-----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, GBGQri79xCT/Jf51IRzqrZ0OJDhvUAcClaGa9LF5oPaARfYMc+KX/78L4jDELiVi dnEIAgfcDwm19lMhhz87Lw== 0001193125-07-211573.txt : 20071002 0001193125-07-211573.hdr.sgml : 20071002 20071002115235 ACCESSION NUMBER: 0001193125-07-211573 CONFORMED SUBMISSION TYPE: N-6/A PUBLIC DOCUMENT COUNT: 16 FILED AS OF DATE: 20071002 DATE AS OF CHANGE: 20071002 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: N-6/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-144594 FILM NUMBER: 071148237 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: N-6/A SEC ACT: 1940 Act SEC FILE NUMBER: 811-08561 FILM NUMBER: 071148238 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 0001051485 S000000574 AGL SEPARATE ACCOUNT VL-R C000052755 AIG INCOME ADVANTAGE VUL N-6/A 1 dn6a.txt PRE-EFFECTIVE AMENDMENT NO. 1 (FORM N-6) AIG INCOME ADVANTAGE VUL Registration Nos. 333-144594 811-08561 As filed With the Securities and Exchange Commission on October 2, 2007 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. [1] Post-Effective Amendment No. [ ] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X] Amendment No. [104] 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) (713) 831-8470 (Depositor's Telephone Number, including Area Code) 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: As soon as practicable after the effective date of this Registration Statement. It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) [ ] on (date) 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. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine. ================================================================================ AIG INCOME ADVANTAGE VUL/SM/ FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES (the "Policies") issued by American General Life Insurance Company ("AGL") through its Separate Account VL-R This Prospectus is dated October 3, 2007 This prospectus describes AIG Income Advantage VUL flexible premium variable universal life insurance Policies issued by AGL. AIG Income Advantage VUL 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 AIG Income Advantage VUL 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" on page 5. The Index of Special Words and Phrases on page 73 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 AIG Income Advantage VUL variable investment options. Currently, the AIG Income Advantage VUL 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 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") .. JPMorgan Insurance Trust ("JPMorgan Insurance Trust") .. MFS(R) Variable Insurance Trust/SM/ ("MFS(R) VIT") .. Neuberger Berman Advisers Management Trust ("Neuberger Berman AMT") .. Oppenheimer Variable Account Funds ("Oppenheimer") .. PIMCO Variable Insurance Trust ("PIMCO VIT") .. Pioneer Variable Contracts Trust ("Pioneer") .. Putnam Variable Trust ("Putnam VT") .. SunAmerica Series Trust ("SunAmerica ST") .. 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 21 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 cash surrender value (the cash 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 universal 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 universal 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.................... 6 Death Benefit Option 1........................................ 6 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............................................................. 7 Flexibility of Premiums.......................................... 7 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..................................... 8 POLICY RISKS............................................................ 9 Investment Risk...................................................... 9 Risk of Lapse........................................................ 9 Tax Risks............................................................ 9 Partial Surrender and Full Surrender Risks........................... 10 Policy Loan Risks.................................................... 10 PORTFOLIO RISKS......................................................... 10 TABLES OF CHARGES....................................................... 11 GENERAL INFORMATION..................................................... 19 American General Life Insurance Company.............................. 19 Separate Account VL-R................................................ 19 Additional Information............................................... 19 Communication with AGL............................................... 19 Administrative Center............................................ 20 E-Delivery, E-Service, telephone transactions and written transactions................................................... 20 E-Delivery.................................................... 20 E-Service..................................................... 20 Telephone transactions and written transactions............... 20 Telephone transactions........................................... 21 Variable Investment Options.......................................... 21 Voting Privileges.................................................... 24 Fixed Account........................................................ 24 Our general account.............................................. 25 How we declare interest.......................................... 25 Illustrations........................................................ 25 POLICY FEATURES......................................................... 26 Age.................................................................. 26 Death Benefits....................................................... 26 Your specified amount of insurance............................... 26 Your death benefit............................................... 26 Required minimum death benefit................................... 27 2 Base coverage and supplemental coverage............................. 28 Premium Payments........................................................ 30 Premium payments.................................................... 30 Premium Payments and Transfer Requests in Good Order................ 30 Limits on premium payments.......................................... 30 Checks.............................................................. 31 Planned periodic premiums........................................... 31 Guarantee period benefit............................................ 31 Free look period.................................................... 32 Changing Your Investment Option Allocations............................. 32 Future premium payments............................................. 32 Transfers of existing accumulation value............................ 32 Dollar cost averaging............................................... 32 Automatic rebalancing............................................... 33 Market timing....................................................... 33 Restrictions initiated by the Funds and information sharing obligations....................................................... 34 Changing the Specified Amount of Insurance.............................. 34 Increase in coverage................................................ 34 Decrease in coverage................................................ 35 Changing Death Benefit Options.......................................... 36 Change of death benefit option...................................... 36 Tax consequences of changes in insurance coverage................... 36 Effect of changes in insurance coverage on guarantee period benefit........................................................... 36 No Tobacco Use Incentive................................................ 37 Account Value Enhancement............................................... 38 Effective Date of Policy and Related Transactions....................... 38 Valuation dates, times, and periods................................. 38 Fund pricing........................................................ 38 Date of receipt..................................................... 39 Commencement of insurance coverage.................................. 39 Date of issue; Policy months and years.............................. 39 Monthly deduction days.............................................. 39 Commencement of investment performance.............................. 39 Effective date of other premium payments and requests that you make.......................................................... 39 Reports to Policy Owners................................................ 40 ADDITIONAL BENEFIT RIDERS.................................................. 40 Riders.................................................................. 40 Accidental Death Benefit Rider...................................... 40 Children's Insurance Benefit Rider.................................. 40 Spouse Term Rider................................................... 41 Enhanced Early Cash Value Term Rider................................ 41 Rider charges.................................................... 41 Rider Amount..................................................... 41 Termination or Automatic Conversion.............................. 41 Maturity Extension Rider............................................ 42 Terminal Illness Rider.............................................. 43 Waiver of Monthly Deduction Rider................................... 43 Overloan Protection Rider........................................... 43 Monthly Guarantee Premium Rider for First 20 Years.................. 45 Monthly Guarantee Premium Rider to Age 100.......................... 46 Guaranteed Minimum Withdrawal Benefit Rider......................... 48 Requirements to purchase the rider............................... 48 Eligibility period............................................... 49 Withdrawal period................................................ 49 Guaranteed Benefit Balance....................................... 49 Maximum guaranteed annual withdrawal............................. 50 Guaranteed Benefit Balance and maximum annual withdrawal amount calculations during the withdrawal period............... 50 Policy surrender or maturity..................................... 50 Policy lapse..................................................... 51 3 Rider charge.............................................. 51 Death benefit............................................. 51 Investment option restrictions............................ 51 Monthly guarantee period benefit.......................... 52 Reinstatement............................................. 53 Termination............................................... 53 Tax Consequences of Additional Rider Benefits.................... 54 POLICY TRANSACTIONS................................................. 54 E-Delivery, E-Service, Telephone Transactions and Written Transactions................................................... 54 Withdrawing Policy Investments................................... 54 Full surrender............................................... 54 Partial surrender............................................ 54 Exchange of Policy in certain states......................... 55 Policy loans................................................. 55 Preferred loan interest rate................................. 56 Maturity of your Policy...................................... 56 Tax considerations........................................... 56 POLICY PAYMENTS..................................................... 56 Payment Options.................................................. 56 Change of payment option..................................... 57 Tax impact................................................... 57 The Beneficiary.................................................. 57 Assignment of a Policy........................................... 57 Payment of Proceeds.............................................. 58 General...................................................... 58 Delay of Fixed Account proceeds.............................. 58 Delay for check clearance.................................... 58 Delay of Separate Account VL-R proceeds...................... 58 Delay to challenge coverage.................................. 58 Delay required under applicable law.......................... 59 ADDITIONAL RIGHTS THAT WE HAVE...................................... 59 Underwriting and premium classes............................. 60 Policies purchased through "internal rollovers".............. 60 State law requirements....................................... 60 Variations in expenses or risks.............................. 60 CHARGES UNDER THE POLICY............................................ 60 Statutory premium tax charge................................. 60 Tax charge back.............................................. 60 Premium expense charge....................................... 61 Daily charge (mortality and expense risk fee)................ 61 Flat monthly charge.......................................... 61 Monthly charge per $1,000 of base coverage................... 61 Monthly insurance charge..................................... 61 Monthly charges for additional benefit riders................ 62 Surrender charge............................................. 62 Partial surrender processing fee............................. 63 Transfer fee................................................. 63 Illustrations................................................ 63 Policy loans................................................. 63 Charge for taxes............................................. 63 Allocation of charges........................................ 64 More About Policy Charges........................................ 64 Purpose of our charges....................................... 64 General...................................................... 64 ACCUMULATION VALUE.................................................. 64 Your accumulation value...................................... 64 Your investment options...................................... 65 POLICY LAPSE AND REINSTATEMENT...................................... 65 FEDERAL TAX CONSIDERATIONS.......................................... 65 Tax Effects...................................................... 66 4 General.......................................................... 66 Testing for modified endowment contract status................... 66 Other effects of Policy changes.................................. 67 Rider benefits................................................... 67 Taxation of pre-death distributions if your Policy is not a modified endowment contract.................................... 67 Taxation of pre-death distributions if your Policy is a modified endowment contract.................................... 68 Policy lapses and reinstatements................................. 69 Diversification and investor control............................. 69 Estate and generation skipping taxes............................. 69 Life insurance in split dollar arrangements...................... 70 Pension and profit-sharing plans................................. 70 Other employee benefit programs.................................. 71 ERISA............................................................ 71 Our taxes........................................................ 71 When we withhold income taxes.................................... 71 Tax changes...................................................... 71 LEGAL PROCEEDINGS....................................................... 72 FINANCIAL STATEMENTS.................................................... 72 INDEX OF SPECIAL WORDS AND PHRASES...................................... 73 CONTACT INFORMATION Addresses and telephone numbers: Here is how you can contact us about the AIG Income Advantage VUL 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 77210-4880 1-800-340-2765 Springfield, IL 62713-0001 1-713-831-3443, 1-800-340-2765 (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 20 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 48 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. Your accumulation value will vary based on the investment performance of the variable investment options you choose and interest credited to the Fixed Account. Your Specified Amount In your application to buy a AIG Income Advantage VUL 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 28. Death Benefit .. Death Benefit Proceeds: We pay the death benefit proceeds (reduced by any outstanding Policy loans and increased by any unearned loan interest we may have already charged) to the beneficiary when the insured person dies. In your application to buy a AIG Income Advantage VUL Policy, you tell us how much life insurance coverage you want. We call this the "specified amount" of insurance. We will increase the death benefit by any additional specified amount under a benefit rider. We also provide a guarantee of a death benefit, contingent upon payment of the required premiums, equal to the specified amount (less any indebtedness) and any 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: 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. 6 . 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. 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 27. 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 and unpaid 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 is also subject to any surrender charge that then applies. 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 three times the amount of the charges we assess against your accumulation value on your monthly deduction day. The minimum loan you may take is $500 or, if less, an amount equal to your Policy's cash surrender value less three times the amount of the charges we assess against your accumulation value on your monthly deduction day. We charge you interest on your loan at an annual effective rate of 3.75%, which accrues daily and is assessed at the end of each Policy year. We credit interest on loaned amounts; we guarantee an annual effective interest rate of 3.00%. 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. 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. After payment of your initial premium, you need only invest enough to ensure your Policy's cash surrender value stays above zero or that either of the "guarantee period benefit" riders (described under "Guarantee period benefit" on page 31) remains in effect. You may 7 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 3% or more 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. In addition, 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 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 day. 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. 8 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 3%. 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 either of the guarantee period benefit riders or the guaranteed minimum withdrawal benefit rider 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. Tax Risks We anticipate that the Policy should generally qualify as 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 65. You should consult a qualified tax adviser for assistance in all Policy-related tax matters. 9 Partial Surrender and Full Surrender Risks The surrender charge under the Policy applies for a maximum of the first 14 Policy years (and for a maximum of the first 14 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. Any outstanding loan balance reduces the amount available to you upon a partial or full surrender. It is possible that you will receive no cash surrender value if you surrender your Policy in the first few Policy years. 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. AGL may also make available to Policy owners other variable universal life insurance policies with different features and different charges. Please ask your AGL representative about our other policies. The first table describes the fees and expenses that are payable at the time that you (1) buy a Policy, (2) change a Policy's specified amount, (3) surrender a Policy during the first 14 Policy years and the first 14 Policy years following an increase in the Policy's specified amount, or (4) transfer accumulation value between investment options. Transaction Fees
Charge When Charge is Deducted Maximum Guaranteed Charge Current Charge - ------ --------------------------------- ------------------------- --------------------------------- Statutory Premium Tax Upon receipt of each premium 3.5%/1/ of each premium 3.5%/1/ of each premium payment Charge payment payment (tax charge back (tax charge back if you purchase if you purchase the the Policy in Oregon)/2/ Policy in Oregon)/2/ Premium Expense Upon receipt of each premium 7.5% of the premium 5% of the premium payment Charge payment payment remaining after remaining after deduction of the deduction of the premium premium tax charge tax charge Partial Surrender Upon a partial surrender of your The lesser of $25 or 2% $10 Processing Fee Policy of the amount of the partial surrender Transfer Fee Upon a transfer of accumulation $25 for each transfer/3/ $25 for each transfer/3/ value Policy Loan Interest Annually, at the end of the Accrues daily at annual Accrues daily at annual effective Charge Policy year effective rate of 3.75% rate of 3.75% of the loan balance of the loan balance Policy Owner Additional Upon each request for a Policy $25 $0 Illustration Charge illustration after the first in a Policy year
- -------- /1/ Statutory 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, 0.5%, is in the state of Illinois. Certain local jurisdictions may assess additional premium taxes. /2/ Instead of a premium tax charge, we assess a tax charge back of 1.78% of each premium payment for Policy owners residing in Oregon. See "Tax charge back" on page 60. /3/ The first 12 transfers in a Policy year are free of charge. 11 Transaction Fees
When Charge is Maximum Guaranteed Charge Deducted Charge Current Charge - ------ ---------------------------------- ----------------------- -------------------------------- Surrender Charge Maximum Charge - for the first Upon a partial surrender or a full $49 per $1,000 of $49 per $1,000 of base Policy year - for a 60 year old surrender of your Policy during base coverage coverage male, with a Specified Amount the first 14 Policy years and of $360,000, of which during the first 14 Policy years $360,000 is base coverage/1/ following an increase in the Policy's base coverage/1/ Upon a partial surrender or a full $3 per $1,000 of base $3 per $1,000 of base Minimum Charge - for the first surrender of your Policy during coverage coverage Policy year - for a 6 year old the first 14 Policy years and female, with a Specified during the first 14 Policy years Amount of $360,000, of which following an increase in the $36,000 is base coverage/1/ Policy's base coverage/1/ Upon a partial surrender or a full $16 per $1,000 of $16 per $1,000 of base Example Charge - for the first surrender of your Policy during base coverage coverage Policy year - for a 38 year old the first 14 Policy years and male, with a Specified Amount during the first 14 Policy years of $360,000, of which following an increase in the $306,000 is base coverage/1/ Policy's base coverage/1/ Overloan Protection Rider At time rider is exercised 5.0% of Policy's 3.5% of Policy's accumulation accumulation value at value at time rider is exercised One-Time Charge time rider is exercised Terminal Illness Rider At time rider benefit is paid and Greater of (1) 5.25% each Policy anniversary thereafter Moody's Bond Average or (2) cash value interest rate Interest on Benefit plus 1%/2/ Administrative Fee At time of claim $250 $150
- -------- /1/ The Surrender Charge will vary based on the insured person's sex, age, Policy year and base coverage. The surrender charge attributable to an increase in the Policy's base coverage applies only to the increase in base coverage. See "Base coverage and supplemental coverage" on page 28. The Surrender Charges shown in the table may not be typical of the charges you will pay. Pages 28 and 29 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 guaranteed maximum interest rate will not exceed the greater of: . the Moody's corporate Bond Yield Average-Monthly Average Corporates for the month of October preceding the calendar year for which the loan interest rate is determined; or . the interest rate used to calculate cash values in the Fixed Account during the period for which the interest rate is determined, plus 1%. 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)
When Charge is Maximum Guaranteed Charge Deducted Charge Current Charge - ------ --------------------------------- --------------------- ----------------------------------- Flat Monthly Charge Monthly, at the beginning of each $10 $10 Policy month Cost of Insurance Charge/1/ Maximum Charge for the first Monthly, at the beginning of each $5.54 per $1,000 of $2.81 per $1,000 of net amount at Policy year - for a 75 year old Policy month net amount at risk/2/ risk attributable to base coverage; male, standard tobacco, with a attributable to base and Specified Amount of $50,000, coverage; and $0.56 per $1,000 of net amount at of which $50,000 is base $5.54 per $1,000 of risk attributable to supplemental coverage net amount at risk coverage attributable to supplemental coverage Minimum Charge for the first Monthly, at the beginning of each $0.06 per $1,000 of $0.04 per $1,000 of net amount at Policy year - for a 6 year old Policy month net amount at risk risk attributable to base coverage; female, juvenile, with a attributable to base and Specified Amount of coverage; and $0.03 per $1,000 of net amount at $1,000,000, of which $100,000 $0.06 per $1,000 of risk attributable to supplemental is base coverage and $900,000 net amount at risk coverage is supplemental coverage attributable to supplemental coverage Example Charge for the first Monthly, at the beginning of each $0.22 per $1,000 of $0.11 per $1,000 of net amount at Policy year - for a 38 year old Policy month net amount at risk risk attributable to base coverage; male, preferred non-tobacco, attributable to base and with a Specified Amount of coverage; and $0.05 per $1,000 of net amount at $360,000, of which $252,000 $0.22 per $1,000 of risk attributable to supplemental is base coverage and $108,000 net amount at risk coverage is supplemental coverage attributable to 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 28. The Cost of Insurance Charges shown in the table may not be typical of the charges you will pay. Page 26 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 25 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)
When Charge is Maximum Guaranteed Charge Deducted Charge Current Charge - ------ ---------------------------------- --------------------- --------------------------- Monthly Charge per $1,000 of base coverage/1/ Maximum Charge - for a 75 Monthly, at the beginning of each $1.67 per $1000 of $1.67 per $1000 of base year old male, standard Policy month. This Charge is base coverage coverage tobacco, with a Specified assessed during the first 3 Policy Amount of $360,000, of which years and the first 3 Policy years $360,000 is base coverage following an increase in base coverage/2/ Minimum Charge - for a 6 year Monthly, at the beginning of each $0.05 per $1000 of $0.05 per $1000 of base old female, juvenile, with a Policy month. This Charge is base coverage coverage Specified Amount of $360,000, assessed during the first 3 Policy of which $36,000 is base years and the first 3 Policy years coverage following an increase in base coverage/2/ Example Charge - for a 38 year Monthly, at the beginning of each $0.20 per $1000 of $0.20 per $1000 of base old male, preferred Policy month. This Charge is base coverage coverage non-tobacco, with a Specified assessed during the first 3 Policy Amount of $360,000, of which years and the first 3 Policy years $306,000 is base coverage following an increase in base coverage/2/ Daily Charge (mortality and Daily annual effective rate annual effective rate of expense risk fee)/3/ of 0.70% of 0.20% of accumulation value accumulation value invested in the variable Policy years 1-10/4/ invested in the investment options variable investment options/4/
- -------- /1/ 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 28. 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 the First Three Years." More detailed information covering your Monthly Charge per $1,000 of base coverage is available on request from our Administrative Center, shown under "Contact Information" on page 5 of this prospectus, or your AGL representative. There is no additional charge for any illustrations which may show various amounts of coverage. /2/ The charge assessed during the first 3 Policy years following an increase in base coverage is only upon the amount of the increase in base coverage. /3/ Policies issued in Maryland refer to this charge as an "account value charge." /4/ After the 10/th/ Policy year, the maximum daily charge will be as follows: Policy years 11-20.annual effective rate of 0.35% Policy years 21+.annual effective rate of 0.15% These reductions in the maximum amount of the daily charge are guaranteed. 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)
When Charge is Maximum Guaranteed Optional Benefit Rider Deducted Charge Current Charge - ---------------------- --------------------------------- -------------------- --------------------------------- Accidental Death Benefit/1/ Maximum Charge - for a 65 Monthly, at the beginning of each $0.15 per $1,000 of $0.15 per $1,000 of rider year old Policy month rider coverage coverage Minimum Charge - for a 29 Monthly, at the beginning of each $0.07 per $1,000 of $0.07 per $1,000 of rider year old Policy month rider coverage coverage Example Charge - for a 38 year Monthly, at the beginning of each $0.09 per $1,000 of $0.09 per $1,000 of rider old Policy month rider coverage coverage Children's Insurance Benefit Monthly, at the beginning of each $0.48 per $1,000 of $0.48 per $1,000 of rider Policy month rider coverage coverage Spouse Term/2/ Maximum charge - for a 75 Monthly at the beginning of each $5.54 per $1,000 of $4.61 per $1,000 of rider year old male, standard Policy month rider coverage coverage tobacco Minimum charge - for a 15 Monthly at the beginning of each $0.07 per $1,000 of $0.01 per $1,000 of rider year old female, standard Policy month rider coverage coverage non-tobacco Example charge - for a 38 year Monthly at the beginning of each $0.22 per $1,000 of $0.14 per $1,000 of rider old male, preferred Policy month rider coverage coverage non-tobacco Maturity Extension Death Benefit Version Initial Charge Monthly beginning 9 years before $1 per $1,000 of net $0.03 per $1,000 of net amount at your original maturity date amount at risk risk attributable to the Policy attributable to the (without any riders) Policy (without any riders) Administrative Charge Monthly, at the beginning of the $10 $0 Policy month which follows your original maturity date
- -------- /1/ The charge for the Accidental Death Benefit Rider will vary based on the insured person's age. /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)
When Charge is Maximum Guaranteed Charge Deducted Charge Current Charge - ------ ----------------------------------- ------------------- --------------------------------- Enhanced Early Cash Value Term Rider Rider Monthly Expense Monthly, at the beginning of each $1.96 per $1,000 of $1.96 per $1,000 of rider amount Maximum Charge/1/ - for a 75 Policy month. This charge is rider amount year old male, standard assessed during the first 10 Policy tobacco years and the first 10 Policy years following an increase in the rider amount./2/ Rider Monthly Expense Monthly, at the beginning of each $0.05 per $1,000 of $0.05 per $1,000 of rider amount Minimum Charge/1/ - for a 6 Policy month. This charge is rider amount year old female, juvenile assessed during the first 10 Policy years and the first 10 Policy years following an increase in the rider amount./ 2/ Rider Monthly Expense Monthly, at the beginning of each $0.27 per $1,000 of $0.27 per $1,000 of rider amount Example Charge/1/ - for a 38 Policy month. This charge is rider amount year old male, preferred assessed during the first 10 Policy non-tobacco years and the first 10 Policy years following an increase in the rider amount./ 2/ Rider Monthly Insurance Monthly, at the beginning of each $5.54 per $1,000 of $2.81 per $1,000 of net amount at Maximum Charge/3/ for the first Policy month net amount at risk risk attributable to the rider Policy year - for a 75 year old attributable to the male, standard tobacco, with a rider rider amount of $100,000 Rider Monthly Insurance Monthly, at the beginning of each $0.06 per $1,000 of $0.04 per $1,000 of net amount at Minimum Charge/3/ - for the Policy month net amount at risk risk attributable to the rider first Policy year - for a 6 year attributable to the old female, juvenile, with a rider rider amount of $100,000 Rider Monthly Insurance Monthly, at the beginning of each $0.22 per $1,000 of $0.11 per $1,000 of net amount at Example Charge/3/ - for the first Policy month net amount at risk risk attributable to the rider Policy year - for a 38 year old attributable to the male, preferred, non-tobacco rider with a rider amount of $100,000
- -------- /1/ The Rider Monthly Expense Charge will vary based on the insured person's sex, age, premium class and the rider amount. /2/ The charge assessed during the first 10 Policy years following an increase in rider coverage is only upon the amount of the increase. /3/ The Rider Monthly Insurance Charge will vary based on the insured person's sex, age, premium class and the net amount at risk attributable to the rider. 16 Periodic Charges (optional benefit riders only)
When Charge is Maximum Guaranteed Optional Benefit Rider Deducted Charge Current Charge - ---------------------- --------------------------------- --------------------- ---------------------------------- Waiver of Monthly Deduction/1/ Maximum Charge - for a 59 Monthly, at the beginning of each $0.40 per $1,000 of $0.40 per $1,000 of net amount at year old Policy month net amount at risk risk attributable to the Policy attributable to the Policy Minimum Charge - for an 18 Monthly, at the beginning of each $0.02 per $1,000 of $0.02 per $1,000 of net amount at year old Policy month net amount at risk risk attributable to the Policy attributable to the Policy Example Charge - for a 38 year Monthly, at the beginning of each $0.03 per $1,000 of $0.03 per $1,000 of net amount at old Policy month net amount at risk risk attributable to the Policy attributable to the Policy Monthly Guarantee Premium Rider to Age 100/2/ Maximum Charge - for a 75 Monthly, at the beginning of each $0.096 per $1,000 of $0.08 per $1,000 of net amount at year old Policy month net amount at risk risk attributable to the Policy attributable to the Policy Minimum Charge - for a 1 year Monthly, at the beginning of each $0.024 per $1,000 of $0.02 per $1,000 of net amount at old Policy month net amount at risk risk attributable to the Policy attributable to the Policy Example Charge - for a 38 year Monthly, at the beginning of each $0.043 per $1,000 of $0.036 per $1,000 of net amount old Policy month net amount at risk at risk attributable to the Policy attributable to the Policy Guaranteed Minimum Withdrawal Benefit Rider Charge Daily Annual effective rate Annual effective rate of 0.75%/3/ of 1.50%/3/
- -------- /1/ The charge for the Waiver of Monthly Deduction Rider will vary based on the insured person's age when we assess the charge. /2/ The charge for the Monthly Guarantee Premium Rider to Age 100 will vary based on the insured person's age when the Policy is issued and the net amount at risk attributable to the Policy. We currently charge for the Rider beginning in the fourth Policy year. We reserve the right to begin the charge as early as the first Policy year. However a change in the beginning date of the charge will not affect the beginning date for any Policy owner who has already selected the rider. /3/ Percentages are calculated as a percent of accumulation value invested in the variable investment options. 17 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, 2006. 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) fees, and other expenses)/1/ 1.28% 0.24% Details concerning each Fund's specific fees and expenses are contained in the Funds' prospectuses. - -------- /1/ Currently 10 of the Funds have contractual reimbursements or fee waivers. These reimbursements or waivers expire on April 30, 2008. 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 1.18% 0.24% 18 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 engaged in a broad range of insurance and insurance-related activities, financial services and asset management in the United States and internationally. 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 74 separate "divisions," 48 of which correspond to the 48 variable "investment options" under the Policy. The remaining 26 divisions, and 42 of these 48 divisions, represent investment options available under other variable universal life policies we offer. 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. One or more of the Funds may sell its shares to other funds. 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. 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. 19 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 21). .. transfer of accumulation value;* .. change of allocation percentages for premium payments; * .. change of allocation percentages for Policy deductions; * .. telephone transaction privileges; * .. loan; .. 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. 20 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. Currently, 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.). The text of the footnotes follows the table. Fund sub-advisers are shown in parenthesis.
Investment Adviser (sub-adviser, if Variable Investment Options applicable) - --------------------------- --------------------------------------- AIM V.I. Global Real Estate Fund - Series I Shares A I M Advisors, Inc. (INVESCO Institutional (N.A.), Inc.) AIM V.I. International Growth 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 Core I Portfolio Credit Suisse Asset Management, LLC Dreyfus VIF International Value Portfolio - Initial Shares The Dreyfus Corporation Fidelity(R) VIP Asset Manager/SM/ Portfolio - Service Class 2/2/ 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 (U.K.) Inc.) (Fidelity Research & Analysis Company)
21
Investment Adviser (sub-adviser, if Variable Investment Options applicable) - --------------------------- ---------------------------------------- Fidelity(R) VIP Contrafund(R) Portfolio Fidelity Management & Research Company - - Service Class 2/3/ (FMR Co., Inc.) (Fidelity International Investment Advisors) (Fidelity International Investment Advisors (U.K.) Limited) (Fidelity Investments Japan Limited) (Fidelity Management & Research (U.K.) Inc.) (Fidelity Research & Analysis Company) Fidelity(R) VIP Equity-Income 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 (U.K.) Inc.) (Fidelity Research & Analysis Company) Fidelity(R) VIP Freedom 2020 Portfolio - - Service Class 2/4/ Strategic Advisers(R), Inc. Fidelity Management & Research Company Fidelity(R) VIP Freedom 2025 Portfolio - - Service Class 2/5/ Strategic Advisers(R), Inc. Fidelity Management & Research Company Fidelity(R) VIP Freedom 2030 Portfolio - - Service Class 2/6/ Strategic Advisers(R), Inc. Fidelity Management & Research Company Fidelity(R) VIP Growth 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 (U.K.) Inc.) (Fidelity Research & Analysis Company) 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 (U.K.) Inc.) (Fidelity Research & Analysis Company) Franklin Templeton VIP Franklin Small Cap Value Securities Fund - Class 2 Franklin Advisory Services, LLC Franklin Templeton VIP Mutual Shares Securities Fund - Class 2/7/ Franklin Mutual Advisers, LLC Janus Aspen Forty Portfolio - Services Shares/8/ Janus Capital Management LLC Janus Aspen International Growth Portfolio - Service Shares Janus Capital Management LLC Janus Aspen Mid Cap Growth Portfolio - Service Shares Janus Capital Management LLC JPMorgan Insurance Trust Government Bond Portfolio JPMorgan Investment Advisors Inc. JPMorgan International Equity Portfolio J.P. Morgan Investment Management Inc. MFS(R) VIT New Discovery Series - Initial Class /9/ Massachusetts Financial Services Company MFS(R) VIT Research Series - Initial Class /10/ Massachusetts Financial Services Company Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Neuberger Berman Management Inc. (Neuberger Berman, LLC) Neuberger Berman AMT Socially Responsive Portfolio - Class I/11/ Neuberger Berman Management Inc. (Neuberger Berman, LLC) Oppenheimer Balanced Fund/VA - Non-Service Shares /12/ OppenheimerFunds, Inc. Oppenheimer Global Securities Fund/VA - Non-Service Shares OppenheimerFunds, Inc. PIMCO VIT CommodityRealReturn Strategy Portfolio - Administrative Class/13/ Pacific Investment Management Company LLC PIMCO VIT Global Bond Portfolio (Unhedged) - Administrative Class Pacific Investment Management Company LLC PIMCO VIT Real Return Portfolio - Administrative Class /14/ 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
22
Investment Adviser (sub-adviser, if Variable Investment Options applicable) - --------------------------- ---------------------------------------- Pioneer Mid Cap Value VCT Portfolio - Class I Shares Pioneer Investment Management, Inc. Putnam VT Diversified Income Fund - Class IB Putnam Investment Management, LLC Putnam VT Small Cap Value Fund - Class IB Putnam Investment Management, LLC SunAmerica ST Aggressive Growth Portfolio - Class 1 Shares AIG SunAmerica Asset Management Corp. SunAmerica ST Balanced Portfolio - Class 1 Shares/15/ AIG SunAmerica Asset Management Corp. (J.P. Morgan Investment Management Inc.) 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/16/ VALIC* (RCM Capital Management, LLC) (T. Rowe Price Associates, Inc.) (Wellington Management Company, LLP) 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, Inc.
- -------- /1/ The Fund type for Alger American Leveraged AllCap Portfolio - Class O Shares is long-term capital appreciation. /2/ The Fund type for Fidelity(R) VIP Asset Manager /SM/ Portfolio - Service Class 2 is high total return. /3/ The Fund type for Fidelity(R) VIP Contrafund(R) Portfolio - Service Class 2 is long-term capital appreciation. /4/ The Fund type for Fidelity(R) VIP Freedom 2020 Portfolio - Service Class 2 is high total return. /5/ The Fund type for Fidelity(R) VIP Freedom 2025 Portfolio - Service Class 2 is high total return. /6/ The Fund type for Fidelity(R) VIP Freedom 2030 Portfolio - Service Class 2 is high total return. /7/ The Fund type for Franklin Templeton VIP Mutual Shares Securities Fund - Class 2 is capital appreciation. /8/ The Fund type for Janus Aspen Forty Portfolio - Service Shares is long-term growth of capital. /9/ The Fund type for MFS(R) VIT New Discovery Series - Initial Class is capital appreciation. /10/ The Fund type for MFS(R) VIT Research Series - Initial Class is capital appreciation. /11/ The Fund type for Neuberger Berman AMT Socially Responsive Portfolio - Class I Shares is long-term growth by investing primarily in securities meeting the Fund's financial criteria and social policy. /12/ The Fund type for Oppenheimer Balanced Fund/VA - Non-Service Shares is total return. /13/ The Fund type for PIMCO VIT CommodityRealReturn Strategy Portfolio - Administrative Class is maximum real return. /14/ The Fund type for PIMCO VIT Real Return Portfolio - Administrative Class is maximum real return. /15/ The Fund type for SunAmerica ST Balanced Portfolio - Class 1 Shares is conservation of principal and capital appreciation. /16/ The Fund type for VALIC Co. I Science & Technology Fund is long-term capital appreciation. This Fund is a sector fund. * "VALIC" means The Variable Annuity Life Insurance Company. ** "Vanguard" is a trademark of the Vanguard Group, Inc. 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. 23 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 daily market value of the assets invested in the underlying Fund as of a certain date, usually paid at the end of each calendar quarter. 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 are 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. From time to time some of these arrangements, except for 12b-1 arrangements, may be renegotiated so that we receive a greater payment than previously paid depending on our determination that the expenses we incur are greater than we anticipated. If the expenses we incur are less than we anticipated, we may make a profit from some of these arrangements. These payments do not result in any additional charges under the Policies that are not described under "Charges Under the Policy" on page 60. 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. Even if Policy owners participating in that Fund choose not to provide voting instructions, we will vote the Fund's shares in the same proportions as the voting instructions which we actually receive. As a result, the instructions of a small number of Policy owners could determine the outcome of matters subject to shareholder vote. 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 3%. Although this interest 24 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 64. The "daily charge" described on page 61 and the fees and expenses of the Funds discussed on page 18 do not apply to 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 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 3%. 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. We do not currently charge for additional personalized illustrations. 25 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. Death Benefits Your specified amount of insurance. In your application to buy a AIG Income Advantage VUL 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. (See "Enhanced Early Cash Value Term Rider" on page 41 for an exception to the 10% requirement.) 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 28. 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 offer two different guarantee period benefit riders. We also offer a guaranteed minimum withdrawal benefit rider that includes a guarantee period benefit. We provide more information about the specified amount and the guarantee period benefit under "Guarantee period benefit," on page 31 and a discussion of the three riders under "Additional Benefit Riders" on page 40. 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 61.) Your death benefit. You must choose one of three death benefit Options under your Policy at the time it is issued. 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. 26 . 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. 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 54 for more information about the effect of partial surrenders on the amount of the death benefit. Under either Option 2 or Option 3, your death benefit will 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 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 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. There is an exception to your electing one of the tests. If you purchase the guaranteed minimum withdrawal benefit rider, we will automatically provide you with the guideline premium test. 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, as 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 the required minimum death benefit. 27 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 be higher. This compensates us for the additional risk that we might have to pay the 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 percentage that will be set forth on page 27 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 to 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. The amount of insurance coverage you select at the time you apply to purchase a Policy is called the specified amount. The specified amount is the total of two types of coverage: your "base coverage" and "supplemental coverage," if any, that you select. 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. 28 There is an exception to the requirement that 10% of the total specified amount must be base coverage. If we issue the enhanced early cash value term rider, your Policy must have an initial specified amount that is all base coverage. Rider coverage must be in an amount equal to 99% of your Policy's initial specified amount. Thereafter, following the first increase in your specified amount, . base coverage must be at least 10% of the sum of your base coverage and rider coverage; and . your Policy's specified amount cannot at any time include any supplemental coverage. See "Enhanced Early Cash Value Term Rider" on page 41. 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. 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: . We pay a higher level of compensation for the sale of base coverage than for supplemental coverage; . 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; . We calculate the monthly guarantee premiums and age 100 monthly guarantee premiums at a higher rate for supplemental coverage than for base coverage (see "Guarantee period benefit" on page 31); 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. However, if you increase your Policy's base coverage, we will impose a new surrender charge only upon the amount of the increase in base coverage. The new surrender charge applies for a maximum of the first 14 Policy years following the increase. 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. (See "Enhanced Early Cash Value Term Rider" on page 41 for an exception to the requirements described in this paragraph.) 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 29 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 coverage 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. 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 32, will be allocated upon receipt to the available investment options you have chosen. Premium Payments and Transfer Requests in Good Order. We will accept the Policy owner's instructions to allocate premium payments to investment options, to make redemptions (including loans) or to transfer values among the Policy owner's investment options, contingent upon the Policy owner's providing us with instructions in good order. This means that the Policy owner's request must be accompanied by sufficient detail to enable us to allocate, redeem or transfer assets properly. When we receive a premium payment in good order, it will be treated as described under "Effective date of other premium payments and requests that you make" on page 39 of this prospectus. If we receive an instruction that is not in good order, the requested action will not be completed, and any premium payments that cannot be allocated will be held in a non-interest bearing account until we receive all necessary information. We will attempt to obtain Policy owner guidance on requests not received in good order for up to five business days following receipt. For instance, one of our representatives may telephone the Policy owner to determine the intent of a request. If a Policy owner's request is still not in good order after five business days, we will cancel the request, and return any unallocated premiums to the Policy owner along with the date the request was cancelled. 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 65. 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. 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 34). 30 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 "Guarantee period benefit" on page 31) 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. Guarantee period benefit. Your Policy makes three benefit riders available to you that provide a "guarantee period benefit." This means that if you have one of these guarantee period benefit riders, your Policy and any other benefit riders you have selected will not lapse during the rider's guarantee period as long as you have paid the required monthly guarantee premiums associated with that rider. The required monthly guarantee premiums for the guarantee period benefit rider you have selected are shown on page 3 of your Policy. The more supplemental coverage you select the higher are the monthly guarantee premiums. If you pay the monthly guarantee premiums while the rider is in force, your Policy will not lapse even if your Policy's cash surrender value has declined to zero. You cannot select any of these riders if you also select death benefit Option 3. There is no death benefit guarantee available with Option 3. One of these riders, called the "monthly guarantee premium rider for the first 20 years," is a benefit provided to any Policy owner who selects either death benefit Option 1 or 2 and who does not select the "guaranteed minimum withdrawal benefit rider." We issue the rider only when the Policy is issued. There is no charge associated with the rider. You may select the "monthly guarantee premium rider to age 100" or the guaranteed minimum withdrawal benefit rider only at the time we issue your Policy and you select either death benefit Option 1 or Option 2 and certain other Policy features. There is a charge for either of these riders. We will not issue the monthly guarantee premium rider for first 20 years or the monthly guarantee premium rider to age 100 if you select the guaranteed minimum withdrawal benefit rider. There is no difference in the calculation of Policy values and the death benefit between a Policy that has a guarantee period benefit under the monthly guarantee premium rider for first 20 years and one that does not, because the rider is free of charge. However, because there is a charge for the monthly guarantee premium rider to age 100 and the guaranteed minimum withdrawal benefit rider, Policy values are lower for a Policy that has either of these riders as opposed to one that does not. Some states require variations in the terms of one or more of the riders or prohibit their availability. The conditions and benefits of each rider are described under "Additional Benefit Riders" on page 40. Be sure to review their descriptions. 31 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 "Contact 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 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 59. 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. 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 38.) You must have at least $5,000 of 32 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 may maintain only one automatic rebalancing instruction with us at a time. 