 -------- -------- -------- (In Thousands) Balance at January 1 $338,520 $351,600 $312,609 Deferral of renewal commissions 3,623 5,274 6,391 Accretion of interest/amortization (30,316) 15,612 (2,300) Effect of unrealized (gains) losses on securities 12,725 (33,966) 33,700 Effect of realized losses on securities 368 -- 1,200 -------- -------- -------- Balance at December 31 $324,920 $338,520 $351,600 ======== ======== ========
During 2003, the Company reduced their CIP amortization by $34 million primarily due to improved mortality. CIP amortization expected to be recorded in each of the next five years is $21.5 million, $21.0 million, $20.5 million, $19.7 million, and $18.3 million, respectively. F-33 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 5. Reserves for Guaranteed Benefits Details concerning the Company's guaranteed minimum death benefit exposure as of December 31, 2004 were as follows: Return of Net Deposits Plus a Minimum Return ---------------------- (In Millions) Account value $ 43,750 Net amount at risk /(a)/ 2,199 Average attained age of contract holders 54 Range of guaranteed minimum return rates 0.00%-3.00% /(a)/ Net amount at risk represents the guaranteed benefit exposure in excess of the current account value if all contract holders died at the same balance sheet date. The following summarizes the reserve for guaranteed benefits on variable contracts, which is reflected in the general account and reported in reserves for fixed annuity contracts on the consolidated balance sheet: (In Millions) ------------- Balance at January 1, 2004 /(b)/ $ 13 Guaranteed benefits incurred 8 Guaranteed benefits paid (11) ---- Balance at December 31, 2004 $ 10 ==== /(b)/ Included in the one-time cumulative effect of accounting change resulting from the adoption of SOP 03-1. The following assumptions and methodology were used to determine the reserve for guaranteed benefits at December 31, 2004: . Data used was 1,000 stochastically generated investment performance scenarios. . Mean investment performance assumption was 10%. . Volatility assumption was 16%. . Mortality was assumed to be 70% to 87.5% of the 1983a table. . Lapse rates vary by contract type and duration and range from 5% to 25%. . The discount rate was 3% to 8%. F-34 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 6. Other Assets Other assets consisted of the following: December 31 ------------------- 2004 2003 -------- -------- (In Thousands) Goodwill $ 39,780 $ 38,973 Computer software, net 104,114 121,866 Account receivable from brokers, net 29,437 84,794 Prepaid expenses 36,605 36,869 Property and equipment 49,594 61,893 Other 12,740 32,183 -------- -------- Total other assets $272,270 $376,578 ======== ======== 7. Restructuring Charges In connection with the Parent's merger with AGC during 2001, the Company incurred $180.4 million in restructuring costs. Of the total restructuring charges, approximately $177.2 million has been paid as of December 31, 2004. The remaining balance is included in Other Liabilities. 8. Federal Income Taxes 8.1 Tax Liabilities Income tax liabilities were as follows: December 31 ------------------------ 2004 2003 ---------- ----------- (In Thousands) Current tax receivables $ (98,435) $ (19,844) Net deferred tax liabilities 1,541,342 1,124,026 ---------- ---------- Income tax payable $1,442,907 $1,104,182 ========== ========== F-35 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 8. Federal Income Taxes (continued) 8.1 Tax Liabilities (continued) The components of deferred tax liabilities and assets at December 31 were as follows: 2004 2003 ---------- ----------- (In Thousands) Deferred tax liabilities applicable to: Deferred policy acquisition costs $ 998,567 $ 997,483 Basis differential of investments 190,550 72,232 Net unrealized gains on debt and equity securities available for sale 882,992 597,954 Capitalized EDP 26,599 30,702 Prepaid expenses 12,803 12,679 Other 47,492 58,044 ---------- ---------- Total deferred tax liabilities 2,159,003 1,769,094 Deferred tax assets applicable to: Policy reserves (584,450) (639,638) Other (33,211) (5,430) ---------- ---------- Total deferred tax assets (617,661) (645,068) ---------- ---------- Net deferred tax liabilities $1,541,342 $1,124,026 ========== ========== Under prior federal income tax law, one-half of the excess of a life insurance company's income from 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, 2004, the Company had approximately $382 million of policyholders' surplus on which no deferred tax liability has been recognized, as federal income taxes are not required unless it is distributed as a dividend, or recognized under other specified conditions. The Company does not believe that any significant portion of the account will be taxed in the foreseeable future.If the entire balance of the policyholders' surplus became taxable at the current federal income tax rates, the tax would be approximately $134 million. The American Jobs Creation Act of 2004 modified federal income tax law to allow life insurance companies to distribute amounts from policyholders' surplus during 2005 and 2006 without incurring federal income tax on the distributions. The Company is evaluating this new law and expects to eliminate its policyholders' surplus balance during these two years. F-36 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 8. Federal Income Taxes (continued) 8.2 Tax Expense Components of income tax expense (benefit) for the years ended December 31 were as follows:
2004 2003 2002 -------- -------- --------- (In Thousands) Income tax at statutory percentage of GAAP pretax income $526,571 $450,865 $ 344,654 Non-conventional fuel source credits (96,202) (93,655) (101,917) Dividends received deduction (19,828) (18,632) (21,641) State taxes 11,823 9,114 7,659 Low income housing & other tax credits (6,654) (6,718) (6,607) Other current taxes related to IRS settlements (27) (6,700) (46,237) Prior year true-ups (16,310) (3,225) (1,956) Non-qualifying and incentive stock option adjustments -- (2,215) (3,872) Other (661) (2,279) 2,336 -------- -------- --------- Income tax expense $398,712 $326,555 $ 172,419 ======== ======== =========
F-37 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 9. Transactions With Affiliates Notes receivable from affiliates were as follows:
December 31, 2004 December 31, 2003 ----------------------------------------------- Par Value Book Value Par Value Book Value --------- ---------- --------- ---------- (In Thousands) American General Corporation, 9.375%, due 2008 $ 4,725 $ 3,932 $ 4,725 $ 3,795 American General Corporation, Promissory notes, 5.50% due 2004 -- -- 2,446 2,446 AGC Life, Promissory notes, 6.75% due 2005 116,000 116,000 116,000 116,000 American General Corporation, Promissory notes, 2.78% due 2006 415,000 415,000 415,000 415,000 Castle Trust 2, Asset backed notes, 5.26%, due 2026 45,990 46,971 -- -- Castle Trust 2, Asset backed notes, 8.26%, due 2026 14,497 16,142 -- -- -------- -------- -------- -------- Total notes receivable from affiliates 596,212 598,045 538,171 537,241 ======== ======== ======== ========
Various AIG companies provide services to the Company, principally mortgage servicing and investment management services, provided by American International Group Global Investment Corporation ("AIGGIC") on a fee basis. The Company paid approximately $67.5 million, $54.4 million and $52.9 million for such services in 2004, 2003 and 2002, respectively. Accounts payable for such services at December 31, 2004 and 2003 were not material. The Company rents facilities and provides services on an allocated cost basis to various AIG companies. Beginning in 1998, amounts received by the Company from affiliates include amounts received by its wholly owned, non-life insurance subsidiary, AGLC. AGLC provides shared services, including technology, to a number of AIG's life insurance subsidiaries. The Company received approximately $337.0 million, $311.4 million and $261.3 million for such services and rent in 2004, 2003 and 2002, respectively. Accounts receivable for rent and services at December 31, 2004 and 2003 were not material. F-38 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 9. Transactions With Affiliates (continued) As a matter of Company policy, derivative contracts are generally executed with AIG Financial Products Corp. ("AIGFP"), an affiliated financial products company. From time to time, derivatives will be entered into with unaffiliated parties in conjunction with private placement investments. During 2004, the Company purchased 38.7% of the non-voting preferred equity issued by Castle Trust 2003-II LP ("Castle Trust 2") for $116,558,398. The remaining non-voting equity interest and 100% of the voting equity of Castle Trust are held by various affiliates of the Company. The business of Castle Trust 2, and its wholly owned subsidiaries, is limited to buying, owning, leasing and selling a portfolio of aircraft. The purchase was funded by a capital contribution received from AGC Life Insurance Company. The Company's investment in Castle Trust 2 is reported in partnerships on the consolidated balance sheet. On January 14, 2004, the Company purchased $65 million of fixed-rate asset-backed notes issued by Castle Trust 2. The notes mature on November 15, 2026 and are included in notes receivable from affiliates on the consolidated balance sheet. On December 29, 2004, the Company purchased from Ambler Holding Corp, a wholly-owned subsidiary of the Company's affiliate AIG Financial Products, all of its Class D membership interests in Spicer Energy II LLC ("Spicer") for a purchase price of $86,100,234. As a result, the Company's Class D interest represents 25.3% of the equity in Spicer's three synfuel facilities. The Company's investment in Spicer is reported in partnerships on the consolidated balance sheet. Effective August 1, 2003, the Company and AIG Life Insurance Company of Bermuda ("AIGB") entered into a Cut-through Agreement pursuant to which insureds, their beneficiaries and owners were granted a direct right of action against the Company in the event AIGB becomes insolvent or otherwise cannot or refuses to perform its obligations under certain life insurance policies issued by AIGB. The Cut-through Agreement was approved by the Texas Department of Insurance. The amount of the retained liability on AIGB's books related to this agreement at December 31, 2004 totaled $295,000. The Company feels the probability of loss under this agreement is remote. Effective June 23, 2003, the Company entered into a Cut-through Agreement