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 affecting your ability to make exchanges within your Policy. We use the term "exchange" to mean two things in this discussion about market timing. We are not referring to the exchange of one life insurance policy for another policy or contract. An exchange can be your allocation of all or a portion of a new premium payment to an investment option. An exchange can also be a transfer of your accumulation value in one investment option (all or a portion of the value) to another investment option. We are required to monitor the Policies to determine if a Policy owner requests: . an exchange out of a variable investment option, other than the money market investment option, within two calendar weeks of an earlier exchange into that same variable investment option; or . an exchange into a variable investment option, other than the money market investment option, within two calendar weeks of an earlier exchange out of that same variable investment option; or . an exchange out of a variable investment option, other than the money market investment option, followed by an exchange into that same variable investment option, more than twice in any one calendar quarter; or 33 . an exchange into a variable investment option, other than the money market investment option, followed by an exchange out of that same variable investment option, more than twice in any one calendar quarter. If any 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 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. A Policy owner's first violation of this policy will result in the suspension of Policy transfer privileges for ninety days. A Policy owner's subsequent violation of this policy will result in the suspension of Policy transfer privileges for 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. Restrictions initiated by the Funds and information sharing obligations. 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 instruct us to reject a Policy owner's transfer request. Additionally, a Fund may instruct us to restrict all purchases or transfers into the Fund by a particular Policy owner. We will follow the Fund's instructions. The availability of transfers from any investment option offered under the Policy is unaffected by the Fund's policies and procedures. Please read the Funds' prospectuses and supplements for information about restrictions that may be initiated by the Funds. In order to prevent market timing, the Funds have the right to request information regarding Policy owner transaction activity. If a Fund requests, we will provide mutually agreed upon information regarding Policy owner transactions in the Fund. 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 AIG Income Advantage VUL Policy; and 34 . applies to the amount of the increase for the 14 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 three 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. See "Enhanced Early Cash Value Term Rider" on page 41 for an exception to the 10% requirement. 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 death benefit 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 any decrease in coverage as of the monthly deduction day (see "Monthly deduction days" on page 39) following the valuation date we receive the request. The decrease in coverage is applied in the following order: . Against the specified amount provided by the most recent increase, applied first to the supplemental coverage portion of the increase, followed by the base coverage portion of the increase; . Against the next most recent increases successively, with supplemental coverage portion of each increase reduced first, followed by the base coverage portion of the same increase; . Against the specified amount provided under your original application, with supplemental coverage reduced first, followed by base coverage. 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 the charges. For instance, if you increase your base coverage and follow it by a decrease in base coverage within five 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 five years even though you have reduced the amount of base coverage. 35 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 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. Any such reduction in specified amount will be subject to the same guidelines and restrictions described in "Decrease in coverage" on page 35. 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 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 66 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 benefit. A change in coverage does not result in termination of any of the guarantee period benefit riders, 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 Premium Rider for First 20 Years" on page 45, "Monthly Guarantee Premium Rider to Age 100" on page 46 and "Guaranteed Minimum Withdrawal Benefit Rider" on page 48. 36 No Tobacco Use Incentive In general, certain charges under life insurance policies are higher if the insured person uses tobacco. We provide an incentive for our insureds to quit the use of tobacco or any other products that contain nicotine. It is important to understand, therefore, that when we refer to "tobacco," we mean tobacco or any other products that contain nicotine. Tobacco use includes the use of nicotine patches and nicotine gum. The owner does not elect this feature. We provide it automatically without additional charge. Here are its terms: . if the insured person is in either the preferred tobacco or standard tobacco underwriting class; then . for the first three Policy years, the cost of insurance charges will automatically be determined as if the insured person was in the standard non-tobacco underwriting class; and . for the first three Policy years the determination of the age 100 monthly guarantee premiums for the monthly guarantee premium rider to age 100 will be based on the insured person's underwriting class and not the standard non-tobacco underwriting class. (See "Monthly Guarantee Premium Rider to Age 100" on page 46.) There is a separate rule for insured persons in the special tobacco underwriting class. For the first three Policy years, the standard non-tobacco rates will be adjusted to reflect the extra amount we always charge due to the health, occupation or avocation of an insured person in that class. If, before the end of the first three Policy years, the Owner provides us with evidence satisfactory to us that: . the insured person has not used tobacco in any form for the preceding 12 months; and . there has been no change in the insured person's health that would prevent him or her from qualifying for our standard non-tobacco underwriting class; then . starting with the fourth policy year, we will continue to use standard non-tobacco cost of insurance rates (adjusted as stated above for the special non-tobacco underwriting class); and . starting with the fourth policy year, we will determine the age 100 monthly guarantee premiums for the monthly guarantee premium rider to age 100 by using the standard non-tobacco underwriting class. If the insured person has not met this non-tobacco use and health condition, then starting with the fourth Policy year we will assess cost of insurance charges for the preferred, standard or special tobacco underwriting class, as appropriate. See "Underwriting and premium classes" on page 60 for more information about our underwriting classifications. 37 Account Value Enhancement Your Policy will be eligible for an Account Value Enhancement at the end of the 21/st/ Policy year, and at the end of each Policy year thereafter. (The Account Value Enhancement and the Enhanced Early Cash Value Term Rider are different features. See "Enhanced Early Cash Value Term Rider" on page 41.) An Account Value Enhancement is a credit we may provide to your accumulation value. At our complete discretion, the credit for any Policy year can be zero or greater, except in Florida and Oregon where the annual credit must be no less than 0.01%. All other Policies issued in the same calendar year, however, will be treated the same. Here are the additional terms of the Account Value Enhancement: . Each Account Value Enhancement will be calculated using your unloaned accumulation value at the end of the last day of the Policy year. . The amount of each Account Value Enhancement will be calculated by applying a percentage to the unloaned accumulation value. The percentage, if any, will be reset annually (the annual credit will be no less than 0.01% in Florida and Oregon). . Each Account Value Enhancement will be allocated to your Policy's investment options using the premium allocation percentages you have in effect at that time. . All eligible Policies issued in the same calendar year will receive the same enhancement percentage credited as of the end of each Policy year. . There is no Policy charge for any Account Value Enhancement, although some of the Policy charges may be higher because of an increase in your accumulation value. Enhancements credited to your variable investment options result in an increase in your accumulation value. Each enhancement is fully vested when credited. You will be subject to the risk that investment performance will be unfavorable and your accumulation value will decrease because of the unfavorable performance and the resulting higher insurance charges. As a result you may not receive any benefit from an Account Value Enhancement. See "Investment Risk" on page 9. 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. 38 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 following 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 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 $500,000 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 a 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; 39 . 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; . If you exercise your right to return your Policy described under "Free look period" on page 32 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 day. 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 this rider at any time. If you do so, the charge will cease. 40 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. Enhanced Early Cash Value Term Rider. This rider provides term life insurance on the life of the Policy's insured person. The rider's death benefit (or "rider amount") must be 99% of the total amount of coverage (the sum of coverage of the Policy and this rider) when the Policy is issued. You must apply for this rider when you apply for the Policy. If you choose this rider your Policy's specified amount cannot have supplemental coverage at any time. The insured person can be no older than attained age 75 at application. Rider charges. The rider has two charges: . a monthly expense charge per $1,000 of the rider amount which will be deducted for the first ten Policy years and for the first ten years following any increase in the rider amount (decreases in the rider amount do not reduce this charge); and . a monthly insurance charge based on the insured person's gender, attained age at each Policy anniversary, premium class and net amount at risk attributable to the rider. Both charges are illustrated in the Tables of Charges that begin on page 11. Rider Amount. You may apply for an increase in the rider amount at any time. You may decrease the total amount of coverage after the first Policy year. Your requested decrease may not result in a decrease in the rider amount. See the rider for more information. If the insured person dies, we will pay the rider amount to the Policy's beneficiary, or to another beneficiary if the Policy owner has designated a different beneficiary under the rider. Termination or Automatic Conversion. You may elect to terminate this rider at any time. If you do so, the rider charges will cease. If the rider has not previously terminated, then on the Policy anniversary nearest the insured person's age 100: . this rider will terminate; and . we will increase the specified amount under the Policy by the rider amount at the time of rider termination. This rider is primarily designed to meet certain small business needs and may not be an appropriate alternative for individuals who are considering applying for a specified amount that is a blend of base coverage and supplemental coverage. This rider may provide a higher cash surrender value in the early Policy years than a Policy would accrue with only base coverage, or with a blend of base coverage and supplemental coverage. However, in later Policy years, base coverage alone or a blend of base coverage and supplemental coverage may provide higher cash surrender values. The potential differences in cash surrender values are because of the current charges for the rider and the current charges for base coverage and supplemental coverage. 41 You should carefully review the illustrations for this Policy to help you decide if this rider is appropriate for you. The illustrations will show potential Policy values with base coverage and this rider, and with base coverage and supplemental coverage. 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 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 61. 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. 42 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. 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 interest on this amount to the next Policy anniversary, plus an administrative fee (not to exceed $250), becomes a "lien" against the remaining benefits payable under the Policy. The maximum interest rate will not exceed the greater of . the Moody's corporate Bond Yield Average-Monthly Average Corporates for the month of October preceding the calendar year for which the loan interest rate is determined; or . the interest rate used to calculate cash values in the Fixed Account during the period for which the interest rate is determined, plus 1%. 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). This rider is not available for Policies with an initial specified amount greater than $5,000,000. 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. Overloan Protection Rider. This rider guarantees that your Policy will not lapse due to interest charges on outstanding Policy loans. This rider allows you to retain the death benefit coverage under your Policy and discontinue paying premiums. We issue this rider automatically when your Policy is issued. There is a one- time charge for this rider, currently equal to 3.5% of your Policy's accumulation value when the rider is exercised. This charge will never be greater than 5% of the accumulation value. There is no charge if the rider is never exercised. You can request to exercise the rider when: 43 . The sum of outstanding Policy loans equals or exceeds 94% of the cash value; and . The Policy has been in force at least until the later of: (a)the Policy anniversary nearest the insured person's age 75; or (b)the 15th Policy anniversary. The exercise date of the rider is the monthly deduction day on or next following the date we receive your written request and all requirements for exercising the rider are satisfied. Here are the requirements: . There must be sufficient cash surrender value to cover the one-time charge; . Death benefit Option 1 must be in force (death benefit Option 1 is equal to the specified amount on the date of the insured person's death); . The Policy must not be a modified endowment contract; . The sum of all partial surrenders taken to date must equal or exceed the sum of all premiums paid; . The sum of all outstanding policy loans must equal or exceed the sum of the specified amount plus the death benefit amount of any term insurance rider issued on the life of the Policy's insured person; and . There can be no riders in force that require charges after the exercise date, other than the maturity extension rider or term riders (a term rider cannot require a change in its death benefit amount that is scheduled to take effect after the exercise date). On the exercise date the portion of your accumulation value not offset by your outstanding Policy loans will be transferred to, or will remain in, the Fixed Account. The following conditions apply beginning with the exercise date: . Interest will continue to be credited to your accumulation value and charged against outstanding loans; . All future monthly deductions will be waived, including those for the maturity extension rider and any term rider; . No additional premiums will be accepted; . The Policy cannot become a modified endowment contract; . No new policy loans or partial surrenders will be allowed; . Policy loans can be repaid; . No changes will be allowed in the specified amount or choice of death benefit Option; 44 . No transfers or allocations of accumulation value from the Fixed Account will be allowed; and . The Policy's death benefit will be the applicable Death Benefit Corridor Rate times the greater of the accumulation value and the outstanding total Policy loan amount. The rider will terminate on the earlier of the following dates: . Upon your written request to terminate the rider; or . Upon termination of the Policy. Monthly Guarantee Premium Rider for First 20 Years. This rider is a benefit available to any Policy owner who selects either death benefit Option 1 or 2 and who does not select the guaranteed minimum withdrawal benefit rider. We issue the rider only when the Policy is issued. There is no charge associated with the rider. The more supplemental coverage you select, however, the higher are the monthly guarantee premiums. The rider provides a guarantee, explained below, until the earlier of: . The 20/th/ Policy anniversary; or . The Policy anniversary nearest the insured person's 95/th/ birthday. Page 3 of your Policy will specify a "Monthly Guarantee Premium." You must pay the monthly guarantee premiums to keep the rider in force. Policy months are measured from the "Date of Issue" that will be shown on page 3 of your Policy. On the first day of each Policy month that you are covered by the rider, we determine if the monthly guarantee premium requirement has been met, as follows: . if the sum of all premiums paid to date, minus withdrawals and minus any outstanding Policy loan amount, equals or exceeds . the sum of all monthly guarantee premiums, beginning with the date of issue and including the monthly guarantee premium for the then-current month, then you have met the monthly guarantee premium requirement. As long as you have met the monthly guarantee premium requirement, your Policy will not enter a grace period, or terminate (i.e., lapse) because of insufficient cash surrender value. See "Policy Lapse and Reinstatement" on page 65. If you do not meet the monthly guarantee premium requirement, we will notify you in writing within 30 days. The monthly guarantee premium rider for first 20 years will remain in force during the 61-day period that follows failure to meet the monthly guarantee premium requirement. The notice will advise you of the amount of premium you must pay to keep the rider from terminating. If you do not pay the amount required to keep the rider in force by the end of the 61-day period, the rider will terminate and cannot be reinstated. 45 If the monthly guarantee premium rider for first 20 years terminates and the cash surrender value is insufficient, the Policy will then lapse unless you pay an amount of premium sufficient to keep the Policy from lapsing. However, the monthly guarantee premium rider for first 20 years will not be reactivated even if you pay enough premium to keep your Policy from lapsing. Whenever you increase or decrease your specified amount, change the percentage of base and supplemental coverages, change death benefit Options, add or delete another benefit rider or change premium class, we calculate a new monthly guarantee premium. These changes will not affect the terms or the duration of the rider. The amount you must pay to keep the rider in force will increase or decrease. We can calculate your new monthly guarantee premium as the 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 person's age on the effective date of the increase, and the amount of the increase. . For decreases in the specified amount, the new 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 or deletion of any other benefit rider except for the age 100 monthly guarantee premium rider, the monthly guarantee premium will be increased or decreased by the amount of the charge for the rider. . For a change in premium class, the new monthly guarantee premium is calculated based on the insured person's attained age and the new premium class. The monthly guarantee premium requirement must be met each Policy month for the duration of the monthly guarantee premium rider for first 20 years, or the rider will be subject to termination. There is no additional charge for this rider. Monthly Guarantee Premium Rider to Age 100. This rider is available to any owner if: . the owner selects the rider when the Policy is issued; . the owner selects either death benefit Option 1 or 2; and . the owner does not select the guaranteed minimum withdrawal benefit rider. If these conditions are met, we will issue the rider at the owner's request. This rider bears a monthly charge currently beginning with the fourth Policy year. We reserve the right to begin the charge as early as the first Policy year. However a change in the beginning date of the charge will not affect the beginning date for any Policy owner who has already selected the rider. The rider provides a guarantee, explained below, which ends no later than the Policy anniversary nearest the insured person's 100/th/ birthday. You may later elect to terminate this rider. If you do so, the charge will cease. If you have selected this rider, page 3 of your Policy will specify an "Age 100 Monthly Guarantee Premium" which has a few special features: 46 . the more supplemental coverage you select the higher are the age 100 monthly guarantee premiums; and . for an insured person in either the preferred tobacco or standard tobacco underwriting class, during the first three Policy years the determination of the age 100 monthly guarantee premiums will be based on the insured person's underwriting class and not the standard non-tobacco underwriting class. (See "No Tobacco Use Incentive" on page 37.) The charge for the monthly guarantee premium rider to age 100 is based on the age of the insured person when the Policy is issued and the net amount at risk attributable to the base Policy. You must meet the age 100 monthly guarantee premium requirement each Policy month after the third Policy year in order to keep the rider in force. The monthly charge for the rider ceases when the rider terminates. Policy months are measured from the "Date of Issue" that will be shown on page 3 of your Policy. On the first day of each Policy month, we determine if the age 100 monthly guarantee premium requirement has been met, as follows: . if the sum of all premiums paid to date, minus withdrawals and minus any outstanding Policy loan amount, equals or exceeds . the sum of all age 100 monthly guarantee premiums, beginning with the date of issue (which includes all Policy months in the first three Policy years when there is no charge for this rider) and including the age 100 monthly guarantee premium for the then-current month, then . you have met the age 100 monthly guarantee premium requirement. So long as you have met the age 100 monthly guarantee premium requirement, your Policy will not enter a grace period, or terminate (i.e., lapse) because of insufficient cash surrender value. See "Policy Lapse and Reinstatement" on page 65. If you do not meet the age 100 monthly guarantee premium requirement, we will notify you in writing within 30 days. The monthly guarantee premium rider to age 100 will remain in force during the 61-day period that follows failure to meet the age 100 monthly guarantee premium requirement. The notice will advise you of the amount of premium you must pay to keep the rider from terminating. If you do not pay the amount required to keep the rider in force by the end of the 61-day period, the rider will terminate and cannot be reinstated. If the monthly guarantee premium rider to age 100 terminates and the cash surrender value is insufficient, the Policy will then lapse unless: . you pay an amount of premium sufficient to keep the Policy from lapsing; or . the Policy remains in force on account of the monthly guarantee premium rider for first 20 years. However, the monthly guarantee premium rider to age 100 will not be reactivated even if you pay enough premium to keep your Policy from lapsing. The monthly charge for the rider ceases when the rider terminates. 47 There is an exception to the above requirements to pay the age 100 monthly guarantee premiums. If at any time during the first three Policy years, the age 100 monthly guarantee premium requirements are not met, guarantees under this rider will not be in effect. This will not terminate the rider. Guarantees under this rider will return upon payment of all past due age 100 monthly guarantee premiums during the first three Policy years. Whenever you increase or decrease your specified amount, change the percentage of base and supplemental coverages, change death benefit Option, add or delete another benefit rider or change premium class, we calculate a new age 100 monthly guarantee premium. These changes will not affect the terms or the duration of the rider. The amount you must pay to keep the rider in force will increase or decrease. We can calculate your new age 100 monthly guarantee premium as the 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 age 100 monthly guarantee premium is calculated based on the insured person's attained age and amount of the increase. . For decreases in the specified amount, the new age 100 monthly guarantee premium is adjusted on a pro-rata basis. For instance, if the specified amount is reduced by one-half, the age 100 monthly guarantee premium is reduced by one-half. . For the addition or deletion of another benefit rider, the age 100 monthly guarantee premium will be increased or decreased by the amount of the charge for the rider. . For a change in premium class, the new age 100 monthly guarantee premium is calculated based on the insured person's attained age and the new premium class. The age 100 monthly guarantee premium requirement must be met each Policy month, beginning in the fourth Policy year, for the duration of the monthly guarantee premium rider to age 100, or the rider will be subject to termination. Once terminated, the monthly charge for the rider ceases and the rider cannot be reinstated. Guaranteed Minimum Withdrawal Benefit Rider. This rider provides for a guaranteed minimum withdrawal benefit. The benefit is available upon your written request while the Policy and this rider are in force. Your request must be made during the eligibility period. The rider also provides a guarantee that your Policy will not lapse for a specified period. The rider will terminate before the end of the eligibility period only upon the occurrence of any one of the events described in "Termination" on page 53. Requirements to purchase the rider - Here are the requirements you must meet in order to purchase this rider: . you must purchase the rider when applying for the Policy; . you may not select either the monthly guarantee premium rider for first 20 years or the monthly guarantee premium rider to age 100; . the Policy's insured person can be no younger than attained age 20 or no older than attained age 60 when we issue the Policy; 48 . you must elect either death benefit Option 1 or 2; . you must elect the guideline premium test; and . you must elect automatic rebalancing and maintain it as long as the rider is in effect. See "Required minimum death benefit" on page 27 and "Automatic rebalancing" on page 33. Eligibility period - The eligibility period: . starts on the tenth Policy anniversary, or the Policy anniversary nearest the insured person's 65th birthday, if earlier; and . ends on the Policy anniversary nearest the insured person's age 70. Withdrawal period - The withdrawal period is the length of time for which we will make guaranteed minimum withdrawal benefit payments. Currently the length of the initial withdrawal period for each rider we issue is 10 years. We reserve the right to increase or decrease the length of the initial withdrawal period for each rider we issue in the future. The actual withdrawal period starts on the date of the first withdrawal on or after the date the eligibility period begins, but no later than on the date the eligibility period ends. The actual withdrawal period for each rider can be longer or shorter than the initial withdrawal period due to loans, partial surrenders and any applicable surrender charges. Guaranteed Benefit Balance - Before the withdrawal period begins and during the eligibility period, we guarantee that an amount equal to what we refer to as the Guaranteed Benefit Balance may be withdrawn over the withdrawal period. Before the first withdrawal during the eligibility period, the Guaranteed Benefit Balance will be calculated as follows: . we will add all premiums paid (limited in each Policy year after the first, to the amount of premium paid during the first Policy year); . less all partial withdrawals; . plus interest at the Accumulation Rate shown on page 3 of your Policy; and . we will subtract the Policy loan balance; and . we will subtract an amount equal to the sum of the monthly guarantee premiums (described in the "Monthly guarantee period benefit" section of this rider description) from the date of issue until the current month, (but not beyond the end of the monthly guarantee period) plus interest at the Accumulation Rate shown on page 3 of your Policy. The monthly guarantee premium for each month in the monthly guarantee period will be added to obtain the sum described in the last bullet above, even if the monthly guarantee premium requirement has not been met. Termination of the monthly guarantee period benefit does not change the length of the monthly guarantee period in effect. We guarantee that an amount equal to the Guaranteed Benefit Balance immediately prior to the first withdrawal during the eligibility period may be withdrawn. The amount of each payment and the actual withdrawal period will vary, subject to: 49 . any subsequent Policy loan activity; . any subsequent full or partial surrenders; and . any applicable surrender charges and additional charges due to partial surrenders. If the Guaranteed Benefit Balance is less than $500, we reserve the right to make payment over a reduced period. There is no benefit payable if the Guaranteed Benefit Balance is less than or equal to zero. Maximum guaranteed annual withdrawal - After the eligibility period begins, the first withdrawal results in calculation of the initial maximum annual withdrawal amount, which is: . the Guaranteed Benefit Balance immediately prior to the first withdrawal; . divided by the number of years in the initial withdrawal period (currently 10). Guaranteed Benefit Balance and maximum annual withdrawal amount calculations during the withdrawal period - The Guaranteed Benefit Balance will be reduced by the amount of any new loans (including loan interest), and any new withdrawals. The Guaranteed Benefit Balance will be increased by any loan repayments and any unearned loan interest. At the end of each 12-month period from the time of the first withdrawal, the maximum annual withdrawal amount for the next 12-month period will be recalculated. If the number of years remaining in the initial withdrawal period is one or more, the recalculation will be the lesser of: . the Guaranteed Benefit Balance at the beginning of the previous 12-month period; less withdrawals and loans made during the previous 12-month period; plus any loan repayments made during the previous 12-month period (including any unearned loan interest); divided by the number of years remaining in the initial withdrawal period; or . the annual withdrawal amount in effect for the previous 12-month period. If the number of years remaining in the initial withdrawal period is less than one, the maximum annual withdrawal amount will be the amount in effect for the previous 12-month period until the Guaranteed Benefit Balance is zero. After the actual withdrawal period has started, premium payments will not be included in the benefit balance calculation. Policy surrender or maturity - If you surrender your Policy or if it matures and the Policy has a cash surrender value, you will receive: . The cash surrender value, at the time of surrender or maturity, in a single sum or under a payment option (see "Payment Options" on page 56); plus . The excess of the Guaranteed Benefit Balance over the cash surrender value paid in equal amounts over the number of years remaining in the initial withdrawal period. 50 If you surrender your Policy or if it matures after the initial withdrawal period, the equal payments will not exceed the maximum annual withdrawal amount in effect at the time you surrender your Policy or it matures. Policy lapse - If your Policy lapses without any cash surrender value during the eligibility Period, you will receive the Guaranteed Benefit Balance in equal amounts over the initial withdrawal period. If the Policy lapses without any cash surrender value during the actual withdrawal period, you will receive the remaining Guaranteed Benefit Balance in equal amounts over the number of years remaining in the initial withdrawal period. If the Policy lapses after the initial withdrawal period, the equal payments will not exceed the maximum annual withdrawal amount in effect at the time of lapse. Rider charge - We will deduct a daily charge at a current annual effective rate of 0.75% of your accumulation value that is then invested in any of the variable investment options. We reserve the right to increase this charge to no more than 1.50%. We will charge you for the rider until the Policy or the rider terminates. Death benefit - This rider does not provide a death benefit payable in addition to the amount payable under the Policy. However, if the Policy has lapsed and at the time of death the Policy owner was receiving payments under any provision of this rider, the present value of any remaining payments will be paid to the Policy owner's beneficiary in a single sum. Investment option restrictions - If you purchased this rider, certain investment options are identified on page 3 of your Policy as "restricted investment options." This means that we will limit the total amount of your accumulation value less Policy loans that may be invested in restricted investment options to 30% of your Policy's total accumulation value less Policy loans. Here is an example: Let us say your total accumulation value is $1,000 and you have an outstanding loan of $300. We will limit the total amount of accumulation value less Policy loans ($1,000 minus $300 = $700) that may be invested in restricted investment options to 30% of your total accumulation value less Policy loans, which is $210 (30% of $700 = $210). If, because of performance, the total amount invested in restricted investment options increases to greater than 30% of your total accumulation value less Policy loans (greater than $210), you will not be in compliance with the 30% requirement. However your rights under the rider are unaffected even though you are not in compliance. In addition you will be brought into compliance through "automatic rebalancing" as explained in the rest of this section. Your Policy identifies the initial list of restricted investment options. We reserve the right under the Policy to add or remove restricted investment options, in the following manner: . If we add an investment option to the Policy, it is possible that it will be a restricted investment option; and . We may decide (or in some cases, we may be required) to remove a restricted investment option from the Policy. If you purchased this rider, you are required to use our automatic rebalancing program. This program assures that you adhere to the 30% requirement for restricted investment options. Under automatic rebalancing, your accumulation value is automatically reallocated to the investment options in percentages to correspond to your then current premium allocation designation. See "Automatic 51 rebalancing" on page 33. Currently we require that you maintain automatic rebalancing on an annual basis. We reserve the right, however, to require that you rebalance more often than annually. You may choose to rebalance more frequently than annually. You may give us new automatic rebalancing instructions at any time. The restricted investment options currently are: . AIM V.I. Global Real Estate Fund . AIM V.I. International Growth Fund . Credit Suisse Trust Small Cap Core I Portfolio . Dreyfus VIP International Value Fund . Franklin Templeton VIP Franklin Small Cap Value Securities Fund . Janus Aspen International Growth Portfolio . JPMorgan International Equity Portfolio . MFS (R) VIT New Discovery Series . Oppenheimer Global Securities Fund/VA . PIMCO VIT CommodityRealReturn Strategy Portfolio . Putnam VT Small Cap Value Fund . VALIC Company I International Equities Fund . VALIC Company I Small Cap Index Fund Monthly guarantee period benefit - As indicated above in "Requirements to purchase the Rider," if you purchase this rider we will not issue either of the guarantee period benefit riders. This rider, however, provides a monthly guarantee period benefit based on your payment of monthly guarantee premiums. The monthly guarantee premium for the initial specified amount and any benefit riders in force on the date of issue is shown on page 3 of your Policy. If you have purchased this rider, the "monthly guarantee premium" in your Policy refers to the monthly guarantee period benefit under this rider. There is no additional charge for this rider's monthly guarantee period benefit. The more supplemental coverage you select, however, the higher are the monthly guarantee premiums. The guarantee period begins on the date of issue and ends on: . the Policy anniversary nearest the insured person's attained age 65; or . the 10th Policy anniversary, if later. Policy months are measured from the date of issue. On the first day of each Policy month that you are covered by this rider we determine if the monthly guarantee premium requirement has been met, as follows: . if the sum of all premiums paid to date, minus withdrawals and minus any outstanding Policy loan amount, equals or exceeds . the sum of all monthly guarantee premiums, beginning with the date of issue and including the monthly guarantee premium for the then-current month, then . you have met the monthly guarantee premium requirement. 52 The Policy will not terminate (i.e., lapse) during the guarantee period if, on the first day of each Policy month during that period you have met the monthly guarantee premium requirement. See "Policy Lapse and Reinstatement" on page 65. If you do not meet the monthly guarantee premium requirement, we will notify you in writing within 30 days. The guarantee period benefit will remain in force during the 61-day period that follows the failure to meet the monthly guarantee premium requirement. The notice will advise you of the amount of premium you must pay to keep the guarantee period benefit from terminating. If you do not pay the amount required to keep the benefit in force by the end of the 61-day period, the guarantee period benefit will terminate and cannot be reactivated. If the monthly guarantee period benefit terminates and the cash surrender value is insufficient, the Policy will then lapse unless you pay an amount of premium sufficient to keep the Policy from lapsing. However, the monthly guarantee period benefit will not be reactivated even if you pay enough premium to keep your Policy from lapsing. Whenever you increase or decrease your specified amount, change the percentage of base and supplemental coverages, change death benefit Options, add or delete another benefit rider, increase or decrease another benefit rider, or change premium class, we calculate a new monthly guarantee premium. Except as described in "Termination," below, these changes will not affect the terms or the duration of the monthly guarantee period benefit or the rider. 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 the 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 person's attained age on the effective date of the increase, and the amount of the increase. . For decreases in the specified amount, the new 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 or deletion of any other benefit rider, the monthly guarantee premium will be increased or decreased by the amount of the charge for the rider. . For a change in premium class, the new monthly guarantee premium is calculated based on the insured person's attained age and the new premium class. Reinstatement - If the Policy lapses, this rider may be reinstated with the Policy if benefits are not being paid under this rider at the time of lapse, subject to: . evidence of insurability; and . payment of the necessary premium to reinstate the Policy. Termination - This rider will terminate if: . the Policy terminates or matures; 53 . withdrawals have been taken during the eligibility period and the Guaranteed Benefit Balance has been reduced to zero; . automatic rebalancing has been discontinued; . automatic rebalancing percentages are changed allowing for more than 30% of the Policy's total accumulation value less Policy loans to be invested in restricted investment options; . the insured person reaches attained age 70 and no withdrawals were taken during the eligibility period; . any of the following occurs after the eligibility period begins: . the Policy's specified amount is increased; or . the Policy's death benefit Option is changed; or . any other rider is added or is terminated prior to its scheduled termination date; or . the Policy's premium class is changed (including a change in rating); or . the Policy's specified amount is decreased for any reason other than due to a partial surrender. (This includes changing the death benefit Option from Option 1 to Option 2.) 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 66. You should consult a qualified tax adviser. 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 26. Certain transactions also entail charges. For information regarding other charges, see "Charges Under the Policy" on page 60. E-Delivery, E-Service, Telephone Transactions and Written Transactions See page 20 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 and unpaid 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 AIG Income Advantage VUL 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. 54 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 34. We also deduct any remaining surrender charge that is associated with any portion of your Policy's base coverage. 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 three times the amount of the charges we assess against your accumulation value on your monthly deduction day. The minimum amount you can borrow is $500 or, if less, your Policy's cash surrender value less three times the amount of the charges we assess against your accumulation value on your monthly deduction day. These rules are not applicable in all states. We reserve the right at any time to limit the maximum loan amount to 90% of you accumulation value less any applicable surrender charges. The 90% limit will apply to . all policies regardless of the date of issue; and . any loans taken after the new limit is declared. Any loans outstanding when the new limit is declared will be administered under the rules for loans that were in place at the time the loan was taken. 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 3.00% (rather than any amount you could otherwise earn in one of our investment options), and we will charge you interest on your loan at the end of each Policy year at a guaranteed annual effective rate of 3.75%. Loan interest accrues daily. 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 55 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 3.00%. We intend to set the rate of interest you are paying to the same 3.00% 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 3.00%, and . will never exceed an annual effective rate of 3.25%. 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 "Maturity Extension Rider," on page 42. Tax considerations. Please refer to "Federal Tax Considerations" on page 65 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 after we receive notification 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 after we receive notification 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. 56 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 2% 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 2%. 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. 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. 57 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; . 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.) 58 . 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; . 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: 59 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. "Tobacco use" refers to not only smoking, but also the use of other products that contain nicotine. Tobacco use includes the use of nicotine patches and nicotine gum. Premium classes are described in your Policy. 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. 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 Statutory 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 0.5% 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 1.78% 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. 60 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% of all premium payments. AGL receives this charge to cover sales expenses, including commissions. Daily charge (mortality and expense risk fee). We will deduct a daily charge at a maximum 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. The current daily charge is at an annual effective rate of 0.20%. After a Policy has been in effect for 10 years, we will reduce the daily charge to a maximum annual effective rate of 0.35%, and after 20 years, to a maximum annual effective rate of 0.15%. Policies issued in Maryland refer to this charge as an "account value charge." AGL receives this charge to pay for our mortality and expense risks. Flat monthly charge. We will deduct $10 from your accumulation value each month. We may lower this charge but it is guaranteed to never exceed $10. 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. The Policies have a monthly expense per $1,000 of specified amount which will be deducted during the first three Policy years and during the first three years following any increase in specified amount. 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 specified amount. (We describe your specified amount under "Your specified amount of insurance" on page 26.) This charge can range from a maximum of $1.67 for each $1000 of specified amount to a minimum of $0.05 for each $1000 of specified amount. The representative charge (referred to as "Example" in the Tables of Charges on page 14) is $0.20 for each $1000 of specified amount. The initial amount of this charge is shown on page 3A of your Policy and is called "Monthly Expense Charge for the First Three Years." 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. 61 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 (insured persons who do not use tobacco or other products that contain nicotine) 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 charge for the guaranteed minimum withdrawal benefit rider, however, will be assessed daily. In addition, the interest charge for the terminal illness rider benefit is assessed each Policy anniversary. 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 coverage you choose under the rider. The riders we currently offer are accidental death benefit rider, children's insurance benefit rider, spouse term rider, enhanced early cash value term rider, two versions of maturity extension rider, terminal illness rider, waiver of monthly deduction rider, overloan protection rider, two versions of guarantee period benefit rider and guaranteed minimum withdrawal benefit rider. The riders are described beginning on page 40, 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 14 Policy years (and for a maximum of the first 14 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 28 of the Policy. As shown in the Tables of Charges beginning on page 11 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 $16 per $1,000 of base coverage (or any increase in the base coverage). The surrender charge decreases on an annual basis until, in the fifteenth Policy 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 14 Policy years. The chart is for a 38 year old male, who is the same person to whom we refer in the Tables of Charges 62 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 38 Year Old Male
Policy Year 1 2 3 4 5 6 7 8 9 10-14 15 - ----------- --- --- --- --- --- --- -- -- -- ----- -- Surrender Charge Per $1,000 of Base Coverage $16 $16 $16 $14 $12 $10 $8 $6 $4 $2 $0
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" on page 54 and "Change of death benefit option" on page 36. For those Policies that lapse in the first 14 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 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 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 3.75%. The loan interest charged on a preferred loan (available after the first 10 Policy years) will never exceed an annual effective rate of 3.25%. AGL receives these charges to help pay for the expenses of administering and providing for Policy loans. See "Policy loans" on page 55. 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 - 18. 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 64. 63 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); . regulatory risks (such as the risk that tax or other regulations may be changed in ways adverse to issuers of variable universal 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. AGL may also make available to Policy owners other variable universal life insurance policies with different features and different charges. Please ask your AGL representative about our other policies. ACCUMULATION VALUE Your accumulation value. From each premium payment you make, we deduct the charges that we describe on page 60 under "Statutory premium tax charge" (or "Tax charge back" if you are a resident of Oregon when you purchase your Policy) and "Premium expense charge." We invest the rest in one or more of the investment options listed in the chart on page 21 of this prospectus, as well as the Fixed Account. 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." 64 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 60 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 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 3%. 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 64. The "daily charge" described on page 61 and the fees and expenses of the Funds discussed on page 18 do not apply to the Fixed Account. Policies are "non-participating." You will not be entitled to any dividends from AGL. POLICY LAPSE AND REINSTATEMENT While either of the guarantee period benefit riders (discussed on page 45 under "Monthly Guarantee Premium Rider for First 20 Years" and on page 46 under "Monthly Guarantee Premium Rider to Age 100") or the guarantee period benefit of the guaranteed minimum withdrawal benefit rider (discussed on page 48 under "Guaranteed Minimum Withdrawal Benefit Rider") is in force, your Policy will not enter a grace period or terminate. You must, however, pay the monthly guarantee premiums or the age 100 monthly guarantee premiums, depending on which rider you have in force. You cannot reinstate the monthly guarantee premium rider for first 20 years, the monthly guarantee premium rider to age 100 or the guarantee period benefit of the guaranteed minimum withdrawal benefit rider once coverage expires or terminates for any reason. After these riders expire or terminate, if your Policy's cash surrender value (the Policy's accumulation value less Policy loans and unpaid loan interest and any surrender charge that then applies) 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 five 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 65 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 . 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," 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; 66 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 I.R.C. Section 1035 exchange for a modified endowment contract will also be considered a modified endowment contract. 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 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 67 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 . 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. 68 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 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 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 $2.0 million for decedents dying in 2007. 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 $2.0 million in 2007. Because these rules are complex, you should consult with a qualified tax adviser for specific information, especially where benefits are passing to younger generations. 69 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 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. 2002-1 CB 398. 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. 70 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. 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 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. 71 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. FINANCIAL STATEMENTS The Financial Statements of AGL and the Separate Account can be found in the SAI. You may obtain a free copy of these Financial Statements if you write us at our Administrative Center, which is located at 2727-A Allen Parkway, Houston, Texas 77019, or call us at 1-800-340-2765. 72 This index should help you to locate more information about some of the terms and phrases used in this prospectus. INDEX OF SPECIAL WORDS AND PHRASES
Page to See in this Defined Term Prospectus ------------ ----------- accumulation value................................ 8 Administrative Center............................. 5 age 100 monthly guarantee premium................. 46 automatic rebalancing............................. 33 base coverage..................................... 28 basis............................................. 67 beneficiary....................................... 57 cash surrender value.............................. 7 cash value accumulation test...................... 27 close of business................................. 38 Code.............................................. 40 Contact Information............................... 5 cost of insurance rates........................... 61 daily charge...................................... 61 date of issue..................................... 39 death benefit..................................... 6 dollar cost averaging............................. 32 Fixed Account..................................... 24 full surrender.................................... 7 Fund, Funds....................................... 6 grace period...................................... 9 guarantee period benefit.......................... 31 Guaranteed Benefit Balance........................ 49 guideline premium test............................ 27 insured person.................................... 1 investment options................................ 65 lapse............................................. 9 loan (see "Policy loans" in this Index)........... 7 loan interest..................................... 63 maturity date..................................... 56 modified endowment contract....................... 66 monthly deduction day............................. 39 monthly guarantee premium......................... 9 monthly insurance charge.......................... 61 net amount at risk................................ 13