with AIG Life of Canada ("AIGC") pursuant to which claimants were granted a direct right of action against the Company in the event AIGC becomes insolvent or otherwise cannot or refuses to perform its obligations under certain structured settlement contracts issued by AIGC. On November 6, 2003, the Company filed the Cut-through Agreement with the Texas Department of Insurance (the F-39 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 9. Transactions With Affiliates (continued) Department). In early 2005, the Company discussed this Cut-through Agreement with the Department and it was agreed that the reserve established under these contracts would not exceed $300 million without the consent of the Department. As of December 31, 2004, the reserves recorded by AIGC, related to these contracts, totaled $121 million. The Company feels the probability of loss under this agreement is remote. On June 23, 2003, VALIC, a subsidiary of the Company, extended credit in the amount of $52.5 million (the "Credit Extension") to Highstar Renewable Fuels, LLC ("Highstar"), an indirect wholly owned subsidiary of AIG. The Credit Extension was evidenced by a note dated June 23, 2003 (the "Note"). The Credit Extension was comprised of the following: (i) a loan in the amount of $37.5 million to Highstar (the "Loan"), (ii) a commitment to make an additional loan to Highstar in an aggregate amount not to exceed $2.5 million (the "Commitment") and (iii) a guaranty (the "Guaranty") to a bank that is not affiliated with VALIC (the "Bank"). Pursuant to the terms of the Guaranty, VALIC guaranteed the obligations of other companies (the "LOC Applicants") to the Bank, which obligations were set forth in reimbursement agreements related to standby letters of credit (the "letters of Credit") issued by the Bank. Highstar as a non-controlling partial indirect ownership interest in the LOC Applicants. The primary beneficiaries of the Letters of Credit are partially owned by the LOC Applicant. If any beneficiary of a Letter of Credit drew against the Letter of Credit, VALIC may have been required to pay the Bank an amount equal to the amount of the draws against the Letter of Credit, but not more than the Guaranteed Amount. Pursuant to the terms of the Note, Highstar was obligated to reimburse the Company for any amounts paid by the Company under the Guaranty. Pursuant to the terms of the Guaranty, the Company had a maximum liability of $12.5 million plus cost of enforcement and collection, if any. Interest on the Note, which accrued at a rate of 12% per annum, and a commitment fee of $0.5 million, were due at maturity. VALIC recognized interest income on the Note of $1.9 million and $2.4 million for the years ended December 31, 2004 and 2003, respectively. The Loan matured and the Commitment expired on June 30, 2004. As of June 30, 2004, VALIC had received from Highstar all amounts due under the Note, and Highstar caused the Guaranty to be released by the Bank on that date. On December 31, 2002, the Company sold certain partnership interests to an affiliate, Pine Street Holdings I LLC ("Pine Street Holdings"). Total proceeds received were $59.8 million, resulting in a realized gain of $5.4 million. The consideration received included $20.7 million of 1.38 percent secured term notes due December 31, 2012, and $14.1 million of preferred membership equity interests, issued by Pine Street Holdings. F-40 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 9. Transactions With Affiliates (continued) The Company's insurance policy obligations are guaranteed by American Home Assurance Company ("American Home"), a subsidiary of AIG. This guarantee is unconditional and irrevocable as to outstanding obligations, and the Company's contractholders have the right to enforce the guarantee directly against American Home. While American Home does not publish financial statements, it does file statutory annual and quarterly reports with the New York State Insurance Department, where such reports are available to the public. 10. Benefit Plans Effective January 1, 2002, the Company's employees participate in various benefit plans sponsored by AIG, including a noncontributory qualified defined benefit retirement plan, various stock option and purchase plans, a 401(k) plan and a post retirement benefit program for medical care and life insurance. AIG's U.S. plans do not separately identify projected benefit obligations and plan assets attributable to employees of participating affiliates. 11. Derivative Financial Instruments 11.1 Use of Derivative Financial Instruments The Company's use of derivative financial instruments is generally limited to swaps, currency swaps, S&P 500 index options and treasury note and U.S. long bond futures as hedges of certain financial assets and liabilities as follows: Derivative Instrument Hedged Item - --------------------- -------------------------------------------- Interest rate and currency swaps Private placement bonds S&P index options Equity-indexed policy liabilities on certain universal life and annuity policies Treasury note and long bond futures Bonds purchased for short-term (trading) purposes Hedge effectiveness is established and documented at inception and is reassessed quarterly by comparing notional amounts and contract terms and maturities for agreement and consistency. With the exception of premiums required for the purchase of publicly-traded or over-the-counter (OTC)- traded S&P 500 index options and futures options, derivatives contracts purchased by the Company require no up-front cash payment and provide for net settlement. F-41 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 11. Derivative Financial Instruments (continued) 11.2 Risks Inherent In the Use of Derivatives Risks inherent in the use of derivatives include market risk, credit risk in the event of non-performance by counterparties, and mismatch risk. Exposure to market risk is mitigated by the fact that all derivatives contracts are executed as effective hedges the financial effects of which are offset by another financial instrument (investment securities or index-based policy liabilities). Counterparty credit exposure is limited by entering into agreements with affiliated counterparties or unaffiliated counterparties having high credit ratings. Affiliated counterparties are guaranteed by AIG and unaffiliated counterparty credit ratings are monitored on a regular basis. Mismatch risk is the risk that hedges are executed improperly or become ineffective over the term of the contracts. Procedures have been implemented at AIG Global Investment Group, the company's affiliated investment advisor, and within the Life Division to prevent and detect such mismatches. 11.3 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 and to convert certain fixed rates to different fixed rates. 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. The difference between amounts paid and received on swap agreements, measured on the basis of fair value of the swaps, is recorded on an accrual basis as an adjustment to net investment income, policyholder interest expense, or other comprehensive income. The related amount payable to or receivable from counterparties is included in derivative liabilities or assets. Swap agreements have terms of two to twenty-two years. There were no gains or losses from early swap terminations deferred in 2004. F-42 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 11. Derivative Financial Instruments (continued) 11.3 Interest Rate and Currency Swap Agreements (continued) Interest rate and currency swap agreements related to investment securities at December 31 were as follows:
2004 2003 ------------------------------------ (In Millions) Interest rate swap agreements to receive fixed rate: Notional amount $ 57 $ 71 Fair value 4 6 Currency swap agreements (receive U.S. dollars/pay Canadian dollars): Notional amount (in U.S. dollars) 154 97 Fair Value (38) (16) Currency swap agreements (receive U.S. dollars/pay Great Britain pounds): Notional amount (in U.S. dollars) 20 - Fair Value (2) - Currency swap agreements (receive U.S. dollars/pay Australian dollars): Notional amount (in U.S. dollars) 53 23 Fair value (8) (4) Currency swap agreements (receive U.S. dollars/pay Japanese Yen): Notional amount (in U.S. dollars) 12 12 Fair value (2) (1) Currency swap agreements (receive U.S. dollars/pay LIBOR and Euro-based floating rate): Notional amount (in U.S. dollars) 21 21 Fair value (0) (5) Combination interest rate and currency swap agreements (receive U.S. dollars/pay Australian dollars): Notional amount (in U.S. dollars) 100 21 Fair value (8) (5)
F-43 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 11. Derivative Financial Instruments (continued) 11.4 Index Options S&P 500 index options (puts and calls) are purchased as fair value hedges of index-based exposures inherent in the Company's equity-indexed universal life and annuity products. Such options generally have terms of one or two years. The Company has procedures in place to effectively match option purchases to policy liabilities and to assess ongoing effectiveness on a periodic basis. Contracts outstanding at December 31 were as follows:
2004 2003 ---------------------------- ----------------------------- Notional Fair Value Notional Fair Value -------- ----------- -------- ---------- (In Millions) Calls: One-year (or less) contracts $ 100 $ 6 $ 29 $ 4 Two-year contracts 13 1 -- --
11.5 Futures The Company purchases and sells short futures options (treasury note and U.S. long bond) to offset interest rate exposures on certain bonds purchased for the trading portfolio. All such positions are closed out each quarter-end with mark to market adjustments recognized currently in earnings. 12. Fair Value of Financial Instruments Statement of Financial Accounting Standards No. 107 "Disclosures about Fair Value of Financial Instruments" ("FASB 107") requires disclosure of fair value information about financial instruments for which it is practicable to estimate such fair value. In the measurement of the fair value of certain of the financial instruments, where quoted market prices were not available, other valuation techniques were utilized. These fair value estimates are derived using internally developed valuation methodologies based on available and observable market information. F-44 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 12. Fair Value of Financial Instruments (continued) Carrying amounts and fair values for certain of the Company's financial instruments at December 31 are presented below.
2004 2003 -------------------------- ---------------------- Fair Carrying Fair Carrying Value Amount Value Amount ------- ---------- ------- ---------- (In Millions) Assets Fixed maturity and equity securities $ 49,525 $ 49,525 $ 45,517 $ 45,517 Mortgage loans on real estate 3,532 3,325 3,246 2,954 Policy loans 1,777 1,731 1,749 1,706 Short-term investments 63 63 112 112 Derivative assets 11 11 10 10 Partnerships 2,092 2,092 1,896 1,896 Separate account seed money 41 41 92 92 Investment in ultimate Parent Company 53 53 54 54 Notes receivable from affiliates 598 598 537 537 Securities lending collateral 9,286 9,286 4,451 4,451 Assets held in separate accounts 25,537 25,537 22,931 22,931 Liabilities Investment contracts 30,792 33,591 29,176 31,760 Dividend accumulations 904 904 901 901 Derivative liabilities 58 58 27 27 Securities lending payable 9,286 9,286 4,451 4,451 Liabilities related to separate accounts 25,537 25,537 22,931 22,931
The following methods and assumptions were used to estimate the fair value of financial instruments: Fixed Maturity and Equity Securities Fair value for fixed maturity securities was based principally on independent pricing services, broker quotes and other independent information. For securities that do not have readily determinable market prices, the Company estimated fair value using internally prepared valuations (including those based on estimates of future profitability). Otherwise, the Company used its most recent purchases and sales of similar unquoted securities, independent broker quotes or comparison to similar securities with quoted prices when possible to estimate the fair value of those securities. F-45 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 12. Fair Value of Financial Instruments (continued) Fixed Maturity and Equity Securities (continued) Fair values for equity securities was based upon quoted market prices. 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 Ultimate Parent Company The fair value of the investment in the ultimate Parent Company is based on quoted market prices of AIG 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 held in separate accounts. Derivative Financial Instruments Fair values for derivative assets and liabilities were based upon quoted market prices received from AIG Financial Products Corp, an affiliated financial products company, and independent sources. Investment Contracts Fair value of insurance investment contracts was estimated using cash flows discounted at market interest rates. F-46 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 12. Fair Value of Financial Instruments (continued) Notes Receivable from Affiliates Fair values of promissory notes and asset backed notes from affiliates 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. Partnerships Fair value of partnerships is based upon the fair value of the net assets of these investments as determined by the general partners. Separate Account Seed Money Fair value is considered to be the market value of the underlying securities. 13. Commitments and Contingencies 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. The Company's ultimate parent, AIG, pursuant to various filings with the SEC, has reported that its Annual Report on Form 10-K for the fiscal year ended December 31, 2004 could not be filed within the prescribed time period due to management changes, as well as AIG's ongoing internal review of the accounting for certain transactions, which review was commenced in connection with regulatory inquiries announced by AIG and described in Current Reports on Forms 8-K filed with the SEC by AIG, including those filed on February 14, 2005, March 15, 2005 and March 30, 2005. In the opinion of the Company's management, based on the current status of these inquiries, it is not likely that any of these inquiries will have a material adverse effect on the Company's consolidated financial condition or results of operations. F-47 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 13. Commitments and Contingencies (continued) 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. The Company had $110.5 million of unfunded commitments for its investments in limited partnerships at December 31, 2004. All fifty states have laws requiring solvent life insurance companies to pay assessments to protect the interests of policyholders of insolvent life insurance and annuity companies. The Company recognizes a liability for insurance-related assessments when all of the following three conditions have been met: (i) an assessment has been imposed or information available prior to the issuance of financial statements indicates it is probable that an assessment will be imposed, (ii) the event obligating the Company to pay an imposed or probable assessment occurred on or before the date of the financial statements and (iii) the amount of the assessment can be reasonably estimated. The December 31, 2004 liability was estimated by the Company using the latest information available from the National Organization of Life and Health Insurance Guaranty Associations. The liability is not material to the Company's consolidated statement of position. While it is not possible to exactly estimate the portion of the industry assessments for which the Company will be responsible, it is expected that any difference between the estimated assessments and the actual assessments will not be material to the Company's consolidated results of operations and financial position. Although the amount accrued represents the Company's best estimate of its liability, this estimate may change in the future. F-48 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 13. Commitments and Contingencies (continued) On November 1, 2002, the Company and various affiliates entered into a one-year inter-affiliate credit facility (the "facility"), under which the Company commits to make loans to AIG in amounts aggregating to not more than $90.0 million. Such loans may take the form of variable rate loans that pay the higher of the federal funds rate plus 0.5 percent or the prime rate, or fixed rate loans that pay LIBOR plus a specific margin. AIG has the option, at the commitment termination date to convert any outstanding loan balances to one-year term. After an initial one-year extension, effective October 29, 2004, the facility was amended to extend the commitment termination date to October 28, 2005. The Company has received annual facility fees of 0.045%. However, effective as of October 29, 2004, the facility fee was changed to 0.040%. No loans were funded during 2004 or 2003. Tax credits generated by the production of synthetic fuel are subject to a phase-out provision that gradually reduces tax credits as the annual average wellhead price per barrel of domestic crude oil increases into an inflation-adjusted phase-out range. For 2003 and 2004, the tax credit would have begun to phase-out when the annual average wellhead price per barrel of domestic crude oil exceeded $50.14 per barrel and $51.35 per barrel, respectively. The 2005 phase-out range will be calculated using inflation rates published in 2006 by the Internal Revenue Service. If domestic crude oil prices remain high in 2005, the tax credits and net income generated by the investments may be reduced substantially. During 1997 and 1998, the Company participated in a workers' compensation underwriting pool with a third party insurance company. Both companies share equally in the pool. Collectively, the workers' compensation business is assumed from over 50 ceding companies and retro-ceded to 15 programs. The business covers risks primarily from the 1997 and 1998 underwriting years but also includes one risk from the 1996 underwriting year as well. Net premiums and losses retained by the Company, after retro-cessions to variable quota share reinsurers, are 100% retro-ceded to another AIG subsidiary, American General Assurance Company ("AGAC"). Under the agreement with AGAC, the company remains liable for any credit losses arising from uncollectible amounts from the third party reinsurers, including the Company's 50% pool participant. During 2004 and 2003, the Company recorded charges of $20.7 million and $0 million, respectively, related to such uncollectible amounts. Reinsurance recoverables included in these financial statements related to the workers' compensation business were $ 62.0 million and $ 137.4 million at December 31, 2004 and 2003, respectively. While not included in these financial statements, the Company is contingently liable for losses incurred by its 50% pool participant should that third party become insolvent or otherwise unable to meet its obligations under the pool agreement. F-49 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 14. Reinsurance Reinsurance transactions for the years ended December 31, 2004, 2003 and 2002 were as follows:
Percentage Ceded to Assumed of Amount Other From Other Assumed Gross Amount Companies Companies Net Amount to Net ------------ ------------ ---------- ------------ ---------- (In Thousands) December 31, 2004 Life insurance in force $410,133,222 $314,611,320 $2,814,650 $ 98,336,552 2.86% ============ ============ ========== ============ Premiums: Life insurance and annuities 1,898,236 395,625 9,307 1,511,918 0.62% Accident and health insurance 25,374 2,999 1,129 23,504 4.80% ------------ ------------ ---------- ------------ Total premiums $ 1,923,610 $ 398,624 $ 10,436 $ 1,535,422 0.68% ============ ============ ========== ============ December 31, 2003 Life insurance in force $314,862,729 $211,992,953 $2,628,269 $105,498,045 2.49% ============ ============ ========== ============ Premiums: Life insurance and annuities 1,758,005 305,828 6,641 1,458,818 0.46% Accident and health insurance 24,827 (6,252) (7,296) 23,783 -30.68% ------------ ------------ ---------- ------------ Total premiums $ 1,782,832 $ 299,576 $ (655) $ 1,482,601 -0.04% ============ ============ ========== ============ December 31, 2002 Life insurance in force $278,188,433 $170,693,613 $2,407,609 $109,902,429 2.19% ============ ============ ========== ============ Premiums: Life insurance and annuities 1,760,974 397,686 21,125 1,384,413 1.53% Accident and health insurance 25,713 983 (583) 24,147 -2.41% ------------ ------------ ---------- ------------ Total premiums $ 1,786,687 $ 398,669 $ 20,542 $ 1,408,560 1.46% ============ ============ ========== ============
Reinsurance recoverable on paid losses was approximately $47.5 million, and $47.5 million, at December 31, 2004 and 2003, respectively. Reinsurance recoverable on unpaid losses was approximately $77.7 million, and $150.2 million at December 31, 2004 and 2003, respectively. F-50 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 14. Reinsurance (continued) In December 2002, the Company entered into a coinsured/modified coinsurance agreement with AIG Life Insurance Company of Bermuda ("AIGB"). The agreement has an effective date of March 1, 2002. Under the agreement, AIGB reinsures 100% quota share of the Company's liability on virtually all level term and universal life products issued by the Company with issue dates on or after March 1, 2002. The agreement is unlimited in duration but either party may terminate the agreement as to new business with thirty days written notice to the other party. The agreement also provides for an experience refund of all profits, less a reinsurance risk charge. 15. Shareholder's Equity 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 Company's stock is held by its immediate parent, AGC Life. The Company paid $300 million, $0 million and $445 million in dividends on common stock to the Parent Company in 2004, 2003 and 2002, respectively. The Company also paid $680,000 in dividends on preferred stock to the Parent Company in 2004, 2003 and 2002. On December 31, 2002, the Parent contributed to the Company a 100 percent interest in SunAmerica Hedge Fund Holdings LLC ("SAHFH"). SAHFH was formed on December 13, 2002. SAHFH's assets consist solely of investments in partnerships, which are included in partnerships in the consolidated balance sheets. The capital contribution was recorded in the amount of $443.8 million, representing the equity of SAHFH. 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, 2004, approximately $9.5 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 $4.3 billion of consolidated shareholder's 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 percent of policyholders' surplus or the previous year's statutory net gain from operations. F-51 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 16. Division Operations 16.1 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, which primarily relates to the operation of VALIC, a wholly owned subsidiary of the Company, 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. 16.2 Division Results Results of each division exclude net realized investment gains. Division earnings information was as follows:
Revenues Income Before Taxes Earnings -------------------------- -------------------------- -------------------------- 2004 2003 2002 2004 2003 2002 2004 2003 2002 ------ ------ ------ ------ ------ ------ ------ ------ ------ (In Millions) Retirement Services $2,531 $2,301 $2,133 $1,116 $ 878 $ 772 $ 774 $ 593 $ 552 Life Insurance 3,855 3,568 3,235 546 467 508 435 406 452 ------ ------ ------ ------ ------ ------ ------ ------ ------ Total divisions 6,386 5,869 5,368 1,662 1,345 1,280 1,209 999 1,004 Realized investment gains (losses) (158) (57) (295) (158) (57) (295) (103) (37) (192) ------ ------ ------ ------ ------ ------ ------ ------ ------ Total consolidated $6,228 $5,812 $5,073 $1,504 $1,288 $ 985 $1,106 $ 962 $ 812 ====== ====== ====== ====== ====== ====== ====== ====== ======