73 INDEX OF SPECIAL WORDS AND PHRASES
Page to See in this Defined Term Prospectus ------------ ----------- Option 1, Option 2, Option 3...................... 6 partial surrender................................. 54 payment options................................... 56 planned periodic premiums......................... 31 Policy loans...................................... 55 Policy months..................................... 39 Policy year....................................... 39 preferred loan.................................... 56 premium class..................................... 60 premium payments.................................. 30 reinstate, reinstatement.......................... 65 required minimum death benefit.................... 27 required minimum death benefit percentage......... 28 Separate Account VL-R............................. 19 seven-pay test.................................... 66 specified amount.................................. 26 supplemental coverage............................. 28 transfers......................................... 32 valuation date.................................... 38 valuation period.................................. 38 variable investment options....................... 21
74 THIS DOCUMENT IS NOT PART OF ANY PROSPECTUS [LOGO OF AIG(R) 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, AIG Worldwide Life Insurance of Bermuda, Ltd, American General Assurance Company, 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 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. 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. (C) 2007 American International Group, Inc. All rights reserved. AGLC0375 Rev0207 Easy & Convenient With e-Service from AIG American General/1/, you have access to the most up-to-date policy information, 24 hours a day, 7 days a week. And with e-Delivery/2/, you can choose to be notified [PHOTO APPEARS HERE] via e-mail that certain regulatory documents are available online for you to view, eliminating the clutter of large, bulky mailings. Need more information? Call our e-Service Customer Service Center at 800-280-2011 between 7:00 a.m. and 6:00 p.m. Central Time, Monday through Friday. Visit www.aigag.com and click on the link to sign up for e-Service and e-Delivery! [LOGO OF ESERVICE] - -------- /1/ AIG American General, www.aigag.com, is the marketing name for the insurance companies and affiliates of American International Group, Inc., (AIG), which comprise AIG's Domestic Life Insurance Operation, including American General Life Company. /2/ Not available for all products American General Life Insurance Company A member company of American International Group, Inc. VUL Administration, P.O. Box 4880, Houston, Texas, 77210-4880 www.aigag.com Variable universal life insurance policies issued by American General Life Insurance Company and distributed by American General Equity Services Corporation, member NASD and a member company of American International Group, Inc. American General Life Insurance Company does not solicit business in the state of New York. Policies and riders not available in all states. (C) 2007 American International Group, Inc. All rights reserved. AGLC101116 REV0507 5516386 THE STRENGTH TO BE THERE(R). [LOGO OF AIG(R) AMERICAN GENERAL] THIS DOCUMENT IS NOT PART OF ANY PROSPECTUS [LOGO OF AIG AMERICAN GENERAL] For E-Service and E-Delivery, or to view and print Policy or Fund prospectuses visit us at www.aigag.com For additional information about the AIG Income Advantage VUL/SM/ Policies and the Separate Account, you may request a copy of the Statement of Additional Information (the "SAI"), dated October 3, 2007. 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 1-800-340-2765. You may also obtain the SAI from an insurance representative through which the Policies may be purchased. Additional information about the AIG Income Advantage VUL Policies, including personalized illustrations of death benefits, cash surrender values, and cash 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, 100 F. Street N.E., Washington, D.C. 20549. Policies issued by: American General Life Insurance Company A member company of American International Group, Inc. 2727-A Allen Parkway, Houston, TX 77019 AIG Income Advantage VUL Flexible Premium Variable Universal Life Insurance Policy Form Number 07704 [LOGO] Membership in IMSA applies only to American General Life Insurance Company and not to its products. Not available in the state of New York Distributed by American General Equity Services Corporation Member FINRA 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 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) 2007 American International Group, Inc. All rights reserved. ICA File No. 811-08561 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R AIG INCOME ADVANTAGE VUL(SM) FLEXIBLE PREMIUM VARIABLE UNIVERSAL 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 OCTOBER 3, 2007 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 October 3, 2007, describing the AIG Income Advantage VUL(sm) flexible premium variable universal life insurance policies (the "Policy" or "Policies"). The prospectus sets forth information that a prospective investor should know before investing. For a copy of the prospectus, and any prospectus supplements, contact American General Life Insurance Company ("AGL") at the address or telephone numbers given above. Each term used in this SAI that is defined in the related prospectus has the same meaning as the prospectus' definition. TABLE OF CONTENTS GENERAL INFORMATION........................................................ 3 AGL..................................................................... 3 Separate Account VL-R................................................... 3 SERVICES................................................................... 3 DISTRIBUTION OF THE POLICIES............................................... 4 PERFORMANCE INFORMATION.................................................... 6 ADDITIONAL INFORMATION ABOUT THE POLICIES.................................. 6 Gender neutral policies............................................. 6 Cost of insurance rates............................................. 6 Certain arrangements................................................ 6 More About the Fixed Account............................................ 7 Our general account................................................. 7 How we declare interest............................................. 7 Adjustments to Death Benefit............................................ 7 Suicide............................................................. 7 Wrong age or gender................................................. 7 Death during grace period........................................... 8 ACTUARIAL EXPERT........................................................... 8 MATERIAL CONFLICTS......................................................... 8 FINANCIAL STATEMENTS....................................................... 8 Separate Account Financial Statements................................... 9 AGL Financial Statements................................................ 9 INDEX TO FINANCIAL STATEMENTS.............................................. 9 Separate Account VL-R Financial Statements.............................. 9 AGL Consolidated 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 engaged in a broad range of insurance and insurance-related activities, financial services and asset management in the United States and internationally. 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 74 separate "divisions," 48 of which are available under the Policies offered by the Policy prospectus as variable "investment options." 42 of these 48 divisions and the remaining 26 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. One or more of the Funds may sell its shares to other funds. 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 3 system at cost. Those services include data processing systems, customer services, product development, actuarial, internal auditing, accounting and legal services. During 2006, 2005 and 2004, AGL paid AGLC for these services $340,329,330, $317,771,939 and $329,659,308, respectively. 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"), 2727-A Allen Parkway, 2-G7, Houston, Texas 77019, 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 Financial Industry Regulatory Authority ("FINRA"). 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 FINRA. 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 premium"; . 3% of the premiums up to the target premium received in each of Policy years 2 through 10; . 3% of the premiums in excess of the target premium 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 1 through 10; 4 . 0.15% of the Policy's accumulation value (reduced by any outstanding loans) in the investment options in each of Policy years 11 through 20; . a comparable amount of compensation to broker-dealers or banks with respect to any increase in the specified amount of coverage that you request; and . any amounts that we may pay for broker-dealers or banks expense allowances, bonuses, wholesaler fees, training allowances or additional compensation for the Policies. 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 premium 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 target premium is also the maximum amount of premium to which the first year commission rate applies. Commissions paid on premiums received in excess of the target premium are paid at the excess rate. The target premium is an amount calculated in accordance with the method of calculation and rates from the AGL target premium schedules. AGL may change the target premium schedules from time to time. The target premium applicable to a particular coverage shall be determined from the schedule in force when the first premium for such coverage is entered as paid in accounting records of AGL. 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 affiliated broker-dealers 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. 5 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 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 Mutual 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 policies for sale in situations which, under current law, require gender-neutral premiums or benefits. However, we offer AIG Income Advantage VUL(sm) Policies on both a gender-neutral and a sex-distinct basis. 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. Currently, these payments range from 0.15% to 0.35% of the market value of 6 the assets invested in the underlying Fund as of a certain date, usually paid at the end of each calendar quarter. Except for the PIMCO Variable Insurance Trust, 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 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 3%. 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. 7 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. 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 universal 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). One or more of the investment portfolios may sell its shares to other investment portfolios. 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. FINANCIAL STATEMENTS PricewaterhouseCoopers LLP ("PwC"), located at 1201 Louisiana Street, Suite 2900, Houston, Texas 77002, is the independent registered public accounting firm for AGL. AIG uses PwC as its corporate-wide auditing firm. 8 Separate Account Financial Statements The statement of net assets as of December 31, 2006 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, 2006 of the Separate Account, appearing herein, have been audited by PwC, an 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, 2006 and 2005 and the related statements of income, shareholder's equity, comprehensive income and cash flows for the three years ended December 31, 2006, appearing herein, have been audited by PwC, an 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 as bearing on the ability of AGL to meet its obligations under the Policies. I. Separate Account VL-R Financial Statements Page - --------------------------------------------- --------- Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.................................................... VL-R - 1 Statement of Net Assets as of December 31, 2006...................... VL-R - 2 Statement of Operations for the year ended December 31, 2006......... VL-R - 4 Statement of Changes in Net Assets for the years ended December 31, 2006 and 2005...................................................... VL-R - 6 Notes to Financial Statements........................................ VL-R - 24 II. AGL Consolidated Financial Statements Page - ----------------------------------------- --------- Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.................................................... F - 1 Consolidated Balance Sheets as of December 31, 2006 and 2005......... F - 2 Consolidated Statements of Income for the years ended December 31, 2006, 2005 and 2004 (restated)..................................... F - 4 Consolidated Statements of Shareholder's Equity for the years ended December 31, 2006, 2005 and 2004 (restated)........................ F - 5 Consolidated Statements of Comprehensive Income for the years ended December 31, 2006, 2005 and 2004 (restated)........................ F - 6 Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004 (restated)........................ F - 7 Notes to Consolidated Financial Statements........................... F - 9 9 [logo of AIG American General] Variable Universal Life Insurance Separate Account VL-R 2006 Annual Report December 31, 2006 American General Life Insurance Company A member company of American International Group, Inc. [LETTERHEAD] PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP 1201 Louisiana Suite 2900 Houston, TX 77002-5678 Telephone (713) 356-4000 Facsimile (713) 356-4717 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, 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 of American General Life Insurance Company Separate Account VL-R (the "Separate Account") listed in Note A at December 31, 2006, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the five 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, 2006 by correspondence with the investment companies, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP April 6, 2007 VL-R - 1 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF NET ASSETS December 31, 2006
Investment Due from (to) American securities - at General Life Insurance Divisions fair value Company Net Assets - ------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Core Equity Fund - Series I $13,342,365 $(1) $13,342,364 AIM V.I. International Growth Fund - Series I 11,904,546 -- 11,904,546 AIM V.I. Premier Equity Fund - Series I -- -- -- Alger American Leveraged AllCap Portfolio - Class O Shares 2,286,824 1 2,286,825 Alger American MidCap Growth Portfolio - Class O Shares 1,869,371 1 1,869,372 American Century VP Value Fund - Class I 17,612,918 (2) 17,612,916 Credit Suisse Small Cap Core I Portfolio 1,830,404 -- 1,830,404 Dreyfus IP MidCap Stock Portfolio - Initial shares 5,228,009 (2) 5,228,007 Dreyfus VIF Developing Leaders Portfolio - Initial shares 11,745,504 1 11,745,505 Dreyfus VIF Quality Bond Portfolio - Initial shares 8,682,661 -- 8,682,661 DWS Equity 500 Index Fund VIP - Class A -- -- -- Fidelity VIP Asset Manager Portfolio - Service Class 2 5,659,244 (1) 5,659,243 Fidelity VIP Contrafund Portfolio - Service Class 2 32,001,369 -- 32,001,369 Fidelity VIP Equity-Income Portfolio - Service Class 2 21,085,399 -- 21,085,399 Fidelity VIP Freedom 2020 Portfolio - Service Class 2 10,491 1 10,492 Fidelity VIP Freedom 2025 Portfolio - Service Class 2 54,891 -- 54,891 Fidelity VIP Freedom 2030 Portfolio - Service Class 2 64,516 -- 64,516 Fidelity VIP Growth Portfolio - Service Class 2 13,810,806 1 13,810,807 Fidelity VIP Mid Cap Portfolio - Service Class 2 6,384,993 -- 6,384,993 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 8,478,085 (1) 8,478,084 Franklin Templeton - Franklin Small-Mid Cap Growth Securities Fund - Class 2 108,582 -- 108,582 Franklin Templeton - Franklin U.S. Government Fund - Class 2 9,397,224 1 9,397,225 Franklin Templeton - Mutual Shares Securities Fund - Class 2 16,532,351 (1) 16,532,350 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 13,623,735 (2) 13,623,733 Goldman Sachs Capital Growth Fund 7,172,977 -- 7,172,977 Janus Aspen Series International Growth Portfolio - Service Shares 11,982,836 (1) 11,982,835 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 3,385,583 2 3,385,585 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 4,430,625 (1) 4,430,624 JPMorgan Mid Cap Value Portfolio 3,498,962 (1) 3,498,961 JPMorgan Small Company Portfolio 2,730,571 -- 2,730,571 MFS VIT Capital Opportunities Series - Initial Class 4,520,899 (1) 4,520,898 MFS VIT Emerging Growth Series - Initial Class 12,087,435 (1) 12,087,434 MFS VIT New Discovery Series - Initial Class 4,151,964 (2) 4,151,962 MFS VIT Research Series - Initial Class 2,381,244 -- 2,381,244 MFS VIT Total Return Series - Initial Class 775,099 -- 775,099 Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I 4,591,606 -- 4,591,606 Neuberger Berman AMT Partners Portfolio - Class I 111,195 -- 111,195 Oppenheimer Balanced Fund/VA - Non-Service Shares 1,365,870 (4) 1,365,866 Oppenheimer Global Securities Fund/VA - Non-Service Shares 4,043,502 (3) 4,043,499 Oppenheimer High Income Fund/VA - Non-Service Shares 110,446 -- 110,446 PIMCO VIT CommodityRealReturn Strategy Portfolio - Administrative Class 255,133 (1) 255,132 PIMCO VIT Real Return Portfolio - Administrative Class 11,744,030 2 11,744,032 PIMCO VIT Short-Term Portfolio - Administrative Class 4,984,783 (4) 4,984,779 PIMCO VIT Total Return Portfolio - Administrative Class 22,661,080 (2) 22,661,078 Pioneer Fund VCT Portfolio - Class I 3,299,217 (1) 3,299,216 Pioneer Growth Opportunities VCT Portfolio - Class I 4,992,391 1 4,992,392 Pioneer Mid Cap Value VCT Portfolio - Class I 75,605 -- 75,605 Putnam VT Diversified Income Fund - Class IB 11,517,002 (2) 11,517,000 Putnam VT Growth and Income Fund - Class IB 21,393,752 (2) 21,393,750 Putnam VT International Growth and Income Fund - Class IB 8,841,468 -- 8,841,468 Putnam VT Small Cap Value Fund - Class IB 416,127 -- 416,127 Putnam VT Vista Fund - Class IB 176,650 -- 176,650 Putnam VT Voyager Fund - Class IB 421,428 -- 421,428
See accompanying notes VL-R - 2 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF NET ASSETS - CONTINUED December 31, 2006
Investment Due from (to) American securities - at General Life Insurance Divisions fair value Company Net Assets - ------------------------------------------------------------------------------------------------------- SunAmerica - Aggressive Growth Portfolio - Class 1 $ 1,130,347 $-- $ 1,130,347 SunAmerica - SunAmerica Balanced Portfolio - Class 1 1,226,451 (1) 1,226,450 UIF Equity Growth Portfolio - Class I 4,054,191 (1) 4,054,190 UIF High Yield Portfolio - Class I 1,465,250 (2) 1,465,248 VALIC Company I - International Equities Fund 2,742,348 (8) 2,742,340 VALIC Company I - Mid Cap Index Fund 17,663,091 (1) 17,663,090 VALIC Company I - Money Market I Fund 30,597,846 -- 30,597,846 VALIC Company I - Nasdaq-100 Index Fund 4,186,473 1 4,186,474 VALIC Company I - Science & Technology Fund 1,228,492 1 1,228,493 VALIC Company I - Small Cap Index Fund 6,676,702 -- 6,676,702 VALIC Company I - Stock Index Fund 35,624,313 (1) 35,624,312 Van Kampen LIT Government Portfolio - Class I 135,776 -- 135,776 Van Kampen LIT Growth and Income Portfolio - Class I 12,098,136 -- 12,098,136 Van Kampen LIT Strategic Growth Portfolio - Class I 57,242 -- 57,242 Vanguard VIF High Yield Bond Portfolio 5,181,038 (1) 5,181,037 Vanguard VIF REIT Index Portfolio 17,122,271 -- 17,122,271
See accompanying notes VL-R - 3 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF OPERATIONS For the Year Ended December 31, 2006
A B A+B=C D E F C+D+E+F Net change Increase Mortality and in unrealized (decrease) in Dividends expense risk Net Capital gain appreciation net assets from and investment Net realized distributions (depreciation) resulting mutual administrative income gain (loss) on from mutual of from Divisions funds charges (loss) investments funds investments operations - ---------------------------------------------------------------------------------------------------------------------------- AIM V.I. Core Equity Fund - Series I $ 71,044 $ (61,355) $ 9,689 $ 23,101 $ -- $ 1,035,524 $1,068,314 AIM V.I. International Growth Fund - Series I 113,939 (70,278) 43,661 834,180 -- 1,524,936 2,402,777 AIM V.I. Premier Equity Fund - Series I 135,522 (30,354) 105,168 1,344,830 -- (774,690) 675,308 Alger American Leveraged AllCap Portfolio - Class O Shares -- (11,375) (11,375) 29,495 -- 256,959 275,079 Alger American MidCap Growth Portfolio - Class O Shares -- (11,700) (11,700) 45,760 233,346 (116,555) 150,851 American Century VP Value Fund - Class I 212,660 (112,507) 100,153 465,305 1,341,492 777,086 2,684,036 Credit Suisse Small Cap Core I Portfolio -- (12,061) (12,061) 38,702 -- 12,446 39,087 Dreyfus IP MidCap Stock Portfolio - Initial shares 18,430 (34,748) (16,318) 76,012 785,785 (516,371) 329,108 Dreyfus VIF Developing Leaders Portfolio - Initial shares 47,323 (82,945) (35,622) 198,431 978,648 (834,177) 307,280 Dreyfus VIF Quality Bond Portfolio - Initial shares 383,019 (59,610) 323,409 (27,971) -- (6,009) 289,429 DWS Equity 500 Index Fund VIP - Class A -- -- -- -- -- -- -- Fidelity VIP Asset Manager Portfolio - Service Class 2 131,826 (38,247) 93,579 87,138 -- 161,458 342,175 Fidelity VIP Contrafund Portfolio - Service Class 2 287,905 (192,377) 95,528 1,566,138 2,505,870 (1,339,399) 2,828,137 Fidelity VIP Equity-Income Portfolio - Service Class 2 557,250 (128,654) 428,596 652,056 2,313,819 (88,746) 3,305,725 Fidelity VIP Freedom 2020 Portfolio - Service Class 2 140 (27) 113 18 93 521 745 Fidelity VIP Freedom 2025 Portfolio - Service Class 2 788 (79) 709 53 744 518 2,024 Fidelity VIP Freedom 2030 Portfolio - Service Class 2 844 (70) 774 199 661 222 1,856 Fidelity VIP Growth Portfolio - Service Class 2 20,635 (91,482) (70,847) 204,881 -- 630,876 764,910 Fidelity VIP Mid Cap Portfolio - Service Class 2 9,887 (42,424) (32,537) 294,963 659,262 (375,386) 546,302 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 35,558 (40,562) (5,004) 111,683 198,975 578,082 883,736 Franklin Templeton - Franklin Small-Mid Cap Growth Securities Fund - Class 2 -- (804) (804) 6,506 -- 3,158 8,860 Franklin Templeton - Franklin U.S. Government Fund - Class 2 409,315 (75,338) 333,977 (224,502) -- 190,212 299,687 Franklin Templeton - Mutual Shares Securities Fund - Class 2 169,027 (91,100) 77,927 335,389 430,467 1,310,423 2,154,206 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 155,732 (87,155) 68,577 763,949 -- 1,507,480 2,340,006 Goldman Sachs Capital Growth Fund 8,848 (38,903) (30,055) 436,754 -- 251,412 658,111 Janus Aspen Series International Growth Portfolio - Service Shares 159,742 (54,587) 105,155 688,113 -- 2,171,821 2,965,089 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares -- (21,547) (21,547) 259,677 -- 128,325 366,455 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 66,179 (28,331) 37,848 137,455 -- 483,941 659,244 JPMorgan Mid Cap Value Portfolio 23,185 (24,827) (1,642) 201,881 93,681 255,664 549,584 JPMorgan Small Company Portfolio -- (15,814) (15,814) 56,457 58,942 209,632 309,217 MFS VIT Capital Opportunities Series - Initial Class 19,178 (29,504) (10,326) 88,619 -- 447,816 526,109 MFS VIT Emerging Growth Series - Initial Class -- (87,148) (87,148) 319,599 -- 579,361 811,812 MFS VIT New Discovery Series - Initial Class -- (27,484) (27,484) 116,523 69,343 305,617 463,999 MFS VIT Research Series - Initial Class 10,484 (15,101) (4,617) 59,542 -- 154,953 209,878 MFS VIT Total Return Series - Initial Class 19,291 (5,941) 13,350 11,625 25,854 29,002 79,831 Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I -- (28,615) (28,615) 176,053 -- 389,383 536,821 Neuberger Berman AMT Partners Portfolio - Class I 779 (812) (33) 5,175 12,005 (5,263) 11,884 Oppenheimer Balanced Fund/VA - Non-Service Shares 21,624 (7,674) 13,950 (199) 47,536 55,219 116,506 Oppenheimer Global Securities Fund/ VA - Non-Service Shares 27,561 (21,278) 6,283 131,058 143,963 239,263 520,567 Oppenheimer High Income Fund/VA - Non-Service Shares 7,928 (798) 7,130 290 -- 1,415 8,835 PIMCO VIT CommodityRealReturn Strategy Portfolio - Administrative Class 7,451 (890) 6,561 (143) 1,003 (16,727) (9,306) PIMCO VIT Real Return Portfolio - Administrative Class 523,982 (85,397) 438,585 9,390 313,163 (741,458) 19,680
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, 2006
A B A+B=C D E F C+D+E+F Net change Increase Mortality and in unrealized (decrease) in expense risk Capital gain appreciation net assets Dividends and Net Net realized distributions (depreciation) resulting from mutual administrative investment gain (loss) on from mutual of from Divisions funds charges income (loss) investments funds investments operations - --------------------------------------------------------------------------------------------------------------------------------- PIMCO VIT Short-Term Portfolio - Administrative Class $ 209,350 $ (33,585) $ 175,765 $ (4,282) $ -- $ (784) $ 170,699 PIMCO VIT Total Return Portfolio - Administrative Class 827,282 (130,445) 696,837 (380,288) 119,901 140,867 577,317 Pioneer Fund VCT Portfolio - Class I 43,052 (23,311) 19,741 66,362 -- 384,974 471,077 Pioneer Growth Opportunities VCT Portfolio - Class I -- (36,577) (36,577) 79,869 -- 189,546 232,838 Pioneer Mid Cap Value VCT Portfolio - Class I 15 (94) (79) (3) 373 2,601 2,892 Putnam VT Diversified Income Fund - Class IB 509,849 (46,223) 463,626 33,585 -- 68,663 565,874 Putnam VT Growth and Income Fund - Class IB 301,826 (116,303) 185,523 575,010 470,152 1,620,179 2,850,864 Putnam VT International Growth and Income Fund - Class IB 74,730 (48,355) 26,375 360,192 -- 1,246,217 1,632,784 Putnam VT Small Cap Value Fund - Class IB 1,285 (2,972) (1,687) 27,091 39,335 (3,385) 61,354 Putnam VT Vista Fund - Class IB -- (793) (793) 1,593 -- 4,353 5,153 Putnam VT Voyager Fund - Class IB 433 (2,913) (2,480) 1,614 -- 18,494 17,628 SunAmerica - Aggressive Growth Portfolio - Class 1 1,098 (7,282) (6,184) 51,285 -- 79,785 124,886 SunAmerica - SunAmerica Balanced Portfolio - Class 1 31,488 (7,534) 23,954 13,228 -- 70,343 107,525 UIF Equity Growth Portfolio - Class I -- (29,592) (29,592) 82,391 -- 77,386 130,185 UIF High Yield Portfolio - Class I 132,730 (11,568) 121,162 (30,482) -- 34,803 125,483 VALIC Company I - International Equities Fund 39,995 (17,898) 22,097 237,928 151,425 105,700 517,150 VALIC Company I - Mid Cap Index Fund 83,758 (121,436) (37,678) 791,315 1,166,529 (412,652) 1,507,514 VALIC Company I - Money Market I Fund 1,544,069 (237,806) 1,306,263 -- -- -- 1,306,263 VALIC Company I - Nasdaq-100 Index Fund 3,186 (29,185) (25,999) 338,983 -- (113,006) 199,978 VALIC Company I - Science & Technology Fund -- (8,670) (8,670) 62,771 -- 663 54,764 VALIC Company I - Small Cap Index Fund 23,429 (42,826) (19,397) 502,152 314,368 178,372 975,495 VALIC Company I - Stock Index Fund 290,415 (250,176) 40,239 2,049,336 1,124,134 1,619,156 4,832,865 Van Kampen LIT Government Portfolio - Class I 6,936 (1,103) 5,833 (1,883) -- (464) 3,486 Van Kampen LIT Growth and Income Portfolio - Class I 110,749 (71,802) 38,947 520,871 613,913 360,307 1,534,038 Van Kampen LIT Strategic Growth Portfolio - Class I -- (421) (421) 471 -- 1,308 1,358 Vanguard VIF High Yield Bond Portfolio 384,088 (36,393) 347,695 (72,435) -- 108,539 383,799 Vanguard VIF REIT Index Portfolio 281,108 (98,945) 182,163 908,031 890,176 2,179,220 4,159,590
See accompanying notes VL-R - 5 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS For the Years Ended December 31, 2006 and 2005
Divisions -------------------------------------------------------------- AIM V.I. Alger American AIM V.I. Core International AIM V.I. Premier Leveraged AllCap Equity Fund - Growth Fund Equity Fund - Portfolio -Class O Series I - Series I Series I Shares ------------- ------------- ---------------- ------------------ For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ 9,689 $ 43,661 $ 105,168 $ (11,375) Net realized gain (loss) on investments 23,101 834,180 1,344,830 29,495 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 1,035,524 1,524,936 (774,690) 256,959 ----------- ----------- ------------ ---------- Increase (decrease) in net assets resulting from operations 1,068,314 2,402,777 675,308 275,079 ----------- ----------- ------------ ---------- PRINCIPAL TRANSACTIONS: Net premiums 1,320,405 1,531,993 651,935 530,629 Net transfers from (to) other Divisions or fixed rate option 12,882,196 1,945,861 (13,314,453) 616,919 Internal rollovers 190 2,416 -- 2,615 Cost of insurance and other charges (956,724) (819,984) (477,989) (145,783) Administrative charges (53,941) (66,896) (25,861) (26,555) Policy loans (217,297) (217,456) (58,474) (12,093) Death benefits (94,289) (109,287) (1,256) -- Withdrawals (606,490) (596,985) (276,220) (6,097) ----------- ----------- ------------ ---------- Increase (decrease) in net assets resulting from principal transactions 12,274,050 1,669,662 (13,502,318) 959,635 ----------- ----------- ------------ ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 13,342,364 4,072,439 (12,827,010) 1,234,714 NET ASSETS: Beginning of year -- 7,832,107 12,827,010 1,052,111 ----------- ----------- ------------ ---------- End of year $13,342,364 $11,904,546 $ -- $2,286,825 =========== =========== ============ ========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ -- $ (492) $ 16,824 $ (5,297) Net realized gain (loss) on investments -- 654,292 (557,531) 11,644 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments -- 435,814 1,124,376 104,855 ----------- ----------- ------------ ---------- Increase (decrease) in net assets resulting from operations -- 1,089,614 583,669 111,202 ----------- ----------- ------------ ---------- PRINCIPAL TRANSACTIONS: Net premiums -- 1,183,506 2,235,554 258,009 Net transfers from (to) other Divisions or fixed rate option -- (778,668) (810,424) 272,618 Internal rollovers -- 374 3,625 238 Cost of insurance and other charges -- (661,674) (1,498,715) (96,966) Administrative charges -- (48,372) (88,424) (11,836) Policy loans -- (127,316) (115,095) (2,006) Death benefits -- (111,066) (42,057) -- Withdrawals -- (277,444) (593,378) (24,484) ----------- ----------- ------------ ---------- Increase (decrease) in net assets resulting from principal transactions -- (820,660) (908,914) 395,573 ----------- ----------- ------------ ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS -- 268,954 (325,245) 506,775 NET ASSETS: Beginning of year -- 7,563,153 13,152,255 545,336 ----------- ----------- ------------ ---------- End of year $ -- $ 7,832,107 $ 12,827,010 $1,052,111 =========== =========== ============ ==========
See accompanying notes VL-R - 6 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions ------------------------------------------------------------------------ Alger American Dreyfus IP MidCap Growth American Century Credit Suisse MidCap Stock Portfolio - Class O VP Value Fund - Small Cap Core I Portfolio - Initial Shares Class I Portfolio shares ------------------- ---------------- ---------------- ------------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ (11,700) $ 100,153 $ (12,061) $ (16,318) Net realized gain (loss) on investments 45,760 465,305 38,702 76,012 Capital gain distributions from mutual funds 233,346 1,341,492 -- 785,785 Net change in unrealized appreciation (depreciation) of investments (116,555) 777,086 12,446 (516,371) ---------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from operations 150,851 2,684,036 39,087 329,108 ---------- ----------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 424,590 2,696,932 332,665 928,653 Net transfers from (to) other Divisions or fixed rate option 92,821 (315,229) 226,847 23,078 Internal rollovers 1,861 3,970 -- 1,603 Cost of insurance and other charges (196,063) (1,498,073) (200,231) (495,316) Administrative charges (21,727) (132,163) (16,371) (45,433) Policy loans (27,097) (100,103) (16,342) (25,963) Death benefits -- (48,479) (2) (1,952) Withdrawals (24,696) (630,156) (50,269) (106,741) ---------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions 249,689 (23,301) 276,297 277,929 ---------- ----------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 400,540 2,660,735 315,384 607,037 NET ASSETS: Beginning of year 1,468,832 14,952,181 1,515,020 4,620,970 ---------- ----------- ---------- ---------- End of year $1,869,372 $17,612,916 $1,830,404 $5,228,007 ========== =========== ========== ========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ (8,405) $ 19,091 $ (11,549) $ (29,791) Net realized gain (loss) on investments 18,798 996,629 175,481 229,730 Capital gain distributions from mutual funds 43,700 1,369,370 -- 17,580 Net change in unrealized appreciation (depreciation) of investments 63,287 (1,811,913) (228,024) 156,882 ---------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from operations 117,380 573,177 (64,092) 374,401 ---------- ----------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 410,486 2,460,436 404,228 973,084 Net transfers from (to) other Divisions or fixed rate option 146,854 127,934 (421,651) 129,977 Internal rollovers 378 1,431 729 420 Cost of insurance and other charges (170,632) (1,398,994) (206,072) (526,854) Administrative charges (20,444) (118,425) (19,048) (46,131) Policy loans 1,738 (69,003) (8,049) (44,088) Death benefits -- (549,247) (1,085) (1,389) Withdrawals (10,163) (549,781) (63,733) (85,220) ---------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions 358,217 (95,649) (314,681) 399,799 ---------- ----------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 475,597 477,528 (378,773) 774,200 NET ASSETS: Beginning of year 993,235 14,474,653 1,893,793 3,846,770 ---------- ----------- ---------- ---------- End of year $1,468,832 $14,952,181 $1,515,020 $4,620,970 ========== =========== ========== ==========
See accompanying notes VL-R - 7 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions -------------------------------------------------------- Dreyfus VIF Dreyfus VIF Developing Leaders Quality Bond DWS Equity 500 Portfolio - Initial Portfolio - Initial Index Fund VIP - shares shares Class A ------------------- ------------------- ---------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ (35,622) $ 323,409 $ -- Net realized gain (loss) on investments 198,431 (27,971) -- Capital gain distributions from mutual funds 978,648 -- -- Net change in unrealized appreciation (depreciation) of investments (834,177) (6,009) -- ----------- ---------- -------- Increase (decrease) in net assets resulting from operations 307,280 289,429 -- ----------- ---------- -------- PRINCIPAL TRANSACTIONS: Net premiums 1,969,882 1,449,497 -- Net transfers from (to) other Divisions or fixed rate option (387,563) 15,458 -- Internal rollovers 10,323 9,234 -- Cost of insurance and other charges (1,170,266) (851,992) -- Administrative charges (87,392) (71,782) -- Policy loans (128,184) (52,220) -- Death benefits (49,652) (1,602) -- Withdrawals (588,301) (197,858) -- ----------- ---------- -------- Increase (decrease) in net assets resulting from principal transactions (431,153) 298,735 -- ----------- ---------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS (123,873) 588,164 -- NET ASSETS: Beginning of year 11,869,378 8,094,497 -- ----------- ---------- -------- End of year $11,745,505 $8,682,661 $ -- =========== ========== ======== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ (80,352) $ 234,531 $ 175 Net realized gain (loss) on investments 290,620 (2,766) 1,229 Capital gain distributions from mutual funds -- -- -- Net change in unrealized appreciation (depreciation) of investments 366,961 (87,917) (1,251) ----------- ---------- -------- Increase (decrease) in net assets resulting from operations 577,229 143,848 153 ----------- ---------- -------- PRINCIPAL TRANSACTIONS: Net premiums 2,191,420 1,331,559 1,301 Net transfers from (to) other Divisions or fixed rate option (982,230) (41,809) (78) Internal rollovers 6,331 1,222 -- Cost of insurance and other charges (1,242,885) (864,751) (1,538) Administrative charges (95,051) (63,234) -- Policy loans (74,740) (24,444) -- Death benefits (65,697) (62,982) -- Withdrawals (365,104) (390,022) (18,687) ----------- ---------- -------- Increase (decrease) in net assets resulting from principal transactions (627,956) (114,461) (19,002) ----------- ---------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS (50,727) 29,387 (18,849) NET ASSETS: Beginning of year 11,920,105 8,065,110 18,849 ----------- ---------- -------- End of year $11,869,378 $8,094,497 $ -- =========== ========== ========
------------ Fidelity VIP Asset Manager Portfolio - Service Class 2 ------------ For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ 93,579 Net realized gain (loss) on investments 87,138 Capital gain distributions from mutual funds -- Net change in unrealized appreciation (depreciation) of investments 161,458 ---------- Increase (decrease) in net assets resulting from operations 342,175 ---------- PRINCIPAL TRANSACTIONS: Net premiums 780,955 Net transfers from (to) other Divisions or fixed rate option 123,800 Internal rollovers 13,162 Cost of insurance and other charges (511,833) Administrative charges (39,787) Policy loans (57,185) Death benefits (2,268) Withdrawals (181,052) ---------- Increase (decrease) in net assets resulting from principal transactions 125,792 ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 467,967 NET ASSETS: Beginning of year 5,191,276 ---------- End of year $5,659,243 ========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ 85,707 Net realized gain (loss) on investments 50,901 Capital gain distributions from mutual funds 1,654 Net change in unrealized appreciation (depreciation) of investments 13,179 ---------- Increase (decrease) in net assets resulting from operations 151,441 ---------- PRINCIPAL TRANSACTIONS: Net premiums 950,956 Net transfers from (to) other Divisions or fixed rate option (44,224) Internal rollovers 13,267 Cost of insurance and other charges (532,397) Administrative charges (47,340) Policy loans (42,449) Death benefits (5,109) Withdrawals (93,365) ---------- Increase (decrease) in net assets resulting from principal transactions 199,339 ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 350,780 NET ASSETS: Beginning of year 4,840,496 ---------- End of year $5,191,276 ==========
See accompanying notes VL-R - 8 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions ----------------------------------------------------------- Fidelity VIP Fidelity VIP Fidelity VIP Contrafund Equity-Income Freedom 2020 Portfolio - Service Portfolio - Service Portfolio - Service Class 2 Class 2 Class 2 ------------------- ------------------- ------------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ 95,528 $ 428,596 $ 113 Net realized gain (loss) on investments 1,566,138 652,056 18 Capital gain distributions from mutual funds 2,505,870 2,313,819 93 Net change in unrealized appreciation (depreciation) of investments (1,339,399) (88,746) 521 ----------- ----------- ------- Increase (decrease) in net assets resulting from operations 2,828,137 3,305,725 745 ----------- ----------- ------- PRINCIPAL TRANSACTIONS: Net premiums 4,923,210 3,099,899 2,737 Net transfers from (to) other Divisions or fixed rate option 2,435,931 641,299 8,494 Internal rollovers 62,573 18,534 -- Cost of insurance and other charges (2,112,995) (1,683,145) (1,347) Administrative charges (237,749) (155,094) (137) Policy loans (394,731) (348,669) -- Death benefits (147) (21,750) -- Withdrawals (881,154) (996,983) -- ----------- ----------- ------- Increase (decrease) in net assets resulting from principal transactions 3,794,938 554,091 9,747 ----------- ----------- ------- TOTAL INCREASE (DECREASE) IN NET ASSETS 6,623,075 3,859,816 10,492 NET ASSETS: Beginning of year 25,378,294 17,225,583 -- ----------- ----------- ------- End of year $32,001,369 $21,085,399 $10,492 =========== =========== ======= For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ (121,727) $ 123,740 $ -- Net realized gain (loss) on investments 1,411,273 658,380 -- Capital gain distributions from mutual funds 3,507 577,829 -- Net change in unrealized appreciation (depreciation) of investments 1,931,073 (639,565) -- ----------- ----------- ------- Increase (decrease) in net assets resulting from operations 3,224,126 720,384 -- ----------- ----------- ------- PRINCIPAL TRANSACTIONS: Net premiums 4,561,396 3,326,778 -- Net transfers from (to) other Divisions or fixed rate option 3,526,648 (1,458,726) -- Internal rollovers 27,494 13,926 -- Cost of insurance and other charges (1,757,809) (1,647,752) -- Administrative charges (218,613) (161,430) -- Policy loans (16,997) (126,201) -- Death benefits (23,657) (174,144) -- Withdrawals (564,870) (593,421) -- ----------- ----------- ------- Increase (decrease) in net assets resulting from principal transactions 5,533,592 (820,970) -- ----------- ----------- ------- TOTAL INCREASE (DECREASE) IN NET ASSETS 8,757,718 (100,586) -- NET ASSETS: Beginning of year 16,620,576 17,326,169 -- ----------- ----------- ------- End of year $25,378,294 $17,225,583 $ -- =========== =========== =======
------------------- Fidelity VIP Freedom 2025 Portfolio - Service Class 2 ------------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ 709 Net realized gain (loss) on investments 53 Capital gain distributions from mutual funds 744 Net change in unrealized appreciation (depreciation) of investments 518 ------- Increase (decrease) in net assets resulting from operations 2,024 ------- PRINCIPAL TRANSACTIONS: Net premiums 12,431 Net transfers from (to) other Divisions or fixed rate option 43,130 Internal rollovers 398 Cost of insurance and other charges (2,470) Administrative charges (622) Policy loans -- Death benefits -- Withdrawals -- ------- Increase (decrease) in net assets resulting from principal transactions 52,867 ------- TOTAL INCREASE (DECREASE) IN NET ASSETS 54,891 NET ASSETS: Beginning of year -- ------- End of year $54,891 ======= For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ -- Net realized gain (loss) on investments -- Capital gain distributions from mutual funds -- Net change in unrealized appreciation (depreciation) of investments -- ------- Increase (decrease) in net assets resulting from operations -- ------- PRINCIPAL TRANSACTIONS: Net premiums -- Net transfers from (to) other Divisions or fixed rate option -- Internal rollovers -- Cost of insurance and other charges -- Administrative charges -- Policy loans -- Death benefits -- Withdrawals -- ------- Increase (decrease) in net assets resulting from principal transactions -- ------- TOTAL INCREASE (DECREASE) IN NET ASSETS -- NET ASSETS: Beginning of year -- ------- End of year $ -- =======
See accompanying notes VL-R - 9 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions --------------------------------------------------------------------------- Fidelity VIP Franklin Templeton - Freedom 2030 Fidelity VIP Fidelity VIP Mid Franklin Small Cap Portfolio - Service Growth Portfolio - Cap Portfolio - Value Securities Class 2 Service Class 2 Service Class 2 Fund - Class 2 ------------------- ------------------ ---------------- -------------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ 774 $ (70,847) $ (32,537) $ (5,004) Net realized gain (loss) on investments 199 204,881 294,963 111,683 Capital gain distributions from mutual funds 661 -- 659,262 198,975 Net change in unrealized appreciation (depreciation) of investments 222 630,876 (375,386) 578,082 ------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from operations 1,856 764,910 546,302 883,736 ------- ----------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 14,163 2,823,425 1,813,879 1,387,979 Net transfers from (to) other Divisions or fixed rate option 53,451 (65,672) (167,074) 2,276,973 Internal rollovers -- 45,852 6,514 19,070 Cost of insurance and other charges (4,256) (1,458,192) (551,666) (360,580) Administrative charges (698) (143,780) (94,728) (72,730) Policy loans -- (130,916) (36,108) (19,981) Death benefits -- (2,075) (34,180) (150) Withdrawals -- (356,477) (115,302) (98,655) ------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions 62,660 712,165 821,335 3,131,926 ------- ----------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 64,516 1,477,075 1,367,637 4,015,662 NET ASSETS: Beginning of year -- 12,333,732 5,017,356 4,462,422 ------- ----------- ---------- ---------- End of year $64,516 $13,810,807 $6,384,993 $8,478,084 ======= =========== ========== ========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ -- $ (48,195) $ (21,364) $ 7,388 Net realized gain (loss) on investments -- 105,974 209,437 172,698 Capital gain distributions from mutual funds -- -- 22,730 24,208 Net change in unrealized appreciation (depreciation) of investments -- 459,808 421,937 137,721 ------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from operations -- 517,587 632,740 342,015 ------- ----------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums -- 2,893,700 999,954 861,667 Net transfers from (to) other Divisions or fixed rate option -- (531,785) 2,773,447 2,573,741 Internal rollovers -- 29,543 4,046 7,008 Cost of insurance and other charges -- (1,454,858) (272,523) (235,830) Administrative charges -- (142,954) (52,402) (43,216) Policy loans -- 246 (16,411) (7,493) Death benefits -- (40,342) (232) -- Withdrawals -- (427,987) (170,063) (210,695) ------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions -- 325,563 3,265,816 2,945,182 ------- ----------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS -- 843,150 3,898,556 3,287,197 NET ASSETS: Beginning of year -- 11,490,582 1,118,800 1,175,225 ------- ----------- ---------- ---------- End of year $ -- $12,333,732 $5,017,356 $4,462,422 ======= =========== ========== ==========
See accompanying notes VL-R - 10 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions -------------------------------------------------------------------- Franklin Templeton Franklin Franklin Franklin - Franklin Small- Templeton - Templeton - Templeton - Mid Cap Growth Franklin U.S. Mutual Shares Templeton Foreign Securities Fund - Government Securities Fund - Securities Fund - Class 2 Fund - Class 2 Class 2 Class 2 ------------------ -------------- ----------------- ----------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ (804) $ 333,977 $ 77,927 $ 68,577 Net realized gain (loss) on investments 6,506 (224,502) 335,389 763,949 Capital gain distributions from mutual funds -- -- 430,467 -- Net change in unrealized appreciation (depreciation) of investments 3,158 190,212 1,310,423 1,507,480 -------- ----------- ----------- ----------- Increase (decrease) in net assets resulting from operations 8,860 299,687 2,154,206 2,340,006 -------- ----------- ----------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 1,443 763,320 1,545,202 929,895 Net transfers from (to) other Divisions or fixed rate option 3,860 (1,008,803) 4,614,713 233,690 Internal rollovers -- 1,038 1,845 13,144 Cost of insurance and other charges (2,602) (1,044,809) (803,603) (854,453) Administrative charges -- (37,501) (71,880) (44,477) Policy loans (431) (11,394) (17,718) (58,675) Death benefits -- (1,616) (2,661) (2,843) Withdrawals (35,641) (2,936,287) (263,351) (302,716) -------- ----------- ----------- ----------- Increase (decrease) in net assets resulting from principal transactions (33,371) (4,276,052) 5,002,547 (86,435) -------- ----------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS (24,511) (3,976,365) 7,156,753 2,253,571 NET ASSETS: Beginning of year 133,093 13,373,590 9,375,597 11,370,162 -------- ----------- ----------- ----------- End of year $108,582 $ 9,397,225 $16,532,350 $13,623,733 ======== =========== =========== =========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ (948) $ 497,209 $ 17,206 $ 48,568 Net realized gain (loss) on investments 5,021 (166,043) 287,343 1,007,998 Capital gain distributions from mutual funds -- -- 29,378 -- Net change in unrealized appreciation (depreciation) of investments (2,476) (101,939) 502,245 (119,732) -------- ----------- ----------- ----------- Increase (decrease) in net assets resulting from operations 1,597 229,227 836,172 936,834 -------- ----------- ----------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 2,467 1,420,202 795,119 995,513 Net transfers from (to) other Divisions or fixed rate option (19,154) 1,559,827 791,478 (816,806) Internal rollovers -- 1,141 1,480 5,557 Cost of insurance and other charges (3,492) (1,043,709) (658,282) (747,421) Administrative charges -- (67,924) (36,414) (43,849) Policy loans 14 (2,004) (51,983) (10,786) Death benefits -- -- (1,036) (528) Withdrawals (5,715) (198,021) (25,552) (214,760) -------- ----------- ----------- ----------- Increase (decrease) in net assets resulting from principal transactions (25,880) 1,669,512 814,810 (833,080) -------- ----------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS (24,283) 1,898,739 1,650,982 103,754 NET ASSETS: Beginning of year 157,376 11,474,851 7,724,615 11,266,408 -------- ----------- ----------- ----------- End of year $133,093 $13,373,590 $ 9,375,597 $11,370,162 ======== =========== =========== ===========
See accompanying notes VL-R - 11 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions --------------------------------------------------------------------- Janus Aspen Series Janus Aspen Janus Aspen Goldman International Series Mid Cap Series Worldwide Sachs Capital Growth Portfolio - Growth Portfolio - Growth Portfolio - Growth Fund Service Shares Service Shares Service Shares ------------- ------------------ ------------------ ------------------ For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ (30,055) $ 105,155 $ (21,547) $ 37,848 Net realized gain (loss) on investments 436,754 688,113 259,677 137,455 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 251,412 2,171,821 128,325 483,941 ----------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from operations 658,111 2,965,089 366,455 659,244 ----------- ----------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums -- 1,159,684 572,813 722,944 Net transfers from (to) other Divisions or fixed rate option (1,476,643) 3,835,895 7,654 (201,972) Internal rollovers -- 3,541 8,440 4,876 Cost of insurance and other charges (387,609) (764,047) (335,512) (412,870) Administrative charges (223) (57,976) (28,857) (37,481) Policy loans (301) (63,516) (31,596) (62,349) Death benefits -- (145) -- (16,309) Withdrawals (6,220) (149,200) (133,652) (217,347) ----------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions (1,870,996) 3,964,236 59,290 (220,508) ----------- ----------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS (1,212,885) 6,929,325 425,745 438,736 NET ASSETS: Beginning of year 8,385,862 5,053,510 2,959,840 3,991,888 ----------- ----------- ---------- ---------- End of year $ 7,172,977 $11,982,835 $3,385,585 $4,430,624 =========== =========== ========== ========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ (27,283) $ 16,613 $ (18,171) $ 20,669 Net realized gain (loss) on investments 42,554 194,184 155,275 45,943 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 173,821 931,398 141,206 116,444 ----------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from operations 189,092 1,142,195 278,310 183,056 ----------- ----------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums -- 767,401 599,159 808,795 Net transfers from (to) other Divisions or fixed rate option (3,745) 443,444 (95,324) (414,321) Internal rollovers -- 429 998 113 Cost of insurance and other charges (487,695) (414,703) (337,320) (450,910) Administrative charges (254) (37,448) (29,512) (41,289) Policy loans (770) (45,570) (26,991) (15,340) Death benefits -- (27,549) (859) (41,202) Withdrawals (5,871) (55,587) (72,511) (56,087) ----------- ----------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions (498,335) 630,417 37,640 (210,241) ----------- ----------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS (309,243) 1,772,612 315,950 (27,185) NET ASSETS: Beginning of year 8,695,105 3,280,898 2,643,890 4,019,073 ----------- ----------- ---------- ---------- End of year $ 8,385,862 $ 5,053,510 $2,959,840 $3,991,888 =========== =========== ========== ==========
See accompanying notes VL-R - 12 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions ------------------------------------------------------------ MFS VIT Capital JPMorgan Mid JPMorgan Small Opportunities MFS VIT Emerging Cap Value Company Series - Initial Growth Series - Portfolio Portfolio Class Initial Class ------------ -------------- ---------------- ---------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ (1,642) $ (15,814) $ (10,326) $ (87,148) Net realized gain (loss) on investments 201,881 56,457 88,619 319,599 Capital gain distributions from mutual funds 93,681 58,942 -- -- Net change in unrealized appreciation (depreciation) of investments 255,664 209,632 447,816 579,361 ----------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from operations 549,584 309,217 526,109 811,812 ----------- ---------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 445,024 413,486 825,232 1,987,547 Net transfers from (to) other Divisions or fixed rate option (1,271,831) 332,503 (275,950) (752,983) Internal rollovers 3,174 3,038 42,045 34,328 Cost of insurance and other charges (103,499) (214,204) (518,563) (1,341,963) Administrative charges (22,428) (19,993) (42,869) (80,358) Policy loans (17,157) (25,021) (54,329) (187,732) Death benefits 81 (4) (2,276) (96,755) Withdrawals (108,604) (75,361) (177,009) (853,221) ----------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions (1,075,240) 414,444 (203,719) (1,291,137) ----------- ---------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS (525,656) 723,661 322,390 (479,325) NET ASSETS: Beginning of year 4,024,617 2,006,910 4,198,508 12,566,759 ----------- ---------- ---------- ----------- End of year $ 3,498,961 $2,730,571 $4,520,898 $12,087,434 =========== ========== ========== =========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ (17,579) $ (12,471) $ 2,387 $ (84,977) Net realized gain (loss) on investments 127,740 174,256 48,971 (166,785) Capital gain distributions from mutual funds 48,776 224,360 -- -- Net change in unrealized appreciation (depreciation) of investments 151,024 (351,009) (11,883) 1,097,176 ----------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from operations 309,961 35,136 39,475 845,414 ----------- ---------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 1,398,718 403,127 932,038 2,391,642 Net transfers from (to) other Divisions or fixed rate option 2,162,817 133,716 (164,810) (3,094,605) Internal rollovers 3,145 2,027 10,963 11,006 Cost of insurance and other charges (125,059) (185,057) (565,568) (1,434,224) Administrative charges (70,067) (18,817) (46,832) (92,031) Policy loans (7,165) (62,970) (60,052) (195,043) Death benefits -- (508) (1,523) (7,641) Withdrawals (157,382) (84,886) (162,933) (526,105) ----------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions 3,205,007 186,632 (58,717) (2,947,001) ----------- ---------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 3,514,968 221,768 (19,242) (2,101,587) NET ASSETS: Beginning of year 509,649 1,785,142 4,217,750 14,668,346 ----------- ---------- ---------- ----------- End of year $ 4,024,617 $2,006,910 $4,198,508 $12,566,759 =========== ========== ========== ===========