F-52 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 16. Division Operations (continued) 16.2 Division Results (continued) Division balance sheet information was as follows: Assets Liabilities ----------------- ----------------- December 31 ------------------------------------- 2004 2003 2004 2003 ------- ------- ------- ------- (In Millions) Retirement Services $68,052 $58,738 $63,063 $54,213 Life Insurance 30,264 27,273 25,083 22,839 ------- ------- ------- ------- Total consolidated $98,316 $86,011 $88,146 $77,052 ======= ======= ======= ======= F-53 PART C: OTHER INFORMATION Item 26. Exhibits (a) Board of Directors Resolution. (1) Resolutions of Board of Directors of American General Life Insurance Company authorizing the establishment of Separate Account VL-R. (1) (b) Custodian Agreements. Inapplicable. (c) Underwriting Contracts. (1) Distribution Agreement between American General Life Insurance Company and American General Equity Services Corporation, effective October 1, 2002. (24) (2) Form of Selling Group Agreement. (25) (3) Schedule of Commissions (Incorporated by reference from the text included under the heading "Distribution of the Policies" in the Statement of Additional Information that is filed as part of this amended Registration Statement). (d) Contracts. (1) Specimen form of the "Platinum Investor(R) III" Flexible Premium Variable Life Insurance Policy (Policy Form No. 00600). (26) (e) Applications. (1) Specimen form of Life Insurance Application - Part A, Form No. AGLC 100565-2003. (22) (2) Specimen form of Life Insurance Application - Part B, Form No. AGLC 100566-2003. (22) (3) Specimen form of Variable Universal Life Insurance Supplemental Application, Form No. AGLC 0198-00 Rev0504. (33) (4) Form of Service Request Form, Form No. AGLC0223 Rev1204. (33) (5) Form of Cash Disbursement Request Form, Form No. AGLC 0109 Rev0103. (25) (6) Form of Assignment Form, Form No. AGLC 0205 Rev0103. (25) C-1 (7) Form of Electronic Funds Authorization Form, Form No. AGLC 0220 Rev0103. (25) (8) Form of Name and Address Change Form, Form No. AGLC 0222 Rev0103. (25) (9) Form of Request for Change of Ownership on a Life Insurance Policy Form, Form No. VUL 0013 Rev1202. (25) (10) Form of Request for Full Cash Surrender Value Form, Form No. VUL 0015 Rev1202. (25) (11) Form of Change of Beneficiary Form, Form No. VUL 0016 Rev1202. (25) (f) Depositor's Certificate of Incorporation and By-Laws. (1) Amended and Restated Articles of Incorporation of American General Life Insurance Company, effective December 31, 1991. (2) (2) Amendment to the Amended and Restated Articles of Incorporation of American General Life Insurance Company, effective July 13, 1995. (5) (3) By-laws of American General Life Insurance Company, adopted January 22, 1992. (3) (g) Reinsurance Contracts. Inapplicable. (h) Participation Agreements. (1)(a) 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) (1)(b) 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) (1)(c) Form of Amendment Six 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. (27) C-2 (2)(a) 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) (2)(b) 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) (2)(c) 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. (18) (2)(d) 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) (3)(a) Form of Participation Agreement Between American General Life Insurance Company, Dreyfus Variable Investment Fund, The Dreyfus Socially Responsible Growth Fund, Inc. and Dreyfus Life and Annuity Index Fund, Inc. (6) (3)(b) 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) (4)(a) Form of Participation Agreement Among MFS Variable Insurance Trust, American General Life Insurance Company and Massachusetts Financial Services Company. (6) (4)(b) Form of Amendment Five to Participation Agreement by and among MFS Variable Insurance Trust, American General Life Insurance Company and Massachusetts Financial Services Company. (18) (5)(a) Participation Agreement by and 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) (5)(b) Amendment Number 1 to Participation Agreement by and among Morgan Stanley Universal Funds, Inc., Morgan Stanley Asset Management Inc., Miller Anderson & Sherrerd LLP, Van Kampen American Capital C-3 Distributors, Inc., American General Life Insurance Company and American General Securities Incorporated. (11) (5)(c) 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) (5)(d) Form of Amendment Ten 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 Distributors, Inc. (28) (6)(a) Form of Participation Agreement Among Putnam Variable Trust, Putnam Mutual Funds Corp., and American General Life Insurance Company. (6) (7)(a) Form of Participation Agreement Among American General Life Insurance Company, American General Securities Incorporated, SAFECO Resources Series Trust, and SAFECO Securities, Inc. (6) (7)(b) Form of Amendment Four to Participation Agreement Among American General Life Insurance Company, American General Securities Incorporated, SAFECO Resources Series Trust, and SAFECO Securities, Inc. (17) (7)(c) Form of Amendment Seven to Participation Agreement Among American General Life Insurance Company, American General Securities Incorporated, SAFECO Resources Series Trust, and SAFECO Securities, Inc. (28) (8)(a) 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) (8)(b) 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) (8)(c) 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) C-4 (8)(d) Form of Amendment Nine 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 Distributors, Inc. (28) (9)(a) Form of Shareholder Services Agreement by and between American General Life Insurance Company and American Century Investment Management, Inc. (15) (9)(b) Form of Amendment No. 2 to Shareholder Services Agreement by and between American General Life Insurance Company and American Century Investment Management, Inc. and American Century Investment Services, Inc. (32) (10)(a) Sales Agreement by and between American General Life Insurance Company, Neuberger & Berman Advisors Management Trust and Neuberger & Berman Management Incorporated. (15) (11)(a) Form of Assignment and Modification Agreement by and between Neuberger & Berman Management Incorporated and American General Life Insurance Company. (15) (12)(a) Form of Participation Agreement by and between Goldman Sachs Variable Insurance Trust, Goldman, Sachs & Co. and American General Life Insurance Company. (31) (13)(a) Form of Fund Participation Agreement by and between American General Life Insurance Company and Janus Aspen Series. (18) (14)(a) Form of Participation Agreement by and between American General Life Insurance Company and J.P. Morgan Series Trust II. (18) (14)(b) Form of Amendment No. 1 to Participation Agreement by and between American General Life Insurance Company and J.P. Morgan Series Trust II. (30) (15)(a) Form of Participation Agreement by and between American General Life Insurance Company, PIMCO Variable Insurance Trust and PIMCO Funds Distributor LLC. (18) (16)(a) Form of Participation Agreement by and between Vanguard Variable Insurance Funds, The Vanguard Group, Inc., Vanguard Marketing Corporation and American General Life Insurance Company. (18) C-5 (16)(b) Form of Amendment to Participation Agreement by and between Vanguard Variable Insurance Funds, The Vanguard Group, Inc., Vanguard Marketing Corporation and American General Life Insurance Company. (32) (17)(a) 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. (18) (18)(a) Form of Amended and Restated Participation Agreement by and between Variable Insurance Products Fund II, Fidelity Distributors Corporation and American General Life Insurance Company. (18) (18)(b) Form of Amendment No. 3 to the Amended and Restated Participation Agreement by and between Variable Insurance Products Fund II, Fidelity Distributors Corporation and American General Life Insurance Company. (30) (19)(a) Form of Amended and Restated Participation Agreement by and between Variable Insurance Products Fund, Fidelity Distributors Corporation and American General Life Insurance Company. (18) (19)(b) Form of Amendment No. 3 to the Amended and Restated Participation Agreement by and between Variable Insurance Products Fund, Fidelity Distributors Corporation and American General Life Insurance Company. (30) (20)(a) Form of Amended and Restated Participation Agreement by and among American General Life Insurance Company, American General Equity Services Corporation, Franklin Templeton Variable Insurance Products Trust and Franklin Templeton Distributors, Inc., dated as of October 1, 2002. (13) (21)(a) Form of Participation Agreement by and between SunAmerica Series Trust and American General Life Insurance Company. (19) (21)(b) Form of Addendum to Fund Participation Agreement For Class A Shares by and between SunAmerica Series Trust and American General Life Insurance Company. (33) (21)(c) Form of Amendment to Participation Agreement by and between SunAmerica Series Trust and American General Life Insurance Company, dated July 2, 2003. (34) (22)(a) Form of Administrative Services Agreement between American General Life Insurance Company and fund distributor. (5) C-6 (23)(a) Form of Administrative Services Agreement between American General Life Insurance Company, Miller Anderson & Sherrard LLP and Morgan Stanley Dean Witter Investment Management Inc. (14) (24)(a) Form of Administrative Services Agreement between American General Life Insurance Company and SAFECO Asset Management Company, effective May 14, 2002. (23) (25)(a) Form of Administrative Services Agreement between Van Kampen Asset Management Inc. and American General Life Insurance Company dated January 1, 2000 (20) (25)(b) Form of Amendment No. 1 to Administrative Services Agreement between Van Kampen Asset Management Inc. and American General Life Insurance Company, dated November 1, 2001. (29) (26)(a) Form of Amended and Restated Administrative Services Agreement between American General Life Insurance Company and A I M Advisors, Inc. (32) (27)(a) Administrative Services Agreement dated as of August 11, 1998, between American General Life Insurance Company and The Dreyfus Corporation. (4) (27)(b) Amendment to Administrative Services Agreement dated as of August 11, 1998, between American General Life Insurance Company and The Dreyfus Corporation effective as of December 1, 1998. (4) (28)(a) Form of Administrative Services Agreement by and between Goldman, Sachs & Co. and American General Life Insurance Company. (31) (29)(a) Form of Administrative Services Agreement by and between American General Life Insurance Company and JPMorgan Chase Bank, effective May 1, 2003. (30) (30)(a) Form of Administrative Services Agreement by and between American General Life Insurance Company and Neuberger & Berman Management Incorporated. (15) (31)(a) Form of Services Agreement by and between American General Life Insurance Company and Pacific Investment Management, LLC. (18) (32)(a) Form of Administrative Services Agreement by and between American General Life Insurance Company and Credit Suisse Asset Management, LLC. (18) C-7 (33)(a) Form of Administrative Services Agreement by and among American General Life Insurance Company and Franklin Templeton Services, Inc., dated as of July 1, 1999. (12) (33)(b) Form of Amendment to Administrative Services Agreement by and among American General Life Insurance Company and Franklin Templeton Services, LLC, effective November 1, 2001. (21) (33)(c) Form of Amendment No. 3 to Administrative Services Agreement by and among American General Life Insurance Company and Franklin Templeton Services, LLC, dated as of July 30, 2004. (13) (34)(a) Form of Service Contract by and between Fidelity Distributors Corporation and American General Equity Services Corporation, effective October 1, 2002. (30) (35)(a) Form of Service Agreement by and between Fidelity Investments Institutional Operations Company, Inc. and American General Life Insurance Company. (18) (36)(a) Form of Distribution and Shareholder Services Agreement by and between Janus Distributors, Inc. and American General Life Insurance Company. (18) (37)(a) Form of PIMCO Variable Insurance Trust Services Agreement by and between American General Life Insurance Company and PIMCO Variable Insurance Trust. (18) (38)(a) Form of Administrative Services Agreement by and between SunAmerica Asset Management Corp. and American General Life Insurance Company. (19) (39)(a) Form of Participation Agreement by and among The Alger American Fund, American General Life Insurance Company and Fred Alger & Company, Incorporated. (30) (40)(a) Form of Service Agreement Class O between Fred Alger Management, Inc. and American General Life Insurance Company. (30) (41)(a) Form of Participation Agreement by and among American General Life Insurance Company, Oppenheimer Variable Account Funds, and OppenheimerFunds, Inc. (20) (41)(b) Form of Amendment No. 1 to Participation Agreement by and among American General Life Insurance Company, Oppenheimer