See accompanying notes VL-R - 13 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions ----------------------------------------------------------------------- Neuberger MFS VIT New MFS VIT MFS VIT Total Berman AMT Mid- Discovery Series - Research Series - Return Series - Cap Growth Initial Class Initial Class Initial Class Portfolio - Class I ------------------ ----------------- --------------- ------------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ (27,484) $ (4,617) $ 13,350 $ (28,615) Net realized gain (loss) on investments 116,523 59,542 11,625 176,053 Capital gain distributions from mutual funds 69,343 -- 25,854 -- Net change in unrealized appreciation (depreciation) of investments 305,617 154,953 29,002 389,383 ---------- ---------- --------- ---------- Increase (decrease) in net assets resulting from operations 463,999 209,878 79,831 536,821 ---------- ---------- --------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 689,882 441,240 10,697 728,925 Net transfers from (to) other Divisions or fixed rate option (26,023) (1,925) (1,385) 300,319 Internal rollovers 11,647 1,895 -- 37,607 Cost of insurance and other charges (508,787) (246,752) (42,538) (397,340) Administrative charges (34,172) (22,315) -- (37,627) Policy loans (40,268) (30,978) (7,202) (28,773) Death benefits (4) (3) -- (1,842) Withdrawals (113,603) (47,513) (84,421) (97,962) ---------- ---------- --------- ---------- Increase (decrease) in net assets resulting from principal transactions (21,328) 93,649 (124,849) 503,307 ---------- ---------- --------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 442,671 303,527 (45,018) 1,040,128 NET ASSETS: Beginning of year 3,709,291 2,077,717 820,117 3,551,478 ---------- ---------- --------- ---------- End of year $4,151,962 $2,381,244 $ 775,099 $4,591,606 ========== ========== ========= ========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ (23,805) $ (4,442) $ 11,796 $ (21,203) Net realized gain (loss) on investments 51,074 27,693 19,227 54,328 Capital gain distributions from mutual funds -- -- 35,945 -- Net change in unrealized appreciation (depreciation) of investments 136,775 110,300 (48,408) 367,089 ---------- ---------- --------- ---------- Increase (decrease) in net assets resulting from operations 164,044 133,551 18,560 400,214 ---------- ---------- --------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 774,724 437,282 20,560 825,349 Net transfers from (to) other Divisions or fixed rate option (62,450) 125,983 (97,689) 22,256 Internal rollovers 3,097 5,775 -- 11,930 Cost of insurance and other charges (476,648) (280,355) 7,733 (369,103) Administrative charges (37,543) (21,889) -- (41,047) Policy loans (28,181) (14,977) (1,228) (20,571) Death benefits (1,019) (31,179) -- (18,592) Withdrawals (79,535) (58,262) (40,753) (66,956) ---------- ---------- --------- ---------- Increase (decrease) in net assets resulting from principal transactions 92,445 162,378 (111,377) 343,266 ---------- ---------- --------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 256,489 295,929 (92,817) 743,480 NET ASSETS: Beginning of year 3,452,802 1,781,788 912,934 2,807,998 ---------- ---------- --------- ---------- End of year $3,709,291 $2,077,717 $ 820,117 $3,551,478 ========== ========== ========= ==========
See accompanying notes VL-R - 14 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions ------------------------------------------------------------------ Oppenheimer Oppenheimer Oppenheimer Neuberger Berman Balanced Global Securities High Income AMT Partners Fund/VA -Non- Fund/VA - Non- Fund/VA -Non- Portfolio - Class I Service Shares Service Shares Service Shares ------------------- -------------- ----------------- -------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ (33) $ 13,950 $ 6,283 $ 7,130 Net realized gain (loss) on investments 5,175 (199) 131,058 290 Capital gain distributions from mutual funds 12,005 47,536 143,963 -- Net change in unrealized appreciation (depreciation) of investments (5,263) 55,219 239,263 1,415 -------- ---------- ---------- -------- Increase (decrease) in net assets resulting from operations 11,884 116,506 520,567 8,835 -------- ---------- ---------- -------- PRINCIPAL TRANSACTIONS: Net premiums 1,480 312,959 933,531 4,297 Net transfers from (to) other Divisions or fixed rate option 2,288 208,785 655,581 32 Internal rollovers -- 3,148 3,958 -- Cost of insurance and other charges (3,285) (152,299) (379,298) (3,662) Administrative charges -- (15,881) (47,436) -- Policy loans (1,833) (6,912) (41,231) (1,833) Death benefits -- -- -- -- Withdrawals (10,133) (48,568) (42,931) (2,588) -------- ---------- ---------- -------- Increase (decrease) in net assets resulting from principal transactions (11,483) 301,232 1,082,174 (3,754) -------- ---------- ---------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS 401 417,738 1,602,741 5,081 NET ASSETS: Beginning of year 110,794 948,128 2,440,758 105,365 -------- ---------- ---------- -------- End of year $111,195 $1,365,866 $4,043,499 $110,446 ======== ========== ========== ======== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ (16) $ 6,133 $ 2,604 $ 5,432 Net realized gain (loss) on investments 25,275 15,116 50,058 (160) Capital gain distributions from mutual funds 18 24,155 -- -- Net change in unrealized appreciation (depreciation) of investments (10,112) (16,437) 230,580 (3,466) -------- ---------- ---------- -------- Increase (decrease) in net assets resulting from operations 15,165 28,967 283,242 1,806 -------- ---------- ---------- -------- PRINCIPAL TRANSACTIONS: Net premiums 1,001 252,321 589,574 4,142 Net transfers from (to) other Divisions or fixed rate option 2,457 179,811 786,680 12,897 Internal rollovers -- 350 5,682 -- Cost of insurance and other charges (2,608) (94,980) (236,212) (3,749) Administrative charges -- (12,637) (28,854) -- Policy loans (1,863) (63,217) 30,370 (1,368) Death benefits -- -- (14) -- Withdrawals (41,001) (2,539) (75,359) (8,526) -------- ---------- ---------- -------- Increase (decrease) in net assets resulting from principal transactions (42,014) 259,109 1,071,867 3,396 -------- ---------- ---------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS (26,849) 288,076 1,355,109 5,202 NET ASSETS: Beginning of year 137,643 660,052 1,085,649 100,163 -------- ---------- ---------- -------- End of year $110,794 $ 948,128 $2,440,758 $105,365 ======== ========== ========== ========
See accompanying notes VL-R - 15 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions ------------------------------------------------------------------------ PIMCO VIT PIMCO VIT PIMCO VIT Real Short-Term PIMCO VIT Total CommodityRealReturn Return Portfolio - Portfolio - Return Portfolio - Strategy Portfolio - Administrative Administrative Administrative Administrative Class Class Class Class -------------------- ------------------ -------------- ------------------ For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ 6,561 $ 438,585 $ 175,765 $ 696,837 Net realized gain (loss) on investments (143) 9,390 (4,282) (380,288) Capital gain distributions from mutual funds 1,003 313,163 -- 119,901 Net change in unrealized appreciation (depreciation) of investments (16,727) (741,458) (784) 140,867 -------- ----------- ----------- ----------- Increase (decrease) in net assets resulting from operations (9,306) 19,680 170,699 577,317 -------- ----------- ----------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 4,357 2,325,664 776,516 3,674,492 Net transfers from (to) other Divisions or fixed rate option 266,099 (837,509) 30,265 (3,145,448) Internal rollovers -- 2,625 3,158 12,412 Cost of insurance and other charges (5,113) (1,381,218) (534,511) (1,466,627) Administrative charges (228) (114,774) (38,393) (175,128) Policy loans -- (231,220) (118,749) (240,984) Death benefits -- (14,069) (2,098) (2,805) Withdrawals (677) (370,689) (156,789) (791,659) -------- ----------- ----------- ----------- Increase (decrease) in net assets resulting from principal transactions 264,438 (621,190) (40,601) (2,135,747) -------- ----------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 255,132 (601,510) 130,098 (1,558,430) NET ASSETS: Beginning of year -- 12,345,542 4,854,681 24,219,508 -------- ----------- ----------- ----------- End of year $255,132 $11,744,032 $ 4,984,779 $22,661,078 ======== =========== =========== =========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ -- $ 250,042 $ 102,437 $ 590,036 Net realized gain (loss) on investments -- 381,521 (2,282) 173,741 Capital gain distributions from mutual funds -- 134,036 -- 367,262 Net change in unrealized appreciation (depreciation) of investments -- (600,970) (11,994) (743,369) -------- ----------- ----------- ----------- Increase (decrease) in net assets resulting from operations -- 164,629 88,161 387,670 -------- ----------- ----------- ----------- PRINCIPAL TRANSACTIONS: Net premiums -- 2,122,820 805,130 5,654,495 Net transfers from (to) other Divisions or fixed rate option -- (1,005,059) (1,085,070) 9,067,641 Internal rollovers -- 1,960 910 4,869 Cost of insurance and other charges -- (1,293,910) (506,287) (1,354,946) Administrative charges -- (101,343) (36,829) (274,581) Policy loans -- (141,900) (37,853) (70,849) Death benefits -- (2,376) (233,520) (122,685) Withdrawals -- (440,954) (137,362) (933,205) -------- ----------- ----------- ----------- Increase (decrease) in net assets resulting from principal transactions -- (860,762) (1,230,881) 11,970,739 -------- ----------- ----------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS -- (696,133) (1,142,720) 12,358,409 NET ASSETS: Beginning of year -- 13,041,675 5,997,401 11,861,099 -------- ----------- ----------- ----------- End of year $ -- $12,345,542 $ 4,854,681 $24,219,508 ======== =========== =========== ===========
See accompanying notes VL-R - 16 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions -------------------------------------------------------------------- Pioneer Growth Pioneer Fund Opportunities Pioneer Mid Cap Putnam VT VCT Portfolio - VCT Portfolio - Value VCT Diversified Income Class I Class I Portfolio -Class I Fund - Class IB --------------- --------------- ------------------ ------------------ For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ 19,741 $ (36,577) $ (79) $ 463,626 Net realized gain (loss) on investments 66,362 79,869 (3) 33,585 Capital gain distributions from mutual funds -- -- 373 -- Net change in unrealized appreciation (depreciation) of investments 384,974 189,546 2,601 68,663 ---------- ---------- ------- ----------- Increase (decrease) in net assets resulting from operations 471,077 232,838 2,892 565,874 ---------- ---------- ------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 295,848 544,505 7,736 1,561,190 Net transfers from (to) other Divisions or fixed rate option (222,509) (98,613) 67,239 (367,345) Internal rollovers 877 3,903 796 8,507 Cost of insurance and other charges (247,435) (441,521) (2,497) (383,769) Administrative charges (10,650) (22,070) (386) (108,472) Policy loans (44,157) (128,459) -- (91,865) Death benefits -- -- -- (662) Withdrawals (176,627) (373,505) (175) (120,411) ---------- ---------- ------- ----------- Increase (decrease) in net assets resulting from principal transactions (404,653) (515,760) 72,713 497,173 ---------- ---------- ------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 66,424 (282,922) 75,605 1,063,047 NET ASSETS: Beginning of year 3,232,792 5,275,314 -- 10,453,953 ---------- ---------- ------- ----------- End of year $3,299,216 $4,992,392 $75,605 $11,517,000 ========== ========== ======= =========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ 20,353 $ (37,450) $ -- $ 521,219 Net realized gain (loss) on investments 15,216 23,981 -- 7,959 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 134,215 306,944 -- (309,930) ---------- ---------- ------- ----------- Increase (decrease) in net assets resulting from operations 169,784 293,475 -- 219,248 ---------- ---------- ------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 365,758 664,335 -- 1,577,522 Net transfers from (to) other Divisions or fixed rate option (112,948) (422,997) -- 1,659,872 Internal rollovers -- -- -- -- Cost of insurance and other charges (282,610) (474,531) -- (313,379) Administrative charges (12,434) (25,096) -- (116,359) Policy loans (37,689) (17,998) -- 31,448 Death benefits (1,969) (3,554) -- (4,347) Withdrawals (200,441) (371,013) -- (133,390) ---------- ---------- ------- ----------- Increase (decrease) in net assets resulting from principal transactions (282,333) (650,854) -- 2,701,367 ---------- ---------- ------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS (112,549) (357,379) -- 2,920,615 NET ASSETS: Beginning of year 3,345,341 5,632,693 -- 7,533,338 ---------- ---------- ------- ----------- End of year $3,232,792 $5,275,314 $ -- $10,453,953 ========== ========== ======= ===========
See accompanying notes VL-R - 17 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions --------------------------------------------------------------- Putnam VT Putnam VT Growth and International Growth Putnam VT Small Putnam VT Income Fund - and Income Fund - Cap Value Fund - Vista Fund - Class IB Class IB Class IB Class IB ------------- -------------------- ---------------- ------------ For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ 185,523 $ 26,375 $ (1,687) $ (793) Net realized gain (loss) on investments 575,010 360,192 27,091 1,593 Capital gain distributions from mutual funds 470,152 -- 39,335 -- Net change in unrealized appreciation (depreciation) of investments 1,620,179 1,246,217 (3,385) 4,353 ----------- ---------- --------- -------- Increase (decrease) in net assets resulting from operations 2,850,864 1,632,784 61,354 5,153 ----------- ---------- --------- -------- PRINCIPAL TRANSACTIONS: Net premiums 3,097,607 1,001,601 10,065 4,056 Net transfers from (to) other Divisions or fixed rate option (1,274,051) 1,400,544 (4,847) 68,594 Internal rollovers 7,117 692 -- -- Cost of insurance and other charges (1,478,341) (550,278) (10,178) (1,956) Administrative charges (180,468) (45,171) -- -- Policy loans (125,493) (46,551) (3,066) (2,219) Death benefits (18,989) (677) -- -- Withdrawals (881,436) (259,387) (53,908) (2,230) ----------- ---------- --------- -------- Increase (decrease) in net assets resulting from principal transactions (854,054) 1,500,773 (61,934) 66,245 ----------- ---------- --------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,996,810 3,133,557 (580) 71,398 NET ASSETS: Beginning of year 19,396,940 5,707,911 416,707 105,252 ----------- ---------- --------- -------- End of year $21,393,750 $8,841,468 $ 416,127 $176,650 =========== ========== ========= ======== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ 174,489 $ 16,006 $ (2,329) $ (800) Net realized gain (loss) on investments 56,535 832,150 40,626 6,358 Capital gain distributions from mutual funds -- -- 27,814 -- Net change in unrealized appreciation (depreciation) of investments 554,254 (174,121) (44,028) 7,457 ----------- ---------- --------- -------- Increase (decrease) in net assets resulting from operations 785,278 674,035 22,083 13,015 ----------- ---------- --------- -------- PRINCIPAL TRANSACTIONS: Net premiums 3,438,858 1,014,354 13,055 3,465 Net transfers from (to) other Divisions or fixed rate option (560,471) (410,506) (84,872) 39,842 Internal rollovers 8,146 1,917 -- -- Cost of insurance and other charges (1,521,031) (484,971) (11,302) (1,946) Administrative charges (202,586) (45,536) -- -- Policy loans (14,161) (29,252) 899 178 Death benefits (125,411) (35,218) -- -- Withdrawals (495,300) (462,336) (20,216) (33,521) ----------- ---------- --------- -------- Increase (decrease) in net assets resulting from principal transactions 528,044 (451,548) (102,436) 8,018 ----------- ---------- --------- -------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,313,322 222,487 (80,353) 21,033 NET ASSETS: Beginning of year 18,083,618 5,485,424 497,060 84,219 ----------- ---------- --------- -------- End of year $19,396,940 $5,707,911 $ 416,707 $105,252 =========== ========== ========= ========
See accompanying notes VL-R - 18 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions ------------------------------------------------------------------------- SunAmerica - Putnam VT SunAmerica - SunAmerica UIF Equity Voyager Fund - Aggressive Growth Balanced Portfolio - Growth Portfolio - Class IB Portfolio - Class 1 Class 1 Class I -------------- ------------------- -------------------- ------------------ For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ (2,480) $ (6,184) $ 23,954 $ (29,592) Net realized gain (loss) on investments 1,614 51,285 13,228 82,391 Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 18,494 79,785 70,343 77,386 -------- ---------- ---------- ---------- Increase (decrease) in net assets resulting from operations 17,628 124,886 107,525 130,185 -------- ---------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 10,826 238,909 369,551 620,892 Net transfers from (to) other Divisions or fixed rate option 21,569 (26,077) 2,227 (52,164) Internal rollovers -- 519 7,959 424 Cost of insurance and other charges (18,043) (134,489) (188,400) (400,159) Administrative charges -- (11,792) (18,655) (20,791) Policy loans (1,507) (27,421) (2,569) (72,970) Death benefits -- -- (550) -- Withdrawals (8,987) (17,230) (15,280) (378,243) -------- ---------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions 3,858 22,419 154,283 (303,011) -------- ---------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 21,486 147,305 261,808 (172,826) NET ASSETS: Beginning of year 399,942 983,042 964,642 4,227,016 -------- ---------- ---------- ---------- End of year $421,428 $1,130,347 $1,226,450 $4,054,190 ======== ========== ========== ========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ (607) $ (5,020) $ 16,832 $ (8,456) Net realized gain (loss) on investments (1,756) 16,108 12,207 (86,301) Capital gain distributions from mutual funds -- -- -- -- Net change in unrealized appreciation (depreciation) of investments 24,381 42,956 (15,953) 634,286 -------- ---------- ---------- ---------- Increase (decrease) in net assets resulting from operations 22,018 54,044 13,086 539,529 -------- ---------- ---------- ---------- PRINCIPAL TRANSACTIONS: Net premiums 9,781 225,240 358,484 694,494 Net transfers from (to) other Divisions or fixed rate option 75,160 326,503 56,742 (94,748) Internal rollovers -- 213 39 1,000 Cost of insurance and other charges (18,351) (112,221) (166,972) (417,067) Administrative charges -- (10,762) (17,676) (22,342) Policy loans (1,170) (65) (2,910) (17,586) Death benefits -- (662) (1,000) (149) Withdrawals (17,859) (14,442) (9,313) (171,302) -------- ---------- ---------- ---------- Increase (decrease) in net assets resulting from principal transactions 47,561 413,804 217,394 (27,700) -------- ---------- ---------- ---------- TOTAL INCREASE (DECREASE) IN NET ASSETS 69,579 467,848 230,480 511,829 NET ASSETS: Beginning of year 330,363 515,194 734,162 3,715,187 -------- ---------- ---------- ---------- End of year $399,942 $ 983,042 $ 964,642 $4,227,016 ======== ========== ========== ==========
See accompanying notes VL-R - 19 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions ------------------------------------------------------------------- VALIC Company I VALIC Company I VALIC Company I UIF High Yield - International - Mid Cap Index - Money Market I Portfolio - Class I Equities Fund Fund Fund ------------------- --------------- --------------- ---------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ 121,162 $ 22,097 $ (37,678) $ 1,306,263 Net realized gain (loss) on investments (30,482) 237,928 791,315 -- Capital gain distributions from mutual funds -- 151,425 1,166,529 -- Net change in unrealized appreciation (depreciation) of investments 34,803 105,700 (412,652) -- ---------- ---------- ----------- ------------ Increase (decrease) in net assets resulting from operations 125,483 517,150 1,507,514 1,306,263 ---------- ---------- ----------- ------------ PRINCIPAL TRANSACTIONS: Net premiums 193,931 322,747 2,179,176 18,366,775 Net transfers from (to) other Divisions or fixed rate option (794,194) (30,669) 213,027 (8,470,372) Internal rollovers -- 190 4,909 878,353 Cost of insurance and other charges (148,896) (204,734) (1,271,719) (3,635,797) Administrative charges (7,659) (14,717) (95,675) (966,049) Policy loans (14,213) (20,113) (404,072) 440,035 Death benefits (4) 80 (183,264) (356,317) Withdrawals (68,240) (176,741) (942,529) (1,520,238) ---------- ---------- ----------- ------------ Increase (decrease) in net assets resulting from principal transactions (839,275) (123,957) (500,147) 4,736,390 ---------- ---------- ----------- ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS (713,792) 393,193 1,007,367 6,042,653 NET ASSETS: Beginning of year 2,179,040 2,349,147 16,655,723 24,555,193 ---------- ---------- ----------- ------------ End of year $1,465,248 $2,742,340 $17,663,090 $ 30,597,846 ========== ========== =========== ============ For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ 153,902 $ 21,987 $ 48,106 $ 607,594 Net realized gain (loss) on investments 5,396 78,643 588,951 -- Capital gain distributions from mutual funds -- -- 621,832 -- Net change in unrealized appreciation (depreciation) of investments (157,984) 218,823 427,603 -- ---------- ---------- ----------- ------------ Increase (decrease) in net assets resulting from operations 1,314 319,453 1,686,492 607,594 ---------- ---------- ----------- ------------ PRINCIPAL TRANSACTIONS: Net premiums 206,936 351,191 2,272,779 17,116,521 Net transfers from (to) other Divisions or fixed rate option 586,384 70,268 (745,112) (19,178,710) Internal rollovers -- -- 5,120 1,098,428 Cost of insurance and other charges (241,844) (188,014) (1,247,061) (4,883,470) Administrative charges (7,889) (15,612) (96,609) (783,880) Policy loans (3,334) (11,642) (83,694) (371,088) Death benefits -- -- (13,524) (430,069) Withdrawals (100,226) (99,036) (585,039) (3,166,246) ---------- ---------- ----------- ------------ Increase (decrease) in net assets resulting from principal transactions 440,027 107,155 (493,140) (10,598,514) ---------- ---------- ----------- ------------ TOTAL INCREASE (DECREASE) IN NET ASSETS 441,341 426,608 1,193,352 (9,990,920) NET ASSETS: Beginning of year 1,737,699 1,922,539 15,462,371 34,546,113 ---------- ---------- ----------- ------------ End of year $2,179,040 $2,349,147 $16,655,723 $ 24,555,193 ========== ========== =========== ============
See accompanying notes VL-R - 20 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions ---------------------------------------------------------------- VALIC Company I VALIC Company I VALIC Company I VALIC Company I - Nasdaq-100 - Science & - Small Cap Index - Stock Index Index Fund Technology Fund Fund Fund --------------- --------------- ----------------- --------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ (25,999) $ (8,670) $ (19,397) $ 40,239 Net realized gain (loss) on investments 338,983 62,771 502,152 2,049,336 Capital gain distributions from mutual funds -- -- 314,368 1,124,134 Net change in unrealized appreciation (depreciation) of investments (113,006) 663 178,372 1,619,156 ---------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from operations 199,978 54,764 975,495 4,832,865 ---------- ---------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 839,415 208,938 1,052,712 3,466,697 Net transfers from (to) other Divisions or fixed rate option (540,461) 57,549 167,695 (2,312,966) Internal rollovers 410 -- 796 12,768 Cost of insurance and other charges (407,935) (221,201) (455,189) (3,020,872) Administrative charges (40,714) (10,104) (50,348) (145,917) Policy loans 7,684 (22,518) (265,086) (701,571) Death benefits -- -- (1,657) (47,112) Withdrawals (123,606) (95,020) (406,828) (3,740,973) ---------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions (265,207) (82,356) 42,095 (6,489,946) ---------- ---------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS (65,229) (27,592) 1,017,590 (1,657,081) NET ASSETS: Beginning of year 4,251,703 1,256,085 5,659,112 37,281,393 ---------- ---------- ---------- ----------- End of year $4,186,474 $1,228,493 $6,676,702 $35,624,312 ========== ========== ========== =========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ (21,652) $ (7,801) $ 12,758 $ 304,763 Net realized gain (loss) on investments 115,488 18,618 204,788 586,994 Capital gain distributions from mutual funds -- -- 174,783 768,036 Net change in unrealized appreciation (depreciation) of investments (59,210) 12,012 (197,125) (277,470) ---------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from operations 34,626 22,829 195,204 1,382,323 ---------- ---------- ---------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 927,826 221,668 975,307 4,361,641 Net transfers from (to) other Divisions or fixed rate option 164,340 8,209 297,440 (1,341,502) Internal rollovers 94 221 5,569 3,312 Cost of insurance and other charges (422,008) (195,541) (397,032) (3,220,274) Administrative charges (44,965) (10,996) (46,314) (184,068) Policy loans 115 (6,853) (31,584) (582,095) Death benefits (989) -- (59,325) (70,939) Withdrawals (68,250) (21,524) (220,122) (1,946,452) ---------- ---------- ---------- ----------- Increase (decrease) in net assets resulting from principal transactions 556,163 (4,816) 523,939 (2,980,377) ---------- ---------- ---------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 590,789 18,013 719,143 (1,598,054) NET ASSETS: Beginning of year 3,660,914 1,238,072 4,939,969 38,879,447 ---------- ---------- ---------- ----------- End of year $4,251,703 $1,256,085 $5,659,112 $37,281,393 ========== ========== ========== ===========
See accompanying notes VL-R - 21 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005
Divisions ------------------------------------------------------------------------- Van Kampen LIT Van Kampen LIT Growth and Van Kampen LIT Vanguard VIF Government Income Portfolio - Strategic Growth High Yield Bond Portfolio - Class I Class I Portfolio - Class I Portfolio ------------------- ------------------ ------------------- --------------- For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ 5,833 $ 38,947 $ (421) $ 347,695 Net realized gain (loss) on investments (1,883) 520,871 471 (72,435) Capital gain distributions from mutual funds -- 613,913 -- -- Net change in unrealized appreciation (depreciation) of investments (464) 360,307 1,308 108,539 -------- ----------- ------- ----------- Increase (decrease) in net assets resulting from operations 3,486 1,534,038 1,358 383,799 -------- ----------- ------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 3,641 1,923,721 4,380 1,061,834 Net transfers from (to) other Divisions or fixed rate option 438 (109,336) (259) (308,335) Internal rollovers -- 1,421 -- 13,671 Cost of insurance and other charges (27,771) (727,324) (2,615) (590,885) Administrative charges -- (90,147) -- (54,057) Policy loans (1,013) (58,688) (3,361) (81,623) Death benefits -- -- -- (1,818) Withdrawals (3,261) (414,854) (203) (470,628) -------- ----------- ------- ----------- Increase (decrease) in net assets resulting from principal transactions (27,966) 524,793 (2,058) (431,841) -------- ----------- ------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS (24,480) 2,058,831 (700) (48,042) NET ASSETS: Beginning of year 160,256 10,039,305 57,942 5,229,079 -------- ----------- ------- ----------- End of year $135,776 $12,098,136 $57,242 $ 5,181,037 ======== =========== ======= =========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ 5,663 $ 29,313 $ (265) $ 347,062 Net realized gain (loss) on investments (1,549) 677,302 (422) 174,975 Capital gain distributions from mutual funds -- 198,372 -- -- Net change in unrealized appreciation (depreciation) of investments 601 (91,197) 4,451 (428,929) -------- ----------- ------- ----------- Increase (decrease) in net assets resulting from operations 4,715 813,790 3,764 93,108 -------- ----------- ------- ----------- PRINCIPAL TRANSACTIONS: Net premiums 21,122 2,269,518 4,642 1,180,630 Net transfers from (to) other Divisions or fixed rate option 604 2,361,781 (143) (2,484,746) Internal rollovers -- 953 -- 4,044 Cost of insurance and other charges (26,599) (646,241) (2,594) (566,909) Administrative charges -- (108,511) -- (54,835) Policy loans 692 (67,443) 470 (30,986) Death benefits -- (3,873) -- (627) Withdrawals (18,386) (236,813) (5,161) (117,978) -------- ----------- ------- ----------- Increase (decrease) in net assets resulting from principal transactions (22,567) 3,569,371 (2,786) (2,071,407) -------- ----------- ------- ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS (17,852) 4,383,161 978 (1,978,299) NET ASSETS: Beginning of year 178,108 5,656,144 56,964 7,207,378 -------- ----------- ------- ----------- End of year $160,256 $10,039,305 $57,942 $ 5,229,079 ======== =========== ======= ===========
See accompanying notes VL-R - 22 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R STATEMENT OF CHANGES IN NET ASSETS - CONTINUED For the Years Ended December 31, 2006 and 2005 Divisions ------------ Vanguard VIF REIT Index Portfolio ------------ For the Year Ended December 31, 2006 OPERATIONS: Net investment income (loss) $ 182,163 Net realized gain (loss) on investments 908,031 Capital gain distributions from mutual funds 890,176 Net change in unrealized appreciation (depreciation) of investments 2,179,220 ----------- Increase (decrease) in net assets resulting from operations 4,159,590 ----------- PRINCIPAL TRANSACTIONS: Net premiums 2,466,113 Net transfers from (to) other Divisions or fixed rate option 736,702 Internal rollovers 15,446 Cost of insurance and other charges (1,236,493) Administrative charges (120,151) Policy loans (228,520) Death benefits (5,694) Withdrawals (717,209) ----------- Increase (decrease) in net assets resulting from principal transactions 910,194 ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 5,069,784 NET ASSETS: Beginning of year 12,052,487 ----------- End of year $17,122,271 =========== For the Year Ended December 31, 2005 OPERATIONS: Net investment income (loss) $ 208,129 Net realized gain (loss) on investments 988,405 Capital gain distributions from mutual funds 621,997 Net change in unrealized appreciation (depreciation) of investments (698,326) ----------- Increase (decrease) in net assets resulting from operations 1,120,205 ----------- PRINCIPAL TRANSACTIONS: Net premiums 2,272,609 Net transfers from (to) other Divisions or fixed rate option (403,002) Internal rollovers 837 Cost of insurance and other charges (995,647) Administrative charges (107,936) Policy loans (61,621) Death benefits (2,224) Withdrawals (373,730) ----------- Increase (decrease) in net assets resulting from principal transactions 329,286 ----------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,449,491 NET ASSETS: Beginning of year 10,602,996 ----------- End of year $12,052,487 =========== See accompanying notes VL-R - 23 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 IV, Platinum Investor FlexDirector, Platinum Investor PLUS, Platinum Investor Survivor, Platinum Investor Survivor II, Platinum Investor VIP and The One VUL Solution. Of the products listed, AG Legacy Plus, 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."): Franklin Templeton Variable Insurance Products Trust AIM V.I. Core Equity Fund - Series I (4) ("Franklin Templeton"): - continued: AIM V.I. International Growth Fund - Series I Franklin Templeton - Franklin U.S. Government Fund - Class 2 AIM V.I. Premier Equity Fund - Series I (4) Franklin Templeton - Mutual Shares Securities Fund - Class 2 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 The Alger American Fund: Alger American Leveraged AllCap Portfolio - Goldman Sachs Variable Insurance Trust Class O Shares ("Goldman Sachs"): Alger American MidCap Growth Portfolio - Class Goldman Sachs Capital Growth Fund O Shares American Century Variable Portfolios, Inc. ("American Century VP"): Janus Aspen Series: American Century VP Value Fund - Class I Janus Aspen Series International Growth Portfolio - Service Shares Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Credit Suisse Trust ("Credit Suisse"): Janus Aspen Series Worldwide Growth Portfolio - Service Shares (7) Credit Suisse Small Cap Core I Portfolio (15) J.P. Morgan Series Trust II ("JPMorgan"): Dreyfus Investment Portfolios ("Dreyfus IP"): JPMorgan Mid Cap Value Portfolio (8) Dreyfus IP MidCap Stock Portfolio - Initial JPMorgan Small Company Portfolio shares (5) Dreyfus Variable Investment Fund MFS(R) Variable Insurance Trust/SM ("Dreyfus VIF"): /("MFS(R) VIT"): Dreyfus VIF Developing Leaders Portfolio - MFS(R) VIT Capital Opportunities Initial shares (5) Series - Initial Class (9) Dreyfus VIF Quality Bond Portfolio - Initial MFS(R) VIT Emerging Growth Series - shares (5) Initial Class (9) MFS(R) VIT New Discovery Series - Initial Class DWS Investments VIT Funds: (2) MFS(R) VIT Research Series - Initial Class DWS Equity 500 Index Fund VIP - Class A (3) MFS(R) VIT Total Return Series - Initial Class Fidelity(R) Variable Insurance Products Neuberger Berman Advisers Management ("Fidelity(R) VIP"): Trust ("Neuberger Berman AMT"): Fidelity(R) VIP Asset Manager/SM/ Portfolio - Service Class 2 Fidelity(R) VIP Contrafund(R) Portfolio - Neuberger Berman AMT Mid-Cap Growth Service Class 2 Portfolio - Class I Fidelity(R) VIP Equity-Income Portfolio - Neuberger Berman AMT Partners Service Class 2 Portfolio - Class I Fidelity(R) VIP Freedom 2020 Portfolio - Service Class 2 (6) Fidelity(R) VIP Freedom 2025 Portfolio - Oppenheimer Variable Account Funds Service Class 2 (6) ("Oppenheimer"): Fidelity(R) VIP Freedom 2030 Portfolio - Oppenheimer Balanced Fund/VA - Service Class 2 (6) Non-Service Shares Fidelity(R) VIP Growth Portfolio - Service Oppenheimer Global Securities Class 2 Fund/VA - Non-Service Shares Fidelity(R) VIP Mid Cap Portfolio - Service Oppenheimer High Income Fund/VA - Class 2 Non-Service Shares Franklin Templeton Variable Insurance Products Trust ("Franklin Templeton"): Franklin Templeton - Franklin Small Cap Value PIMCO Variable Insurance Trust ("PIMCO Securities Fund - Class 2 VIT"): Franklin Templeton - Franklin Small-Mid Cap PIMCO VIT CommodityRealReturn Growth Securities Fund - Class 2 (1) Strategy Portfolio - Administrative Class (10) PIMCO VIT Real Return Portfolio - Administrative Class PIMCO VIT Short-Term Portfolio - Administrative Class
VL-R - 24 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note A - Organization - Continued PIMCO Variable Insurance Trust ("PIMCO The Universal Institutional Funds, VIT"): - continued: Inc. ("UIF"): PIMCO VIT Total Return Portfolio - UIF Equity Growth Portfolio - Administrative Class Class I (13) UIF High Yield Portfolio - Class I (13) Pioneer Variable Contracts Trust ("Pioneer"): Pioneer Fund VCT Portfolio - Class I VALIC Company I: Pioneer Growth Opportunities VCT VALIC Company I - International Portfolio - Class I Equities Fund Pioneer Mid Cap Value VCT Portfolio VALIC Company I - Mid Cap Index - Class I (11) Fund VALIC Company I - Money Market I Fund Putnam Variable Trust ("Putnam VT"): VALIC Company I - Nasdaq-100(R) Index Fund Putnam VT Diversified Income Fund - VALIC Company I - Science & Class IB Technology Fund Putnam VT Growth and Income Fund - VALIC Company I - Small Cap Index Class IB (12) Fund Putnam VT International Growth and VALIC Company I - Stock Index Fund Income Fund - Class IB Putnam VT Small Cap Value Fund - Class IB Putnam VT Vista Fund - Class IB Van Kampen Life Investment Trust Putnam VT Voyager Fund - Class IB ("Van Kampen LIT"): Van Kampen LIT Government Portfolio - Class I SunAmerica Series Trust ("SunAmerica"): Van Kampen LIT Growth and Income Portfolio - Class I SunAmerica - Aggressive Growth Van Kampen LIT Strategic Growth Portfolio - Class 1 Portfolio - Class I (14) SunAmerica - SunAmerica Balanced Portfolio - Class 1 Vanguard(R) Variable Insurance Fund ("Vanguard(R) VIF"): Vanguard(R) VIF High Yield Bond Portfolio Vanguard(R) VIF REIT Index Portfolio - -------- (1) Effective May 1, 2005, Franklin Templeton - Franklin Small Cap Fund - Class 2 changed its name to Franklin Templeton - Franklin Small-Mid Cap Growth Securities Fund - Class 2. (2) Effective February 6, 2006, Scudder Investments VIT Funds changed its name to DWS Investments VIT Funds. (3) Effective February 6, 2006, Scudder VIT Equity 500 Index Fund - Class A changed its name to DWS Equity 500 Index Fund VIP - Class A. (4) Effective May 1, 2006, AIM V.I. Premier Equity Fund - Series I merged into AIM V.I. Core Equity Fund - Series I. AIM V.I. Core Equity Fund - Series I is no longer offered as an investment option for policies with an issue date of May 1, 2006 or later. This restriction is not applicable to Platinum Investor I, Platinum Investor Survivor, and Corporate America. (5) Effective May 1, 2006, Dreyfus IP MidCap Stock Portfolio - Initial shares, Dreyfus VIF Developing Leaders Portfolio - Initial shares and Dreyfus VIF Quality Bond Portfolio - Initial shares are no longer offered as investment options for policies with an issue date of May 1, 2006 or later. This restriction is not applicable to Platinum Investor I, Platinum Investor Survivor, and Corporate America. (6) Effective May 1, 2006, Fidelity VIP Freedom 2020 Portfolio - Service Class 2, Fidelity VIP Freedom 2025 Portfolio - Service Class 2 and Fidelity VIP Freedom 2030 Portfolio - Service Class 2 became available as investment options. (7) Effective May 1, 2006, Janus Aspen Series Worldwide Growth Portfolio - Service Shares is no longer offered as an investment option for policies with an issue date of May 1, 2006 or later. This restriction is not applicable to Platinum Investor I, Platinum Investor Survivor, and Corporate America. (8) Effective May 1, 2006, JPMorgan Mid Cap Value Portfolio is no longer offered as an investment option for policies with an issue date of May 1, 2006 or later and is not available for new investments in existing policies. (9) Effective May 1, 2006, MFS VIT Capital Opportunities Series - Initial Class and MFS VIT Emerging Growth Series - Initial Class are no longer offered as investment options for policies with an issue date of May 1, 2006 or later. This restriction is not applicable to Platinum Investor I, Platinum Investor Survivor, and Corporate America. (10)Effective May 1, 2006, PIMCO VIT CommodityRealReturn Strategy Portfolio - Administrative Class became available as an investment option. (11)Effective May 1, 2006, Pioneer Mid Cap Value VCT Portfolio - Class 1 became available as an investment option. (12)Effective May 1, 2006, Putnam VT Growth and Income Fund - Class IB is no longer offered as an investment option for policies with an issue date of May 1, 2006 or later. This restriction is not applicable to Platinum Investor I, Platinum Investor Survivor, and Corporate America. VL-R - 25 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note A - Organization - Continued (13)Effective May 1, 2006, UIF Equity Growth Portfolio - Class I and UIF High Yield Portfolio - Class I are no longer offered as investment options for policies with an issue date of May 1, 2006 or later. (14)Effective August 15, 2006, Van Kampen LIT Emerging Growth Portfolio - Class I changed its name to Van Kampen LIT Strategic Growth Portfolio - Class I. (15)Effective December 1, 2006, Credit Suisse Small Cap Growth Portfolio changed its name to Credit Suisse Small Cap Core I Portfolio. 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. 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. Changes in presentation - Certain items have been reclassified to conform to the current period's presentation. 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. VL-R - 26 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 - Continued Accumulation unit--This is a measuring unit used to calculate the policy owner's interest. Such units are valued on each day that the New York Stock Exchange ("NYSE") is open for business to reflect investment performance and the prorated daily deduction for mortality and expense risk charges. Internal rollovers - A policy owner with an eligible Company life insurance policy may elect to replace their existing policy with another insurance policy offered by the Company. Internal rollovers are included in the Statement of Changes in Net Assets under principal transactions. 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. Current Premium Policies Expense Charge -------- --------------- Platinum Investor I and II 2.50% Platinum Investor III 5.00% Platinum Investor IV 5.00% Platinum Investor FlexDirector 5.00% Platinum Investor PLUS 5.00% Platinum Investor Survivor 6.50% Platinum Investor Survivor II 5.00% Platinum Investor VIP 5.00% Mortality and expense risk and administrative charges--Deductions for administrative expenses and mortality and expense risks assumed by the Company are assessed through the daily unit value calculation and paid to the Company from the daily net asset value of the Divisions. A summary of these charges by policy follows:
First Reduction in Second Reduction in Mortality and Mortality and Mortality and Expense Risk and Expense Risk and After Expense Risk and Administrative Charges Administrative Policy Administrative After Policy Policies Current Annual Rate Charges Rate Year Charges 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 IV 0.70% 0.35% 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 Platinum Investor VIP 0.70% 0.35% 10 0.20% 20
VL-R - 27 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note C - Policy Charges - Continued Guaranteed Minimum Withdrawal Benefit (GMWB) Rider charge - Daily charges for the GMWB rider are assessed through the daily unit value calculation on all policies that have elected this option and are equivalent, on an annual basis, to 0.75% of the value of the policy, which may be increased to a maximum of 1.50%. These charges are included as part of the mortality and expense risk and administrative charges line of the Statement of Operations. Monthly administrative and expense charges - Monthly administrative charges are paid to the Company for the administrative services provided under the current policies. The Company may charge a maximum fee of $12 for the monthly administrative charge. The Company may deduct an additional monthly expense charge for expenses associated with acquisition, administrative and underwriting of your policy. The monthly expense charge is applied only against each $1,000 of base coverage. This charge varies according to the ages, gender and the premium classes of both of the contingent insurers, as well as the amount of coverage. The monthly administrative and expense charges are paid by redemption of units outstanding. Monthly administrative and expense charges are included with cost of insurance in the Statement of Changes in Net Assets under principal transactions. Cost of insurance charge - 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. The cost of insurance charges are paid by redemption of units outstanding. Cost of insurance charges are included in the Statement of Changes in Net Assets under principal transactions. Optional rider charges - Monthly charges are deducted if the policy owner selects additional benefit riders. 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 rider charges are paid by redemption of units outstanding. Optional rider charges are included with cost of insurance in the Statement of Changes in Net Assets under principal transactions. Transfer charges - 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. The transfer charges are paid by redemption of units outstanding. Transfer charges are included with net transfers from (to) other divisions or fixed rate option in the Statement of Changes in Net Assets under principal transactions. Surrender charge - 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. The surrender and partial withdrawal charges are paid by redemption of units outstanding. Surrender and partial withdrawal charges are included with withdrawals in the Statement of Changes in Net Assets under principal transactions. Policy loan - 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 - 28 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, 2006, the aggregate cost of purchases and proceeds from the sales of investments were:
Cost of Proceeds from Divisions Purchases Sales - ------------------------------------------------------------------------------------------------------ AIM V.I. Core Equity Fund - Series I $13,754,113 $ 1,470,373 AIM V.I. International Growth Fund - Series I 3,668,435 1,955,112 AIM V.I. Premier Equity Fund - Series I 438,465 13,835,616 Alger American Leveraged AllCap Portfolio - Class O Shares 1,068,056 119,796 Alger American MidCap Growth Portfolio - Class O Shares 915,316 443,982 American Century VP Value Fund - Class I 3,854,413 2,436,069 Credit Suisse Small Cap Core I Portfolio 542,454 278,220 Dreyfus IP MidCap Stock Portfolio - Initial shares 1,575,180 527,782 Dreyfus VIF Developing Leaders Portfolio - Initial shares 2,162,160 1,650,287 Dreyfus VIF Quality Bond Portfolio - Initial shares 1,514,794 892,652 Fidelity VIP Asset Manager Portfolio - Service Class 2 917,305 697,934 Fidelity VIP Contrafund Portfolio - Service Class 2 11,046,726 4,650,392 Fidelity VIP Equity-Income Portfolio - Service Class 2 5,867,516 2,571,011 Fidelity VIP Freedom 2020 Portfolio - Service Class 2 10,203 252 Fidelity VIP Freedom 2025 Portfolio - Service Class 2 55,529 1,209 Fidelity VIP Freedom 2030 Portfolio - Service Class 2 70,012 5,917 Fidelity VIP Growth Portfolio - Service Class 2 1,912,329 1,271,013 Fidelity VIP Mid Cap Portfolio - Service Class 2 4,648,499 3,200,439 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 4,127,748 801,848 Franklin Templeton - Franklin Small-Mid Cap Growth Securities Fund - Class 2 5,035 39,210 Franklin Templeton - Franklin U.S. Government Fund - Class 2 1,507,464 5,449,540 Franklin Templeton - Mutual Shares Securities Fund - Class 2 6,803,466 1,292,524 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 1,908,782 1,926,639 Goldman Sachs Capital Growth Fund 909,743 2,810,795 Janus Aspen Series International Growth Portfolio - Service Shares 5,406,891 1,337,500 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 719,012 681,270 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 444,980 627,640 JPMorgan Mid Cap Value Portfolio 781,080 1,764,280 JPMorgan Small Company Portfolio 952,517 494,944 MFS VIT Capital Opportunities Series - Initial Class 479,673 693,717 MFS VIT Emerging Growth Series - Initial Class 872,175 2,250,460 MFS VIT New Discovery Series - Initial Class 470,492 449,957 MFS VIT Research Series - Initial Class 369,071 280,040 MFS VIT Total Return Series - Initial Class 54,024 139,670 Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I 1,014,534 539,841 Neuberger Berman AMT Partners Portfolio - Class I 16,027 15,538 Oppenheimer Balanced Fund/VA - Non-Service Shares 539,948 177,227 Oppenheimer Global Securities Fund/VA - Non-Service Shares 1,789,734 557,311 Oppenheimer High Income Fund/VA - Non-Service Shares 10,378 7,002 PIMCO VIT CommodityRealReturn Strategy Portfolio - Administrative Class 287,627 15,624 PIMCO VIT Real Return Portfolio - Administrative Class 2,799,741 2,669,182 PIMCO VIT Short-Term Portfolio - Administrative Class 990,992 855,904 PIMCO VIT Total Return Portfolio - Administrative Class 12,835,463 14,154,468 Pioneer Fund VCT Portfolio - Class I 187,491 572,404 Pioneer Growth Opportunities VCT Portfolio - Class I 250,630 802,970 Pioneer Mid Cap Value VCT Portfolio - Class I 73,447 439 Putnam VT Diversified Income Fund - Class IB 4,151,909 3,191,109 Putnam VT Growth and Income Fund - Class IB 3,197,556 3,395,934 Putnam VT International Growth and Income Fund - Class IB 2,458,963 931,816 Putnam VT Small Cap Value Fund - Class IB 49,310 73,595 Putnam VT Vista Fund - Class IB 71,695 6,243
VL-R - 29 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, 2006, the aggregate cost of purchases and proceeds from the sales of investments were: Cost of Proceeds from Divisions Purchases Sales ------------------------------------------------------------------------------ Putnam VT Voyager Fund - Class IB $ 32,363 $ 30,984 SunAmerica - Aggressive Growth Portfolio - Class 1 180,118 163,883 SunAmerica - SunAmerica Balanced Portfolio - Class 1 286,225 107,988 UIF Equity Growth Portfolio - Class I 492,180 824,782 UIF High Yield Portfolio - Class I 416,369 1,134,482 VALIC Company I - International Equities Fund 616,200 566,631 VALIC Company I - Mid Cap Index Fund 3,425,713 2,797,009 VALIC Company I - Money Market I Fund 33,509,692 27,467,039 VALIC Company I - Nasdaq-100 Index Fund 701,340 992,547 VALIC Company I - Science & Technology Fund 211,835 302,863 VALIC Company I - Small Cap Index Fund 1,647,935 1,310,871 VALIC Company I - Stock Index Fund 3,914,926 9,240,499 Van Kampen LIT Government Portfolio - Class I 9,229 31,361 Van Kampen LIT Growth and Income Portfolio - Class I 3,783,364 2,605,710 Van Kampen LIT Strategic Growth Portfolio - Class I 3,643 6,122 Vanguard VIF High Yield Bond Portfolio 1,473,733 1,557,877 Vanguard VIF REIT Index Portfolio 4,480,475 2,497,942 VL-R - 30 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, 2006.
Net Asset Value Per Value of Shares Cost of Shares Divisions Shares Share at Fair Value Held - --------- --------- --------- --------------- -------------- AIM V.I. Core Equity Fund - Series I 490,168 $27.22 $13,342,365 $12,306,841 AIM V.I. International Growth Fund - Series I 404,504 29.43 11,904,546 8,401,229 Alger American Leveraged AllCap Portfolio - Class O Shares 55,131 41.48 2,286,824 1,882,896 Alger American MidCap Growth Portfolio - Class O Shares 90,090 20.75 1,869,371 1,799,587 American Century VP Value Fund - Class I 2,015,208 8.74 17,612,918 15,762,759 Credit Suisse Small Cap Core I Portfolio 117,334 15.60 1,830,404 1,730,889 Dreyfus IP MidCap Stock Portfolio - Initial shares 300,633 17.39 5,228,009 4,844,882 Dreyfus VIF Developing Leaders Portfolio - Initial shares 279,455 42.03 11,745,504 10,182,093 Dreyfus VIF Quality Bond Portfolio - Initial shares 773,167 11.23 8,682,661 8,832,307 Fidelity VIP Asset Manager Portfolio - Service Class 2 365,821 15.47 5,659,244 5,076,535 Fidelity VIP Contrafund Portfolio - Service Class 2 1,028,652 31.11 32,001,369 28,009,575 Fidelity VIP Equity-Income Portfolio - Service Class 2 815,052 25.87 21,085,399 18,948,424 Fidelity VIP Freedom 2020 Portfolio - Service Class 2 868 12.08 10,491 9,969 Fidelity VIP Freedom 2025 Portfolio - Service Class 2 4,510 12.17 54,891 54,373 Fidelity VIP Freedom 2030 Portfolio - Service Class 2 5,195 12.42 64,516 64,294 Fidelity VIP Growth Portfolio - Service Class 2 389,915 35.42 13,810,806 11,595,452 Fidelity VIP Mid Cap Portfolio - Service Class 2 186,423 34.25 6,384,993 6,152,027 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 451,202 18.79 8,478,085 7,575,757 Franklin Templeton - Franklin Small-Mid Cap Growth Securities Fund -Class 2 4,907 22.13 108,582 84,994 Franklin Templeton - Franklin U.S. Government Fund - Class 2 750,577 12.52 9,397,224 9,538,682 Franklin Templeton - Mutual Shares Securities Fund - Class 2 807,638 20.47 16,532,351 12,861,981 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 727,764 18.72 13,623,735 9,297,072 Goldman Sachs Capital Growth Fund 619,428 11.58 7,172,977 5,907,967 Janus Aspen Series International Growth Portfolio - Service Shares 236,768 50.61 11,982,836 8,176,386 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 105,175 32.19 3,385,583 2,430,835 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 137,554 32.21 4,430,625 3,352,903 JPMorgan Mid Cap Value Portfolio 110,867 31.56 3,498,962 3,021,116 JPMorgan Small Company Portfolio 153,231 17.82 2,730,571 2,457,157 MFS VIT Capital Opportunities Series - Initial Class 291,483 15.51 4,520,899 3,462,595 MFS VIT Emerging Growth Series - Initial Class 585,632 20.64 12,087,435 9,366,635 MFS VIT New Discovery Series - Initial Class 238,345 17.42 4,151,964 3,200,845 MFS VIT Research Series - Initial Class 131,998 18.04 2,381,244 1,812,292 MFS VIT Total Return Series - Initial Class 35,409 21.89 775,099 663,979 Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I 197,404 23.26 4,591,606 3,330,612 Neuberger Berman AMT Partners Portfolio - Class I 5,255 21.16 111,195 98,856 Oppenheimer Balanced Fund/VA - Non-Service Shares 77,211 17.69 1,365,870 1,270,740 Oppenheimer Global Securities Fund/VA - Non-Service Shares 109,908 36.79 4,043,502 3,414,733 Oppenheimer High Income Fund/VA - Non-Service Shares 12,918 8.55 110,446 103,106 PIMCO VIT CommodityRealReturn Strategy Portfolio - Administrative Class 22,558 11.31 255,133 271,860 PIMCO VIT Real Return Portfolio - Administrative Class 984,412 11.93 11,744,030 12,410,609 PIMCO VIT Short-Term Portfolio - Administrative Class 496,492 10.04 4,984,783 5,003,338 PIMCO VIT Total Return Portfolio - Administrative Class 2,239,237 10.12 22,661,080 23,033,709 Pioneer Fund VCT Portfolio - Class I 133,033 24.80 3,299,217 2,706,930 Pioneer Growth Opportunities VCT Portfolio - Class I 186,353 26.79 4,992,391 4,339,733 Pioneer Mid Cap Value VCT Portfolio - Class I 3,721 20.32 75,605 73,005 Putnam VT Diversified Income Fund - Class IB 1,311,731 8.78 11,517,002 11,363,021 Putnam VT Growth and Income Fund - Class IB 728,670 29.36 21,393,752 16,775,793 Putnam VT International Growth and Income Fund - Class IB 460,253 19.21 8,841,468 6,173,963 Putnam VT Small Cap Value Fund - Class IB 17,146 24.27 416,127 283,351
VL-R - 31 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note E - Investments - Continued The following is a summary of fund shares owned as of December 31, 2006.