Variable Account Funds, and OppenheimerFunds, Inc. (30) C-8 (42)(a) Form of Administrative Services Agreement by and among American General Life Insurance Company and OppenheimerFunds, Inc. (20) (42)(b) Form of Amendment No. 1 to Administrative Services Agreement by and among American General Life Insurance Company and OppenheimerFunds, Inc. (30) (43)(a) Form of Participation Agreement by and between Variable Insurance Products Fund III, Fidelity Distributors Corporation and American General Life Insurance Company. (30) (44)(a) Form of Participation Agreement by and Among Pioneer Variable Contracts Trust, American General Life Insurance Company, on its own Behalf and on Behalf of Each of the Segregated Asset Accounts, Pioneer Investment Management, Inc. and Pioneer Funds Distributor, Inc. (13) (45)(a) Form of Indemnification Letter Agreement by and between J.P. Morgan Investment Management Inc. and American General Life Insurance Company. (32) (i) Administrative Contracts. (1) 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) (2)(a) Form of Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company. (16) (2)(b) Form of Addendum No. 1 to Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company, dated May 21, 1975. (16) (2)(c) Form of Addendum No. 2 to Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company, dated September 23, 1975. (16) (2)(d) Form of Addendum No. 24 to Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company, dated December 30, 1998. (16) C-9 (2)(e) Form of Addendum No. 28 to Service and Expense Agreement dated February 1, 1974, among American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company and American General Life Companies, effective January 1, 2002. (16) (2)(f) Form of Addendum No. 30 to Service and Expense Agreement dated February 1, 1974, among American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company and American General Life Companies, LLC, effective January 1, 2002. (16) (2)(g) Form of Addendum No. 32 to Service and Expense Agreement dated February 1, 1974, among American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company, American General Life Companies, LLC and American General Equity Services Corporation, effective May 1, 2004. (33) (j) Other Material Contracts. None (k) Legal Opinion. (1) Opinion and Consent of Pauletta P. Cohn, General Counsel, Life Insurance Operations of American General Life Companies. (26) (l) Actuarial Opinion. (1) Opinion and Consent of American General Life Insurance Company's actuary. (26) (m) Calculation. None (n) Other Opinions. (1) Consent of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP. (Filed herewith) (o) Omitted Financial Statements. None (p) Initial Capital Agreements. None (q) Redeemability Exemption. (1) 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. (32) C-10 (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. 033-43390) 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. 033-43390) 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. 033-44745) 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. 033-43390) 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. C-11 (12) 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. (13) Incorporated by reference to Post-Effective Amendment No. 7 to Form N-6 Registration Statement (File No. 333-80191) of American General Life Insurance Company Separate Account VL-R filed on December 2, 2004. (14) Incorporated by reference to Post-Effective Amendment No. 18 to Form N-4 Registration Statement (File No. 033-43390) of American General Life Insurance Company Separate Account D filed on April 12, 2000. (15) 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. (16) Incorporated by reference to Post-Effective Amendment No. 8 to Form N-6 Registration Statement (File No. 333-43264) of American General Life Insurance Company Separate Account VL-R filed on May 3, 2004. (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 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. (19) Incorporated by reference to Post-Effective Amendment No. 2 to Form S-6 Registration Statement (File No. 333-65170) of American General Life Insurance Company Separate Account VL-R filed on April 24, 2002. (20) Incorporated by reference to Pre-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 January 20, 2000. (21) 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. (22) Incorporated by reference to initial filing of Form N-6 Registration Statement (File No. 333-109613) of American General Life Insurance Company Separate Account VL-R filed on October 10, 2003. C-12 (23) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-82982) of American General Life Insurance Company Separate Account VL-R filed on May 13, 2002. (24) Incorporated by reference to Post-Effective Amendment No. 7 to Form N-4 Registration Statement (File No. 333-40637) of American General Life Insurance Company Separate Account D filed on November 8, 2002. (25) Incorporated by reference to initial filing of Form N-6 Registration Statement (File No. 333-102299) of American General Life Insurance Company Separate Account VUL-2 filed on December 31, 2002. (26) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-43264) of American General Life Insurance Company Separate Account VL-R filed on October 26, 2000. (27) Incorporated by reference to initial filing of Form N-6 Registration Statement (File No. 333-103361) of American General Life Insurance Company Separate Account VL-R filed on February 21, 2003. (28) Incorporated by reference to Post-Effective Amendment No. 3 to Form N-6 Registration Statement (File No. 333-65170) of American General Life Insurance Company Separate Account VL-R filed on January 23, 2003. (29) Incorporated by reference to Post-Effective Amendment No. 4 to Form N-6 Registration Statement (File No. 333-43264) of American General Life Insurance Company Separate Account VL-R filed on February 10, 2003. (30) Incorporated by reference to Post-Effective Amendment No. 6 to Form N-6 Registration Statement (File No. 333-43264) of American General Life Insurance Company Separate Account VL-R filed on April 30, 2003. (31) Incorporated by reference to Post-Effective Amendment No. 7 to Form N-6 Registration Statement (File No. 333-90787) of American General Life Insurance Company Separate Account VL-R filed on December 19, 2003. (32) Incorporated by reference to Post-Effective Amendment No. 1 to Form N-6 Registration Statement (File No. 333-118318) of American General Life Insurance Company Separate Account VL-R filed on May 2, 2005. (33) Incorporated by reference to Post-Effective Amendment No. 9 to Form N-6 Registration Statement (File No. 333-43264) of American General Life Insurance Company Separate Account VL-R filed on December 3, 2004. C-13 (34) Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-109206) of American General Life Insurance Company Separate Account D filed on December 17, 2003. Item 27. Directors and Officers of the Depositor Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ --------------------------------------- Rodney O. Martin, Jr. Director, Chairman of the Board of Directors, 2929 Allen Parkway President and Chief Executive Officer Houston, TX 77019 M. Bernard Aidinoff Director Sullivan and Cromwell 125 Broad Street New York, NY 10004 David J. Dietz Director and Chairman-Affluent & Corporate 830 Third Avenue Markets Profit Center New York, NY 10022 David L. Herzog Director 2929 Allen Parkway Houston, TX 77019 Richard A. Hollar Director, President-AIG Life Brokerage Profit 750 West Virginia Street Center and Chief Executive Officer-AIG Life Milwaukee, WI 53204 Brokerage Profit Center Royce G. Imhoff, II Director, President-Affluent & Corporate Markets 2929 Allen Parkway Profit Center and Chief Executive Officer- Houston, TX 77019 Affluent & Corporate Markets Profit Center Donald P. Kanak, Jr. Director 70 Pine Street New York, NY 10270 Richard J. Miller Director, President-Independent Advisory Network 2929 Allen Parkway Profit Center and Chief Executive Houston, TX 77019 Officer-Independent Advisory Group Ernest T. Patrikis Director 70 Pine Street New York, NY 10270 C-14 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ --------------------------------------- Gary D. Reddick Director, Chief Administrative Officer and 2929 Allen Parkway Executive Vice President Houston, TX 77019 Martin J. Sullivan Director 70 Pine Street New York, NY 10270 Christopher J. Swift Director, Chief Financial Officer and Executive 2929 Allen Parkway Vice President Houston, TX 77019 James W. Weakley Director, President-Worksite Solutions Profit 2929 Allen Parkway Center and Chief Executive Officer-Worksite Houston, TX 77019 Solutions Profit Center Thomas L. Booker President-Structured Settlements/SPIA 2727 Allen Parkway Profit Center Houston, TX 77019 Lawrence J. O'Brien President-Agency Building Profit Center 2727 Allen Parkway Houston, TX 77019 Jeffrey H. Carlson Chief Information Officer and Senior Vice 2727 Allen Parkway President Houston, TX 77019 Steven D. Anderson Senior Vice President-Independent Advisory Group 2727 Allen Parkway Houston, TX 77019 Stephen A. Appleyard Senior Vice President-Accident & Health 2727 Allen Parkway Houston, TX 77019 David R. Armstrong Senior Vice President 3600 Route 66 Neptune, NJ 07754 C-15 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ --------------------------------------- Erik A. Baden Senior Vice President 2727 Allen Parkway Houston, TX 77019 Wayne A. Barnard Senior Vice President 2929 Allen Parkway Houston, TX 77019 Robert M. Beuerlein Senior Vice President 2727-A Allen Parkway Houston, TX 77019 Rebecca G. Campbell Senior Vice President 2929 Allen Parkway Houston, TX 77019 James A. Galli Senior Vice President 830 Third Avenue New York, NY 10022 William F. Guterding Senior Vice President 830 Third Avenue New York, NY 10022 Robert F. Herbert, Jr. Senior Vice President, Treasurer and Controller 2727-A Allen Parkway Houston, TX 77019 S. Douglas Israel Senior Vice President 2929 Allen Parkway Houston, TX 77019 Kyle L. Jennings Senior Vice President 2929 Allen Parkway Houston, TX 77019 Althea R. Johnson Senior Vice President 2929 Allen Parkway Houston, TX 77019 C-16 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ --------------------------------------- Glen D. Keller Senior Vice President 2727 Allen Parkway Houston, TX 77019 Simon J. Leech Senior Vice President 2727-A Allen Parkway Houston, TX 77019 Kent D. Major Senior Vice President 2727-A Allen Parkway Houston, TX 77019 Mark R. McGuire Senior Vice President 2727-A Allen Parkway Houston, TX 77019 Laura W. Milazzo Senior Vice President 2727 Allen Parkway Houston, TX 77019 A. Hasan Qureshi Senior Vice President 1 ALICO Plaza 600 King Street Wilmington, DE 19801 Dennis H. Roberts Senior Vice President 2727 Allen Parkway Houston, TX 77019 Richard C. Schuettner Senior Vice President 750 West Virginia Street Milwaukee, WI 53204 James P. Sennett Senior Vice President 2727 Allen Parkway Houston, TX 77019 James P. Steele Senior Vice President 205 E. 10th Street Amarillo, TX 79101 C-17 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ --------------------------------------- Robert E. Steele Senior Vice President 205 E. 10th Street Amarillo, TX 79101 Dan E. Trudan Senior Vice President 750 West Virginia St. Milwaukee, WI 53204 Frederic R. Yopps Senior Vice President 750 West Virginia St. Milwaukee, WI 53204 Steven E. Zimmerman Senior Vice President 2727 Allen Parkway Houston, TX 77019 Edward F. Bacon Vice President 2727-A Allen Parkway Houston, TX 77019 Joan M. Bartel Vice President 2727 Allen Parkway Houston, TX 77019 Michael B. Boesen Vice President 2727-A Allen Parkway Houston, TX 77019 James B. Brown Vice President 2727 Allen Parkway Houston, TX 77019 Robert W. Chesner Vice President 2929 Allen Parkway Houston, TX 77019 Valerie A. Childrey Vice President 750 West Virginia Street Milwaukee, WI 53204 C-18 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ --------------------------------------- Mark E. Childs Vice President 2727 Allen Parkway Houston, TX 77019 Robert M. Cicchi Vice President 2727 Allen Parkway Houston, TX 77019 Donald L. Davis Vice President 205 E. 10th Street Amarillo, TX 79101 Steven A. Dmytrack Vice President 2929 Allen Parkway Houston, TX 77019 Timothy M. Donovan Vice President 2727 Allen Parkway Houston, TX 77019 Farideh N. Farrokhi Vice President 2727-A Allen Parkway Houston, TX 77019 Patrick Froze Vice President 750 West Virginia Street Milwaukee, WI 53204 Frederick J. Garland, Jr. Vice President 2727 Allen Parkway Houston, TX 77019 Lisa Gerhart Vice President 2727 Allen Parkway Houston, TX 77019 Richard L. Gravette Vice President 2727-A Allen Parkway Houston, TX 77019 C-19 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ --------------------------------------- Kenneth J. Griesemer Vice President 6363 Forest Park Road Dallas, TX 75235 Daniel J. Gutenberger Vice President 70 Pine Street New York, NY 10270 Joel H. Hammer Vice President 1 Chase Manhattan Place New York, NY 10005 John Harmeling Vice President 2929 Allen Parkway Houston, Texas 77019 Craig H. Harrel Vice President 2929 Allen Parkway Houston, TX 77019 D. Leigh Harrington Vice President 2727 Allen Parkway Houston, TX 77019 Bradley Harris Vice President 2727 Allen Parkway Houston, TX 77019 Michael Harrison Vice President 2727 Allen Parkway Houston, TX 77019 Neal C. Hasty Vice President 