Net Asset Value of Value Per Shares at Fair Cost of Shares Divisions Shares Share Value Held - ------------------------------------------------------------------------------------------------------- Putnam VT Vista Fund - Class IB 12,017 $14.70 $ 176,650 $ 149,654 Putnam VT Voyager Fund - Class IB 14,015 30.07 421,428 350,942 SunAmerica - Aggressive Growth Portfolio - Class 1 90,143 12.54 1,130,347 917,577 SunAmerica - SunAmerica Balanced Portfolio - Class 1 81,828 14.99 1,226,451 1,116,431 UIF Equity Growth Portfolio - Class I 246,007 16.48 4,054,191 3,220,879 UIF High Yield Portfolio - Class I 108,057 13.56 1,465,250 1,436,415 VALIC Company I - International Equities Fund 265,474 10.33 2,742,348 2,021,162 VALIC Company I - Mid Cap Index Fund 758,724 23.28 17,663,091 14,631,213 VALIC Company I - Money Market I Fund 30,597,846 1.00 30,597,846 30,597,846 VALIC Company I - Nasdaq-100 Index Fund 861,414 4.86 4,186,473 3,489,072 VALIC Company I - Science & Technology Fund 98,358 12.49 1,228,492 1,065,826 VALIC Company I - Small Cap Index Fund 371,134 17.99 6,676,702 5,559,922 VALIC Company I - Stock Index Fund 972,014 36.65 35,624,313 29,578,327 Van Kampen LIT Government Portfolio - Class I 14,600 9.30 135,776 137,089 Van Kampen LIT Growth and Income Portfolio - Class I 549,915 22.00 12,098,136 10,698,165 Van Kampen LIT Strategic Growth Portfolio - Class I 1,987 28.81 57,242 42,746 Vanguard VIF High Yield Bond Portfolio 600,352 8.63 5,181,038 5,098,099 Vanguard VIF REIT Index Portfolio 685,439 24.98 17,122,271 12,843,752
VL-R - 32 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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------------- AIM V.I. Core Equity Fund--Series I Corporate America 3,876 (118) 3,758 Corporate America (reduced surrender charge) 2,292 (7) 2,285 Platinum Investor I & II 831,187 (95,279) 735,908 Platinum Investor III 424,592 (49,325) 375,267 Platinum Investor IV 14,822 (2,389) 12,433 Platinum Investor FlexDirector 437 (13) 424 Platinum Investor PLUS 26,067 (2,608) 23,459 Platinum Investor Survivor 78,959 (14,120) 64,839 Platinum Investor Survivor II 10,165 (405) 9,760 AIM V.I. International Growth Fund - Series I AG Legacy Plus 1,148 (8,304) (7,156) Corporate America 26 (116) (90) Corporate America (reduced surrender charge) 5,321 (82) 5,239 Platinum Investor I & II 35,977 (47,093) (11,116) Platinum Investor III 144,343 (46,476) 97,867 Platinum Investor IV 26,015 (6,617) 19,398 Platinum Investor FlexDirector 848 (118) 730 Platinum Investor PLUS 4,163 (2,074) 2,089 Platinum Investor Survivor 14,974 (4,987) 9,987 Platinum Investor Survivor II 4,335 (389) 3,946 Platinum Investor VIP 18,692 (1,163) 17,529 Platinum Investor VIP (with GMWB rider) 262 (6) 256 AIM V.I. Premier Equity Fund - Series I Corporate America 46 (5,706) (5,660) Corporate America (reduced surrender charge) 5 (5) -- Platinum Investor I & II 26,206 (790,148) (763,942) Platinum Investor III 35,764 (519,375) (483,611) Platinum Investor IV 2,139 (8,346) (6,207) Platinum Investor FlexDirector 1 (390) (389) Platinum Investor PLUS 1,511 (20,843) (19,332) Platinum Investor Survivor 1,220 (109,571) (108,351) Platinum Investor Survivor II 571 (8,917) (8,346) Alger American Leveraged AllCap Portfolio - Class O Shares Platinum Investor I & II 5,295 (867) 4,428 Platinum Investor III 45,768 (5,285) 40,483 Platinum Investor IV 10,592 (2,174) 8,418 Platinum Investor FlexDirector -- (40) (40) Platinum Investor PLUS 3,168 (1,375) 1,793 Platinum Investor Survivor 126 (116) 10 Platinum Investor Survivor II 933 (20) 913 Platinum Investor VIP 8,682 (354) 8,328 Platinum Investor VIP (with GMWB rider) 180 (16) 164 Alger American MidCap Growth Portfolio - Class O Shares Corporate America (reduced surrender charge) 4,132 (109) 4,023 Platinum Investor I & II 136 (813) (677) Platinum Investor III 13,945 (18,725) (4,780) Platinum Investor IV 16,735 (2,908) 13,827 Platinum Investor FlexDirector 1,101 (922) 179 Platinum Investor PLUS 2,630 (1,859) 771 Platinum Investor Survivor 5,315 (285) 5,030
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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ------------------------------------------------------------------------------------------------------------ Alger American MidCap Growth Portfolio - Class O Shares - Continued Platinum Investor Survivor II 846 (344) 502 Platinum Investor VIP 2,579 (349) 2,230 American Century VP Value Fund - Class I AG Legacy Plus 1,109 (4,555) (3,446) Corporate America 1 (1,269) (1,268) Corporate America (reduced surrender charge) 12,688 (347) 12,341 Platinum Investor I & II 14,262 (55,898) (41,636) Platinum Investor III 97,892 (87,348) 10,544 Platinum Investor IV 34,738 (10,632) 24,106 Platinum Investor FlexDirector 907 (23) 884 Platinum Investor PLUS 14,309 (10,325) 3,984 Platinum Investor Survivor 1,945 (3,619) (1,674) Platinum Investor Survivor II 10,211 (8,367) 1,844 Platinum Investor VIP 13,150 (821) 12,329 Platinum Investor VIP (with GMWB rider) 179 (17) 162 Credit Suisse Small Cap Core I Portfolio Platinum Investor I & II 5,259 (4,540) 719 Platinum Investor III 27,694 (21,601) 6,093 Platinum Investor IV 12,335 (1,884) 10,451 Platinum Investor FlexDirector 1,406 (820) 586 Platinum Investor PLUS 3,089 (2,396) 693 Platinum Investor Survivor 154 (164) (10) Platinum Investor Survivor II 608 (637) (29) Platinum Investor VIP 8,390 (212) 8,178 Dreyfus IP MidCap Stock Portfolio - Initial shares Platinum Investor I & II 10,303 (6,692) 3,611 Platinum Investor III 46,598 (38,092) 8,506 Platinum Investor IV 10,830 (2,903) 7,927 Platinum Investor FlexDirector 1 (2) (1) Platinum Investor PLUS 5,575 (3,613) 1,962 Platinum Investor Survivor 844 (3,534) (2,690) Platinum Investor Survivor II 3,001 (957) 2,044 Dreyfus VIF Developing Leaders Portfolio - Initial shares Corporate America 33 (440) (407) Corporate America (reduced surrender charge) 717 (12) 705 Platinum Investor I & II 35,156 (68,730) (33,574) Platinum Investor III 96,793 (94,319) 2,474 Platinum Investor IV 9,122 (3,493) 5,629 Platinum Investor FlexDirector 447 -- 447 Platinum Investor PLUS 10,248 (6,771) 3,477 Platinum Investor Survivor 4,101 (18,531) (14,430) Platinum Investor Survivor II 8,944 (4,662) 4,282 Dreyfus VIF Quality Bond Portfolio - Initial shares Corporate America 21 (86) (65) Corporate America (reduced surrender charge) 8,115 (295) 7,820 Platinum Investor I & II 11,692 (25,567) (13,875) Platinum Investor III 75,603 (49,625) 25,978 Platinum Investor IV 10,566 (3,255) 7,311 Platinum Investor FlexDirector 198 (25) 173 Platinum Investor PLUS 7,213 (4,893) 2,320
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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - -------------------------------------------------------------------------------------------------------- Dreyfus VIF Quality Bond Portfolio - Initial shares - Continued Platinum Investor Survivor 939 (2,927) (1,988) Platinum Investor Survivor II 2,752 (3,280) (528) Fidelity VIP Asset Manager Portfolio - Service Class 2 AG Legacy Plus 46 (1,929) (1,883) Platinum Investor I & II 1,923 (17,270) (15,347) Platinum Investor III 52,559 (42,046) 10,513 Platinum Investor IV 7,369 (2,430) 4,939 Platinum Investor FlexDirector 625 (66) 559 Platinum Investor PLUS 5,809 (4,044) 1,765 Platinum Investor Survivor 2,488 (1,379) 1,109 Platinum Investor Survivor II 13,185 (5,618) 7,567 Platinum Investor VIP 2,466 (197) 2,269 Fidelity VIP Contrafund Portfolio - Service Class 2 AG Legacy Plus 4,945 (4,089) 856 Corporate America -- (884) (884) Corporate America (reduced surrender charge) 14,712 (322) 14,390 Platinum Investor I & II 119,041 (35,038) 84,003 Platinum Investor III 229,530 (141,892) 87,638 Platinum Investor IV 75,078 (16,909) 58,169 Platinum Investor FlexDirector 2,710 (180) 2,530 Platinum Investor PLUS 27,727 (62,333) (34,606) Platinum Investor Survivor 32,122 (4,723) 27,399 Platinum Investor Survivor II 26,436 (6,446) 19,990 Platinum Investor VIP 38,997 (2,112) 36,885 Platinum Investor VIP (with GMWB rider) 467 (24) 443 Fidelity VIP Equity-Income Portfolio - Service Class 2 AG Legacy Plus 2,385 (8,338) (5,953) Corporate America -- (613) (613) Corporate America (reduced surrender charge) 13,323 (1,637) 11,686 Platinum Investor I & II 19,277 (34,170) (14,893) Platinum Investor III 157,230 (170,479) (13,249) Platinum Investor IV 32,971 (7,953) 25,018 Platinum Investor FlexDirector 275 (174) 101 Platinum Investor PLUS 18,125 (12,148) 5,977 Platinum Investor Survivor 12,148 (13,813) (1,665) Platinum Investor Survivor II 23,457 (1,759) 21,698 Platinum Investor VIP 16,398 (471) 15,927 Platinum Investor VIP (with GMWB rider) 173 (16) 157 Fidelity VIP Freedom 2020 Portfolio - Service Class 2 Platinum Investor III 714 (49) 665 Platinum Investor IV 132 (24) 108 Platinum Investor FlexDirector 6 (1) 5 Platinum Investor VIP 269 (58) 211 Fidelity VIP Freedom 2025 Portfolio - Service Class 2 Platinum Investor III 2,144 -- 2,144 Platinum Investor IV 66 (16) 50 Platinum Investor VIP 3,146 (217) 2,929 Fidelity VIP Freedom 2030 Portfolio - Service Class 2 Platinum Investor III 881 -- 881 Platinum Investor IV 88 (27) 61
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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------------------------------- Fidelity VIP Freedom 2030 Portfolio - Service Class 2 - Continued Platinum Investor PLUS 953 (24) 929 Platinum Investor VIP 4,465 (351) 4,114 Fidelity VIP Growth Portfolio - Service Class 2 AG Legacy Plus 888 (3,450) (2,562) Corporate America (reduced surrender charge) 8,665 (203) 8,462 Platinum Investor I & II 13,114 (33,599) (20,485) Platinum Investor III 277,006 (231,913) 45,093 Platinum Investor IV 23,052 (7,502) 15,550 Platinum Investor FlexDirector 8,053 (1,496) 6,557 Platinum Investor PLUS 24,630 (16,534) 8,096 Platinum Investor Survivor 8,970 (5,090) 3,880 Platinum Investor Survivor II 10,005 (3,208) 6,797 Platinum Investor VIP 5,603 (550) 5,053 Platinum Investor VIP (with GMWB rider) 5 (1) 4 Fidelity VIP Mid Cap Portfolio - Service Class 2 Corporate America (reduced surrender charge) 12,307 (2,742) 9,565 Platinum Investor I & II 4,793 (1,460) 3,333 Platinum Investor III 44,278 (52,794) (8,516) Platinum Investor IV 48,807 (10,963) 37,844 Platinum Investor FlexDirector 304 (59) 245 Platinum Investor PLUS 7,422 (3,410) 4,012 Platinum Investor Survivor 746 (6,067) (5,321) Platinum Investor Survivor II 7,086 (4,083) 3,003 Platinum Investor VIP 23,031 (1,437) 21,594 Platinum Investor VIP (with GMWB rider) 195 (18) 177 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 Corporate America (reduced surrender charge) 8,500 (222) 8,278 Platinum Investor I & II 2,361 (722) 1,639 Platinum Investor III 111,116 (9,600) 101,516 Platinum Investor IV 36,043 (6,903) 29,140 Platinum Investor FlexDirector 1,114 (122) 992 Platinum Investor PLUS 7,981 (6,338) 1,643 Platinum Investor Survivor 19,675 (773) 18,902 Platinum Investor Survivor II 8,314 (4,141) 4,173 Platinum Investor VIP 17,231 (605) 16,626 Franklin Templeton - Franklin Small-Mid Cap Growth Securities Fund - Class 2 AG Legacy Plus 697 (5,146) (4,449) Franklin Templeton - Franklin U.S. Government Fund - Class 2 Platinum Investor I & II 3,542 (7,923) (4,381) Platinum Investor III 38,023 (420,577) (382,554) Platinum Investor IV 33,839 (6,165) 27,674 Platinum Investor FlexDirector 861 (38) 823 Platinum Investor PLUS 5,265 (5,169) 96 Platinum Investor Survivor 179 (8,877) (8,698) Platinum Investor Survivor II 8,775 (9,331) (556) Platinum Investor VIP 3,373 (296) 3,077 Franklin Templeton - Mutual Shares Securities Fund - Class 2 Platinum Investor I & II 78,540 (19,320) 59,220 Platinum Investor III 260,222 (42,479) 217,743 Platinum Investor IV 32,572 (6,656) 25,916
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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ----------------------------------------------------------------------------------------------------------------- Franklin Templeton - Mutual Shares Securities Fund - Class 2 - Continued Platinum Investor FlexDirector 2,792 (124) 2,668 Platinum Investor PLUS 8,925 (5,644) 3,281 Platinum Investor Survivor 34,493 (703) 33,790 Platinum Investor Survivor II 6,217 (785) 5,432 Platinum Investor VIP 9,719 (691) 9,028 Platinum Investor VIP (with GMWB rider) 1,049 (23) 1,026 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 AG Legacy Plus 777 (5,685) (4,908) Platinum Investor I & II 14,573 (17,180) (2,607) Platinum Investor III 33,619 (68,707) (35,088) Platinum Investor IV 20,546 (4,555) 15,991 Platinum Investor FlexDirector 1,768 (205) 1,563 Platinum Investor PLUS 6,184 (4,475) 1,709 Platinum Investor Survivor 11,431 (2,417) 9,014 Platinum Investor Survivor II 6,484 (1,333) 5,151 Platinum Investor VIP 9,161 (452) 8,709 Platinum Investor VIP (with GMWB rider) 9 (2) 7 Goldman Sachs Capital Growth Fund Platinum Investor I & II -- (8,506) (8,506) Platinum Investor III -- (1,324) (1,324) Platinum Investor PLUS -- (2) (2) Platinum Investor Survivor -- (37,958) (37,958) Platinum Investor Survivor II -- (128,556) (128,556) Janus Aspen Series International Growth Portfolio - Service Shares Corporate America (reduced surrender charge) 3,778 (52) 3,726 Platinum Investor I & II 33,114 (20,901) 12,213 Platinum Investor III 204,899 (32,830) 172,069 Platinum Investor IV 23,365 (5,005) 18,360 Platinum Investor FlexDirector 852 (4,918) (4,066) Platinum Investor PLUS 30,861 (2,113) 28,748 Platinum Investor Survivor 24,177 (4,409) 19,768 Platinum Investor Survivor II 15,615 (660) 14,955 Platinum Investor VIP 14,565 (1,074) 13,491 Platinum Investor VIP (with GMWB rider) 168 (15) 153 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Corporate America -- (316) (316) Corporate America (reduced surrender charge) 2,200 (22) 2,178 Platinum Investor I & II 5,179 (23,277) (18,098) Platinum Investor III 72,359 (59,569) 12,790 Platinum Investor IV 4,086 (1,263) 2,823 Platinum Investor PLUS 4,036 (1,592) 2,444 Platinum Investor Survivor 2,214 (2,726) (512) Platinum Investor Survivor II 260 (2,420) (2,160) Platinum Investor VIP 2,310 (205) 2,105 Janus Aspen Series Worldwide Growth Portfolio - Service Shares Corporate America -- (358) (358) Corporate America (reduced surrender charge) 2,898 (1,396) 1,502 Platinum Investor I & II 3,814 (23,021) (19,207) Platinum Investor III 76,526 (90,684) (14,158) Platinum Investor IV 3,726 (1,195) 2,531
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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ------------------------------------------------------------------------------------------------------------------- Janus Aspen Series Worldwide Growth Portfolio - Service Shares - Continued Platinum Investor PLUS 3,789 (2,455) 1,334 Platinum Investor Survivor 2,934 (8,616) (5,682) Platinum Investor Survivor II 588 (498) 90 JPMorgan Mid Cap Value Portfolio Platinum Investor I & II 34 (1,161) (1,127) Platinum Investor III 18,714 (68,844) (50,130) Platinum Investor IV 8,447 (2,241) 6,206 Platinum Investor PLUS 4,745 (6,882) (2,137) Platinum Investor Survivor 60 (5,978) (5,918) Platinum Investor Survivor II 163 (7,509) (7,346) JPMorgan Small Company Portfolio Platinum Investor I & II 2,497 (3,974) (1,477) Platinum Investor III 31,218 (13,674) 17,544 Platinum Investor IV 10,203 (2,438) 7,765 Platinum Investor FlexDirector 241 (59) 182 Platinum Investor PLUS 2,566 (1,744) 822 Platinum Investor Survivor 364 (155) 209 Platinum Investor Survivor II 629 (622) 7 Platinum Investor VIP 11,557 (437) 11,120 MFS VIT Capital Opportunities Series - Initial Class Corporate America -- (61) (61) Corporate America (reduced surrender charge) 1,921 (11) 1,910 Platinum Investor I & II 3,678 (26,585) (22,907) Platinum Investor III 86,140 (97,125) (10,985) Platinum Investor IV 4,024 (1,270) 2,754 Platinum Investor FlexDirector -- (11) (11) Platinum Investor PLUS 11,098 (8,150) 2,948 Platinum Investor Survivor 2,914 (11,617) (8,703) Platinum Investor Survivor II 1,134 (423) 711 MFS VIT Emerging Growth Series - Initial Class AG Legacy Plus 604 (2,402) (1,798) Corporate America (reduced surrender charge) 2,145 (38) 2,107 Platinum Investor I & II 77,151 (153,315) (76,164) Platinum Investor III 123,996 (195,000) (71,004) Platinum Investor IV 4,261 (1,573) 2,688 Platinum Investor FlexDirector 174 (46) 128 Platinum Investor PLUS 11,035 (7,133) 3,902 Platinum Investor Survivor 15,574 (30,459) (14,885) Platinum Investor Survivor II 718 (883) (165) MFS VIT New Discovery Series - Initial Class AG Legacy Plus 1,151 (2,253) (1,102) Corporate America -- (318) (318) Corporate America (reduced surrender charge) 1,984 (42) 1,942 Platinum Investor I & II 2,122 (21,895) (19,773) Platinum Investor III 57,469 (49,070) 8,399 Platinum Investor IV 4,289 (1,307) 2,982 Platinum Investor FlexDirector 2 (12) (10) Platinum Investor PLUS 5,064 (3,627) 1,437 Platinum Investor Survivor 1,338 (1,668) (330) Platinum Investor Survivor II 954 (247) 707
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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------------- MFS VIT New Discovery Series - Initial Class - Continued Platinum Investor VIP 1,921 (118) 1,803 Platinum Investor VIP (with GMWB rider) 296 (8) 288 MFS VIT Research Series - Initial Class Platinum Investor I & II 2,144 (2,789) (645) Platinum Investor III 40,462 (38,885) 1,577 Platinum Investor IV 1,665 (702) 963 Platinum Investor FlexDirector 1 (7) (6) Platinum Investor PLUS 3,246 (1,275) 1,971 Platinum Investor Survivor 1,802 (1,838) (36) Platinum Investor Survivor II 3,803 (264) 3,539 Platinum Investor VIP 943 (40) 903 Platinum Investor VIP (with GMWB rider) 5 (1) 4 MFS VIT Total Return Series - Initial Class AG Legacy Plus 1,628 (20,854) (19,226) Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Corporate America (reduced surrender charge) 2,748 (58) 2,690 Platinum Investor I & II 15,928 (4,892) 11,036 Platinum Investor III 63,107 (42,149) 20,958 Platinum Investor IV 11,715 (2,018) 9,697 Platinum Investor FlexDirector 188 (10) 178 Platinum Investor PLUS 9,445 (6,331) 3,114 Platinum Investor Survivor 5,519 (2,625) 2,894 Platinum Investor Survivor II 884 (638) 246 Platinum Investor VIP 4,433 (231) 4,202 Neuberger Berman AMT Partners Portfolio - Class I AG Legacy Plus 126 (953) (827) Oppenheimer Balanced Fund/VA - Non-Service Shares Platinum Investor I & II 19 (4,676) (4,657) Platinum Investor III 15,218 (5,980) 9,238 Platinum Investor IV 19,189 (5,146) 14,043 Platinum Investor FlexDirector 2,222 (219) 2,003 Platinum Investor PLUS 980 (880) 100 Platinum Investor Survivor 324 (471) (147) Platinum Investor Survivor II 295 (290) 5 Platinum Investor VIP 6,818 (426) 6,392 Oppenheimer Global Securities Fund/VA - Non-Service Shares Corporate America (reduced surrender charge) 6,715 (81) 6,634 Platinum Investor I & II 7,592 (1,781) 5,811 Platinum Investor III 32,223 (12,499) 19,724 Platinum Investor IV 20,330 (5,541) 14,789 Platinum Investor FlexDirector 577 (17) 560 Platinum Investor PLUS 4,768 (1,962) 2,806 Platinum Investor Survivor 2,890 (243) 2,647 Platinum Investor Survivor II 1,298 (325) 973 Platinum Investor VIP 15,438 (828) 14,610 Platinum Investor VIP (with GMWB rider) 189 (18) 171 Oppenheimer High Income Fund/VA - Non-Service Shares AG Legacy Plus 327 (616) (289)
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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ---------------------------------------------------------------------------------------------------------------- PIMCO VIT CommodityRealReturn Strategy Portfolio - Administrative Class Platinum Investor I & II 21,833 (266) 21,567 Platinum Investor III 2,834 (114) 2,720 Platinum Investor IV 234 (51) 183 Platinum Investor PLUS 39 (1) 38 Platinum Investor Survivor II 193 (14) 179 Platinum Investor VIP 2,023 (138) 1,885 Platinum Investor VIP (with GMWB rider) 4 (1) 3 PIMCO VIT Real Return Portfolio - Administrative Class AG Legacy Plus 1,735 (11,623) (9,888) Corporate America -- (114) (114) Corporate America (reduced surrender charge) 10,633 (366) 10,267 Platinum Investor I & II 13,499 (69,614) (56,115) Platinum Investor III 97,016 (106,614) (9,598) Platinum Investor IV 39,397 (9,236) 30,161 Platinum Investor FlexDirector 546 (106) 440 Platinum Investor PLUS 10,934 (10,302) 632 Platinum Investor Survivor 8,274 (4,524) 3,750 Platinum Investor Survivor II 9,831 (6,878) 2,953 Platinum Investor VIP 3,781 (391) 3,390 PIMCO VIT Short-Term Portfolio - Administrative Class Corporate America -- (627) (627) Corporate America (reduced surrender charge) 857 (7) 850 Platinum Investor I & II 3,407 (10,327) (6,920) Platinum Investor III 38,784 (55,551) (16,767) Platinum Investor IV 15,643 (5,453) 10,190 Platinum Investor FlexDirector 2,259 (1,279) 980 Platinum Investor PLUS 6,068 (4,103) 1,965 Platinum Investor Survivor 582 (695) (113) Platinum Investor Survivor II 3,724 (925) 2,799 Platinum Investor VIP 6,777 (481) 6,296 Platinum Investor VIP (with GMWB rider) 5 (1) 4 PIMCO VIT Total Return Portfolio - Administrative Class AG Legacy Plus 1,416 (9,207) (7,791) Corporate America (reduced surrender charge) 13,761 (307) 13,454 Platinum Investor I & II 37,678 (23,678) 14,000 Platinum Investor III 170,473 (354,595) (184,122) Platinum Investor IV 54,007 (12,051) 41,956 Platinum Investor FlexDirector 3,537 (1,701) 1,836 Platinum Investor PLUS 17,527 (12,867) 4,660 Platinum Investor Survivor 2,787 (25,618) (22,831) Platinum Investor Survivor II 9,197 (38,683) (29,486) Platinum Investor VIP 14,410 (849) 13,561 Platinum Investor VIP (with GMWB rider) 411 (11) 400 Pioneer Fund VCT Portfolio - Class I Platinum Investor I & II 15,172 (29,952) (14,780) Platinum Investor III 8,674 (10,891) (2,217) Platinum Investor PLUS 121 (226) (105) Platinum Investor Survivor 839 (19,293) (18,454) Platinum Investor Survivor II 33 (13) 20
VL-R - 40 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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - -------------------------------------------------------------------------------------------------- Pioneer Growth Opportunities VCT Portfolio - Class I Corporate America 24 (106) (82) Platinum Investor I & II 21,141 (67,105) (45,964) Platinum Investor III 23,140 (23,164) (24) Platinum Investor PLUS 1,068 (799) 269 Platinum Investor Survivor 2,141 (3,489) (1,348) Platinum Investor Survivor II 16 (12) 4 Pioneer Mid Cap Value VCT Portfolio - Class I Platinum Investor I & II 9 (5) 4 Platinum Investor III 3,743 (43) 3,700 Platinum Investor IV 136 (59) 77 Platinum Investor PLUS 30 (5) 25 Platinum Investor Survivor II 2,372 -- 2,372 Platinum Investor VIP 1,065 (132) 933 Putnam VT Diversified Income Fund - Class IB AG Legacy Plus 979 (1,824) (845) Corporate America 44,500 (43,016) 1,484 Corporate America (reduced surrender charge) 31,006 (496) 30,510 Platinum Investor I & II 77,173 (11,941) 65,232 Platinum Investor III 33,920 (105,329) (71,409) Platinum Investor IV 7,278 (1,761) 5,517 Platinum Investor FlexDirector -- (4) (4) Platinum Investor PLUS 2,507 (1,254) 1,253 Platinum Investor Survivor 9,469 (184) 9,285 Platinum Investor Survivor II 845 (306) 539 Platinum Investor VIP 4,366 (297) 4,069 Putnam VT Growth and Income Fund - Class IB Corporate America 51,176 (53,224) (2,048) Corporate America (reduced surrender charge) 32,845 (1,896) 30,949 Platinum Investor I & II 33,174 (102,936) (69,762) Platinum Investor III 113,175 (122,364) (9,189) Platinum Investor IV 22,373 (8,691) 13,682 Platinum Investor FlexDirector 1,028 (1,592) (564) Platinum Investor PLUS 9,637 (7,085) 2,552 Platinum Investor Survivor 3,041 (36,367) (33,326) Platinum Investor Survivor II 2,328 (770) 1,558 Putnam VT International Growth and Income Fund - Class IB Corporate America (reduced surrender charge) 3,327 (28) 3,299 Platinum Investor I & II 40,918 (16,483) 24,435 Platinum Investor III 72,423 (25,996) 46,427 Platinum Investor IV 16,964 (3,799) 13,165 Platinum Investor FlexDirector 473 (18) 455 Platinum Investor PLUS 4,478 (2,402) 2,076 Platinum Investor Survivor 3,380 (4,691) (1,311) Platinum Investor Survivor II 2,897 (246) 2,651 Platinum Investor VIP 8,934 (687) 8,247 Putnam VT Small Cap Value Fund - Class IB AG Legacy Plus 440 (3,256) (2,816) Putnam VT Vista Fund - Class IB AG Legacy Plus 10,890 (633) 10,257
VL-R - 41 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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------- Putnam VT Voyager Fund - Class IB AG Legacy Plus 4,943 (4,486) 457 SunAmerica - Aggressive Growth Portfolio - Class 1 Platinum Investor I & II 286 (4,008) (3,722) Platinum Investor III 11,221 (9,174) 2,047 Platinum Investor IV 3,328 (1,667) 1,661 Platinum Investor PLUS 2,515 (1,710) 805 Platinum Investor Survivor -- (138) (138) Platinum Investor Survivor II 870 (153) 717 Platinum Investor VIP 869 (121) 748 SunAmerica - SunAmerica Balanced Portfolio - Class 1 Platinum Investor I & II 110 (105) 5 Platinum Investor III 20,129 (13,883) 6,246 Platinum Investor IV 5,231 (2,393) 2,838 Platinum Investor PLUS 5,384 (3,282) 2,102 Platinum Investor Survivor II 1,395 (306) 1,089 Platinum Investor VIP 1,923 (153) 1,770 UIF Equity Growth Portfolio - Class I Platinum Investor I & II 36,338 (65,895) (29,557) Platinum Investor III 20,827 (21,031) (204) Platinum Investor IV 2,950 (989) 1,961 Platinum Investor PLUS 1,190 (702) 488 Platinum Investor Survivor 4,840 (2,824) 2,016 Platinum Investor Survivor II 111 (32) 79 UIF High Yield Portfolio - Class I Platinum Investor I & II 7,251 (12,553) (5,302) Platinum Investor III 4,984 (6,867) (1,883) Platinum Investor IV 1,185 (282) 903 Platinum Investor FlexDirector 456 (295) 161 Platinum Investor PLUS 828 (587) 241 Platinum Investor Survivor 350 (73,074) (72,724) Platinum Investor Survivor II 3,336 (169) 3,167 VALIC Company I - International Equities Fund AG Legacy Plus 275 (6,044) (5,769) Platinum Investor I & II 5,019 (14,826) (9,807) Platinum Investor III 14,685 (17,446) (2,761) Platinum Investor IV 3,511 (1,220) 2,291 Platinum Investor FlexDirector 137 (47) 90 Platinum Investor PLUS 1,304 (1,556) (252) Platinum Investor Survivor 1,243 (985) 258 Platinum Investor Survivor II 502 (321) 181 Platinum Investor VIP 7,549 (260) 7,289 VALIC Company I - Mid Cap Index Fund AG Legacy Plus 1,280 (4,645) (3,365) Corporate America 32 (524) (492) Corporate America (reduced surrender charge) 2,420 (41) 2,379 Platinum Investor I & II 26,640 (52,625) (25,985) Platinum Investor III 76,591 (98,616) (22,025) Platinum Investor IV 18,226 (5,083) 13,143 Platinum Investor FlexDirector 458 (76) 382 Platinum Investor PLUS 6,678 (4,601) 2,077
VL-R - 42 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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ----------------------------------------------------------------------------------------- VALIC Company I - Mid Cap Index Fund - Continued Platinum Investor Survivor 4,757 (6,336) (1,579) Platinum Investor Survivor II 8,664 (1,543) 7,121 Platinum Investor VIP 14,822 (611) 14,211 Platinum Investor VIP (with GMWB rider) 196 (19) 177 VALIC Company I - Money Market I Fund AG Legacy Plus 566 (12,440) (11,874) Corporate America (reduced surrender charge) 183,677 (150,792) 32,885 Platinum Investor I & II 137,205 (208,885) (71,680) Platinum Investor III 574,620 (135,605) 439,015 Platinum Investor IV 527,282 (531,198) (3,916) Platinum Investor FlexDirector 17,352 (17,335) 17 Platinum Investor PLUS 36,064 (40,019) (3,955) Platinum Investor Survivor 74,482 (43,514) 30,968 Platinum Investor Survivor II 112,952 (106,385) 6,567 Platinum Investor VIP 404,521 (352,052) 52,469 Platinum Investor VIP (with GMWB rider) 3,357 (2,916) 441 VALIC Company I - Nasdaq-100 Index Fund Platinum Investor I & II 13,996 (33,104) (19,108) Platinum Investor III 82,107 (172,472) (90,365) Platinum Investor IV 3,303 (1,103) 2,200 Platinum Investor FlexDirector 49 (26) 23 Platinum Investor PLUS 3,291 (2,433) 858 Platinum Investor Survivor 409 (3,526) (3,117) Platinum Investor Survivor II 23,550 (4,287) 19,263 Platinum Investor VIP 951 (71) 880 VALIC Company I - Science & Technology Fund Platinum Investor I & II 11,575 (28,989) (17,414) Platinum Investor III 33,351 (38,602) (5,251) Platinum Investor IV 2,052 (600) 1,452 Platinum Investor FlexDirector 54 (25) 29 Platinum Investor PLUS 1,178 (1,158) 20 Platinum Investor Survivor 1,880 (7,947) (6,067) Platinum Investor Survivor II 1,170 (97) 1,073 Platinum Investor VIP 361 (23) 338 VALIC Company I - Small Cap Index Fund Corporate America -- (211) (211) Corporate America (reduced surrender charge) 2,463 (20) 2,443 Platinum Investor I & II 7,231 (13,159) (5,928) Platinum Investor III 43,975 (61,944) (17,969) Platinum Investor IV 14,868 (2,950) 11,918 Platinum Investor FlexDirector 982 (116) 866 Platinum Investor PLUS 4,833 (2,870) 1,963 Platinum Investor Survivor 1,371 (1,786) (415) Platinum Investor Survivor II 4,868 (813) 4,055 Platinum Investor VIP 12,547 (434) 12,113 Platinum Investor VIP (with GMWB rider) 186 (17) 169 VALIC Company I - Stock Index Fund AG Legacy Plus 1,329 (9,845) (8,516) Corporate America 57 (256) (199) Corporate America (reduced surrender charge) 3,300 (133) 3,167
VL-R - 43 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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------- VALIC Company I - Stock Index Fund - Continued Platinum Investor I & II 99,429 (233,607) (134,178) Platinum Investor III 161,236 (624,509) (463,273) Platinum Investor IV 35,862 (6,568) 29,294 Platinum Investor FlexDirector 2,625 (550) 2,075 Platinum Investor PLUS 13,928 (11,110) 2,818 Platinum Investor Survivor 10,232 (126,259) (116,027) Platinum Investor Survivor II 18,762 (3,182) 15,580 Platinum Investor VIP 7,401 (521) 6,880 Van Kampen LIT Government Portfolio - Class I AG Legacy Plus 275 (2,378) (2,103) Van Kampen LIT Growth and Income Portfolio - Class I Platinum Investor I & II 20,015 (94,692) (74,677) Platinum Investor III 109,768 (35,434) 74,334 Platinum Investor IV 25,003 (6,863) 18,140 Platinum Investor FlexDirector 554 (80) 474 Platinum Investor PLUS 7,277 (4,519) 2,758 Platinum Investor Survivor 9,817 (7,179) 2,638 Platinum Investor Survivor II 16,112 (8,180) 7,932 Platinum Investor VIP 7,407 (528) 6,879 Van Kampen LIT Strategic Growth Portfolio - Class I AG Legacy Plus 860 (1,228) (368) Vanguard VIF High Yield Bond Portfolio Corporate America (reduced surrender charge) 4,444 (33) 4,411 Platinum Investor I & II 2,634 (24,526) (21,892) Platinum Investor III 48,405 (88,907) (40,502) Platinum Investor IV 18,809 (4,902) 13,907 Platinum Investor FlexDirector 93 (19) 74 Platinum Investor PLUS 7,281 (6,885) 396 Platinum Investor Survivor 11,434 (2,314) 9,120 Platinum Investor Survivor II 3,828 (572) 3,256 Platinum Investor VIP 5,457 (443) 5,014 Platinum Investor VIP (with GMWB rider) 3 (1) 2 Vanguard VIF REIT Index Portfolio Corporate America -- (115) (115) Corporate America (reduced surrender charge) 5,655 (96) 5,559 Platinum Investor I & II 8,453 (21,641) (13,188) Platinum Investor III 50,371 (46,873) 3,498 Platinum Investor IV 38,700 (11,505) 27,195 Platinum Investor FlexDirector 1,212 (571) 641 Platinum Investor PLUS 32,546 (5,921) 26,625 Platinum Investor Survivor 739 (6,093) (5,354) Platinum Investor Survivor II 4,662 (2,398) 2,264 Platinum Investor VIP 19,550 (1,481) 18,069 Platinum Investor VIP (with GMWB rider) 539 (24) 515
VL-R - 44 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, 2006.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------------- AIM V.I. International Growth Fund - Series I AG Legacy Plus 9,348 (1,529) 7,819 Corporate America 37 (2,935) (2,898) Corporate America (reduced surrender charge) 1,228 (19) 1,209 Platinum Investor I & II 38,436 (56,918) (18,482) Platinum Investor III 52,170 (112,757) (60,587) Platinum Investor IV 12,470 (1,524) 10,946 Platinum Investor FlexDirector 95 (13) 82 Platinum Investor PLUS 7,492 (2,000) 5,492 Platinum Investor Survivor 5,150 (22,858) (17,708) Platinum Investor Survivor II 823 (15,625) (14,802) AIM V.I. Premier Equity Fund - Series I Corporate America 72 (247) (175) Platinum Investor I & II 100,946 (187,692) (86,746) Platinum Investor III 124,273 (140,038) (15,765) Platinum Investor IV 7,072 (865) 6,207 Platinum Investor FlexDirector 196 (11) 185 Platinum Investor PLUS 6,234 (3,606) 2,628 Platinum Investor Survivor 16,843 (24,564) (7,721) Platinum Investor Survivor II 2,313 (1,195) 1,118 Alger American Leveraged AllCap Portfolio - Class O Shares Platinum Investor I & II 7,531 (151) 7,380 Platinum Investor III 22,081 (6,643) 15,438 Platinum Investor IV 5,794 (408) 5,386 Platinum Investor FlexDirector 96 (9) 87 Platinum Investor PLUS 3,954 (1,761) 2,193 Platinum Investor Survivor 144 (136) 8 Platinum Investor Survivor II 66 (1) 65 Alger American MidCap Growth Portfolio - Class O Shares Corporate America (reduced surrender charge) 1,175 (2) 1,173 Platinum Investor I & II 250 (335) (85) Platinum Investor III 24,332 (8,737) 15,595 Platinum Investor IV 4,959 (676) 4,283 Platinum Investor FlexDirector 1,234 (326) 908 Platinum Investor PLUS 3,093 (1,696) 1,397 Platinum Investor Survivor 844 (144) 700 Platinum Investor Survivor II 1,484 (236) 1,248 American Century VP Value Fund - Class I AG Legacy Plus 1,816 (6,571) (4,755) Corporate America 152 (627) (475) Corporate America (reduced surrender charge) 7,835 (281) 7,554 Platinum Investor I & II 65,135 (34,272) 30,863 Platinum Investor III 105,581 (129,287) (23,706) Platinum Investor IV 26,500 (2,312) 24,188 Platinum Investor FlexDirector 35 (19) 16
VL-R - 45 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, 2005.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - -------------------------------------------------------------------------------------------------- American Century VP Value Fund - Class I - Continued Platinum Investor PLUS 24,553 (10,023) 14,530 Platinum Investor Survivor 2,869 (12,940) (10,071) Platinum Investor Survivor II 7,307 (45,673) (38,366) Credit Suisse Small Cap Growth Portfolio Platinum Investor I & II 5,374 (37,671) (32,297) Platinum Investor III 35,401 (52,803) (17,402) Platinum Investor IV 3,114 (398) 2,716 Platinum Investor FlexDirector 1,093 (101) 992 Platinum Investor PLUS 4,861 (2,485) 2,376 Platinum Investor Survivor 543 (173) 370 Platinum Investor Survivor II 723 (211) 512 Dreyfus IP MidCap Stock Portfolio - Initial shares Platinum Investor I & II 15,309 (11,330) 3,979 Platinum Investor III 55,819 (33,968) 21,851 Platinum Investor IV 5,274 (625) 4,649 Platinum Investor FlexDirector 2 (2) -- Platinum Investor PLUS 7,675 (3,490) 4,185 Platinum Investor Survivor 1,728 (4,780) (3,052) Platinum Investor Survivor II 4,012 (784) 3,228 Dreyfus VIF Developing Leaders Portfolio - Initial shares Corporate America 65 (5,678) (5,613) Corporate America (reduced surrender charge) 833 (4) 829 Platinum Investor I & II 44,487 (67,776) (23,289) Platinum Investor III 116,261 (113,424) 2,837 Platinum Investor IV 5,731 (906) 4,825 Platinum Investor FlexDirector 503 -- 503 Platinum Investor PLUS 11,797 (6,828) 4,969 Platinum Investor Survivor 4,497 (8,068) (3,571) Platinum Investor Survivor II 3,040 (30,390) (27,350) Dreyfus VIF Quality Bond Portfolio - Initial shares Corporate America 23 (4,442) (4,419) Corporate America (reduced surrender charge) 4,205 (48) 4,157 Platinum Investor I & II 15,154 (30,975) (15,821) Platinum Investor III 75,734 (70,094) 5,640 Platinum Investor IV 7,852 (699) 7,153 Platinum Investor PLUS 8,391 (4,518) 3,873 Platinum Investor Survivor 2,158 (9,432) (7,274) Platinum Investor Survivor II 3,876 (1,288) 2,588 Fidelity VIP Asset Manager Portfolio - Service Class 2 AG Legacy Plus 118 (2,972) (2,854) Platinum Investor I & II 2,350 (34,154) (31,804) Platinum Investor III 79,181 (39,978) 39,203 Platinum Investor IV 3,759 (458) 3,301 Platinum Investor FlexDirector 741 (12) 729
VL-R - 46 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, 2005.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ----------------------------------------------------------------------------------------------------------- Fidelity VIP Asset Manager Portfolio - Service Class 2 - Continued Platinum Investor PLUS 10,968 (4,043) 6,925 Platinum Investor Survivor 1,462 (723) 739 Platinum Investor Survivor II 3,750 (1,538) 2,212 Fidelity VIP Contrafund Portfolio - Service Class 2 AG Legacy Plus 2,298 (3,083) (785) Corporate America 105 (1,453) (1,348) Corporate America (reduced surrender charge) 4,508 (300) 4,208 Platinum Investor I & II 88,166 (34,119) 54,047 Platinum Investor III 397,278 (128,791) 268,487 Platinum Investor IV 38,296 (3,476) 34,820 Platinum Investor FlexDirector 5,263 (28) 5,235 Platinum Investor PLUS 85,504 (15,581) 69,923 Platinum Investor Survivor 17,558 (4,999) 12,559 Platinum Investor Survivor II 34,928 (8,314) 26,614 Fidelity VIP Equity-Income Portfolio - Service Class 2 AG Legacy Plus 3,219 (9,652) (6,433) Corporate America 171 (14,885) (14,714) Corporate America (reduced surrender charge) 13,226 (305) 12,921 Platinum Investor I & II 34,960 (107,166) (72,206) Platinum Investor III 191,278 (219,541) (28,263) Platinum Investor IV 22,978 (2,312) 20,666 Platinum Investor FlexDirector 729 (66) 663 Platinum Investor PLUS 31,194 (12,995) 18,199 Platinum Investor Survivor 13,160 (32,981) (19,821) Platinum Investor Survivor II 13,470 (4,129) 9,341 Fidelity VIP Growth Portfolio - Service Class 2 AG Legacy Plus 984 (3,159) (2,175) Corporate America -- (5,424) (5,424) Corporate America (reduced surrender charge) 8,144 (98) 8,046 Platinum Investor I & II 27,833 (144,346) (116,513) Platinum Investor III 296,802 (191,916) 104,886 Platinum Investor IV 20,027 (2,310) 17,717 Platinum Investor FlexDirector 1,782 (4,398) (2,616) Platinum Investor PLUS 38,244 (17,765) 20,479 Platinum Investor Survivor 7,605 (16,974) (9,369) Platinum Investor Survivor II 6,304 (3,763) 2,541 Fidelity VIP Mid Cap Portfolio - Service Class 2 Corporate America (reduced surrender charge) 12,827 (165) 12,662 Platinum Investor I & II 222 (6,998) (6,776) Platinum Investor III 164,804 (14,515) 150,289 Platinum Investor IV 17,797 (1,901) 15,896 Platinum Investor FlexDirector 268 (33) 235 Platinum Investor PLUS 6,212 (2,292) 3,920
VL-R - 47 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, 2005.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------------------------------- Fidelity VIP Mid Cap Portfolio - Service Class 2 - Continued Platinum Investor Survivor 12,066 (214) 11,852 Platinum Investor Survivor II 9,925 (4,438) 5,487 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 Corporate America (reduced surrender charge) 2,772 (27) 2,745 Platinum Investor I & II 2,789 (696) 2,093 Platinum Investor III 156,031 (16,334) 139,697 Platinum Investor IV 17,337 (1,360) 15,977 Platinum Investor FlexDirector 161 (39) 122 Platinum Investor PLUS 12,527 (2,882) 9,645 Platinum Investor Survivor 10,876 (632) 10,244 Platinum Investor Survivor II 12,531 (4,745) 7,786 Franklin Templeton - Franklin Small-Mid Cap Growth Securities Fund - Class 2 AG Legacy Plus 355 (4,550) (4,195) Franklin Templeton - Franklin U.S. Government Fund - Class 2 Platinum Investor I & II 18,671 (6,949) 11,722 Platinum Investor III 197,373 (87,246) 110,127 Platinum Investor IV 5,264 (699) 4,565 Platinum Investor PLUS 6,395 (4,605) 1,790 Platinum Investor Survivor 9,007 (49) 8,958 Platinum Investor Survivor II 18,858 (8,439) 10,419 Franklin Templeton - Mutual Shares Securities Fund - Class 2 Platinum Investor I & II 52,199 (6,755) 45,444 Platinum Investor III 52,326 (39,950) 12,376 Platinum Investor IV 10,709 (1,134) 9,575 Platinum Investor FlexDirector 3,326 (12) 3,314 Platinum Investor PLUS 16,740 (5,462) 11,278 Platinum Investor Survivor 992 (112) 880 Platinum Investor Survivor II 1,210 (14,738) (13,528) Franklin Templeton - Templeton Foreign Securities Fund - Class 2 AG Legacy Plus 1,356 (3,036) (1,680) Platinum Investor I & II 16,838 (48,205) (31,367) Platinum Investor III 42,328 (94,391) (52,063) Platinum Investor IV 15,235 (1,456) 13,779 Platinum Investor FlexDirector 1,460 (55) 1,405 Platinum Investor PLUS 16,047 (4,151) 11,896 Platinum Investor Survivor 639 (14,440) (13,801) Platinum Investor Survivor II 7,990 (3,275) 4,715 Goldman Sachs Capital Growth Fund Platinum Investor I & II -- (713) (713) Platinum Investor III -- (1,680) (1,680) Platinum Investor PLUS -- (1) (1) Platinum Investor Survivor -- (35,970) (35,970) Platinum Investor Survivor II -- (15,231) (15,231)
VL-R - 48 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, 2005.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ----------------------------------------------------------------------------------------------------------- Janus Aspen Series International Growth Portfolio - Service Shares Corporate America -- (3,189) (3,189) Platinum Investor I & II 15,049 (13,519) 1,530 Platinum Investor III 62,954 (32,705) 30,249 Platinum Investor IV 11,141 (1,087) 10,054 Platinum Investor FlexDirector 2,666 (1,241) 1,425 Platinum Investor PLUS 15,668 (1,965) 13,703 Platinum Investor Survivor 9,075 (3,507) 5,568 Platinum Investor Survivor II 2,179 (490) 1,689 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Corporate America 38 (208) (170) Platinum Investor I & II 29,597 (6,527) 23,070 Platinum Investor III 87,693 (100,095) (12,402) Platinum Investor IV 1,966 (279) 1,687 Platinum Investor PLUS 3,831 (1,802) 2,029 Platinum Investor Survivor 2,782 (20,228) (17,446) Platinum Investor Survivor II 968 (224) 744 Janus Aspen Series Worldwide Growth Portfolio - Service Shares Corporate America 38 (6,684) (6,646) Corporate America (reduced surrender charge) 4,208 (58) 4,150 Platinum Investor I & II 4,346 (20,792) (16,446) Platinum Investor III 92,425 (85,480) 6,945 Platinum Investor IV 5,402 (357) 5,045 Platinum Investor PLUS 5,345 (2,785) 2,560 Platinum Investor Survivor 4,564 (15,712) (11,148) Platinum Investor Survivor II 2,669 (18,374) (15,705) JPMorgan Mid Cap Value Portfolio Platinum Investor I & II 5,014 (160) 4,854 Platinum Investor III 180,868 (7,200) 173,668 Platinum Investor IV 11,049 (941) 10,108 Platinum Investor PLUS 5,746 (1,408) 4,338 Platinum Investor Survivor 15,786 (132) 15,654 Platinum Investor Survivor II 17,743 (7,811) 9,932 JPMorgan Small Company Portfolio Platinum Investor I & II 15,581 (6,935) 8,646 Platinum Investor III 25,543 (29,113) (3,570) Platinum Investor IV 4,213 (662) 3,551 Platinum Investor FlexDirector 78 (19) 59 Platinum Investor PLUS 5,533 (2,006) 3,527 Platinum Investor Survivor 148 (305) (157) Platinum Investor Survivor II 2,196 (402) 1,794 MFS VIT Capital Opportunities Series - Initial Class Corporate America 64 (3) 61 Platinum Investor I & II 4,027 (15,030) (11,003) Platinum Investor III 101,212 (114,625) (13,413)
VL-R - 49 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, 2005.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------------------- MFS VIT Capital Opportunities Series - Initial Class - Continued Platinum Investor IV 3,535 (374) 3,161 Platinum Investor FlexDirector 177 (7) 170 Platinum Investor PLUS 15,014 (6,376) 8,638 Platinum Investor Survivor 5,300 (10,021) (4,721) Platinum Investor Survivor II 822 (538) 284 MFS VIT Emerging Growth Series - Initial Class AG Legacy Plus 1,562 (1,202) 360 Corporate America -- (1,040) (1,040) Corporate America (reduced surrender charge) 795 (27) 768 Platinum Investor I & II 111,738 (185,234) (73,496) Platinum Investor III 155,992 (501,772) (345,780) Platinum Investor IV 4,748 (343) 4,405 Platinum Investor FlexDirector 178 (44) 134 Platinum Investor PLUS 14,712 (6,799) 7,913 Platinum Investor Survivor 19,049 (71,595) (52,546) Platinum Investor Survivor II 885 (29,287) (28,402) MFS VIT New Discovery Series - Initial Class AG Legacy Plus 5,728 (1,942) 3,786 Corporate America 30 (249) (219) Platinum Investor I & II 4,995 (23,768) (18,773) Platinum Investor III 71,845 (55,538) 16,307 Platinum Investor IV 4,159 (329) 3,830 Platinum Investor FlexDirector 166 (13) 153 Platinum Investor PLUS 6,686 (3,412) 3,274 Platinum Investor Survivor 2,612 (1,305) 1,307 Platinum Investor Survivor II 1,300 (982) 318 MFS VIT Research Series - Initial Class Corporate America -- (3,158) (3,158) Corporate America (reduced surrender charge) 134 (134) -- Platinum Investor I & II 2,995 (8,893) (5,898) Platinum Investor III 51,776 (31,226) 20,550 Platinum Investor IV 2,669 (161) 2,508 Platinum Investor FlexDirector 101 (5) 96 Platinum Investor PLUS 3,891 (1,172) 2,719 Platinum Investor Survivor 2,542 (2,344) 198 Platinum Investor Survivor II 1,823 (526) 1,297 MFS VIT Total Return Series - Initial Class AG Legacy Plus 3,325 (20,877) (17,552) Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Corporate America -- (1,789) (1,789) Corporate America (reduced surrender charge) 730 (6) 724 Platinum Investor I & II 8,930 (9,237) (307) Platinum Investor III 74,065 (49,732) 24,333 Platinum Investor IV 4,611 (381) 4,230
VL-R - 50 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, 2005.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ------------------------------------------------------------------------------------------------------------ Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I - Continued Platinum Investor FlexDirector 377 (7) 370 Platinum Investor PLUS 16,081 (6,033) 10,048 Platinum Investor Survivor 8,668 (8,724) (56) Platinum Investor Survivor II 3,277 (992) 2,285 Neuberger Berman AMT Partners Portfolio - Class I AG Legacy Plus 86 (3,886) (3,800) Oppenheimer Balanced Fund/VA - Non-Service Shares Platinum Investor I & II 9,959 (271) 9,688 Platinum Investor III 15,213 (5,339) 9,874 Platinum Investor IV 14,336 (755) 13,581 Platinum Investor FlexDirector 44 (11) 33 Platinum Investor PLUS 7,526 (17,692) (10,166) Platinum Investor Survivor 350 (350) -- Platinum Investor Survivor II 420 (264) 156 Oppenheimer Global Securities Fund/VA - Non-Service Shares Platinum Investor I & II 11,767 (4,553) 7,214 Platinum Investor III 48,944 (10,387) 38,557 Platinum Investor IV 16,002 (1,447) 14,555 Platinum Investor FlexDirector 13 (5) 8 Platinum Investor PLUS 5,004 (1,820) 3,184 Platinum Investor Survivor 2,543 (136) 2,407 Platinum Investor Survivor II 3,188 (155) 3,033 Oppenheimer High Income Fund/VA - Non-Service Shares AG Legacy Plus 1,259 (972) 287 PIMCO VIT Real Return Portfolio - Administrative Class AG Legacy Plus 3,229 (11,422) (8,193) Corporate America -- (100) (100) Corporate America (reduced surrender charge) 5,166 (76) 5,090 Platinum Investor I & II 66,209 (16,080) 50,129 Platinum Investor III 96,677 (186,538) (89,861) Platinum Investor IV 14,468 (1,053) 13,415 Platinum Investor FlexDirector 290 (36) 254 Platinum Investor PLUS 12,622 (8,420) 4,202 Platinum Investor Survivor 1,601 (17,047) (15,446) Platinum Investor Survivor II 5,802 (16,513) (10,711) PIMCO VIT Short-Term Portfolio - Administrative Class Corporate America 62 (20,734) (20,672) Platinum Investor I & II 12,114 (129,917) (117,803) Platinum Investor III 48,383 (36,378) 12,005 Platinum Investor IV 13,656 (1,441) 12,215 Platinum Investor FlexDirector 2,624 (479) 2,145 Platinum Investor PLUS 16,275 (3,001) 13,274 Platinum Investor Survivor 701 (8,720) (8,019) Platinum Investor Survivor II 2,014 (2,941) (927)
VL-R - 51 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, 2005.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ------------------------------------------------------------------------------------------------ PIMCO VIT Total Return Portfolio - Administrative Class AG Legacy Plus 8,772 (6,331) 2,441 Corporate America -- (8,965) (8,965) Corporate America (reduced surrender charge) 4,365 (41) 4,324 Platinum Investor I & II 79,462 (23,513) 55,949 Platinum Investor III 834,665 (94,490) 740,175 Platinum Investor IV 24,985 (2,450) 22,535 Platinum Investor FlexDirector 3,410 (540) 2,870 Platinum Investor PLUS 31,264 (11,354) 19,910 Platinum Investor Survivor 54,723 (3,630) 51,093 Platinum Investor Survivor II 74,195 (38,428) 35,767 Pioneer Fund VCT Portfolio - Class I Platinum Investor I & II 23,363 (48,647) (25,284) Platinum Investor III 9,657 (10,996) (1,339) Platinum Investor PLUS 208 (158) 50 Platinum Investor Survivor 1,432 (2,322) (890) Platinum Investor Survivor II 231 (61) 170 Pioneer Growth Opportunities VCT Portfolio - Class I Corporate America 29 (101) (72) Platinum Investor I & II 32,721 (71,344) (38,623) Platinum Investor III 27,707 (30,394) (2,687) Platinum Investor PLUS 1,271 (598) 673 Platinum Investor Survivor 885 (3,881) (2,996) Platinum Investor Survivor II 46 (19,774) (19,728) Putnam VT Diversified Income Fund - Class IB AG Legacy Plus 1,325 (870) 455 Corporate America 63,105 (6,026) 57,079 Corporate America (reduced surrender charge) 8,421 (134) 8,287 Platinum Investor I & II 21,713 (12,226) 9,487 Platinum Investor III 114,367 (11,568) 102,799 Platinum Investor IV 4,383 (333) 4,050 Platinum Investor FlexDirector 65 (4) 61 Platinum Investor PLUS 3,012 (1,326) 1,686 Platinum Investor Survivor 8,330 (180) 8,150 Platinum Investor Survivor II 963 (468) 495 Putnam VT Growth and Income Fund - Class IB Corporate America 76,130 (18,293) 57,837 Corporate America (reduced surrender charge) 13,633 (540) 13,093 Platinum Investor I & II 43,814 (127,798) (83,984) Platinum Investor III 136,054 (100,872) 35,182 Platinum Investor IV 20,946 (2,683) 18,263 Platinum Investor FlexDirector 2,502 (172) 2,330 Platinum Investor PLUS 13,340 (6,110) 7,230 Platinum Investor Survivor 7,950 (10,687) (2,737) Platinum Investor Survivor II 2,586 (1,433) 1,153
VL-R - 52 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, 2005.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - -------------------------------------------------------------------------------------------------- Putnam VT International Growth and Income Fund - Class IB Corporate America -- (2,293) (2,293) Corporate America (reduced surrender charge) 246 -- 246 Platinum Investor I & II 17,282 (46,769) (29,487) Platinum Investor III 51,765 (66,315) (14,550) Platinum Investor IV 10,019 (1,061) 8,958 Platinum Investor FlexDirector 95 (20) 75 Platinum Investor PLUS 5,934 (2,182) 3,752 Platinum Investor Survivor 5,090 (8,106) (3,016) Platinum Investor Survivor II 1,528 (626) 902 Putnam VT Small Cap Value Fund - Class IB AG Legacy Plus 644 (5,935) (5,291) Putnam VT Vista Fund - Class IB AG Legacy Plus 7,876 (6,018) 1,858 Putnam VT Voyager Fund - Class IB AG Legacy Plus 15,173 (6,332) 8,841 Scudder VIT Equity 500 Index Fund - Class A Legacy Plus 129 (1,986) (1,857) SunAmerica - Aggressive Growth Portfolio - Class 1 Platinum Investor I & II 15,054 (844) 14,210 Platinum Investor III 22,228 (7,666) 14,562 Platinum Investor IV 3,920 (467) 3,453 Platinum Investor PLUS 3,564 (1,344) 2,220 Platinum Investor Survivor 27 (158) (131) Platinum Investor Survivor II 267 (68) 199 SunAmerica - SunAmerica Balanced Portfolio - Class 1 Platinum Investor I & II 617 (139) 478 Platinum Investor III 24,132 (12,167) 11,965 Platinum Investor IV 4,648 (585) 4,063 Platinum Investor PLUS 7,119 (3,335) 3,784 Platinum Investor Survivor II 587 (296) 291 UIF Equity Growth Portfolio - Class I Platinum Investor I & II 49,612 (60,437) (10,825) Platinum Investor III 19,799 (10,289) 9,510 Platinum Investor IV 1,392 (228) 1,164 Platinum Investor PLUS 1,462 (701) 761 Platinum Investor Survivor 2,112 (3,844) (1,732) Platinum Investor Survivor II 167 (50) 117 UIF High Yield Portfolio - Class I Platinum Investor I & II 8,255 (20,756) (12,501) Platinum Investor III 5,820 (5,914) (94) Platinum Investor IV 876 (78) 798 Platinum Investor FlexDirector 736 (39) 697 Platinum Investor PLUS 1,511 (541) 970
VL-R - 53 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, 2005.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ----------------------------------------------------------------------------------------- UIF High Yield Portfolio - Class I - Continued Platinum Investor Survivor 59,726 (10,922) 48,804 Platinum Investor Survivor II 1,590 (366) 1,224 VALIC Company I - International Equities Fund AG Legacy Plus 424 (5,603) (5,179) Platinum Investor I & II 15,348 (12,417) 2,931 Platinum Investor III 19,650 (15,712) 3,938 Platinum Investor IV 2,379 (408) 1,971 Platinum Investor FlexDirector 304 (48) 256 Platinum Investor PLUS 4,950 (990) 3,960 Platinum Investor Survivor 2,294 (1,608) 686 Platinum Investor Survivor II 443 (424) 19 VALIC Company I - Mid Cap Index Fund AG Legacy Plus 1,620 (3,284) (1,664) Corporate America 174 (210) (36) Corporate America (reduced surrender charge) 1,419 (24) 1,395 Platinum Investor I & II 35,368 (55,580) (20,212) Platinum Investor III 85,114 (80,111) 5,003 Platinum Investor IV 11,392 (1,227) 10,165 Platinum Investor FlexDirector 55 (18) 37 Platinum Investor PLUS 13,840 (9,920) 3,920 Platinum Investor Survivor 5,080 (10,350) (5,270) Platinum Investor Survivor II 2,987 (21,626) (18,639) VALIC Company I - Money Market I Fund AG Legacy Plus (6,171) (17,613) (23,784) Corporate America -- (6,349) (6,349) Corporate America (reduced surrender charge) 42,570 (63,906) (21,336) Legacy Plus 63 (1,149) (1,086) Platinum Investor I & II 191,702 (385,744) (194,042) Platinum Investor III 651,771 (1,134,793) (483,022) Platinum Investor IV 461,751 (427,201) 34,550 Platinum Investor FlexDirector 17,563 (22,449) (4,886) Platinum Investor PLUS 172,233 (242,213) (69,980) Platinum Investor Survivor 22,562 (217,068) (194,506) Platinum Investor Survivor II 110,826 (121,464) (10,638) VALIC Company I - Nasdaq-100 Index Fund Platinum Investor I & II 26,851 (14,601) 12,250 Platinum Investor III 97,983 (77,914) 20,069 Platinum Investor IV 1,746 (268) 1,478 Platinum Investor FlexDirector 54 (30) 24 Platinum Investor PLUS 6,744 (2,251) 4,493 Platinum Investor Survivor 9,425 (26,728) (17,303) Platinum Investor Survivor II 44,630 (3,616) 41,014
VL-R - 54 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, 2005.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - --------------------------------------------------------------------------------------------- VALIC Company I - Science & Technology Fund Platinum Investor I & II 5,360 (23,221) (17,861) Platinum Investor III 40,684 (33,471) 7,213 Platinum Investor IV 1,582 (130) 1,452 Platinum Investor FlexDirector 57 (31) 26 Platinum Investor PLUS 1,402 (1,131) 271 Platinum Investor Survivor 3,503 (2,128) 1,375 Platinum Investor Survivor II 659 (197) 462 VALIC Company I - Small Cap Index Fund Corporate America 74 (4,279) (4,205) Platinum Investor I & II 32,495 (7,861) 24,634 Platinum Investor III 49,159 (32,246) 16,913 Platinum Investor IV 9,595 (720) 8,875 Platinum Investor FlexDirector 93 (39) 54 Platinum Investor PLUS 9,790 (6,896) 2,894 Platinum Investor Survivor 1,563 (10,153) (8,590) Platinum Investor Survivor II 1,935 (601) 1,334 VALIC Company I - Stock Index Fund AG Legacy Plus 18,710 (4,408) 14,302 Corporate America 73 (7,950) (7,877) Corporate America (reduced surrender charge) 5,046 (202) 4,844 Platinum Investor I & II 113,856 (246,853) (132,997) Platinum Investor III 252,515 (453,138) (200,623) Platinum Investor IV 16,848 (1,417) 15,431 Platinum Investor FlexDirector 8,440 (265) 8,175 Platinum Investor PLUS 53,614 (9,776) 43,838 Platinum Investor Survivor 19,675 (78,975) (59,300) Platinum Investor Survivor II 3,899 (12,104) (8,205) Van Kampen LIT Emerging Growth Portfolio - Class I AG Legacy Plus 1,050 (1,655) (605) Van Kampen LIT Government Portfolio - Class I AG Legacy Plus 1,709 (3,427) (1,718) Van Kampen LIT Growth and Income Portfolio - Class I Platinum Investor I & II 82,381 (17,783) 64,598 Platinum Investor III 217,277 (32,656) 184,621 Platinum Investor IV 20,371 (1,711) 18,660 Platinum Investor FlexDirector 602 (19) 583 Platinum Investor PLUS 8,687 (3,750) 4,937 Platinum Investor Survivor 20,449 (4,933) 15,516 Platinum Investor Survivor II 19,828 (9,788) 10,040 Vanguard VIF High Yield Bond Portfolio Corporate America (reduced surrender charge) 1,611 (7) 1,604 Platinum Investor I & II 15,203 (31,164) (15,961) Platinum Investor III 55,322 (128,470) (73,148) Platinum Investor IV 11,730 (1,247) 10,483
VL-R - 55 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, 2005.
Accumulation Accumulation Net Increase Divisions Units Issued Units Redeemed (Decrease) - ------------------------------------------------------------------------------------------- Vanguard VIF High Yield Bond Portfolio - Continued Platinum Investor FlexDirector 35 (20) 15 Platinum Investor PLUS 11,067 (5,297) 5,770 Platinum Investor Survivor 5,661 (75,416) (69,755) Platinum Investor Survivor II 1,543 (19,516) (17,973) Vanguard VIF REIT Index Portfolio Corporate America 102 (27) 75 Corporate America (reduced surrender charge) 1,010 (4) 1,006 Platinum Investor I & II 26,831 (9,552) 17,279 Platinum Investor III 66,201 (79,745) (13,544) Platinum Investor IV 28,204 (2,942) 25,262 Platinum Investor FlexDirector 1,593 (87) 1,506 Platinum Investor PLUS 15,837 (17,997) (2,160) Platinum Investor Survivor 2,218 (7,228) (5,010) Platinum Investor Survivor II 3,803 (2,763) 1,040
VL-R - 56 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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------ AIM V.I. Core Equity Fund - Series I Corporate America 3,758 $10.89 $ 40,922 0.88% 0.35% 8.90% Corporate America (reduced surrender charge) 2,285 10.87 24,835 0.88% 0.65% 8.69% Platinum Investor I & II 735,908 10.86 7,992,901 1.07% 0.75% 8.61% Platinum Investor III 375,267 10.86 4,077,242 1.07% 0.70% 8.65% Platinum Investor IV 12,433 10.86 135,088 1.06% 0.70% 8.65% Platinum Investor FlexDirector 424 10.86 4,603 1.07% 0.70% 8.65% Platinum Investor PLUS 23,459 10.86 254,879 1.06% 0.70% 8.65% Platinum Investor Survivor 64,839 10.89 705,893 1.06% 0.40% 8.87% Platinum Investor Survivor II 9,760 10.86 106,001 1.07% 0.75% 8.61% AIM V.I. International Growth Fund - Series I AG Legacy Plus 25,612 11.98 306,732 0.93% 0.75% 27.28% Corporate America 4,241 11.69 49,559 1.26% 0.35% 27.79% Corporate America (reduced surrender charge) 7,127 17.41 124,105 1.26% 0.65% 27.41% Platinum Investor I & II 292,495 16.57 4,847,867 1.14% 0.75% 27.28% Platinum Investor III 340,444 13.93 4,743,020 1.18% 0.70% 27.34% Platinum Investor IV 30,344 14.81 449,267 1.40% 0.70% 27.34% Platinum Investor FlexDirector 812 17.09 13,875 1.70% 0.70% 27.34% Platinum Investor PLUS 17,467 19.27 336,677 1.09% 0.70% 27.34% Platinum Investor Survivor 59,983 11.66 699,501 1.12% 0.40% 27.72% Platinum Investor Survivor II 6,039 20.17 121,810 1.13% 0.75% 27.28% Platinum Investor VIP 17,529 11.93 209,100 1.12% 0.70% 19.29% Platinum Investor VIP (with GMWB rider) 256 11.87 3,033 1.12% 1.45% 18.70% AIM V.I. Premier Equity Fund - Series I Corporate America -- -- -- 2.82% 0.35% 5.45% Platinum Investor I & II -- -- -- 2.09% 0.75% 5.31% Platinum Investor III -- -- -- 2.12% 0.70% 5.33% Platinum Investor IV -- -- -- 3.12% 0.70% 5.33% Platinum Investor FlexDirector -- -- -- 2.17% 0.70% 5.33% Platinum Investor PLUS -- -- -- 2.18% 0.70% 5.33% Platinum Investor Survivor -- -- -- 2.13% 0.40% 5.44% Platinum Investor Survivor II -- -- -- 2.26% 0.75% 5.31% Alger American Leveraged AllCap Portfolio - Class O Shares Platinum Investor I & II 11,906 17.40 207,102 0.00% 0.75% 18.38% Platinum Investor III 88,630 17.43 1,544,555 0.00% 0.70% 18.43% Platinum Investor IV 13,804 13.72 189,390 0.00% 0.70% 18.43% Platinum Investor FlexDirector 47 13.73 649 0.00% 0.70% 18.43% Platinum Investor PLUS 13,020 17.43 226,897 0.00% 0.70% 18.43% Platinum Investor Survivor 168 17.62 2,958 0.00% 0.40% 18.79% Platinum Investor Survivor II 1,106 17.40 19,245 0.00% 0.75% 18.38% Platinum Investor VIP 8,328 11.31 94,186 0.00% 0.70% 13.10% Platinum Investor VIP (with GMWB rider) 164 11.25 1,843 0.00% 1.45% 12.53% Alger American MidCap Growth Portfolio - Class O Shares Corporate America (reduced surrender charge) 5,196 13.61 70,695 0.00% 0.65% 9.43% Platinum Investor I & II 8,117 18.15 147,281 0.00% 0.75% 9.32% Platinum Investor III 55,215 18.18 1,003,756 0.00% 0.70% 9.37% Platinum Investor IV 18,110 12.03 217,883 0.00% 0.70% 9.37% Platinum Investor FlexDirector 6,774 12.69 85,956 0.00% 0.70% 9.37% Platinum Investor PLUS 8,924 18.18 162,222 0.00% 0.70% 9.37%
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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------- Alger American MidCap Growth Portfolio - Class O Shares - Continued Platinum Investor Survivor 5,975 $18.38 $ 109,826 0.00% 0.40% 9.70% Platinum Investor Survivor II 2,680 18.15 48,637 0.00% 0.75% 9.32% Platinum Investor VIP 2,230 10.37 23,116 0.00% 0.70% 3.67% American Century VP Value Fund - Class I AG Legacy Plus 25,927 20.67 535,799 1.31% 0.75% 17.77% Corporate America 1,247 19.13 23,856 0.93% 0.35% 18.24% Corporate America (reduced surrender charge) 19,895 13.22 262,932 0.93% 0.65% 17.89% Platinum Investor I & II 221,804 18.67 4,140,787 1.39% 0.75% 17.77% Platinum Investor III 513,640 18.58 9,542,265 1.30% 0.70% 17.83% Platinum Investor IV 48,294 12.22 589,984 1.00% 0.70% 17.83% Platinum Investor FlexDirector 931 13.30 12,382 0.12% 0.70% 17.83% Platinum Investor PLUS 58,246 15.74 916,725 1.29% 0.70% 17.83% Platinum Investor Survivor 20,805 19.08 396,872 1.36% 0.40% 18.18% Platinum Investor Survivor II 63,728 16.44 1,048,012 1.30% 0.75% 17.77% Platinum Investor VIP 12,329 11.47 141,453 0.00% 0.70% 14.73% Platinum Investor VIP (with GMWB rider) 162 11.42 1,849 0.00% 1.45% 14.16% Credit Suisse Small Cap Core I Portfolio * Platinum Investor I & II 39,132 8.22 321,493 0.00% 0.75% 3.99% Platinum Investor III 128,637 8.06 1,036,204 0.00% 0.70% 4.04% Platinum Investor IV 13,167 10.29 135,520 0.00% 0.70% 4.04% Platinum Investor FlexDirector 6,301 10.19 64,198 0.00% 0.70% 4.04% Platinum Investor PLUS 11,493 12.86 147,782 0.00% 0.70% 4.04% Platinum Investor Survivor 3,159 8.39 26,520 0.00% 0.40% 4.35% Platinum Investor Survivor II 1,758 12.17 21,405 0.00% 0.75% 3.99% Platinum Investor VIP 8,178 9.45 77,282 0.00% 0.70% -5.50% Dreyfus IP MidCap Stock Portfolio - Initial shares Platinum Investor I & II 81,102 14.09 1,142,564 0.38% 0.75% 6.95% Platinum Investor III 234,893 13.87 3,258,099 0.37% 0.70% 7.00% Platinum Investor IV 12,576 11.64 146,421 0.39% 0.70% 7.00% Platinum Investor FlexDirector 0 12.60 4 0.61% 0.70% 7.00% Platinum Investor PLUS 22,807 14.57 332,244 0.37% 0.70% 7.00% Platinum Investor Survivor 12,083 14.40 173,935 0.40% 0.40% 7.32% Platinum Investor Survivor II 10,961 15.94 174,740 0.37% 0.75% 6.95% Dreyfus VIF Developing Leaders Portfolio - Initial shares Corporate America 5,204 12.56 65,345 0.38% 0.35% 3.41% Corporate America (reduced surrender charge) 1,534 11.74 18,015 0.38% 0.65% 3.10% Platinum Investor I & II 318,961 15.05 4,800,994 0.41% 0.75% 3.00% Platinum Investor III 450,710 11.61 5,231,878 0.40% 0.70% 3.05% Platinum Investor IV 10,454 11.05 115,502 0.32% 0.70% 3.05% Platinum Investor FlexDirector 950 11.00 10,459 0.51% 0.70% 3.05% Platinum Investor PLUS 35,521 12.53 445,116 0.38% 0.70% 3.05% Platinum Investor Survivor 45,846 12.53 574,469 0.44% 0.40% 3.36% Platinum Investor Survivor II 35,559 13.60 483,727 0.37% 0.75% 3.00% Dreyfus VIF Quality Bond Portfolio - Initial shares Corporate America 2,421 14.17 34,295 4.77% 0.35% 3.87% Corporate America (reduced surrender charge) 11,977 10.78 129,065 4.77% 0.65% 3.56% Platinum Investor I & II 281,631 14.03 3,950,746 4.49% 0.75% 3.46% Platinum Investor III 285,395 13.30 3,795,577 4.64% 0.70% 3.51% Platinum Investor IV 14,464 10.45 151,092 4.89% 0.70% 3.51%
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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------- Dreyfus VIF Quality Bond Portfolio - Initial shares - Continued Platinum Investor FlexDirector 173 $10.74 $ 1,861 6.82% 0.70% 3.69% Platinum Investor PLUS 23,919 11.79 282,019 4.53% 0.70% 3.51% Platinum Investor Survivor 16,209 14.14 229,150 4.47% 0.40% 3.82% Platinum Investor Survivor II 9,205 11.83 108,856 4.56% 0.75% 3.46% Fidelity VIP Asset Manager Portfolio - Service Class 2 AG Legacy Plus 15,921 11.71 186,460 2.58% 0.75% 6.34% Platinum Investor I & II 156,694 11.15 1,746,813 2.56% 0.75% 6.34% Platinum Investor III 258,611 11.14 2,879,764 2.41% 0.70% 6.39% Platinum Investor IV 8,240 10.96 90,298 1.57% 0.70% 6.39% Platinum Investor FlexDirector 1,288 11.14 14,349 1.75% 0.70% 6.39% Platinum Investor PLUS 26,410 12.73 336,198 2.45% 0.70% 6.39% Platinum Investor Survivor 11,229 11.39 127,904 2.30% 0.40% 6.71% Platinum Investor Survivor II 20,438 12.42 253,780 1.90% 0.75% 6.34% Platinum Investor VIP 2,269 10.43 23,677 0.00% 0.70% 4.33% Fidelity VIP Contrafund Portfolio - Service Class 2 AG Legacy Plus 42,199 15.88 670,065 0.92% 0.75% 10.60% Corporate America 1,580 14.27 22,543 1.11% 0.35% 11.04% Corporate America (reduced surrender charge) 18,598 14.13 262,724 1.11% 0.65% 10.71% Platinum Investor I & II 517,717 13.92 7,207,050 1.00% 0.75% 10.60% Platinum Investor III 1,262,624 13.75 17,364,615 1.00% 0.70% 10.66% Platinum Investor IV 92,989 12.68 1,179,075 1.11% 0.70% 10.66% Platinum Investor FlexDirector 8,086 14.04 113,515 1.06% 0.70% 10.66% Platinum Investor PLUS 107,304 16.46 1,765,960 0.98% 0.70% 10.66% Platinum Investor Survivor 116,730 14.22 1,660,381 1.02% 0.40% 10.99% Platinum Investor Survivor II 78,211 17.33 1,355,621 1.02% 0.75% 10.60% Platinum Investor VIP 36,885 10.71 395,099 0.98% 0.70% 7.12% Platinum Investor VIP (with GMWB rider) 443 10.66 4,721 0.98% 1.45% 6.58% Fidelity VIP Equity-Income Portfolio - Service Class 2 AG Legacy Plus 51,368 13.75 706,254 2.94% 0.75% 19.04% Corporate America 4,106 14.25 58,490 2.91% 0.35% 19.51% Corporate America (reduced surrender charge) 25,321 13.51 342,065 2.91% 0.65% 19.15% Platinum Investor I & II 283,801 13.90 3,944,532 2.90% 0.75% 19.04% Platinum Investor III 836,470 13.93 11,653,724 2.92% 0.70% 19.09% Platinum Investor IV 45,684 12.47 569,724 2.93% 0.70% 19.09% Platinum Investor FlexDirector 1,384 13.26 18,364 2.91% 0.70% 19.09% Platinum Investor PLUS 78,094 15.00 1,171,538 2.93% 0.70% 19.09% Platinum Investor Survivor 85,837 14.20 1,219,038 2.92% 0.40% 19.45% Platinum Investor Survivor II 80,050 15.20 1,217,117 2.88% 0.75% 19.04% Platinum Investor VIP 15,927 11.48 182,759 1.32% 0.70% 14.75% Platinum Investor VIP (with GMWB rider) 157 11.42 1,794 1.32% 1.45% 14.18% Fidelity VIP Freedom 2020 Portfolio - Service Class 2 Platinum Investor III 665 10.56 7,019 2.70% 0.70% 5.55% Platinum Investor IV 108 10.56 1,140 2.52% 0.70% 5.55% Platinum Investor FlexDirector 5 10.56 50 1.92% 0.70% 5.55% Platinum Investor VIP 211 10.80 2,283 2.65% 0.70% 8.02% Fidelity VIP Freedom 2025 Portfolio - Service Class 2 Platinum Investor III 2,144 10.56 22,639 2.88% 0.70% 5.60% Platinum Investor IV 50 10.56 530 2.53% 0.70% 5.60% Platinum Investor VIP 2,929 10.83 31,722 2.87% 0.70% 8.31%
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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------------------- Fidelity VIP Freedom 2030 Portfolio - Service Class 2 Platinum Investor III 881 $10.56 $ 9,304 2.61% 0.70% 5.64% Platinum Investor IV 61 10.56 648 2.75% 0.70% 5.64% Platinum Investor PLUS 929 10.56 9,811 2.63% 0.70% 5.64% Platinum Investor VIP 4,114 10.88 44,753 2.61% 0.70% 8.78% Fidelity VIP Growth Portfolio - Service Class 2 AG Legacy Plus 23,993 8.99 215,778 0.17% 0.75% 5.78% Corporate America (reduced surrender charge) 16,761 11.88 199,165 0.12% 0.65% 5.88% Platinum Investor I & II 208,946 7.52 1,572,153 0.17% 0.75% 5.78% Platinum Investor III 1,189,561 7.46 8,878,331 0.16% 0.70% 5.83% Platinum Investor IV 33,267 11.24 373,966 0.12% 0.70% 5.83% Platinum Investor FlexDirector 11,345 10.81 122,619 0.07% 0.70% 5.83% Platinum Investor PLUS 111,405 12.01 1,338,133 0.16% 0.70% 5.83% Platinum Investor Survivor 70,637 7.69 543,075 0.16% 0.40% 6.15% Platinum Investor Survivor II 48,295 10.67 515,279 0.15% 0.75% 5.78% Platinum Investor VIP 5,053 10.34 52,266 0.00% 0.70% 3.44% Platinum Investor VIP (with GMWB rider) 4 10.29 42 0.00% 1.45% 2.92% Fidelity VIP Mid Cap Portfolio - Service Class 2 Corporate America (reduced surrender charge) 22,227 15.07 334,918 0.11% 0.65% 11.68% Platinum Investor I & II 13,301 22.63 301,019 0.09% 0.75% 11.57% Platinum Investor III 180,244 22.67 4,086,599 0.20% 0.70% 11.62% Platinum Investor IV 53,740 12.88 691,998 0.10% 0.70% 11.62% Platinum Investor FlexDirector 768 15.16 11,634 0.14% 0.70% 11.62% Platinum Investor PLUS 14,277 22.67 323,706 0.15% 0.70% 11.62% Platinum Investor Survivor 8,347 22.92 191,340 0.22% 0.40% 11.96% Platinum Investor Survivor II 9,479 22.63 214,514 0.14% 0.75% 11.57% Platinum Investor VIP 21,594 10.53 227,412 0.00% 0.70% 5.31% Platinum Investor VIP (with GMWB rider) 177 10.48 1,853 0.00% 1.45% 4.79% Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 Corporate America (reduced surrender charge) 11,486 14.18 162,829 0.69% 0.65% 16.23% Platinum Investor I & II 16,237 20.43 331,726 0.67% 0.75% 16.11% Platinum Investor III 282,124 20.47 5,774,559 0.53% 0.70% 16.17% Platinum Investor IV 45,117 12.42 560,143 0.74% 0.70% 16.17% Platinum Investor FlexDirector 1,289 14.63 18,857 0.22% 0.70% 16.17% Platinum Investor PLUS 23,719 20.47 485,483 0.67% 0.70% 16.17% Platinum Investor Survivor 34,379 20.69 711,439 0.45% 0.40% 16.52% Platinum Investor Survivor II 12,461 20.43 254,585 0.54% 0.75% 16.11% Platinum Investor VIP 16,626 10.73 178,463 0.01% 0.70% 7.34% Franklin Templeton - Franklin Small-Mid Cap Growth Securities Fund - Class 2 AG Legacy Plus 13,801 7.87 108,582 0.00% 0.75% 7.88% Franklin Templeton - Franklin U.S. Government Fund - Class 2 Platinum Investor I & II 24,202 11.95 289,196 3.18% 0.75% 3.24% Platinum Investor III 673,395 11.98 8,066,647 3.52% 0.70% 3.29% Platinum Investor IV 32,239 10.44 336,569 6.10% 0.70% 3.29% Platinum Investor FlexDirector 823 10.67 8,781 4.60% 0.70% 3.38% Platinum Investor PLUS 40,170 11.59 465,468 4.20% 0.70% 3.29% Platinum Investor Survivor 893 12.16 10,857 0.77% 0.40% 3.60% Platinum Investor Survivor II 15,730 11.95 187,966 5.44% 0.75% 3.24% Platinum Investor VIP 3,077 10.32 31,741 0.00% 0.70% 3.16%
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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------------- Franklin Templeton - Mutual Shares Securities Fund - Class 2 Platinum Investor I & II 159,272 $15.68 $ 2,497,778 1.24% 0.75% 17.50% Platinum Investor III 769,387 15.72 12,095,950 1.34% 0.70% 17.56% Platinum Investor IV 35,491 12.86 456,520 1.32% 0.70% 17.56% Platinum Investor FlexDirector 6,294 13.85 87,153 1.59% 0.70% 17.56% Platinum Investor PLUS 34,198 15.46 528,663 1.29% 0.70% 17.56% Platinum Investor Survivor 36,447 15.96 581,636 0.79% 0.40% 17.91% Platinum Investor Survivor II 10,882 15.68 170,655 1.17% 0.75% 17.50% Platinum Investor VIP 9,028 11.34 102,414 0.00% 0.70% 13.44% Platinum Investor VIP (with GMWB rider) 1,026 11.29 11,581 0.00% 1.45% 12.87% Franklin Templeton - Templeton Foreign Securities Fund - Class 2 AG Legacy Plus 12,189 13.08 159,389 1.20% 0.75% 20.54% Platinum Investor I & II 90,007 16.36 1,472,909 1.25% 0.75% 20.54% Platinum Investor III 597,923 16.41 9,809,047 1.24% 0.70% 20.60% Platinum Investor IV 29,770 13.10 389,863 1.37% 0.70% 20.60% Platinum Investor FlexDirector 3,405 14.65 49,879 1.58% 0.70% 20.60% Platinum Investor PLUS 27,887 15.86 442,340 1.23% 0.70% 20.60% Platinum Investor Survivor 14,765 16.65 245,867 1.89% 0.40% 20.96% Platinum Investor Survivor II 58,266 16.36 953,477 1.16% 0.75% 20.54% Platinum Investor VIP 8,709 11.58 100,882 0.07% 0.70% 15.83% Platinum Investor VIP (with GMWB rider) 7 11.53 80 0.07% 1.45% 15.26% Goldman Sachs Capital Growth Fund Platinum Investor I & II 4,775 10.19 48,659 0.07% 0.75% 7.75% Platinum Investor III 11,374 10.22 116,245 0.12% 0.70% 7.80% Platinum Investor PLUS 110 12.49 1,375 0.13% 0.70% 7.80% Platinum Investor Survivor 629,846 10.41 6,555,947 0.12% 0.40% 8.13% Platinum Investor Survivor II 41,634 10.83 450,751 0.05% 0.75% 7.75% Janus Aspen Series International Growth Portfolio - Service Shares Corporate America (reduced surrender charge) 3,726 22.30 83,075 2.40% 0.65% 37.16% Platinum Investor I & II 129,467 15.04 1,947,003 1.93% 0.75% 45.54% Platinum Investor III 431,775 14.95 6,455,480 1.87% 0.70% 45.61% Platinum Investor IV 28,414 18.79 534,018 1.97% 0.70% 45.61% Platinum Investor FlexDirector 10,143 20.74 210,403 1.56% 0.70% 45.61% Platinum Investor PLUS 50,064 23.96 1,199,523 2.05% 0.70% 45.61% Platinum Investor Survivor 57,117 15.37 877,687 1.93% 0.40% 46.05% Platinum Investor Survivor II 21,071 23.64 498,180 1.32% 0.75% 45.54% Platinum Investor VIP 13,491 13.01 175,488 1.00% 0.70% 30.08% Platinum Investor VIP (with GMWB rider) 153 12.94 1,978 1.00% 1.45% 29.43% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Corporate America -- 6.81 -- 0.00% 0.35% 12.91% Corporate America (reduced surrender charge) 2,178 14.46 31,494 0.00% 0.65% 9.49% Platinum Investor I & II 57,097 6.64 379,113 0.00% 0.75% 12.46% Platinum Investor III 402,798 6.48 2,611,910 0.00% 0.70% 12.52% Platinum Investor IV 4,510 12.58 56,753 0.00% 0.70% 12.52% Platinum Investor PLUS 13,069 16.94 221,438 0.00% 0.70% 12.52% Platinum Investor Survivor 8,380 6.78 56,855 0.00% 0.40% 12.85% Platinum Investor Survivor II 372 15.11 5,620 0.00% 0.75% 12.46% Platinum Investor VIP 2,105 10.64 22,402 0.00% 0.70% 6.42%
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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------- Janus Aspen Series Worldwide Growth Portfolio - Service Shares Corporate America 2,356 $ 8.17 $ 19,239 1.57% 0.35% 17.53% Corporate America (reduced surrender charge) 5,652 13.55 76,560 1.57% 0.65% 17.17% Platinum Investor I & II 89,477 7.97 712,859 1.47% 0.75% 17.06% Platinum Investor III 360,131 7.91 2,847,552 1.58% 0.70% 17.12% Platinum Investor IV 7,576 12.34 93,519 1.86% 0.70% 17.12% Platinum Investor PLUS 16,370 12.63 206,702 1.61% 0.70% 17.12% Platinum Investor Survivor 20,259 8.14 164,922 1.65% 0.40% 17.47% Platinum Investor Survivor II 25,600 12.08 309,271 1.59% 0.75% 17.06% JPMorgan Mid Cap Value Portfolio Platinum Investor I & II 5,703 18.68 106,542 0.57% 0.75% 15.97% Platinum Investor III 150,607 18.71 2,818,547 0.59% 0.70% 16.03% Platinum Investor IV 16,314 12.40 202,340 0.93% 0.70% 16.03% Platinum Investor PLUS 6,734 18.71 126,028 0.70% 0.70% 16.03% Platinum Investor Survivor 9,943 18.92 188,141 0.58% 0.40% 16.37% Platinum Investor Survivor II 3,071 18.68 57,363 0.94% 0.75% 15.97% JPMorgan Small Company Portfolio Platinum Investor I & II 48,036 13.37 642,235 0.00% 0.75% 14.15% Platinum Investor III 118,040 13.17 1,554,596 0.00% 0.70% 14.21% Platinum Investor IV 11,316 11.97 135,411 0.00% 0.70% 14.21% Platinum Investor FlexDirector 241 14.21 3,426 0.00% 0.70% 14.21% Platinum Investor PLUS 10,278 16.40 168,543 0.00% 0.70% 14.21% Platinum Investor Survivor 1,887 13.66 25,780 0.00% 0.40% 14.55% Platinum Investor Survivor II 4,947 17.18 84,995 0.00% 0.75% 14.15% Platinum Investor VIP 11,120 10.39 115,585 0.00% 0.70% 3.95% MFS VIT Capital Opportunities Series - Initial Class Corporate America -- 7.80 -- 0.00% 0.35% 13.40% Corporate America (reduced surrender charge) 1,910 12.62 24,108 0.00% 0.65% 10.44% Platinum Investor I & II 80,028 7.61 608,843 0.47% 0.75% 12.95% Platinum Investor III 391,046 7.69 3,005,410 0.43% 0.70% 13.01% Platinum Investor IV 5,915 11.70 69,193 0.45% 0.70% 13.01% Platinum Investor FlexDirector 332 12.07 4,004 0.44% 0.70% 13.01% Platinum Investor PLUS 44,725 12.95 578,981 0.43% 0.70% 13.01% Platinum Investor Survivor 23,342 7.77 181,455 0.51% 0.40% 13.35% Platinum Investor Survivor II 4,151 11.78 48,904 0.41% 0.75% 12.95% MFS VIT Emerging Growth Series - Initial Class AG Legacy Plus 8,181 12.45 101,831 0.00% 0.75% 7.09% Corporate America (reduced surrender charge) 3,795 13.23 50,218 0.00% 0.65% 7.20% Platinum Investor I & II 557,011 12.12 6,750,035 0.00% 0.75% 7.09% Platinum Investor III 608,177 6.42 3,906,235 0.00% 0.70% 7.14% Platinum Investor IV 7,093 11.93 84,654 0.00% 0.70% 7.14% Platinum Investor FlexDirector 459 12.23 5,608 0.00% 0.70% 7.14% Platinum Investor PLUS 41,485 13.52 561,079 0.00% 0.70% 7.14% Platinum Investor Survivor 101,337 5.78 585,434 0.00% 0.40% 7.46% Platinum Investor Survivor II 3,643 11.62 42,340 0.00% 0.75% 7.09% MFS VIT New Discovery Series - Initial Class AG Legacy Plus 18,891 9.19 173,554 0.00% 0.75% 12.37% Corporate America 2,179 10.09 21,981 0.00% 0.35% 12.82% Corporate America (reduced surrender charge) 1,942 13.48 26,187 0.00% 0.65% 3.76% Platinum Investor I & II 50,346 9.84 495,454 0.00% 0.75% 12.37%
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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------ MFS VIT New Discovery Series - Initial Class - Continued Platinum Investor III 290,883 $ 9.65 $2,806,891 0.00% 0.70% 12.43% Platinum Investor IV 6,812 12.10 82,438 0.00% 0.70% 12.43% Platinum Investor FlexDirector 399 11.70 4,665 0.00% 0.70% 12.43% Platinum Investor PLUS 21,631 13.11 283,573 0.00% 0.70% 12.43% Platinum Investor Survivor 11,457 10.06 115,209 0.00% 0.40% 12.76% Platinum Investor Survivor II 9,508 12.62 119,995 0.00% 0.75% 12.37% Platinum Investor VIP 1,803 10.53 18,992 0.00% 0.70% 5.34% Platinum Investor VIP (with GMWB rider) 288 10.48 3,023 0.00% 1.45% 4.82% MFS VIT Research Series - Initial Class Platinum Investor I & II 41,679 8.79 366,566 0.49% 0.75% 9.65% Platinum Investor III 181,505 8.77 1,591,741 0.47% 0.70% 9.71% Platinum Investor IV 3,471 11.71 40,642 0.48% 0.70% 9.71% Platinum Investor FlexDirector 196 12.64 2,480 0.50% 0.70% 9.71% Platinum Investor PLUS 10,838 13.86 150,226 0.49% 0.70% 9.71% Platinum Investor Survivor 9,854 8.99 88,558 0.53% 0.40% 10.04% Platinum Investor Survivor II 10,176 12.90 131,265 0.39% 0.75% 9.65% Platinum Investor VIP 903 10.77 9,723 0.00% 0.70% 7.72% Platinum Investor VIP (with GMWB rider) 4 10.72 43 0.00% 1.45% 7.19% MFS VIT Total Return Series - Initial Class AG Legacy Plus 109,796 7.06 775,099 2.42% 0.75% 11.06% Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Corporate America (reduced surrender charge) 3,647 14.62 53,308 0.00% 0.65% 13.95% Platinum Investor I & II 70,356 8.22 578,080 0.00% 0.75% 13.84% Platinum Investor III 333,481 8.09 2,696,892 0.00% 0.70% 13.90% Platinum Investor IV 13,927 12.87 179,221 0.00% 0.70% 13.90% Platinum Investor FlexDirector 714 14.23 10,164 0.00% 0.70% 13.90% Platinum Investor PLUS 41,810 15.08 630,433 0.00% 0.70% 13.90% Platinum Investor Survivor 30,403 8.40 255,255 0.00% 0.40% 14.24% Platinum Investor Survivor II 10,380 13.82 143,498 0.00% 0.75% 13.84% Platinum Investor VIP 4,202 10.65 44,755 0.00% 0.70% 6.51% Neuberger Berman AMT Partners Portfolio - Class I AG Legacy Plus 7,514 14.80 111,195 0.70% 0.75% 11.40% Oppenheimer Balanced Fund/VA - Non-Service Shares Platinum Investor I & II 7,426 14.76 109,608 2.53% 0.75% 10.32% Platinum Investor III 48,802 14.79 721,678 1.94% 0.70% 10.37% Platinum Investor IV 27,624 11.30 312,121 1.57% 0.70% 10.37% Platinum Investor FlexDirector 2,036 12.06 24,542 0.05% 0.70% 10.37% Platinum Investor PLUS 4,373 14.79 64,665 2.05% 0.70% 10.37% Platinum Investor Survivor 286 14.95 4,271 2.46% 0.40% 10.70% Platinum Investor Survivor II 4,031 14.76 59,494 2.01% 0.75% 10.32% Platinum Investor VIP 6,392 10.87 69,487 0.00% 0.70% 8.71% Oppenheimer Global Securities Fund/VA - Non-Service Shares Corporate America (reduced surrender charge) 6,634 15.54 103,066 0.06% 0.65% 11.20% Platinum Investor I & II 17,823 22.29 397,267 0.77% 0.75% 16.81% Platinum Investor III 109,609 22.33 2,447,539 0.93% 0.70% 16.87% Platinum Investor IV 29,344 13.56 397,860 0.77% 0.70% 16.87% Platinum Investor FlexDirector 570 14.82 8,452 0.04% 0.70% 16.87% Platinum Investor PLUS 11,603 22.33 259,082 0.91% 0.70% 16.87% Platinum Investor Survivor 7,429 22.58 167,710 0.76% 0.40% 17.22%
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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------------------------- Oppenheimer Global Securities Fund/VA - Non-Service Shares - Continued Platinum Investor Survivor II 4,384 $22.29 $ 97,708 0.87% 0.75% 16.81% Platinum Investor VIP 14,610 11.15 162,922 0.00% 0.70% 11.52% Platinum Investor VIP (with GMWB rider) 171 11.10 1,893 0.00% 1.45% 10.96% Oppenheimer High Income Fund/VA - Non-Service Shares AG Legacy Plus 8,002 13.80 110,446 7.35% 0.75% 8.61% PIMCO VIT CommodityRealReturn Strategy Portfolio - Administrative Class Platinum Investor I & II 21,567 9.56 206,126 5.92% 0.75% -4.43% Platinum Investor III 2,720 9.56 26,007 5.87% 0.70% -4.39% Platinum Investor IV 183 9.56 1,753 5.14% 0.70% -4.39% Platinum Investor PLUS 38 9.56 361 4.69% 0.70% -4.39% Platinum Investor Survivor II 179 9.56 1,712 5.24% 0.75% -4.43% Platinum Investor VIP 1,885 10.16 19,142 5.06% 0.70% 1.55% Platinum Investor VIP (with GMWB rider) 3 10.10 31 5.06% 1.45% 1.05% PIMCO VIT Real Return Portfolio - Administrative Class AG Legacy Plus 29,743 14.18 421,867 4.71% 0.75% -0.05% Corporate America 2,113 15.84 33,458 4.57% 0.35% 0.35% Corporate America (reduced surrender charge) 16,110 10.46 168,582 4.57% 0.65% 0.05% Platinum Investor I & II 113,865 15.45 1,759,230 4.83% 0.75% -0.05% Platinum Investor III 462,472 15.53 7,182,052 4.16% 0.70% 0.00% Platinum Investor IV 43,576 10.03 437,184 5.05% 0.70% 0.00% Platinum Investor FlexDirector 992 10.52 10,435 5.15% 0.70% 0.00% Platinum Investor PLUS 35,349 13.11 463,456 4.18% 0.70% 0.00% Platinum Investor Survivor 54,072 15.79 853,623 4.34% 0.40% 0.30% Platinum Investor Survivor II 28,648 13.27 380,231 4.41% 0.75% -0.05% Platinum Investor VIP 3,390 10.00 33,914 2.47% 0.70% 0.04% PIMCO VIT Short-Term Portfolio - Administrative Class Corporate America 666 11.99 7,987 4.04% 0.35% 3.91% Corporate America (reduced surrender charge) 850 10.59 8,993 4.04% 0.65% 2.53% Platinum Investor I & II 95,302 11.70 1,115,337 4.29% 0.75% 3.50% Platinum Investor III 206,087 11.73 2,417,253 4.19% 0.70% 3.55% Platinum Investor IV 22,405 10.52 235,808 4.69% 0.70% 3.55% Platinum Investor FlexDirector 7,184 10.59 76,050 4.47% 0.70% 3.55% Platinum Investor PLUS 29,401 10.92 320,971 4.35% 0.70% 3.55% Platinum Investor Survivor 31,994 11.96 382,585 4.32% 0.40% 3.86% Platinum Investor Survivor II 32,237 11.01 354,789 4.39% 0.75% 3.50% Platinum Investor VIP 6,296 10.32 64,966 1.78% 0.70% 3.19% Platinum Investor VIP (with GMWB rider) 4 10.27 40 1.78% 1.45% 2.68% PIMCO VIT Total Return Portfolio - Administrative Class AG Legacy Plus 33,244 13.02 432,989 4.66% 0.75% 3.07% Corporate America (reduced surrender charge) 17,778 10.59 188,244 4.80% 0.65% 3.17% Platinum Investor I & II 318,679 13.65 4,349,723 3.92% 0.75% 3.07% Platinum Investor III 1,024,392 13.74 14,071,624 3.25% 0.70% 3.12% Platinum Investor IV 64,491 10.43 672,919 4.86% 0.70% 3.12% Platinum Investor FlexDirector 11,001 10.74 118,186 4.42% 0.70% 3.12% Platinum Investor PLUS 71,700 11.97 858,520 4.46% 0.70% 3.12% Platinum Investor Survivor 75,028 13.95 1,046,388 3.28% 0.40% 3.43% Platinum Investor Survivor II 64,509 12.07 778,824 4.37% 0.75% 3.07% Platinum Investor VIP 13,561 10.29 139,563 1.99% 0.70% 2.91% Platinum Investor VIP (with GMWB rider) 400 10.24 4,098 1.99% 1.45% 2.40%