6363 Forest Park Road Dallas, TX 75235 Keith C. Honig Vice President 1 SunAmerica Center Los Angeles, CA 90067 C-20 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ --------------------------------------- Walter P. Irby Vice President 2727 Allen Parkway Houston, TX 77019 Sharla A. Jackson Vice President 205 E. 10th Street Amarillo, TX 79101 David S. Jorgensen Vice President 2727-A Allen Parkway Houston, TX 77019 Stephen C. Kennedy Vice President 750 West Virginia Street Milwaukee, WI 53204 Gary J. Kleinman Vice President 1 Chase Manhattan Place New York, NY 10005 Charles L. Levy Vice President 2727 Allen Parkway Houston, TX 77019 Linda Lewis Vice President 6363 Forest Park Road Dallas, TX 75235 Robert J. Ley Vice President 70 Pine Street New York, NY 10270 Jerry L. Livers Vice President 2727 Allen Parkway Houston, TX 77019 Gwendolyn J. Mallett Vice President 2727 Allen Parkway Houston, TX 77019 C-21 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ --------------------------------------- W. Larry Mask Vice President 2727 Allen Parkway Houston, TX 77019 Gordon S. Massie Vice President 2929 Allen Parkway Houston, TX 77019 Melvin C. McFall Vice President 2727 Allen Parkway Houston, TX 77019 Richard D. McFarland Vice President 2727 Allen Parkway Houston, TX 77019 Candace A. Michael Vice President 2727 Allen Parkway Houston, TX 77019 Anne K. Milio Vice President 2727 Allen Parkway Houston, TX 77019 Sylvia A. Miller Vice President #1 Franklin Square Springfield, IL 62713 Alex N. Moral Vice President-Product Design and Development 2727 Allen Parkway Houston, TX 77019 Michael R. Murphy Vice President 750 West Virginia Street Milwaukee, WI 53204 Carl T. Nichols Vice President 205 E. 10th Street Amarillo, TX 79101 C-22 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ --------------------------------------- Deanna D. Osmonson Vice President and Chief Compliance Officer 2727 Allen Parkway Houston, TX 77019 Rembert R. Owen, Jr. Vice President 2929 Allen Parkway Houston, TX 77019 Lori J. Payne Vice President 2727 Allen Parkway Houston, TX 77019 Kirsten M. Pedersen Vice President 2929 Allen Parkway Houston, TX 77019 John W. Penko Vice President 2727 Allen Parkway Houston, TX 77019 Cathy A. Percival Vice President 2727 Allen Parkway Houston, TX 77019 Terri Robbins Vice President 175 Water Street New York, NY 10038 Dale W. Sachtleben Vice President #1 Franklin Square Springfield, IL 62713 Robert C. Sage Vice President 2727 Allen Parkway Houston, TX 77019 Kristin Sather Vice President 1 Chase Manhattan Place New York, NY 10005 C-23 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ --------------------------------------- Richard W. Scott Vice President 2929 Allen Parkway Houston, TX 77019 Tom L. Scott Vice President 2929 Allen Parkway Houston, TX 77019 T. Clay Spires Vice President 2929 Allen Parkway Houston, TX 77019 Gregory R. Thornton Vice President #1 Franklin Square Springfield, IL 62713 Alan Vale Vice President 2929 Allen Parkway Houston, TX 77019 Christian D. Weiss Vice President #1 Franklin Square Springfield, IL 62713 Bridgette Wilson Vice President #1 Franklin Square Springfield, IL 62713 Elizabeth M. Tuck Secretary 70 Pine Street New York, NY 10270 Item 28. Persons Controlled by or Under Common Control with the Depositor or the Registrant The Depositor is an indirect wholly-owned subsidiary of American International Group, Inc. ("AIG"). Set forth below is an organizational chart for AIG filed with the SEC on March 15, 2004 as Exhibit 21 to the Form 10-K. Footnotes to the organizational chart below are located at the end of Item 28. The current organizational chart for AIG can be found as Exhibit 21 in Form 10-K filed in 2005, SEC file number 001-08787. C-24
SUBSIDIARIES OF AIG % of Voting Securities Owned by Jurisdiction of its Incorporation Immediate or Organization Parent(2) --------------- --------- American International Group, Inc. (1) .......................................................... Delaware............. (3) AIG Aviation, Inc. .......................................................................... Georgia ........... 100% AIG Bulgaria Insurance and Reinsurance Company EAD ........................................ Bulgaria ........... 100% AIG Capital Corporation .................................................................... Delaware ........... 100% AIG Consumer Finance Group, Inc. ....................................................... Delaware ........... 100% AIG Bank Polska S.A ................................................................. Poland ......... 97.23% AIG Credit S.A ...................................................................... Poland ............ 80% Compania Financiera Argentina S.A ................................................ Argentina .......... 92.7% AIG Global Asset Management Holdings Corp. ............................................. Delaware ........... 100% AIG Capital Partners, Inc. ........................................................ Delaware ........... 100% AIG Global Investment Corp. ..................................................... New Jersey ........... 100% John McStay Investment Counsel, L.P. ................................................. Texas ......... 82.84% International Lease Finance Corporation .............................................. California ......... 64.85% (4) AIG Claim Services, Inc. ................................................................... Delaware ........... 100% AIG Credit Corp. ........................................................................... Delaware ........... 100% A.I. Credit Corp. ................................................................. New Hampshire ........... 100% Imperial Premium Finance, Inc. ....................................................... California ........... 100% Imperial Premium Finance, Inc. ......................................................... Delaware ........... 100% AIG Equity Sales Corp. ..................................................................... New York ........... 100% AIG Federal Savings Bank ................................................................... Delaware ........... 100% AIG Finance Holdings, Inc. ................................................................. New York ........... 100% AIG Finance (Hong Kong) Limited ....................................................... Hong Kong ........... 100% AIG Financial Advisor Services, Inc. ...................................................... Delaware ........... 100% AIG Financial Advisor Services (Europe), S.A. ........................................ Luxembourg ........... 100% AIG Financial Products Corp. ............................................................... Delaware ........... 100% AIG Matched Funding Corp. .............................................................. Delaware ........... 100% Banque AIG ............................................................................... France ........... 90% (5) AIG Funding, Inc. .......................................................................... Delaware ........... 100% AIG Global Real Estate Investment Corp. .................................................... Delaware ........... 100% AIG Global Trade & Political Risk Insurance Company ...................................... New Jersey ........... 100% A.I.G. Golden Insurance Ltd. ................................................................. Israel ......... 50.01% AIG Life Insurance Company ..................................................................Delaware .............79% (6) AIG Life Insurance Company of Canada ......................................................... Canada ........... 100% AIG Life Insurance Company of Puerto Rico ............................................... Puerto Rico ........... 100% AIG Marketing, Inc ......................................................................... Delaware ........... 100% AIG Memsa, Inc. ............................................................................ Delaware ........... 100% Tata AIG General Insurance Company Limited ................................................ India ............ 26% AIG Private Bank Ltd. ................................................................... Switzerland ........... 100% AIG Retirement Services, Inc. .............................................................. Delaware ........... 100% (7) SunAmerica Life Insurance Company ....................................................... Arizona ........... 100% SunAmerica Investments, Inc. ....................................................... Georgia ............ 70% (8) AIG Advisor Group, Inc. ....................................................... Maryland ........... 100% Advantage Capital Corporation ............................................. New York ........... 100% FSC Securities Corporation ................................................ Delaware ........... 100% Sentra Securities Corporation ........................................... California ........... 100% Spelman & Co., Inc. ..................................................... California ........... 100% SunAmerica Securities, Inc. ............................................... Delaware ........... 100%
C-25
SUBSIDIARIES OF AIG % of Voting Securities Owned by Jurisdiction of its Incorporation Immediate or Organization Parent(2) --------------- --------- AIG SunAmerica Life Assurance Company .......................................... Arizona ........... 100% (9) Saamsun Holdings Corp. ........................................................ Delaware ........... 100% SAM Holdings Corporation ................................................ California ........... 100% AIG SunAmerica Asset Management Corp. ................................ Delaware ........... 100% AIG SunAmerica Capital Services, Inc. ................................ Delaware ........... 100% Sun Royal Holdings Corporation .......................................... California ........... 100% Royal Alliance Associates, Inc. ........................................................ Delaware ........... 100% First SunAmerica Life Insurance Company .................................................... New York ........... 100% AIG Risk Management, Inc. ....................................................................... New York ........... 100% AIG Technologies, Inc. ..................................................................... New Hampshire ........... 100% AIGTI, Inc. ..................................................................................... Delaware ........... 100% AIG Trading Group Inc. .......................................................................... Delaware ........... 100% AIG International, Inc. .................................................................... Delaware ........... 100% AIU Insurance Company ........................................................................... New York ............ 52% (10) AIU North America, Inc. ......................................................................... New York ........... 100% American General Corporation ....................................................................... Texas ........... 100% American General Bancassurance Services, Inc. .............................................. Illinois ........... 100% AGC Life Insurance Company ................................................................. Missouri ........... 100% AIG Assurance Canada ..................................................................... Canada ........... 100% (11) AIG Life of Bermuda, Ltd. ............................................................... Bermuda ........... 100% American General Life and Accident Insurance Company .................................. Tennessee ........... 100% American General Life Insurance Company ................................................... Texas ........... 100% American General Annuity Service Corporation ......................................... Texas ........... 100% AIG Enterprise Services, LLC ...................................................... Delaware ........... 100% American General Equity Services Corporation ...................................... Delaware ........... 100% American General Life Companies, LLC .............................................. Delaware ........... 100% The Variable Annuity Life Insurance Company .......................................... Texas ........... 100% VALIC Retirement Services Company ................................................ Texas ........... 100% VALIC Trust Company .............................................................. Texas ........... 100% American General Property Insurance Company ........................................... Tennessee ......... 51.85% (12) American General Property Insurance Company of Florida ............................. Florida ........... 100% AIG Annuity Insurance Company ............................................................. Texas ........... 100% The United States Life Insurance Company in the City of New York ....................... New York ........... 100% American General Finance, Inc. ............................................................. Indiana ........... 100% AGF Investment Corp. .................................................................... Indiana ........... 100% American General Auto Finance, Inc. .................................................... Delaware ........... 100% American General Finance Corporation ................................................... Indiana ........... 100% Crossroads Mortgage, Inc. ........................................................ Tennessee ........... 100% ENM, Inc. ........................................................................ Tennessee ........... 100% MorEquity, Inc. ..................................................................... Nevada ........... 100% Wilmington Finance, Inc. ...................................................... Delaware ........... 100% Merit Life Insurance Co. ........................................................... Indiana ........... 100% Yosemite Insurance Company ......................................................... Indiana ........... 100% CommoLoCo, Inc. ............................................................ Puerto Rico ........... 100% American General Financial Services of Alabama, Inc. ............................... Alabama ........... 100% HSA Residential Mortgage Services of Texas, Inc. .................................. Delaware ........... 100% American General Investment Management Corporation ..................................... Delaware ........... 100%