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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------- Pioneer Fund VCT Portfolio - Class I Platinum Investor I & II 202,285 $12.47 $2,521,852 1.34% 0.75% 15.76% Platinum Investor III 51,887 12.48 647,531 1.33% 0.70% 15.82% Platinum Investor PLUS 943 12.48 11,766 1.31% 0.70% 15.82% Platinum Investor Survivor 8,828 12.56 110,856 1.04% 0.40% 16.17% Platinum Investor Survivor II 578 12.47 7,211 1.37% 0.75% 15.76% Pioneer Growth Opportunities VCT Portfolio - Class I Corporate America 3,320 11.50 38,192 0.00% 0.35% 5.23% Platinum Investor I & II 263,245 11.41 3,003,742 0.00% 0.75% 4.81% Platinum Investor III 135,222 11.42 1,544,521 0.00% 0.70% 4.86% Platinum Investor PLUS 5,921 11.42 67,627 0.00% 0.70% 4.86% Platinum Investor Survivor 9,975 11.49 114,644 0.00% 0.40% 5.18% Platinum Investor Survivor II 19,602 11.41 223,666 0.00% 0.75% 4.81% Pioneer Mid Cap Value VCT Portfolio - Class I Platinum Investor I & II 4 10.60 42 0.00% 0.75% 6.00% Platinum Investor III 3,700 10.60 39,237 0.00% 0.70% 6.04% Platinum Investor IV 77 10.60 814 0.00% 0.70% 6.04% Platinum Investor PLUS 25 10.60 265 0.00% 0.70% 6.04% Platinum Investor Survivor II 2,372 10.60 25,140 0.00% 0.75% 6.00% Platinum Investor VIP 933 10.83 10,107 0.30% 0.70% 8.29% Putnam VT Diversified Income Fund - Class IB AG Legacy Plus 12,568 14.80 186,024 5.84% 0.75% 5.50% Corporate America 454,666 15.24 6,928,517 5.28% 0.35% 5.92% Corporate America (reduced surrender charge) 38,797 11.22 435,342 5.28% 0.65% 5.61% Platinum Investor I & II 135,182 14.30 1,932,575 3.34% 0.75% 5.50% Platinum Investor III 93,931 15.33 1,440,078 3.61% 0.70% 5.55% Platinum Investor IV 9,567 10.67 102,088 5.38% 0.70% 5.55% Platinum Investor FlexDirector 122 11.48 1,396 5.67% 0.70% 5.55% Platinum Investor PLUS 9,089 14.21 129,141 5.26% 0.70% 5.55% Platinum Investor Survivor 18,717 15.21 284,612 0.28% 0.40% 5.87% Platinum Investor Survivor II 2,371 14.58 34,570 6.07% 0.75% 5.50% Platinum Investor VIP 4,069 10.48 42,657 0.00% 0.70% 4.83% Putnam VT Growth and Income Fund - Class IB Corporate America 555,630 13.63 7,571,940 1.40% 0.35% 15.51% Corporate America (reduced surrender charge) 44,042 12.96 570,814 1.40% 0.65% 15.16% Platinum Investor I & II 338,156 14.01 4,736,505 1.56% 0.75% 15.05% Platinum Investor III 550,344 12.66 6,969,006 1.51% 0.70% 15.10% Platinum Investor IV 31,945 11.96 382,007 1.28% 0.70% 15.10% Platinum Investor FlexDirector 10,914 12.69 138,516 1.35% 0.70% 15.10% Platinum Investor PLUS 36,439 14.17 516,420 1.42% 0.70% 15.10% Platinum Investor Survivor 30,051 13.60 408,642 1.75% 0.40% 15.45% Platinum Investor Survivor II 7,192 13.89 99,900 1.52% 0.75% 15.05% Putnam VT International Growth and Income Fund - Class IB Corporate America (reduced surrender charge) 3,545 16.49 58,445 0.68% 0.65% 26.40% Platinum Investor I & II 199,621 18.41 3,675,650 1.06% 0.75% 26.28% Platinum Investor III 223,141 16.32 3,640,803 1.00% 0.70% 26.34% Platinum Investor IV 22,123 14.30 316,258 0.83% 0.70% 26.34% Platinum Investor FlexDirector 642 16.19 10,399 0.49% 0.70% 26.34% Platinum Investor PLUS 14,565 19.17 279,276 1.10% 0.70% 26.34% Platinum Investor Survivor 33,285 15.95 530,826 1.18% 0.40% 26.72%
VL-R - 65 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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------- Putnam VT International Growth and Income Fund - Class IB - Continued Platinum Investor Survivor II 11,104 $20.82 $ 231,128 0.98% 0.75% 26.28% Platinum Investor VIP 8,247 11.97 98,683 0.00% 0.70% 19.66% Putnam VT Small Cap Value Fund - Class IB AG Legacy Plus 16,985 24.50 416,127 0.31% 0.75% 16.42% Putnam VT Vista Fund - Class IB AG Legacy Plus 27,252 6.48 176,650 0.00% 0.75% 4.67% Putnam VT Voyager Fund - Class IB AG Legacy Plus 66,699 6.32 421,428 0.11% 0.75% 4.65% SunAmerica - Aggressive Growth Portfolio - Class 1 Platinum Investor I & II 17,757 14.05 249,429 0.10% 0.75% 12.45% Platinum Investor III 45,746 14.08 644,074 0.11% 0.70% 12.50% Platinum Investor IV 5,114 11.95 61,097 0.11% 0.70% 12.50% Platinum Investor PLUS 9,223 14.95 137,898 0.11% 0.70% 12.50% Platinum Investor Survivor 750 14.28 10,708 0.10% 0.40% 12.84% Platinum Investor Survivor II 1,364 14.05 19,155 0.13% 0.75% 12.45% Platinum Investor VIP 748 10.68 7,986 0.15% 0.70% 6.75% SunAmerica - SunAmerica Balanced Portfolio - Class 1 Platinum Investor I & II 730 11.93 8,702 2.77% 0.75% 10.04% Platinum Investor III 70,947 11.96 848,269 2.85% 0.70% 10.10% Platinum Investor IV 6,901 11.14 76,869 3.41% 0.70% 10.10% Platinum Investor PLUS 19,626 12.33 242,055 2.84% 0.70% 10.10% Platinum Investor Survivor II 2,630 11.93 31,377 2.85% 0.75% 10.04% Platinum Investor VIP 1,770 10.84 19,178 2.71% 0.70% 8.38% UIF Equity Growth Portfolio - Class I Platinum Investor I & II 248,559 12.18 3,028,213 0.00% 0.75% 3.33% Platinum Investor III 88,608 8.19 725,418 0.00% 0.70% 3.38% Platinum Investor IV 3,125 12.27 38,349 0.00% 0.70% 3.38% Platinum Investor PLUS 5,404 13.04 70,451 0.00% 0.70% 3.38% Platinum Investor Survivor 23,805 7.85 186,981 0.00% 0.40% 3.69% Platinum Investor Survivor II 415 11.50 4,778 0.00% 0.75% 3.33% UIF High Yield Portfolio - Class I Platinum Investor I & II 76,001 12.04 915,380 8.16% 0.75% 7.81% Platinum Investor III 26,657 12.50 333,263 7.57% 0.70% 7.87% Platinum Investor IV 1,701 10.77 18,330 7.40% 0.70% 7.87% Platinum Investor FlexDirector 2,593 11.68 30,297 7.69% 0.70% 7.87% Platinum Investor PLUS 3,405 13.96 47,537 7.99% 0.70% 7.87% Platinum Investor Survivor 256 11.80 3,022 5.20% 0.40% 8.19% Platinum Investor Survivor II 8,625 13.61 117,419 6.10% 0.75% 7.81% VALIC Company I - International Equities Fund AG Legacy Plus 9,194 11.65 107,097 1.25% 0.75% 22.14% Platinum Investor I & II 63,701 14.94 951,862 1.50% 0.75% 22.14% Platinum Investor III 87,669 12.94 1,134,020 1.58% 0.70% 22.20% Platinum Investor IV 4,262 14.14 60,257 2.11% 0.70% 22.20% Platinum Investor FlexDirector 695 15.90 11,054 1.72% 0.70% 22.20% Platinum Investor PLUS 11,740 16.94 198,841 1.59% 0.70% 22.20% Platinum Investor Survivor 14,503 11.53 167,217 1.62% 0.40% 22.57% Platinum Investor Survivor II 1,507 17.59 26,517 1.71% 0.75% 22.14% Platinum Investor VIP 7,289 11.73 85,475 2.93% 0.70% 17.27%
VL-R - 66 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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------- VALIC Company I - Mid Cap Index Fund AG Legacy Plus 19,582 $15.64 $ 306,276 0.46% 0.75% 9.15% Corporate America 5,475 17.12 93,748 0.54% 0.35% 9.59% Corporate America (reduced surrender charge) 4,478 13.72 61,432 0.54% 0.65% 9.26% Platinum Investor I & II 350,008 23.19 8,116,965 0.48% 0.75% 9.15% Platinum Investor III 413,935 15.25 6,312,099 0.48% 0.70% 9.21% Platinum Investor IV 23,308 12.18 283,853 0.65% 0.70% 9.21% Platinum Investor FlexDirector 419 13.22 5,539 0.88% 0.70% 9.21% Platinum Investor PLUS 43,892 15.70 689,091 0.51% 0.70% 9.21% Platinum Investor Survivor 61,023 17.09 1,042,738 0.49% 0.40% 9.54% Platinum Investor Survivor II 35,204 17.11 602,297 0.55% 0.75% 9.15% Platinum Investor VIP 14,211 10.36 147,222 0.87% 0.70% 3.59% Platinum Investor VIP (with GMWB rider) 177 10.31 1,830 0.87% 1.45% 3.08% VALIC Company I - Money Market I Fund AG Legacy Plus 16,295 11.14 181,446 3.96% 0.75% 3.84% Corporate America (reduced surrender charge) 38,636 10.63 410,658 5.40% 0.65% 3.94% Platinum Investor I & II 681,680 12.27 8,366,230 4.97% 0.75% 3.84% Platinum Investor III 1,178,024 11.06 13,032,151 6.84% 0.70% 3.89% Platinum Investor IV 30,634 10.59 324,280 6.05% 0.70% 3.89% Platinum Investor FlexDirector 17 10.61 179 907.96% 0.70% 3.89% Platinum Investor PLUS 34,418 10.63 365,827 3.91% 0.70% 3.89% Platinum Investor Survivor 192,818 11.65 2,245,828 5.41% 0.40% 4.20% Platinum Investor Survivor II 481,493 10.64 5,124,182 4.48% 0.75% 3.84% Platinum Investor VIP 52,469 10.34 542,527 2.99% 0.70% 3.40% Platinum Investor VIP (with GMWB rider) 441 10.29 4,538 2.99% 1.45% 2.88% VALIC Company I - Nasdaq-100 Index Fund Platinum Investor I & II 188,901 5.16 974,283 0.07% 0.75% 5.86% Platinum Investor III 410,245 5.07 2,081,367 0.07% 0.70% 5.92% Platinum Investor IV 3,678 11.26 41,405 0.11% 0.70% 5.92% Platinum Investor FlexDirector 95 11.48 1,092 0.09% 0.70% 5.92% Platinum Investor PLUS 17,060 14.55 248,157 0.08% 0.70% 5.92% Platinum Investor Survivor 9,147 5.27 48,208 0.07% 0.40% 6.23% Platinum Investor Survivor II 71,610 10.93 782,789 0.09% 0.75% 5.86% Platinum Investor VIP 880 10.42 9,173 0.15% 0.70% 4.20% VALIC Company I - Science & Technology Fund Platinum Investor I & II 57,061 4.26 242,800 0.00% 0.75% 5.06% Platinum Investor III 195,015 4.22 823,789 0.00% 0.70% 5.11% Platinum Investor IV 2,904 11.17 32,430 0.00% 0.70% 5.11% Platinum Investor FlexDirector 106 10.74 1,140 0.00% 0.70% 5.11% Platinum Investor PLUS 3,788 13.09 49,595 0.00% 0.70% 5.11% Platinum Investor Survivor 11,405 4.35 49,586 0.00% 0.40% 5.43% Platinum Investor Survivor II 2,616 9.82 25,682 0.00% 0.75% 5.06% Platinum Investor VIP 338 10.27 3,471 0.00% 0.70% 2.70% VALIC Company I - Small Cap Index Fund Corporate America -- 16.45 -- 0.65% 0.35% 17.65% Corporate America (reduced surrender charge) 2,443 13.88 33,899 0.65% 0.65% 1.02% Platinum Investor I & II 126,100 16.05 2,024,385 0.37% 0.75% 17.18% Platinum Investor III 213,978 15.82 3,385,593 0.36% 0.70% 17.24% Platinum Investor IV 20,793 12.46 259,100 0.50% 0.70% 17.24% Platinum Investor FlexDirector 952 13.32 12,683 0.66% 0.70% 17.24%
VL-R - 67 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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ---------------------------------------------------------------------------------------------------------------------- VALIC Company I - Small Cap Index Fund - Continued Platinum Investor PLUS 28,524 $16.73 $ 477,336 0.39% 0.70% 17.24% Platinum Investor Survivor 11,854 16.40 194,454 0.38% 0.40% 17.59% Platinum Investor Survivor II 8,722 17.98 156,826 0.47% 0.75% 17.18% Platinum Investor VIP 12,113 10.78 130,611 0.69% 0.70% 7.83% Platinum Investor VIP (with GMWB rider) 169 10.73 1,815 0.69% 1.45% 7.29% VALIC Company I - Stock Index Fund AG Legacy Plus 76,604 9.92 760,082 0.83% 0.75% 14.55% Corporate America 6,614 10.02 66,268 0.98% 0.35% 15.01% Corporate America (reduced surrender charge) 8,011 12.89 103,293 0.98% 0.65% 14.66% Platinum Investor I & II 1,139,545 13.60 15,492,256 0.83% 0.75% 14.55% Platinum Investor III 1,326,823 10.30 13,664,729 0.75% 0.70% 14.61% Platinum Investor IV 44,725 11.95 534,307 1.23% 0.70% 14.61% Platinum Investor FlexDirector 10,337 12.55 129,718 0.96% 0.70% 14.61% Platinum Investor PLUS 109,880 14.11 1,550,729 0.88% 0.70% 14.61% Platinum Investor Survivor 261,843 10.00 2,617,693 0.72% 0.40% 14.95% Platinum Investor Survivor II 47,924 13.12 628,916 1.03% 0.75% 14.55% Platinum Investor VIP 6,880 11.09 76,321 1.53% 0.70% 10.94% Van Kampen LIT Government Portfolio - Class I AG Legacy Plus 9,986 13.60 135,776 4.69% 0.75% 2.57% Van Kampen LIT Growth and Income Portfolio - Class I Platinum Investor I & II 181,624 15.03 2,729,972 1.03% 0.75% 15.37% Platinum Investor III 501,127 15.07 7,549,952 0.98% 0.70% 15.43% Platinum Investor IV 36,800 12.54 461,468 0.87% 0.70% 15.43% Platinum Investor FlexDirector 1,089 13.65 14,856 1.41% 0.70% 15.43% Platinum Investor PLUS 23,855 15.35 366,194 1.06% 0.70% 15.43% Platinum Investor Survivor 34,840 15.28 532,301 0.90% 0.40% 15.77% Platinum Investor Survivor II 24,347 15.03 365,949 1.43% 0.75% 15.37% Platinum Investor VIP 6,879 11.26 77,444 0.00% 0.70% 12.58% Van Kampen LIT Strategic Growth Portfolio - Class I * AG Legacy Plus 11,018 5.20 57,242 0.00% 0.75% 2.09% Vanguard VIF High Yield Bond Portfolio Corporate America (reduced surrender charge) 6,015 11.33 68,129 3.16% 0.65% 7.57% Platinum Investor I & II 62,165 13.99 869,391 7.62% 0.75% 7.46% Platinum Investor III 216,582 14.11 3,055,522 7.69% 0.70% 7.52% Platinum Investor IV 24,390 10.90 265,743 5.81% 0.70% 7.52% Platinum Investor FlexDirector 121 11.69 1,416 9.62% 0.70% 7.52% Platinum Investor PLUS 28,223 13.57 382,889 7.12% 0.70% 7.52% Platinum Investor Survivor 25,443 14.29 363,576 6.34% 0.40% 7.84% Platinum Investor Survivor II 8,739 13.87 121,186 5.56% 0.75% 7.46% Platinum Investor VIP 5,014 10.60 53,164 0.00% 0.70% 6.03% Platinum Investor VIP (with GMWB rider) 2 10.55 21 0.00% 1.45% 5.50% Vanguard VIF REIT Index Portfolio Corporate America 668 33.12 22,132 1.09% 0.35% 34.46% Corporate America (reduced surrender charge) 6,565 17.25 113,228 1.09% 0.65% 34.06% Platinum Investor I & II 103,667 32.32 3,350,190 1.98% 0.75% 33.92% Platinum Investor III 293,212 32.36 9,488,562 1.95% 0.70% 33.99% Platinum Investor IV 52,457 15.48 811,986 1.70% 0.70% 33.99% Platinum Investor FlexDirector 5,996 18.01 107,994 2.01% 0.70% 33.99% Platinum Investor PLUS 64,510 24.34 1,570,440 1.80% 0.70% 33.99%
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, 2006 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ---------------------------------------------------------------------------------------------------------- Vanguard VIF REIT Index Portfolio - Continued Platinum Investor Survivor 20,454 $33.02 $675,402 2.23% 0.40% 34.39% Platinum Investor Survivor II 26,865 28.16 756,516 1.96% 0.75% 33.92% Platinum Investor VIP 18,069 12.15 219,598 0.00% 0.70% 21.54% Platinum Investor VIP (with GMWB rider) 515 12.09 6,223 0.00% 1.45% 20.93%
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 year ended December 31, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------ AIM V.I. International Growth Fund - Series I AG Legacy Plus 32,768 $ 9.41 $ 308,334 0.74% 0.75% 17.05% Corporate America 4,331 9.15 39,611 0.62% 0.35% 17.52% Corporate America (reduced surrender charge) 1,888 13.67 25,808 0.62% 0.65% 17.17% Platinum Investor I & II 303,611 13.02 3,953,631 0.64% 0.75% 17.05% Platinum Investor III 242,577 10.94 2,653,921 0.57% 0.70% 17.11% Platinum Investor IV 10,946 11.63 127,267 1.11% 0.70% 16.27% Platinum Investor FlexDirector 82 13.42 1,100 1.25% 0.70% 17.11% Platinum Investor PLUS 15,378 15.14 232,771 0.78% 0.70% 17.11% Platinum Investor Survivor 49,996 9.13 456,490 0.57% 0.40% 17.46% Platinum Investor Survivor II 2,093 15.85 33,174 0.16% 0.75% 17.05% AIM V.I. Premier Equity Fund - Series I Corporate America 5,660 6.57 37,172 0.84% 0.35% 5.29% Platinum Investor I & II 763,942 10.42 7,961,692 0.81% 0.75% 4.87% Platinum Investor III 483,611 7.75 3,749,782 0.84% 0.70% 4.92% Platinum Investor IV 6,207 10.54 65,390 1.48% 0.70% 5.36% Platinum Investor FlexDirector 389 10.70 4,164 0.56% 0.70% 4.92% Platinum Investor PLUS 19,332 11.25 217,528 0.90% 0.70% 4.92% Platinum Investor Survivor 108,351 6.56 710,371 0.82% 0.40% 5.23% Platinum Investor Survivor II 8,346 9.69 80,911 0.91% 0.75% 4.87% Alger American Leveraged AllCap Portfolio - Class O Shares Platinum Investor I & II 7,478 14.69 109,883 0.00% 0.75% 13.59% Platinum Investor III 48,147 14.71 708,454 0.00% 0.70% 13.65% Platinum Investor IV 5,386 11.58 62,390 0.00% 0.70% 15.84% Platinum Investor FlexDirector 87 11.60 1,008 0.00% 0.70% 13.65% Platinum Investor PLUS 11,227 14.71 165,196 0.00% 0.70% 13.65% Platinum Investor Survivor 158 14.83 2,338 0.00% 0.40% 13.99% Platinum Investor Survivor II 193 14.69 2,842 0.00% 0.75% 13.59% Alger American MidCap Growth Portfolio - Class O Shares Corporate America (reduced surrender charge) 1,173 12.43 14,580 0.00% 0.65% 9.11% Platinum Investor I & II 8,794 16.60 145,966 0.00% 0.75% 9.01% Platinum Investor III 59,995 16.62 997,163 0.00% 0.70% 9.06% Platinum Investor IV 4,283 11.00 47,112 0.00% 0.70% 10.00% Platinum Investor FlexDirector 6,595 11.60 76,513 0.00% 0.70% 9.06% Platinum Investor PLUS 8,153 16.62 135,516 0.00% 0.70% 9.06% Platinum Investor Survivor 945 16.75 15,837 0.00% 0.40% 9.39% Platinum Investor Survivor II 2,178 16.60 36,145 0.00% 0.75% 9.01% American Century VP Value Fund - Class I AG Legacy Plus 29,373 17.55 515,430 0.91% 0.75% 4.25% Corporate America 2,515 16.18 40,705 0.53% 0.35% 4.67% Corporate America (reduced surrender charge) 7,554 11.21 84,683 0.53% 0.65% 4.35% Platinum Investor I & II 263,440 15.85 4,176,032 0.88% 0.75% 4.25% Platinum Investor III 503,096 15.77 7,932,245 0.77% 0.70% 4.30% Platinum Investor IV 24,188 10.37 250,785 0.00% 0.70% 3.68%
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, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------- American Century VP Value Fund - Class I - Continued Platinum Investor FlexDirector 47 $11.29 $ 530 0.76% 0.70% 4.30% Platinum Investor PLUS 54,262 13.36 724,814 0.81% 0.70% 4.30% Platinum Investor Survivor 22,479 16.14 362,826 0.65% 0.40% 4.62% Platinum Investor Survivor II 61,884 13.96 864,131 0.88% 0.75% 4.25% Credit Suisse Small Cap Growth Portfolio Platinum Investor I & II 38,413 7.90 303,486 0.00% 0.75% -3.40% Platinum Investor III 122,544 7.74 948,802 0.00% 0.70% -3.36% Platinum Investor IV 2,716 9.89 26,872 0.00% 0.70% -1.07% Platinum Investor FlexDirector 5,715 9.79 55,969 0.00% 0.70% -3.36% Platinum Investor PLUS 10,800 12.36 133,478 0.00% 0.70% -3.36% Platinum Investor Survivor 3,169 8.04 25,490 0.00% 0.40% -3.07% Platinum Investor Survivor II 1,787 11.71 20,923 0.00% 0.75% -3.40% Dreyfus IP MidCap Stock Portfolio - Initial shares Platinum Investor I & II 77,491 13.17 1,020,785 0.04% 0.75% 8.36% Platinum Investor III 226,387 12.96 2,934,707 0.03% 0.70% 8.41% Platinum Investor IV 4,649 10.88 50,588 0.00% 0.70% 8.81% Platinum Investor FlexDirector 1 11.78 12 0.00% 0.70% 8.41% Platinum Investor PLUS 20,845 13.61 283,805 0.03% 0.70% 8.41% Platinum Investor Survivor 14,773 13.41 198,157 0.03% 0.40% 8.74% Platinum Investor Survivor II 8,917 14.91 132,916 0.03% 0.75% 8.36% Dreyfus VIF Developing Leaders Portfolio - Initial shares Corporate America 5,611 12.14 68,140 0.00% 0.35% 5.43% Corporate America (reduced surrender charge) 829 11.39 9,438 0.00% 0.65% 5.12% Platinum Investor I & II 352,535 14.61 5,151,944 0.00% 0.75% 5.01% Platinum Investor III 448,236 11.26 5,049,247 0.00% 0.70% 5.06% Platinum Investor IV 4,825 10.72 51,735 0.00% 0.70% 7.22% Platinum Investor FlexDirector 503 10.68 5,372 0.00% 0.70% 5.06% Platinum Investor PLUS 32,044 12.16 389,665 0.00% 0.70% 5.06% Platinum Investor Survivor 60,276 12.12 730,742 0.00% 0.40% 5.38% Platinum Investor Survivor II 31,277 13.21 413,095 0.00% 0.75% 5.01% Dreyfus VIF Quality Bond Portfolio - Initial shares Corporate America 2,486 13.64 33,915 3.56% 0.35% 2.12% Corporate America (reduced surrender charge) 4,157 10.41 43,253 3.56% 0.65% 1.82% Platinum Investor I & II 295,506 13.56 4,006,889 3.56% 0.75% 1.71% Platinum Investor III 259,417 12.85 3,333,169 3.74% 0.70% 1.77% Platinum Investor IV 7,153 10.09 72,187 2.51% 0.70% 0.92% Platinum Investor PLUS 21,599 11.39 246,034 3.61% 0.70% 1.77% Platinum Investor Survivor 18,197 13.62 247,796 3.28% 0.40% 2.07% Platinum Investor Survivor II 9,733 11.43 111,254 3.54% 0.75% 1.71% Fidelity VIP Asset Manager Portfolio - Service Class 2 AG Legacy Plus 17,804 11.01 196,081 2.63% 0.75% 3.01% Platinum Investor I & II 172,041 10.48 1,803,598 2.65% 0.75% 3.01% Platinum Investor III 248,098 10.47 2,596,756 2.24% 0.70% 3.06%
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, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------- Fidelity VIP Asset Manager Portfolio - Service Class 2 - Continued Platinum Investor IV 3,301 $10.30 $ 34,007 0.00% 0.70% 3.01% Platinum Investor FlexDirector 729 10.47 7,634 0.00% 0.70% 3.06% Platinum Investor PLUS 24,645 11.97 294,879 2.20% 0.70% 3.06% Platinum Investor Survivor 10,120 10.67 108,029 2.38% 0.40% 3.37% Platinum Investor Survivor II 12,871 11.68 150,292 2.21% 0.75% 3.01% Fidelity VIP Contrafund Portfolio - Service Class 2 AG Legacy Plus 41,343 14.36 593,539 0.12% 0.75% 15.78% Corporate America 2,464 12.85 31,663 0.09% 0.35% 16.24% Corporate America (reduced surrender charge) 4,208 12.76 53,697 0.09% 0.65% 15.89% Platinum Investor I & II 433,714 12.59 5,458,933 0.13% 0.75% 15.78% Platinum Investor III 1,174,986 12.43 14,603,155 0.12% 0.70% 15.84% Platinum Investor IV 34,820 11.46 398,996 0.00% 0.70% 14.59% Platinum Investor FlexDirector 5,556 12.69 70,488 0.04% 0.70% 15.84% Platinum Investor PLUS 141,910 14.87 2,110,564 0.10% 0.70% 15.84% Platinum Investor Survivor 89,331 12.82 1,144,849 0.12% 0.40% 16.18% Platinum Investor Survivor II 58,221 15.67 912,410 0.12% 0.75% 15.78% Fidelity VIP Equity-Income Portfolio - Service Class 2 AG Legacy Plus 57,321 11.55 662,077 1.48% 0.75% 4.78% Corporate America 4,719 11.92 56,248 1.58% 0.35% 5.20% Corporate America (reduced surrender charge) 13,635 11.34 154,584 1.58% 0.65% 4.89% Platinum Investor I & II 298,694 11.68 3,487,648 1.57% 0.75% 4.78% Platinum Investor III 849,719 11.70 9,940,258 1.25% 0.70% 4.84% Platinum Investor IV 20,666 10.47 216,404 0.00% 0.70% 4.72% Platinum Investor FlexDirector 1,283 11.14 14,285 0.78% 0.70% 4.84% Platinum Investor PLUS 72,117 12.60 908,410 1.23% 0.70% 4.84% Platinum Investor Survivor 87,502 11.89 1,040,329 1.61% 0.40% 5.15% Platinum Investor Survivor II 58,352 12.77 745,340 1.35% 0.75% 4.78% Fidelity VIP Growth Portfolio - Service Class 2 AG Legacy Plus 26,555 8.50 225,771 0.27% 0.75% 4.72% Corporate America -- 7.26 -- 0.22% 0.35% 5.13% Corporate America (reduced surrender charge) 8,299 11.22 93,130 0.22% 0.65% 4.82% Platinum Investor I & II 229,431 7.11 1,631,987 0.33% 0.75% 4.72% Platinum Investor III 1,144,468 7.05 8,071,149 0.25% 0.70% 4.77% Platinum Investor IV 17,717 10.62 188,184 0.00% 0.70% 6.22% Platinum Investor FlexDirector 4,788 10.21 48,901 0.33% 0.70% 4.77% Platinum Investor PLUS 103,309 11.35 1,172,519 0.24% 0.70% 4.77% Platinum Investor Survivor 66,757 7.24 483,521 0.28% 0.40% 5.08% Platinum Investor Survivor II 41,498 10.09 418,570 0.20% 0.75% 4.72% Fidelity VIP Mid Cap Portfolio - Service Class 2 Corporate America (reduced surrender charge) 12,662 13.49 170,834 0.00% 0.65% 17.25% Platinum Investor I & II 9,968 20.29 202,196 0.00% 0.75% 17.14% Platinum Investor III 188,760 20.31 3,834,116 0.00% 0.70% 17.19% Platinum Investor IV 15,896 11.54 183,376 0.00% 0.70% 15.36%
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, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------------- Fidelity VIP Mid Cap Portfolio - Service Class 2 - Continued Platinum Investor FlexDirector 523 $13.58 $ 7,105 0.00% 0.70% 17.19% Platinum Investor PLUS 10,265 20.31 208,499 0.00% 0.70% 17.19% Platinum Investor Survivor 13,668 20.48 279,857 0.00% 0.40% 17.55% Platinum Investor Survivor II 6,476 20.29 131,373 0.00% 0.75% 17.14% Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 Corporate America (reduced surrender charge) 3,208 12.20 39,130 0.24% 0.65% 8.06% Platinum Investor I & II 14,598 17.60 256,872 1.00% 0.75% 7.96% Platinum Investor III 180,608 17.62 3,182,234 1.09% 0.70% 8.01% Platinum Investor IV 15,977 10.69 170,753 0.31% 0.70% 6.87% Platinum Investor FlexDirector 297 12.59 3,742 0.50% 0.70% 8.01% Platinum Investor PLUS 22,076 17.62 388,964 0.77% 0.70% 8.01% Platinum Investor Survivor 15,477 17.76 274,888 1.40% 0.40% 8.33% Platinum Investor Survivor II 8,288 17.60 145,839 2.06% 0.75% 7.96% Franklin Templeton -Franklin Small-Mid Cap Growth Securities Fund - Class 2 * AG Legacy Plus 18,250 7.29 133,093 0.00% 0.75% 4.01% Franklin Templeton - Franklin U.S. Government Fund - Class 2 Platinum Investor I & II 28,583 11.57 330,815 12.95% 0.75% 1.64% Platinum Investor III 1,055,949 11.60 12,246,014 4.54% 0.70% 1.69% Platinum Investor IV 4,565 10.11 46,137 1.46% 0.70% 1.07% Platinum Investor PLUS 40,074 11.22 449,553 4.28% 0.70% 1.69% Platinum Investor Survivor 9,591 11.74 112,573 10.64% 0.40% 2.00% Platinum Investor Survivor II 16,286 11.57 188,498 8.18% 0.75% 1.64% Franklin Templeton - Mutual Shares Securities Fund - Class 2 Platinum Investor I & II 100,052 13.35 1,335,396 1.14% 0.75% 9.73% Platinum Investor III 551,644 13.37 7,377,455 0.88% 0.70% 9.79% Platinum Investor IV 9,575 10.94 104,772 0.51% 0.70% 9.42% Platinum Investor FlexDirector 3,626 11.78 42,710 1.46% 0.70% 9.79% Platinum Investor PLUS 30,917 13.15 406,562 0.86% 0.70% 9.79% Platinum Investor Survivor 2,657 13.53 35,958 0.69% 0.40% 10.11% Platinum Investor Survivor II 5,450 13.35 72,744 1.41% 0.75% 9.73% Franklin Templeton - Templeton Foreign Securities Fund - Class 2 AG Legacy Plus 17,097 10.85 185,470 1.12% 0.75% 9.35% Platinum Investor I & II 92,614 13.58 1,257,319 1.17% 0.75% 9.35% Platinum Investor III 633,011 13.60 8,610,818 1.10% 0.70% 9.40% Platinum Investor IV 13,779 10.86 149,627 0.31% 0.70% 8.59% Platinum Investor FlexDirector 1,842 12.15 22,381 1.41% 0.70% 9.40% Platinum Investor PLUS 26,178 13.15 344,295 1.12% 0.70% 9.40% Platinum Investor Survivor 5,751 13.77 79,176 0.48% 0.40% 9.73% Platinum Investor Survivor II 53,115 13.58 721,076 0.99% 0.75% 9.35% Goldman Sachs Capital Growth Fund Platinum Investor I & II 13,281 9.46 125,593 0.15% 0.75% 2.17% Platinum Investor III 12,698 9.48 120,387 0.14% 0.70% 2.23% Platinum Investor PLUS 112 11.58 1,294 0.15% 0.70% 2.23%
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, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------------------------- Goldman Sachs Capital Growth Fund - Continued Platinum Investor Survivor 667,804 $ 9.63 $6,428,556 0.15% 0.40% 2.53% Platinum Investor Survivor II 170,190 10.05 1,710,032 0.14% 0.75% 2.17% Janus Aspen Series International Growth Portfolio - Service Shares Corporate America -- 10.55 -- 1.45% 0.35% 31.48% Platinum Investor I & II 117,254 10.33 1,211,612 1.05% 0.75% 30.96% Platinum Investor III 259,706 10.27 2,666,639 1.01% 0.70% 31.02% Platinum Investor IV 10,054 12.91 129,774 1.05% 0.70% 29.07% Platinum Investor FlexDirector 14,209 14.25 202,421 1.04% 0.70% 31.02% Platinum Investor PLUS 21,316 16.45 350,743 0.92% 0.70% 31.02% Platinum Investor Survivor 37,349 10.52 392,972 1.12% 0.40% 31.41% Platinum Investor Survivor II 6,116 16.24 99,349 1.05% 0.75% 30.96% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares Corporate America 316 6.03 1,902 0.00% 0.35% 11.64% Platinum Investor I & II 75,195 5.90 443,960 0.00% 0.75% 11.19% Platinum Investor III 390,008 5.76 2,247,637 0.00% 0.70% 11.25% Platinum Investor IV 1,687 11.18 18,865 0.00% 0.70% 11.83% Platinum Investor PLUS 10,625 15.06 160,004 0.00% 0.70% 11.25% Platinum Investor Survivor 8,892 6.01 53,459 0.00% 0.40% 11.58% Platinum Investor Survivor II 2,532 13.44 34,013 0.00% 0.75% 11.19% Janus Aspen Series Worldwide Growth Portfolio - Service Shares Corporate America 2,714 6.95 18,860 1.51% 0.35% 5.20% Corporate America (reduced surrender charge) 4,150 11.56 47,979 1.51% 0.65% 4.89% Platinum Investor I & II 108,684 6.81 739,710 1.15% 0.75% 4.78% Platinum Investor III 374,289 6.75 2,526,992 1.19% 0.70% 4.83% Platinum Investor IV 5,045 10.54 53,177 1.27% 0.70% 5.40% Platinum Investor PLUS 15,036 10.78 162,111 1.26% 0.70% 4.83% Platinum Investor Survivor 25,941 6.93 179,779 1.23% 0.40% 5.15% Platinum Investor Survivor II 25,510 10.32 263,280 0.88% 0.75% 4.78% JPMorgan Mid Cap Value Portfolio Platinum Investor I & II 6,830 16.11 110,019 0.26% 0.75% 8.40% Platinum Investor III 200,737 16.13 3,237,786 0.29% 0.70% 8.45% Platinum Investor IV 10,108 10.69 108,048 0.01% 0.70% 6.90% Platinum Investor PLUS 8,871 16.13 143,086 0.17% 0.70% 8.45% Platinum Investor Survivor 15,861 16.26 257,881 0.34% 0.40% 8.78% Platinum Investor Survivor II 10,417 16.11 167,797 0.58% 0.75% 8.40% JPMorgan Small Company Portfolio Platinum Investor I & II 49,513 11.71 579,930 0.00% 0.75% 2.65% Platinum Investor III 100,496 11.53 1,158,901 0.00% 0.70% 2.70% Platinum Investor IV 3,551 10.48 37,209 0.00% 0.70% 4.78% Platinum Investor FlexDirector 59 12.44 739 0.00% 0.70% 2.70% Platinum Investor PLUS 9,456 14.36 135,771 0.00% 0.70% 2.70% Platinum Investor Survivor 1,678 11.93 20,009 0.00% 0.40% 3.00% Platinum Investor Survivor II 4,940 15.05 74,351 0.00% 0.75% 2.65%
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, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------ MFS VIT Capital Opportunities Series - Initial Class Corporate America 61 $ 6.88 $ 420 0.00% 0.35% 1.33% Platinum Investor I & II 102,935 6.74 693,317 0.73% 0.75% 0.93% Platinum Investor III 402,031 6.80 2,734,163 0.73% 0.70% 0.98% Platinum Investor IV 3,161 10.35 32,714 0.05% 0.70% 3.51% Platinum Investor FlexDirector 343 10.68 3,664 0.50% 0.70% 0.98% Platinum Investor PLUS 41,777 11.46 478,568 0.72% 0.70% 0.98% Platinum Investor Survivor 32,045 6.86 219,779 0.78% 0.40% 1.28% Platinum Investor Survivor II 3,440 10.43 35,883 0.73% 0.75% 0.93% MFS VIT Emerging Growth Series - Initial Class AG Legacy Plus 9,979 11.62 115,986 0.00% 0.75% 8.38% Corporate America -- 5.38 -- 0.00% 0.35% 8.81% Corporate America (reduced surrender charge) 1,688 12.34 20,834 0.00% 0.65% 8.48% Platinum Investor I & II 633,175 11.32 7,165,076 0.00% 0.75% 8.38% Platinum Investor III 679,181 5.99 4,071,476 0.00% 0.70% 8.43% Platinum Investor IV 4,405 11.14 49,067 0.00% 0.70% 11.38% Platinum Investor FlexDirector 331 11.41 3,773 0.00% 0.70% 8.43% Platinum Investor PLUS 37,583 12.62 474,425 0.00% 0.70% 8.43% Platinum Investor Survivor 116,222 5.38 624,792 0.00% 0.40% 8.76% Platinum Investor Survivor II 3,808 10.85 41,330 0.00% 0.75% 8.38% MFS VIT New Discovery Series - Initial Class AG Legacy Plus 19,993 8.18 163,457 0.00% 0.75% 4.46% Corporate America 2,497 8.94 22,327 0.00% 0.35% 4.88% Platinum Investor I & II 70,119 8.76 614,070 0.00% 0.75% 4.46% Platinum Investor III 282,484 8.58 2,424,535 0.00% 0.70% 4.51% Platinum Investor IV 3,830 10.76 41,230 0.00% 0.70% 7.64% Platinum Investor FlexDirector 409 10.40 4,250 0.00% 0.70% 4.51% Platinum Investor PLUS 20,194 11.66 235,469 0.00% 0.70% 4.51% Platinum Investor Survivor 11,787 8.92 105,111 0.00% 0.40% 4.83% Platinum Investor Survivor II 8,801 11.23 98,842 0.00% 0.75% 4.46% MFS VIT Research Series - Initial Class Corporate America -- 8.19 -- 0.99% 0.35% 7.42% Corporate America (reduced surrender charge) -- 12.05 -- 0.99% 0.65% 7.10% Platinum Investor I & II 42,324 8.02 339,466 0.46% 0.75% 7.00% Platinum Investor III 179,928 7.99 1,438,273 0.45% 0.70% 7.05% Platinum Investor IV 2,508 10.67 26,765 0.00% 0.70% 6.72% Platinum Investor FlexDirector 202 11.52 2,326 0.31% 0.70% 7.05% Platinum Investor PLUS 8,867 12.63 112,031 0.45% 0.70% 7.05% Platinum Investor Survivor 9,890 8.17 80,775 0.49% 0.40% 7.37% Platinum Investor Survivor II 6,637 11.76 78,081 0.41% 0.75% 7.00% MFS VIT Total Return Series - Initial Class AG Legacy Plus 129,022 6.36 820,117 2.12% 0.75% 2.05%
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, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------ Neuberger Berman AMT Mid-Cap Growth Portfolio - Class I Corporate America -- $ 7.37 $ -- 0.00% 0.35% 13.34% Corporate America (reduced surrender charge) 957 12.83 12,280 0.00% 0.65% 13.01% Platinum Investor I & II 59,320 7.22 428,152 0.00% 0.75% 12.89% Platinum Investor III 312,523 7.10 2,219,037 0.00% 0.70% 12.95% Platinum Investor IV 4,230 11.30 47,791 0.00% 0.70% 12.98% Platinum Investor FlexDirector 536 12.49 6,690 0.00% 0.70% 12.95% Platinum Investor PLUS 38,696 13.24 512,286 0.00% 0.70% 12.95% Platinum Investor Survivor 27,509 7.35 202,176 0.00% 0.40% 13.29% Platinum Investor Survivor II 10,134 12.14 123,066 0.00% 0.75% 12.89% Neuberger Berman AMT Partners Portfolio - Class I AG Legacy Plus 8,341 13.28 110,794 0.63% 0.75% 17.17% Oppenheimer Balanced Fund/VA - Non-Service Shares Platinum Investor I & II 12,083 13.38 161,680 1.82% 0.75% 3.11% Platinum Investor III 39,564 13.40 530,087 1.64% 0.70% 3.17% Platinum Investor IV 13,581 10.24 139,032 0.00% 0.70% 2.37% Platinum Investor FlexDirector 33 10.92 355 0.00% 0.70% 3.17% Platinum Investor PLUS 4,273 13.40 57,255 0.64% 0.70% 3.17% Platinum Investor Survivor 433 13.51 5,853 15.63% 0.40% 3.48% Platinum Investor Survivor II 4,026 13.38 53,866 1.66% 0.75% 3.11% Oppenheimer Global Securities Fund/VA - Non-Service Shares Platinum Investor I & II 12,012 19.08 229,194 1.55% 0.75% 13.46% Platinum Investor III 89,885 19.11 1,717,343 0.82% 0.70% 13.51% Platinum Investor IV 14,555 11.60 168,845 0.00% 0.70% 16.01% Platinum Investor FlexDirector 10 12.68 132 0.32% 0.70% 13.51% Platinum Investor PLUS 8,797 19.11 168,068 0.81% 0.70% 13.51% Platinum Investor Survivor 4,782 19.26 92,101 0.64% 0.40% 13.85% Platinum Investor Survivor II 3,411 19.08 65,075 1.05% 0.75% 13.46% Oppenheimer High Income Fund/VA - Non-Service Shares AG Legacy Plus 8,291 12.71 105,365 6.07% 0.75% 1.55% PIMCO VIT Real Return Portfolio - Administrative Class AG Legacy Plus 39,631 14.19 562,357 2.58% 0.75% 1.33% Corporate America 2,227 15.78 35,144 2.82% 0.35% 1.74% Corporate America (reduced surrender charge) 5,843 10.46 61,112 2.82% 0.65% 1.43% Platinum Investor I & II 169,980 15.46 2,627,400 2.82% 0.75% 1.33% Platinum Investor III 472,070 15.53 7,330,772 2.58% 0.70% 1.38% Platinum Investor IV 13,415 10.03 134,583 2.25% 0.70% 0.32% Platinum Investor FlexDirector 552 10.52 5,813 2.37% 0.70% 1.38% Platinum Investor PLUS 34,717 13.11 455,156 2.82% 0.70% 1.38% Platinum Investor Survivor 50,322 15.74 792,015 2.53% 0.40% 1.69% Platinum Investor Survivor II 25,695 13.28 341,190 2.44% 0.75% 1.33% PIMCO VIT Short-Term Portfolio - Administrative Class Corporate America 1,293 11.54 14,927 2.65% 0.35% 2.14% Platinum Investor I & II 102,222 11.31 1,155,888 2.02% 0.75% 1.74%
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, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------------------- PIMCO VIT Short-Term Portfolio - Administrative Class - Continued Platinum Investor III 222,854 $11.33 $ 2,524,319 2.79% 0.70% 1.79% Platinum Investor IV 12,215 10.16 124,159 2.60% 0.70% 1.64% Platinum Investor FlexDirector 6,204 10.22 63,427 3.13% 0.70% 1.79% Platinum Investor PLUS 27,436 10.54 289,255 2.63% 0.70% 1.79% Platinum Investor Survivor 32,107 11.51 369,672 2.64% 0.40% 2.09% Platinum Investor Survivor II 29,438 10.63 313,034 2.73% 0.75% 1.74% PIMCO VIT Total Return Portfolio - Administrative Class AG Legacy Plus 41,035 12.64 518,568 3.37% 0.75% 1.69% Corporate America -- 13.52 -- 3.42% 0.35% 2.09% Corporate America (reduced surrender charge) 4,324 10.26 44,383 3.42% 0.65% 1.79% Platinum Investor I & II 304,679 13.24 4,034,932 3.53% 0.75% 1.69% Platinum Investor III 1,208,514 13.32 16,098,999 4.27% 0.70% 1.74% Platinum Investor IV 22,535 10.12 228,029 2.96% 0.70% 1.19% Platinum Investor FlexDirector 9,165 10.42 95,488 3.74% 0.70% 1.74% Platinum Investor PLUS 67,040 11.61 778,460 3.52% 0.70% 1.74% Platinum Investor Survivor 97,859 13.48 1,319,594 4.43% 0.40% 2.04% Platinum Investor Survivor II 93,995 11.71 1,101,055 4.68% 0.75% 1.69% Pioneer Fund VCT Portfolio - Class I Platinum Investor I & II 217,065 10.77 2,337,632 1.32% 0.75% 5.38% Platinum Investor III 54,104 10.77 582,964 1.29% 0.70% 5.43% Platinum Investor PLUS 1,048 10.77 11,287 1.32% 0.70% 5.43% Platinum Investor Survivor 27,282 10.81 294,897 1.32% 0.40% 5.75% Platinum Investor Survivor II 558 10.77 6,012 1.57% 0.75% 5.38% Pioneer Growth Opportunities VCT Portfolio - Class I Corporate America 3,402 10.93 37,194 0.00% 0.35% 6.31% Platinum Investor I & II 309,209 10.89 3,366,299 0.00% 0.75% 5.89% Platinum Investor III 135,246 10.89 1,473,170 0.00% 0.70% 5.94% Platinum Investor PLUS 5,652 10.89 61,565 0.00% 0.70% 5.94% Platinum Investor Survivor 11,323 10.93 123,729 0.00% 0.40% 6.26% Platinum Investor Survivor II 19,598 10.89 213,357 0.00% 0.75% 5.89% Putnam VT Diversified Income Fund - Class IB AG Legacy Plus 13,413 14.03 188,182 7.19% 0.75% 2.28% Corporate America 453,182 14.39 6,519,762 6.70% 0.35% 2.69% Corporate America (reduced surrender charge) 8,287 10.63 88,056 6.70% 0.65% 2.38% Platinum Investor I & II 69,950 13.55 947,869 6.86% 0.75% 2.28% Platinum Investor III 165,340 14.52 2,401,485 4.20% 0.70% 2.33% Platinum Investor IV 4,050 10.11 40,950 0.00% 0.70% 1.10% Platinum Investor FlexDirector 126 10.87 1,369 4.78% 0.70% 2.33% Platinum Investor PLUS 7,836 13.46 105,479 6.41% 0.70% 2.33% Platinum Investor Survivor 9,432 14.36 135,474 1.64% 0.40% 2.64% Platinum Investor Survivor II 1,832 13.82 25,327 8.15% 0.75% 2.28%
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, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------- Putnam VT Growth and Income Fund - Class IB Corporate America 557,678 $11.80 $6,579,575 1.43% 0.35% 4.86% Corporate America (reduced surrender charge) 13,093 11.25 147,352 1.43% 0.65% 4.55% Platinum Investor I & II 407,918 12.17 4,966,360 1.59% 0.75% 4.44% Platinum Investor III 559,533 11.00 6,155,601 1.47% 0.70% 4.50% Platinum Investor IV 18,263 10.39 189,737 0.00% 0.70% 3.89% Platinum Investor FlexDirector 11,478 11.03 126,565 1.38% 0.70% 4.50% Platinum Investor PLUS 33,887 12.31 417,233 1.43% 0.70% 4.50% Platinum Investor Survivor 63,377 11.78 746,490 1.71% 0.40% 4.81% Platinum Investor Survivor II 5,634 12.07 68,027 1.72% 0.75% 4.44% Putnam VT International Growth and Income Fund - Class IB Corporate America -- 12.61 -- 1.54% 0.35% 13.70% Corporate America (reduced surrender charge) 246 13.04 3,212 1.54% 0.65% 13.36% Platinum Investor I & II 175,186 14.58 2,554,483 0.85% 0.75% 13.25% Platinum Investor III 176,714 12.91 2,282,174 1.21% 0.70% 13.31% Platinum Investor IV 8,958 11.32 101,365 0.00% 0.70% 13.15% Platinum Investor FlexDirector 187 12.81 2,390 0.55% 0.70% 13.31% Platinum Investor PLUS 12,489 15.18 189,541 0.70% 0.70% 13.31% Platinum Investor Survivor 34,596 12.59 435,400 0.87% 0.40% 13.65% Platinum Investor Survivor II 8,453 16.48 139,346 0.78% 0.75% 13.25% Putnam VT Small Cap Value Fund - Class IB AG Legacy Plus 19,801 21.04 416,707 0.19% 0.75% 6.23% Putnam VT Vista Fund - Class IB AG Legacy Plus 16,995 6.19 105,252 0.00% 0.75% 11.31% Putnam VT Voyager Fund - Class IB AG Legacy Plus 66,242 6.04 399,942 0.59% 0.75% 4.91% Scudder VIT Equity 500 Index Fund - Class A Legacy Plus -- 10.55 -- 2.93% 0.75% 3.90% SunAmerica - Aggressive Growth Portfolio - Class 1 Platinum Investor I & II 21,479 12.49 268,304 0.00% 0.75% 7.93% Platinum Investor III 43,699 12.51 546,865 0.00% 0.70% 7.98% Platinum Investor IV 3,453 10.62 36,675 0.00% 0.70% 6.20% Platinum Investor PLUS 8,418 13.29 111,874 0.00% 0.70% 7.98% Platinum Investor Survivor 888 12.65 11,239 0.00% 0.40% 8.30% Platinum Investor Survivor II 647 12.49 8,085 0.00% 0.75% 7.93% SunAmerica - SunAmerica Balanced Portfolio - Class 1 Platinum Investor I & II 725 10.84 7,860 3.86% 0.75% 1.14% Platinum Investor III 64,701 10.86 702,653 2.66% 0.70% 1.19% Platinum Investor IV 4,063 10.12 41,111 3.69% 0.70% 1.17% Platinum Investor PLUS 17,524 11.20 196,315 2.60% 0.70% 1.19% Platinum Investor Survivor II 1,541 10.84 16,703 2.73% 0.75% 1.14% UIF Equity Growth Portfolio - Class I Platinum Investor I & II 278,116 11.79 3,279,112 0.47% 0.75% 14.85% Platinum Investor III 88,812 7.92 703,309 0.46% 0.70% 14.90%
VL-R - 78 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, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------- UIF Equity Growth Portfolio - Class I - Continued Platinum Investor IV 1,164 $11.87 $ 13,815 0.31% 0.70% 18.72% Platinum Investor PLUS 4,916 12.61 61,991 0.46% 0.70% 14.90% Platinum Investor Survivor 21,789 7.58 165,054 0.46% 0.40% 15.25% Platinum Investor Survivor II 336 11.13 3,735 0.45% 0.75% 14.85% UIF High Yield Portfolio - Class I Platinum Investor I & II 81,303 11.17 908,279 7.18% 0.75% 0.30% Platinum Investor III 28,540 11.59 330,786 7.30% 0.70% 0.35% Platinum Investor IV 798 9.99 7,976 1.87% 0.70% -0.11% Platinum Investor FlexDirector 2,432 10.83 26,347 7.68% 0.70% 0.35% Platinum Investor PLUS 3,164 12.94 40,952 7.87% 0.70% 0.35% Platinum Investor Survivor 72,980 10.90 795,784 12.17% 0.40% 0.65% Platinum Investor Survivor II 5,458 12.63 68,916 6.29% 0.75% 0.30% VALIC Company I - International Equities Fund AG Legacy Plus 14,963 9.54 142,691 1.63% 0.75% 16.11% Platinum Investor I & II 73,508 12.23 899,274 1.66% 0.75% 16.11% Platinum Investor III 90,430 10.59 957,210 1.75% 0.70% 16.17% Platinum Investor IV 1,971 11.57 22,799 1.26% 0.70% 15.68% Platinum Investor FlexDirector 605 13.01 7,871 1.23% 0.70% 16.17% Platinum Investor PLUS 11,992 13.86 166,203 1.55% 0.70% 16.17% Platinum Investor Survivor 14,245 9.41 133,999 1.75% 0.40% 16.52% Platinum Investor Survivor II 1,326 14.40 19,100 1.73% 0.75% 16.11% VALIC Company I - Mid Cap Index Fund AG Legacy Plus 22,947 14.33 328,807 0.93% 0.75% 11.36% Corporate America 5,967 15.63 93,231 0.97% 0.35% 11.81% Corporate America (reduced surrender charge) 2,099 12.56 26,356 0.97% 0.65% 11.47% Platinum Investor I & II 375,993 21.25 7,988,267 0.98% 0.75% 11.36% Platinum Investor III 435,960 13.96 6,087,361 0.98% 0.70% 11.42% Platinum Investor IV 10,165 11.15 113,354 0.72% 0.70% 11.51% Platinum Investor FlexDirector 37 12.10 451 0.70% 0.70% 11.42% Platinum Investor PLUS 41,815 14.38 601,133 0.94% 0.70% 11.42% Platinum Investor Survivor 62,602 15.60 976,586 0.99% 0.40% 11.75% Platinum Investor Survivor II 28,083 15.67 440,177 0.94% 0.75% 11.36% VALIC Company I - Money Market I Fund AG Legacy Plus 28,169 10.72 302,068 3.28% 0.75% 1.96% Corporate America -- 11.20 -- 1.17% 0.35% 2.37% Corporate America (reduced surrender charge) 5,751 10.23 58,803 1.17% 0.65% 2.06% Legacy Plus -- 11.29 -- 3.50% 0.75% 1.96% Platinum Investor I & II 753,360 11.82 8,904,036 2.58% 0.75% 1.96% Platinum Investor III 739,009 10.65 7,869,198 2.87% 0.70% 2.01% Platinum Investor IV 34,550 10.19 352,032 3.79% 0.70% 1.89% Platinum Investor FlexDirector -- 10.22 -- 0.79% 0.70% 2.01% Platinum Investor PLUS 38,373 10.23 392,587 3.01% 0.70% 2.01%