C-26
SUBSIDIARIES OF AIG % of Voting Securities Owned by Jurisdiction of its Incorporation Immediate or Organization Parent(2) --------------- --------- American General Realty Investment Corporation ............................................ Texas ........... 100% American General Assurance Company ..................................................... Illinois ........... 100% American General Indemnity Company ............................................ Illinois ........... 100% USLIFE Credit Life Insurance Company of Arizona ................................ Arizona ........... 100% Knickerbocker Corporation ............................................................ Texas ........... 100% American Home Assurance Company ................................................................. New York ........... 100% AIG Hawaii Insurance Company, Inc. ........................................................... Hawaii ........... 100% American Pacific Insurance Company, Inc. ................................................. Hawaii ........... 100% American International Insurance Company ................................................... New York ........... 100% American International Insurance Company of California, Inc. ......................... California ........... 100% American International Insurance Company of New Jersey ............................... New Jersey ........... 100% Minnesota Insurance Company ........................................................... Minnesota ........... 100% American International Realty Corp. .................................................... Delaware .......... 31.5% (13) Pine Street Real Estate Holdings Corp. ............................................ New Hampshire ......... 31.47% (13) Transatlantic Holdings, Inc. ........................................................... Delaware ......... 33.61% (14) Transatlantic Reinsurance Company ................................................. New York ........... 100% Putnam Reinsurance Company .................................................... New York ........... 100% Trans Re Zurich ............................................................ Switzerland ........... 100% American International Insurance Company of Delaware ............................................ Delaware ........... 100% American International Life Assurance Company of New York ....................................... New York ......... 77.52% (15) American International Reinsurance Company, Ltd. ................................................. Bermuda ........... 100% AIG Edison Life Insurance Company ............................................................. Japan ............ 90% (16) American International Assurance Company, Limited ......................................... Hong Kong ........... 100% American International Assurance Company (Australia) Limited .......................... Australia ........... 100% American International Assurance Company (Bermuda) Limited .................................. Bermuda ........... 100% American International Assurance Co. (Vietnam) Limited .................................. Vietnam ........... 100% Tata AIG Life Insurance Company Limited ................................................... India ........... 26% Nan Shan Life Insurance Company, Ltd. ........................................................ Taiwan ............ 95% American International Underwriters Corporation ................................................. New York ........... 100% American International Underwriters Overseas, Ltd. ............................................... Bermuda ........... 100% AIG Europe (Ireland) Limited ................................................................ Ireland ........... 100% AIG Europe (U.K.) Limited ................................................................... England ........... 100% AIG Brasil Companhia de Seguros .............................................................. Brazil ............ 50% Universal Insurance Co., Ltd. .............................................................. Thailand ........... 100% La Seguridad de Centroamerica, Compania de Seguros S.A. ................................... Guatemala ........... 100% American International Insurance Company of Puerto Rico ................................. Puerto Rico ........... 100% A.I.G. Colombia Seguros Generales S.A. ..................................................... Colombia ........... 100% American International Underwriters GmBH .................................................... Germany ........... 100% Underwriters Adjustment Company, Inc. ........................................................ Panama ........... 100% American Life Insurance Company ............................................................ Delaware ........... 100% AIG Life (Bulgaria) Z.D. A.D ........................................................... Bulgaria ........... 100% ALICO, S.A ............................................................................... France ........... 100% American Life Insurance Company (Kenya) Limited ........................................... Kenya ......... 66.67% Pharaonic American Life Insurance Company ................................................. Egypt ......... 71.63% AIG Life Insurance Company (Switzerland) Ltd. ........................................... Switzerland ........... 100% American Security Life Insurance Company, Ltd. ......................................... Lichtenstein ........... 100% Birmingham Fire Insurance Company of Pennsylvania ...................................... Pennsylvania ........... 100%
C-27
SUBSIDIARIES OF AIG % of Voting Securities Owned by Jurisdiction of its Incorporation Immediate or Organization Parent(2) --------------- --------- China America Insurance Company, Ltd. ...................................................... Delaware ............ 50% Commerce and Industry Insurance Company .................................................... New York ........... 100% Commerce and Industry Insurance Company of Canada ........................................... Ontario ........... 100% Delaware American Life Insurance Company ................................................... Delaware ........... 100% Hawaii Insurance Consultants, Ltd. ........................................................... Hawaii ........... 100% HSB Group, Inc. ............................................................................ Delaware ........... 100% The Hartford Steam Boiler Inspection and Insurance Company .......................... Connecticut ........... 100% The Allen Insurance Company, Ltd. .................................................. Bermuda ........... 100% The Hartford Steam Boiler Inspection and Insurance Company of Connecticut ...... Connecticut ........... 100% HSB Engineering Insurance Limited .................................................. England ........... 100% The Boiler Inspection and Insurance Company of Canada ........................... Canada ........... 100% The Insurance Company of the State of Pennsylvania ..................................... Pennsylvania ........... 100% Landmark Insurance Company ............................................................... California ........... 100% Mt. Mansfield Company, Inc. ................................................................. Vermont ........... 100% National Union Fire Insurance Company of Pittsburgh, Pa ..................................... Pennsylvania ........... 100% American International Specialty Lines Insurance Company ..................................... Alaska ............ 70% (17) Lexington Insurance Company ................................................................ Delaware ............ 70% (17) GE Property & Casualty Insurance Company ........................................... Pennsylvania ........... 100% GE Casualty Insurance Company ................................................. Pennsylvania ........... 100% GE Indemnity Insurance Company ............................................ Pennsylvania ........... 100% GE Auto & Home Assurance Company .............................................. Pennsylvania ........... 100% Bayside Casualty Insurance Company .............................................. New Jersey ........... 100% JI Accident & Fire Insurance Co. Ltd. ..................................................... Japan ............ 50% National Union Fire Insurance Company of Louisiana ........................................ Louisiana ........... 100% National Union Fire Insurance Company of Vermont ............................................ Vermont ........... 100% 21st Century Insurance Group ............................................................. California ......... 33.03% (18) 21st Century Insurance Company ....................................................... California ........... 100% 21st Century Casualty Company ........................................................ California ........... 100% 21st Century Insurance Company of Arizona ............................................... Arizona ........... 100% Starr Excess Liability Insurance Company, Ltd. ............................................. Delaware ........... 100% Starr Excess Liability Insurance International Ltd. ..................................... Ireland ........... 100% NHIG Holding Corp. .............................................................................. Delaware ........... 100% Audubon Insurance Company ................................................................. Louisiana ........... 100% Audubon Indemnity Company ........................................................... Mississippi ........... 100% Agency Management Corporation ......................................................... Louisiana ........... 100% The Gulf Agency, Inc. .............................................................. Alabama ........... 100% New Hampshire Insurance Company ........................................................ Pennsylvania ........... 100% AIG Europe, S.A .......................................................................... France ........... (19) AI Network Corporation ................................................................. Delaware ........... 100% American International Pacific Insurance Company ....................................... Colorado ........... 100% American International South Insurance Company ..................................... Pennsylvania ........... 100% Granite State Insurance Company .................................................... Pennsylvania ........... 100% New Hampshire Indemnity Company, Inc. .............................................. Pennsylvania ........... 100% AIG National Insurance Company, Inc. ................................................... New York ........... 100% Illinois National Insurance Co. ........................................................ Illinois ........... 100% New Hampshire Insurance Services, Inc. ............................................ New Hampshire ........... 100% AIG Star Life Insurance Co., Ltd .............................................................. Japan ........... 100%
C-28
SUBSIDIARIES OF AIG % of Voting Securities Owned by Jurisdiction of its Incorporation Immediate or Organization Parent(2) --------------- --------- Pharaonic Insurance Company, S.A.E ................................................................. Egypt ......... 89.98% The Philippine American Life and General Insurance Company ................................... Philippines ......... 99.78% Pacific Union Assurance Company .......................................................... California ........... 100% Philam Equitable Life Assurance Company, Inc. ........................................... Philippines ......... 95.31% The Philippine American General Insurance Company, Inc. ................................. Philippines ........... 100% Philam Insurance Company, Inc. ...................................................... Philippines ........... 100% Risk Specialist Companies, Inc. ................................................................. Delaware ........... 100% United Guaranty Corporation ............................................................... North Carolina ......... 36.3l% (20) United Guaranty Insurance Company .................................................... North Carolina ........... 100% United Guaranty Mortgage Insurance Company ........................................... North Carolina ........... 100% United Guaranty Mortgage Insurance Company of North Carolina ......................... North Carolina ........... 100% United Guaranty Partners Insurance Company .................................................. Vermont ............ 80% United Guaranty Residential Insurance Company of North Carolina ...................... North Carolina ........... 100% United Guaranty Residential Insurance Company ........................................ North Carolina ......... 75.03% (21) United Guaranty Commercial Insurance Company of North Carolina ................... North Carolina ........... 100% United Guaranty Mortgage Indemnity Company ....................................... North Carolina ........... 100% United Guaranty Credit Insurance Company ......................................... North Carolina ........... 100% United Guaranty Services, Inc. ....................................................... North Carolina ........... 100%
- ---------- (1) All subsidiaries listed are consolidated in the financial statements of AIG filed in its Form 10-K in 2004, SEC file number 001-08787. Certain subsidiaries have been omitted from the tabulation. The omitted subsidiaries, when considered in the aggregate as a single subsidiary, do not constitute a significant subsidiary. (2) Percentages include directors' qualifying shares. (3) The common stock is owned approximately 11.9 percent by Starr International Company, Inc., 1.8 percent by C. V. Starr & Co., Inc. and 2.0 percent by The Starr Foundation. (4) Also owned 35.15 percent by National Union Fire Insurance Company of Pittsburgh, Pa. (5) Also owned 10 percent by AIG Matched Funding Corp. (6) Also owned 21 percent by Commerce and Industry Insurance Company. (7) Formerly known as AIG SunAmerica Inc. (8) Also owned 30 percent by AIG Retirement Services. Inc. (9) Formerly known as Anchor National Life Insurance Company. (10) Also owned 8 percent by The Insurance Company of the State of Pennsylvania, 32 percent by National Union Fire Insurance Company of Pittsburgh, Pa. and 8 percent by Birmingham Fire Insurance Company of Pennsylvania. (11) Indirect wholly-owned subsidiary. (12) Also owned 48.15 percent by American General Life and Accident Insurance Company. (13) Also owned by 11 other AIG subsidiaries. (14) Also owned 26.06 percent by AIG. (15) Also owned 22.48 percent by American Home Assurance Company. (16) Also owned 10 percent by a subsidiary of American Life Insurance Company. (17) Also owned 20 percent by The Insurance Company of the State of Pennsylvania and 10 percent by Birmingham Fire Insurance Company of Pennsylvania. (18) Also owned 16.85 percent by American Home Assurance Company, 6.34 percent by Commerce and Industry Insurance Company and 6.34 percent by New Hampshire Insurance Company. (19) 100 percent to be held with other AIG companies. C-29 (20) Also owned 45.88 percent by National Union Fire Insurance Company of Pittsburgh, Pa., 16.95 percent by New Hampshire Insurance Company and 0.86 percent by The Insurance Company of the State of Pennsylvania. (21) Also owned 24.97 percent by United Guaranty Residential Insurance Company of North Carolina. The Registrant is a separate account of American General Life Insurance Company (Depositor). Item 29. Indemnification Article VII, section 1, of the Company's By-Laws provides, in part, that the Company shall have power to indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the Company) by reason of the fact that such person is or was serving at the request of the Company, against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with such proceeding if such person acted in good faith and in a manner such person reasonably believed to be in the best interest of the Company and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful. Article VII, section 1 (in part), section 2, and section 3, provide that the Company shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action by or in the right of the Company to procure a judgment in its favor by reason of the fact that such person is or was acting in behalf of the Company, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action if such person acted in good faith, in a manner such person believed to be in the best interests of the Company, and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. No indemnification shall be made under section 1: (a) in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable to the Company, unless and only to the extent that the court in which such action was brought shall determine upon application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for the expenses which such court shall determine; (b) of amounts paid in settling or otherwise disposing of a threatened or pending action with or without court approval; or (c) of expense incurred in defending a threatened or pending action which is settled or otherwise disposed of without court approval. Article VII, section 3, provides that, with certain exceptions, any indemnification under Article VII shall be made by the Company only if authorized in the specific case, upon a determination that indemnification of the person is proper in the circumstances because the person has met the applicable standard of conduct set forth in section 1 of Article VII by (a) a majority vote of a quorum consisting of directors who are not parties to such proceeding; (b) approval of the shareholders, with the shares owned by the person to be indemnified not being entitled to vote thereon; or (c) the court in which such proceeding is or was pending upon application made by the Company or the indemnified person or the attorney or other persons rendering services in connection with the defense, whether or not such application by the attorney or indemnified person is opposed by the Company. Article VII, section 7, provides that for purposes of Article VII, those persons subject to indemnification include any person who is or was a director, officer, or employee of the Company, or is or was serving at the request of the Company as a director, officer, or employee of another C-30 foreign or domestic corporation which was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation. Insofar as indemnification for liability arising under the Securities Act of 1933 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. Item 30. Principal Underwriters (a) Other Activity. Registrant's principal underwriter, American General Equity Services Corporation, also acts as principal underwriter for American General Life Insurance Company Separate Account A, American General Life Insurance Company Separate Account D, American General Life Insurance Company Separate Account VA-1 and American General Life Insurance Company Separate Account VA-2, which all offer interests in variable annuities. American General Equity Services Corporation also acts as principal underwriter for American General Life Insurance Company Separate Account VUL and American General Life Insurance Company Separate Account VUL-2, which both offer interests in flexible premium variable life insurance policies. American General Equity Services Corporation also acts as principal underwriter for certain other separate accounts of American General Life Insurance Company affiliates. (b) Management. Name and Principal Positions and Offices with Underwriter Business Address American General Equity Services Corporation - ------------------ -------------------------------------------- Rodney O. Martin, Jr. Director and Chairman of the Board of Directors 2929 Allen Parkway Houston, TX 77019 Mark R. McGuire Director and Senior Vice President 2727 Allen Parkway Houston, TX 77019 Ernest T. Patrikis Director 70 Pine Street New York, NY 10270 C-31 Name and Principal Positions and Offices with Underwriter Business Address American General Equity Services Corporation - ------------------ -------------------------------------------- Gary D. Reddick Director 2929 Allen Parkway Houston, TX 77019 Richard J. Miller President and Chief Executive Officer 2929 Allen Parkway Houston, TX 77019 Robert F. Herbert, Jr. Vice President 2727-A Allen Parkway Houston, TX 77019 Lucille S. Martinez Vice President, Treasurer and Controller 2727 Allen Parkway Houston, TX 77019 Deanna D. Osmonson Vice President, Chief Compliance Officer and 2727 Allen Parkway Anti-Money Laundering Compliance Officer Houston, TX 77019 Elizabeth M. Tuck Secretary 70 Pine Street New York, NY 10270 Edward F. Andrzejewski Tax Officer 70 Pine Street New York, NY 10270 Amy M. Cinquegrana Assistant Secretary 2929 Allen Parkway Houston, TX 77019 Lauren W. Jones Assistant Secretary 2929 Allen Parkway Houston, TX 77019 David M. Robinson Assistant Secretary 2929 Allen Parkway Houston, TX 77019 John D. Fleming Assistant Treasurer 2929 Allen Parkway Houston, TX 77019 C-32 Name and Principal Positions and Offices with Underwriter Business Address American General Equity Services Corporation - ------------------ -------------------------------------------- Barbara J. Moore Assistant Tax Officer 2919 Allen Parkway Houston, TX 77019 T. Clay Spires Assistant Tax Officer 2727-A Allen Parkway Houston, TX 77019 (c) Compensation From the Registrant.
Name of Principal Net Compensation on Brokerage Other Underwriter Underwriting Events Occasioning Commissions Compensation Discounts and the Deduction of a Commissions Deferred Sales Load American General 0 0 0 0 Equity Services Corporation
Item 31. Location of Accounts and Records All records referenced under Section 31(a) of the 1940 Act, and Rules 31a-1 through 31a-3 thereunder, are maintained and in the custody of American General Life Insurance Company at its principal executive office located at 2727-A Allen Parkway, Houston, Texas 77019-2191 or at American General Life Insurance Company's Administrative Office located at #1 Franklin Square, Springfield, Illinois 62713. Item 32. Management Services Not applicable. Item 33. Fee Representation 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. C-33 POWERS OF ATTORNEY Each person whose signature appears below hereby appoints Robert F. Herbert, Jr., Gary D. Reddick and Kyle L. Jennings 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 and the Investment Company Act of 1940, 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 under 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, duly authorized, in the City of Houston, and State of Texas on the 29th day of April, 2005. AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R (Registrant) BY: AMERICAN GENERAL LIFE INSURANCE COMPANY (On behalf of the Registrant and itself) BY: ROBERT F. HERBERT, JR. ---------------------- ROBERT F. HERBERT, JR. SENIOR VICE PRESIDENT, TREASURER AND CONTROLLER [SEAL] ATTEST: 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 Dte - --------- ----- --- RODNEY O. MARTIN, JR. Director, Chairman, April 29, 2005 - ---------------------- President and Chief RODNEY O. MARTIN, JR. Executive Officer CHRISTOPHER J. SWIFT Director and Chief April 29, 2005 - ---------------------- Financial Officer CHRISTOPHER J. SWIFT M. BERNARD AIDINOFF Director April 29, 2005 - ---------------------- M. BERNARD AIDINOFF DAVID J. DIETZ Director April 29, 2005 - ---------------------- DAVID J. DIETZ DAVID L. HERZOG Director April 29, 2005 - ---------------------- DAVID L. HERZOG RICHARD A. HOLLAR Director April 29, 2005 - ---------------------- RICHARD A. HOLLAR ROYCE G. IMHOFF II Director April 29, 2005 - ---------------------- ROYCE G. IMHOFF II DONALD P. KANAK, JR. Director April 29, 2005 - ---------------------- DONALD P. KANAK, JR. Signature Title Dte - --------- ----- --- RICHARD J. MILLER Director April 29, 2005 - ---------------------- RICHARD J. MILLER ERNEST T. PATRIKIS Director April 29, 2005 - ---------------------- ERNEST T. PATRIKIS GARY D. REDDICK Director April 29, 2005 - ---------------------- GARY D. REDDICK MARTIN J. SULLIVAN Director April 29, 2005 - ---------------------- MARTIN J. SULLIVAN JAMES W. WEAKLEY Director April 29, 2005 - ---------------------- JAMES W. WEAKLEY EXHIBIT INDEX Item 26. Exhibits (n)(1) Consent of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP. E-1 EX-99.N.1 3 dex99n1.txt PRICEWATERHOUSECOOPERS LLP CONSENT EXHIBIT (n)(1) CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the use in this Post-Effective Amendment No. 10 to the Registration Statement on Form N-6 (Registration Nos. 333-43264 and 811-08561) of our report dated April 29, 2005 relating to the financial statements and financial highlights of American General Life Insurance Company Separate Account VL-R and our report dated April 29, 2005 relating to the consolidated financial statements of American General Life Insurance Company, which appear in such Registration Statement. We also consent to the references to us under the heading "Financial Statements" in such Registration Statement. PRICEWATERHOUSECOOOPERS LLP Houston, Texas April 29, 2005 -----END PRIVACY-ENHANCED MESSAGE-----