VL-R - 79 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, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------- VALIC Company I - Money Market I Fund - Continued Platinum Investor Survivor 161,850 $11.18 $ 1,809,085 3.05% 0.40% 2.32% Platinum Investor Survivor II 474,926 10.25 4,867,384 2.82% 0.75% 1.96% VALIC Company I - Nasdaq-100 Index Fund Platinum Investor I & II 208,009 4.87 1,013,403 0.13% 0.75% 0.49% Platinum Investor III 500,610 4.79 2,397,938 0.13% 0.70% 0.54% Platinum Investor IV 1,478 10.63 15,709 0.08% 0.70% 6.28% Platinum Investor FlexDirector 72 10.84 785 0.10% 0.70% 0.54% Platinum Investor PLUS 16,202 13.73 222,513 0.14% 0.70% 0.54% Platinum Investor Survivor 12,264 4.96 60,838 0.08% 0.40% 0.84% Platinum Investor Survivor II 52,347 10.33 540,517 0.14% 0.75% 0.49% VALIC Company I - Science & Technology Fund Platinum Investor I & II 74,475 4.05 301,637 0.00% 0.75% 2.56% Platinum Investor III 200,266 4.02 804,835 0.00% 0.70% 2.61% Platinum Investor IV 1,452 10.62 15,422 0.00% 0.70% 6.23% Platinum Investor FlexDirector 77 10.22 786 0.00% 0.70% 2.61% Platinum Investor PLUS 3,768 12.46 46,935 0.00% 0.70% 2.61% Platinum Investor Survivor 17,472 4.12 72,057 0.00% 0.40% 2.92% Platinum Investor Survivor II 1,543 9.34 14,413 0.00% 0.75% 2.56% VALIC Company I - Small Cap Index Fund Corporate America 211 13.99 2,943 0.95% 0.35% 3.90% Platinum Investor I & II 132,028 13.70 1,808,759 0.88% 0.75% 3.49% Platinum Investor III 231,947 13.50 3,130,218 0.93% 0.70% 3.54% Platinum Investor IV 8,875 10.63 94,331 0.68% 0.70% 6.28% Platinum Investor FlexDirector 86 11.36 979 0.74% 0.70% 3.54% Platinum Investor PLUS 26,561 14.27 379,123 0.77% 0.70% 3.54% Platinum Investor Survivor 12,269 13.95 171,149 0.92% 0.40% 3.85% Platinum Investor Survivor II 4,667 15.34 71,610 1.03% 0.75% 3.49% VALIC Company I - Stock Index Fund AG Legacy Plus 85,120 8.66 737,309 1.38% 0.75% 3.78% Corporate America 6,813 8.71 59,349 1.48% 0.35% 4.20% Corporate America (reduced surrender charge) 4,844 11.25 54,477 1.48% 0.65% 3.88% Platinum Investor I & II 1,273,723 11.87 15,117,163 1.47% 0.75% 3.78% Platinum Investor III 1,790,096 8.99 16,086,446 1.49% 0.70% 3.83% Platinum Investor IV 15,431 10.42 160,853 1.03% 0.70% 4.24% Platinum Investor FlexDirector 8,262 10.95 90,468 1.38% 0.70% 3.83% Platinum Investor PLUS 107,062 12.31 1,318,403 1.54% 0.70% 3.83% Platinum Investor Survivor 377,870 8.70 3,286,369 1.46% 0.40% 4.14% Platinum Investor Survivor II 32,344 11.46 370,556 1.75% 0.75% 3.78% Van Kampen LIT Emerging Growth Portfolio - Class I AG Legacy Plus 11,386 5.09 57,942 0.25% 0.75% 7.13% Van Kampen LIT Government Portfolio - Class I AG Legacy Plus 12,089 13.26 160,256 4.10% 0.75% 2.77%
VL-R - 80 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, 2005 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Growth and Income Portfolio - Class I Platinum Investor I & II 256,301 $13.03 $3,339,226 0.86% 0.75% 9.17% Platinum Investor III 426,793 13.05 5,570,693 1.38% 0.70% 9.22% Platinum Investor IV 18,660 10.86 202,726 0.00% 0.70% 8.64% Platinum Investor FlexDirector 615 11.82 7,272 1.89% 0.70% 9.22% Platinum Investor PLUS 21,097 13.30 280,565 0.99% 0.70% 9.22% Platinum Investor Survivor 32,202 13.20 424,960 1.50% 0.40% 9.55% Platinum Investor Survivor II 16,415 13.03 213,863 0.59% 0.75% 9.17% Vanguard VIF High Yield Bond Portfolio Corporate America (reduced surrender charge) 1,604 10.53 16,886 0.00% 0.65% 2.09% Platinum Investor I & II 84,057 13.01 1,093,916 8.12% 0.75% 1.99% Platinum Investor III 257,084 13.12 3,373,341 5.78% 0.70% 2.04% Platinum Investor IV 10,483 10.13 106,234 0.00% 0.70% 1.34% Platinum Investor FlexDirector 47 10.88 515 4.15% 0.70% 2.04% Platinum Investor PLUS 27,827 12.62 351,119 6.71% 0.70% 2.04% Platinum Investor Survivor 16,323 13.25 216,306 3.51% 0.40% 2.34% Platinum Investor Survivor II 5,483 12.90 70,762 11.75% 0.75% 1.99% Vanguard VIF REIT Index Portfolio Corporate America 783 24.63 19,276 1.88% 0.35% 11.45% Corporate America (reduced surrender charge) 1,006 12.87 12,942 1.88% 0.65% 11.11% Platinum Investor I & II 116,855 24.13 2,819,784 2.52% 0.75% 11.00% Platinum Investor III 289,714 24.15 6,996,982 2.53% 0.70% 11.06% Platinum Investor IV 25,262 11.55 291,840 0.00% 0.70% 15.52% Platinum Investor FlexDirector 5,355 13.44 71,970 2.89% 0.70% 11.06% Platinum Investor PLUS 37,885 18.17 688,310 2.23% 0.70% 11.06% Platinum Investor Survivor 25,808 24.57 634,112 2.54% 0.40% 11.39% Platinum Investor Survivor II 24,601 21.03 517,271 2.76% 0.75% 11.00%
VL-R - 81 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 year ended December 31, 2004 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------ 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% Corporate America (reduced surrender charge) -- 10.74 -- 0.00% 0.65% 0.00% 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%
VL-R - 82 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 year ended December 31, 2004 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------- Credit Suisse Small Cap Growth Portfolio - Continued 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% 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%
VL-R - 83 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 year ended December 31, 2004 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------------- 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% 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%
VL-R - 84 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 year ended December 31, 2004 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------- 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% 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%
VL-R - 85 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 year ended December 31, 2004 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------------- 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% 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%
VL-R - 86 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 year ended December 31, 2004 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------------------- MFS VIT Research Series - Initial Class - Continued 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% 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%
VL-R - 87 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 year ended December 31, 2004 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------- 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% 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%
VL-R - 88 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 year ended December 31, 2004 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------- Putnam VT Growth and Income Fund - Class IB - Continued 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% 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%
VL-R - 89 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 year ended December 31, 2004 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------- SunAmerica - SunAmerica Balanced Portfolio - Class 1 - Continued 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% 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%
VL-R - 90 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 year ended December 31, 2004 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------- 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% Platinum Investor Survivor II 6,375 11.93 76,084 0.94% 0.75% 13.52%
VL-R - 91 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 year ended December 31, 2004 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ---------------------------------------------------------------------------------------------------- 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%
VL-R - 92 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 year ended December 31, 2003 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------ 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% 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%
VL-R - 93 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 year ended December 31, 2003 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------- Credit Suisse Small Cap Growth Portfolio - Continued 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% 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%
VL-R - 94 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 year ended December 31, 2003 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------------------------- Fidelity VIP Equity-Income Portfolio - Service Class 2 - Continued Platinum Investor Survivor 65,789 $10.21 $671,430.00 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% 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%
VL-R - 95 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 year ended December 31, 2003 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------------------- 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% 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%
VL-R - 96 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 year ended December 31, 2003 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------- MFS VIT Capital Opportunities Series - Initial Class - Continued 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%
VL-R - 97 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 year ended December 31, 2003 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------ 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% 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%
VL-R - 98 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 year ended December 31, 2003 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------------------- Putnam VT Growth and Income Fund - Class IB - Continued 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% 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%
VL-R - 99 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 year ended December 31, 2003 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - -------------------------------------------------------------------------------------------------------------- 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% 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%
VL-R - 100 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 year ended December 31, 2003 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------- 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% 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%
VL-R - 101 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 year ended December 31, 2002 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ---------------------------------------------------------------------------------------------------------------- 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% 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%
VL-R - 102 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 year ended December 31, 2002 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ---------------------------------------------------------------------------------------------------------------------------- Dreyfus IP MidCap Stock Portfolio - Initial shares - Continued 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% 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%
VL-R - 103 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 year ended December 31, 2002 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ---------------------------------------------------------------------------------------------------------------------------- Fidelity VIP Growth Portfolio - Service Class 2 - Continued 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% 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%
VL-R - 104 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 year ended December 31, 2002 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------ Janus Aspen Series Worldwide Growth Portfolio - Service Shares - Continued 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% 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%
VL-R - 105 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 year ended December 31, 2002 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------- 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% 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%
VL-R - 106 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - Continued 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 year ended December 31, 2002 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ----------------------------------------------------------------------------------------------------------------------- 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% 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%
VL-R - 107 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 year ended December 31, 2002 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ------------------------------------------------------------------------------------------------------------------ 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%
VL-R - 108 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 year ended December 31, 2002 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - --------------------------------------------------------------------------------------------------------------------- VALIC Company I - Money Market I Fund - Continued Platinum Investor I & II 1,576,362 $11.60 $18,291,099 1.32% 0.75% 0.49% Platinum Investor III 1,284,697 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%
VL-R - 109 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 year ended December 31, 2002 are as follows:
Investment Income Expense Total Divisions Units Unit Value Net Assets Ratio (a) Ratio (b) Return (c) - ---------------------------------------------------------------------------------------------------- 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% 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%
VL-R - 110 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights (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, no total return was calculated if the Division became an available investment option during the year. For the years ended December 31, 2006, 2005, 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. * Fund Name Changes 2004 . Effective May 1, 2004, Oppenheimer Multiple Strategies Fund/VA - Non-Service Shares changed its name to Oppenheimer Balanced Fund/VA - Non-Service Shares. 2005 . Effective May 1, 2005, Franklin Templeton - Franklin Small Cap Fund - Class 2 changed its name to Franklin Templeton - Franklin Small-Mid Cap Growth Securities Fund - Class 2. 2006 . Effective August 15, 2006, Van Kampen LIT Emerging Growth Portfolio - Class I changed its name to Van Kampen LIT Strategic Growth Portfolio - Class I. . Effective December 1, 2006, Credit Suisse Small Cap Growth Portfolio changed its name to Credit Suisse Small Cap Core I Portfolio. VL-R - 111 LOGO OF PRICEWATERHOUSECOOPERS 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, 2006 and 2005 and the related consolidated statements of income, shareholder's equity, comprehensive income and cash flows present fairly, in all material respects, the financial position of American General Life Insurance Company and subsidiaries (the "Company"), an indirect, wholly-owned subsidiary of American International Group, Inc. at December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, 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 financial statements, the Company changed its method for accounting for certain hybrid financial instruments in 2006, and changed its method of accounting for certain nontraditional long-duration contracts in 2004. PRICEWATERHOUSECOOPERS LLP Houston, Texas April 27, 2007 F-1 American General Life Insurance Company Consolidated Balance Sheet
December 31 ------------------------- 2006 2005 ------------ ------------ (In Thousands) Assets Investments: Fixed maturity securities, available for sale, at fair value (amortized cost - $49,672,653 - 2006; $48,882,647 - 2005) $ 50,811,516 $ 50,523,762 Hybrid securities, at fair value (amortized cost: 2006 - $159,623) 154,304 -- Fixed maturity securities, trading, at fair value (amortized cost - $150,863 - 2006; $148,276 - 2005) 147,820 148,025 Equity securities, available for sale, at fair value (cost - $43,908 - 2006; $33,457 - 2005) 83,314 66,361 Equity securities, trading, at fair value (cost - $1,000 - 2006; $1,000 - 2005) 1,000 1,000 Mortgage loans on real estate, net of allowance ($4,206 - 2006; $4,679 - 2005) 4,918,215 3,694,210 Policy loans 1,820,277 1,774,872 Investment real estate 34,086 35,595 Partnerships & other invested assets 3,482,590 2,656,696 Securities lending collateral 17,344,914 15,901,157 Short-term investments 42,485 84,220 Derivative assets 32,386 13,190 ------------ ------------ Total investments 78,872,907 74,899,088 Cash and cash equivalents 247,344 222,192 Restricted cash 18,433 17,705 Investment in ultimate Parent Company (cost - $8,597 in 2006 and 2005) 58,056 55,277 Notes receivable from affiliates 748,239 753,666 Accrued investment income 745,413 722,214 Accounts receivable 1,161,660 1,123,440 Deferred policy acquisition costs/cost of insurance purchased 5,228,469 4,308,283 Other assets 299,447 260,926 Deferred sales inducement 82,128 46,960 Assets held in separate accounts 30,272,167 27,162,510 ------------ ------------ Total assets $117,734,263 $109,572,261 ============ ============
See accompanying notes to consolidated financial statements. F-2 American General Life Insurance Company Consolidated Balance Sheet
December 31 ------------------------- 2006 2005 ------------ ------------ (In Thousands) Liabilities, Minority Interest and Shareholder's Equity Liabilities: Future policy benefits $ 11,630,686 $ 10,343,640 Policyholder contract deposits 41,038,296 39,716,124 Other policy claims and benefits payable 269,560 238,727 Other policyholders' funds 3,149,965 2,762,101 Federal income taxes 1,333,177 1,404,000 Indebtedness to affiliates 213,275 234,563 Securities lending payable 17,344,914 15,901,157 Other liabilities 1,251,272 1,328,146 Derivative liabilities 114,414 66,081 Liabilities related to separate accounts 30,272,167 27,162,510 ------------ ------------ Total liabilities 106,617,726 99,157,049 Minority interest 110,227 105,740 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 3,664,906 3,627,638 Accumulated other comprehensive income 699,465 909,440 Retained earnings 6,635,089 5,765,544 ------------ ------------ Total shareholder's equity 11,006,310 10,309,472 ------------ ------------ Total liabilities, minority interest and shareholder's equity $117,734,263 $109,572,261 ============ ============
See accompanying notes to consolidated financial statements. F-3 American General Life Insurance Company Consolidated Statement of Income
2006 2005 2004 ---------- ---------- ---------- (In Thousands) Revenues: Premiums and other considerations $2,879,680 $2,782,785 $2,540,322 Net investment income 3,962,820 3,633,886 3,485,349 Net realized investment gain (losses) (289,654) (52,851) (63,437) Other 248,696 315,008 288,640 ---------- ---------- ---------- Total revenues 6,801,542 6,678,828 6,250,874 ---------- ---------- ---------- Benefits and expenses: Policyholders' benefits 2,027,046 1,782,042 1,650,664 Interest credited 2,299,622 2,163,035 2,063,646 Operating costs and expenses 1,009,675 1,129,210 1,069,054 ---------- ---------- ---------- Total benefits and expenses 5,336,343 5,074,287 4,783,364 ---------- ---------- ---------- Income before income tax expense 1,465,199 1,604,541 1,467,510 ---------- ---------- ---------- Income tax expense: Current 387,854 243,542 124,643 Deferred 4,451 137,039 267,475 ---------- ---------- ---------- Total income tax expense 392,305 380,581 392,118 ---------- ---------- ---------- Net income before cumulative effect of accounting change 1,072,894 1,223,960 1,075,392 Cumulative effect of accounting change, net of tax -- -- (16,859) ---------- ---------- ---------- Net income $1,072,894 $1,223,960 $1,058,533 ========== ========== ==========
See accompanying notes to consolidated financial statements. F-4 American General Life Insurance Company Consolidated Statement of Shareholder's Equity
Year ended December 31 ------------------------------------- 2006 2005 2004 ----------- ----------- ----------- (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 3,627,638 3,619,068 3,503,978 Capital contribution from Parent Company 37,268 8,570 115,090 ----------- ----------- ----------- Balance at end of year 3,664,906 3,627,638 3,619,068 Accumulated other comprehensive income: Balance at beginning of year 909,440 1,443,524 1,116,855 Other comprehensive income (loss) (209,975) (534,084) 326,669 ----------- ----------- ----------- Balance at end of year 699,465 909,440 1,443,524 Retained earnings: Balance at beginning of year 5,765,544 4,982,264 4,224,411 Net income 1,072,894 1,223,960 1,058,533 Dividends paid (208,213) (440,680) (300,680) Cumulative effect of accounting change, net of tax 4,864 -- -- ----------- ----------- ----------- Balance at end of year 6,635,089 5,765,544 4,982,264 ----------- ----------- ----------- Total shareholder's equity $11,006,310 $10,309,472 $10,051,706 =========== =========== ===========
See accompanying notes to consolidated financial statements. F-5 American General Life Insurance Company Consolidated Statement of Comprehensive Income
2006 2005 2004 ---------- ---------- ---------- (In Thousands) Net income $1,072,894 $1,223,960 $1,058,533 Other comprehensive income (loss): Net unrealized gains (losses) on securities, after tax (pretax: 2006 - $(79,564); 2005 - $(895,502); 2004 - $461,126) (51,717) (582,077) 299,732 Reclassification adjustment for (gains) losses included in net income (158,258) 47,993 26,937 ---------- ---------- ---------- Other comprehensive income (loss) (209,975) (534,084) 326,669 ---------- ---------- ---------- Comprehensive income $ 862,919 $ 689,876 $1,385,202 ========== ========== ==========
See accompanying notes to consolidated financial statements. F-6 American General Life Insurance Company Consolidated Statement of Cash Flows
2006 2005 2004 ------------ ------------ ------------ (In Thousands) Operating activities Net income $ 1,072,894 $ 1,223,960 $ 1,058,533 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 2,299,622 2,163,035 2,063,646 Change in future policy benefits and other policy claims (244,724) (335,380) (1,003,487) Realized investments (gains) losses 289,654 52,851 63,437 Change in other policyholders' funds 387,863 248,538 308,794 Amortization of policy acquisition costs and cost of insurance purchased 194,108 388,103 320,443 Policy acquisition costs deferred (921,193) (854,609) (732,410) Depreciation and amortization, including premiums and discounts 160,721 188,160 193,670 Provision for deferred income tax expense 2,223 160,107 250,746 Change in indebtedness to (from) affiliates (15,861) (142,992) (181,863) Change in trading securities 205 (131,000) 51,067 Change in accounts receivable (38,220) (35,189) (74,800) Other, net 3,414 59,664 64,984 ------------ ------------ ------------ Net cash provided by operating activities 3,190,706 2,985,248 2,399,619 Investing activities Purchases of : Fixed maturity and equity securities (16,398,704) (31,593,646) (27,390,556) Mortgage loans on real estate (1,680,140) (778,836) (691,747) Other investments (2,914,316) (2,063,663) (5,442,537) Sales of: Fixed maturity and equity securities 13,450,527 26,780,200 26,942,747 Other investments 397,147 1,109,408 120,049 Redemptions and maturities of: Fixed maturity and equity securities 3,096,819 2,892,484 1,735,026 Mortgage loans on real estate 441,731 412,603 307,711 Sales and purchases of property, equipment, and software, net 23,435 12,425 9,648 Change in short-term investments 41,735 (21,307) 49,527 Change in securities lending collateral (1,443,757) (2,887,153) (5,765,710) ------------ ------------ ------------ Net cash used in investing activities (4,985,523) (6,137,485) (10,125,842)
See accompanying notes to consolidated financial statements. F-7 American General Life Insurance Company Consolidated Statement of Cash Flows (continued)
2006 2005 2004 ----------- ----------- ----------- (In Thousands) Financing activities Net policyholder account deposits $ 5,070,463 $ 4,948,706 $ 7,332,833 Net policyholder account withdrawals (4,485,310) (4,278,916) (5,296,849) Dividends paid (208,213) (440,680) (300,680) Capital contribution from parent -- -- 115,090 Change in securities lending payable 1,443,757 2,887,153 5,765,710 Change in restricted cash (728) 942 70,134 ----------- ----------- ----------- Net cash provided by financing activities 1,819,969 3,117,205 7,686,238 ----------- ----------- ----------- Increase (decrease) in cash 25,152 (35,032) (39,985) Cash and cash equivalents at beginning of year 222,192 257,224 297,209 ----------- ----------- ----------- Cash and cash equivalents at end of year $ 247,344 $ 222,192 $ 257,224 =========== =========== =========== SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid $ -- $ 121,904 $ 208,397 Interest paid $ 42,283 $ 44,952 $ 47,709 =========== =========== ===========
See accompanying notes to consolidated financial statements. F-8 American General Life Insurance Company Notes to Consolidated Financial Statements December 31, 2006 1. Nature of Operations American General Life Insurance Company including its wholly owned subsidiaries ("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"). The Company offers a broad portfolio 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. The Company serves the estate planning needs of middle- and upper-income households and the life insurance needs of small- to medium-sized businesses. The Company, through its subsidiaries American General Life Companies ("AGLC") and American General Enterprise Services ("AGES"), and AGL's wholly owned broker-dealer subsidiary American General Equity Services Corporation ("AGESC"), also provides support services to certain affiliated insurance companies. The financial results, of the Variable Annuity Life Insurance Company ("VALIC"), a wholly owned subsidiary of the Company are also included in these consolidated financial statements. 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. 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, including its wholly owned subsidiaries and a variable interest entity (see below) in which the Company has a partial ownership interest. All significant intercompany accounts and transactions are eliminated in consolidation. Certain prior period items have been reclassified to conform to the current period's presentation. The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect amounts reported in the consolidated 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. The company performed a migration of certain blocks of reserves and deferred acquisition costs from various legacy valuation systems to a new valuation system as of December 31, 2006, F-9 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.1 Preparation of Financial Statements representing approximately $9.6 billion of reserves and $1.4 billion of DAC. The new system has the capability to refine estimates to a greater degree than previously possible using the older systems. The conversion resulted in an increase in GAAP reserves of $154.5 million, an increase in DAC of $136.3 million and a net decrease to 2006 pre-tax earnings of $18.2 million. CONSOLIDATION OF VARIABLE INTEREST ENTITY: On January 14, 2004, the Company purchased 43% of the non-voting preferred equity issued by Castle 2003-2 Trust ("Castle 1 Trust"), a Delaware special-purpose statutory trust established on November 21, 2003 (see Note 13). The business of Castle 2 Trust and its wholly owned subsidiaries is limited to acquiring, owning, leasing, maintaining, operating and selling commercial jet aircraft. In December 2003, the Financial Accounting Standards Board ("FASB") issued a "Revision to Interpretation No. 46, Consolidation of Variable Interest Entities" ("FIN 46(R)"). In accordance with FIN 46(R), the accounts of Castle 1 Trust have been included in these consolidated financial statements as of and for the years ended December 31, 2006, 2005 and 2004. 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, 2006. Statutory net income, capital and surplus of AGL at December 31 was as follows: 2006 2005 2004 ---------- ---------- ---------- (In Thousands) Statutory net income $ 506,996 $ 637,973 $ 567,253 Statutory capital and surplus $5,447,528 $5,010,153 $4,705,497 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 F-10 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.2 Statutory Accounting (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. 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 Cash & Short-Term Investments Cash includes cash and cash equivalents with original maturities of three months or less. Short-term investments primarily include interest bearing cash accounts, commercial paper and money market investments, with maturities of between three months and one year. F-11 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.4 Investments Restricted Cash Castle 1 Trust maintains restricted cash which primarily represents security deposits from lessees that are required to be segregated from other funds. Fixed Maturity and Equity Securities Fixed maturity and equity securities classified as available-for-sale are recorded at fair value at December 31, 2006 and 2005. Unrealized gains and losses, net of deferred taxes and amortization of deferred acquisition costs, are recorded as a separate component of other comprehensive income or loss within shareholder's equity. Realized gains and losses on the sale of investments are recognized in operating earnings at the date of sale and are determined by using the specific cost identification method. Interest on fixed maturity securities is recorded as income when earned and is adjusted for any amortization of premium or accretion of 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. Dividend income on equity securities is generally recognized as income on the ex-dividend date. The Company may elect to measure any hybrid financial instrument at fair value, with changes in fair value recognized in earnings, if the hybrid instrument contains an embedded derivative that would otherwise be required to be bifurcated and accounting for separately. The election to measure the hybrid instrument at fair value is made on an instrument-by-instrument basis and is irrevocable at the acquisition of issuance date. Fixed maturity and equity securities classified as trading securities are carried at fair value, as it is the Company's intention to sell these securities in the near future. Realized and unrealized gains and losses are reflected in income currently. The Company regularly 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 judgment of the Company's management and a continual review of its investments. In general, a security is considered a candidate for impairment if it meets any of the following criteria: F-12 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.4 Investments (continued) . 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 the debtor defaulting or seeking bankruptcy or insolvency protection or voluntary reorganization; . The probability of non-realization of a full recovery on its investment, irrespective of the occurrence of one of the foregoing events. At each balance sheet date, the Company evaluates its securities holdings in an unrealized loss position. Where the Company does not intend to hold such securities until they have fully recovered their carrying value, based on the circumstances present at the date of evaluation, the Company records the unrealized loss in income. If events or circumstances change, such as unexpected changes in the creditworthiness of the obligor, unanticipated changes in interest rates, tax laws, statutory capital positions and liquidity events, among others, the Company revisits its intent. Further, if a loss is recognized from a sale subsequent to a balance sheet date pursuant to these unexpected changes in circumstances, the loss is recognized in the period in which the intent to hold the securities to recovery no longer existed. In periods subsequent to the recognition of an other-than-temporary impairment loss for debt securities, the Company generally amortizes the discount or reduced premium over the remaining life of the security in a prospective manner based on the amount and timing of future estimated cash flows. 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. Mortgage Loans Mortgage loans are reported at the unpaid principal balance, net of any 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 costs to sell. F-13 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.4 Investments (continued) Interest on performing mortgage loans is recorded as income when earned and is adjusted for any amortization of premium or accretion of discount. Interest on non-performing mortgage loans is recorded as income when received. 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 & Other Invested Assets 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. With respect to partnerships in which the Company holds in the aggregate a five percent or greater interest, or less than five percent interest but the Company has more than a minor influence over the operations of the investee, the Company's carrying value is the net asset value. The changes in such net asset values accounted for under the equity method are recorded in earnings through net investment income. Aircraft owned by Castle 1 Trust are recorded at cost within other invested assets and depreciated on a straight-line basis, generally over estimated useful lives of 25 years from the date of manufacture to a residual value that is 15% of cost. Certain major additions and modifications to aircraft may be capitalized. The residual value estimates are reviewed periodically to ensure continued appropriateness. Aircraft are periodically reviewed for impairment and an impairment loss is recorded when the estimate of undiscounted future cash flows expected to be generated by the aircraft is less than its carrying value (net book value). Other invested assets also includes preferred equity investments in partially owned companies. Generally, the equity method of accounting is used for the Company's investment in F-14 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.4 Investments (continued) companies in which the Company's ownership interest approximates 20 percent but is not greater than 50 percent. At December 31, 2006 and 2005, the Company's investments in partially owned companies included its 38.7% interest in the non-voting preferred equity of Castle 2003-2 Trust ("Castle 2 Trust"; see Note 8). Other invested assets also include assets related to derivative financial instruments. Realized gains and losses on the sale of investments are recognized in operations at the date of sale and are determined by using the specific cost identification method. 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. 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. The fair values of securities pledged under the securities lending agreement were $17.3 billion and $ 15.9 billion as of December 31, 2006 and 2005, respectively, which represents securities included in fixed maturity securities available for sale in the consolidated balance sheet at the respective balance sheet dates. The collateral is held by the lending agent for the benefit of the Company and not available for the general use of the Company (restricted). 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. Dollar Roll Agreements Throughout the year, the Company may enter into dollar roll agreements. These are agreements to sell mortgage-backed securities ("MBS") and to repurchase substantially similar securities at a specific price and date in the future. Dollar roll agreements are accounted for as sales of financial assets and forward repurchase commitments. Assets are removed from the consolidated balance sheet at the time of sale. The difference between sales proceeds and carrying values are recorded as realized gains or losses. The forward repurchase commitments are accounted for at fair value, and the changes in fair value are recorded as realized gains or losses. Assets are recorded at the F-15 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.4 Investments (continued) time of purchase at fair value. Unsettled amounts on the purchase contracts are reflected in the consolidated balance sheets in other liabilities. At December 31, 2006 and 2005, the Company had no dollar roll agreements outstanding. Derivative Financial Instruments The Company reports all derivative instruments at fair value in the consolidated balance sheet. 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 from 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 nor trader in derivative instruments. The Company has issued a small number of equity-indexed annuity contracts, which contain embedded derivatives associated with guarantees tied to the S&P 500 index. The Company uses S&P 500 indexed call options to offset the increase in its liabilities resulting from the equity-indexed features of these annuity contracts. The embedded derivatives and the call options are carried at fair value, with changes in fair value recognized in realized investment gains and losses. 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 contracts (short positions on U.S. treasury notes and U.S. long bonds). The Company believes that such hedging activities have been and remain economically effective, but do not currently qualify for hedge accounting (see Note 10). The Company carries all derivatives at fair value in the consolidated balance sheet. Changes in the fair value of derivatives are reported as part of realized investment gains and losses in the consolidated statement of income. 2.5 Separate Accounts Separate account assets and liabilities represent funds that are separately administered for variable annuities and variable universal life contracts, for which the investment risk lies solely with the contract holder, except to the extent of minimum guarantees made by the Company with respect F-16 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.5 Separate Accounts (continued) to certain policies. Therefore, the Company's liability for these separate accounts equals the value of the separate 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 and other fees for assuming mortality and certain expense risks. Such fees are included in premiums and other considerations in the consolidated statement of income. 2.6 Deferred Policy Acquisition Costs ("DPAC"), Cost of Insurance Purchased ("CIP") and Deferred Sales Inducements 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 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 F-17 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.6 Deferred Policy Acquisition Costs ("DPAC"), Cost of Insurance Purchased ("CIP") and Deferred Sales Inducements (continued) 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 universal life policies, the assumption for the long-term growth of the separate 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. 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 at least annually. 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. The Company currently offers sales inducements, which may include enhanced crediting rates or bonus payments to contractholders, on certain of its products. Sales inducements provided to the contractholder are recognized as part of the liability for policyholder contract deposits on the consolidated balance sheet. Deferred sales inducement assets are deferred and amortized over the life of the policy using the same methodology and assumptions used to amortize DAC. To qualify for such accounting treatment, the bonus interest must be explicitly identified in the contract at inception, and the Company must demonstrate that such amounts are incremental to amounts the Company credits on similar contracts without bonus interest, and are higher than the contract's expected ongoing crediting rates for periods after the bonus period. F-18 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.7 Future Life Policy Benefits and Policyholder Contract Deposits 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 deposit liabilities were as follows at December 31: 2006 2005 ----------- ----------- (In Thousands) Future policy benefits: Ordinary life $ 5,190,640 $ 4,852,453 Group life 25,202 25,760 Life contingent group annuities 83,159 85,565 Life contingent annuities 5,678,513 4,737,550 Terminal funding 394,000 397,630 Accident and health 259,172 244,682 ----------- ----------- Total $11,630,686 $10,343,640 =========== =========== Policyholder contract deposits: Annuities $33,738,454 $33,228,804 Corporate-owned life insurance 354,723 373,848 Universal life 6,945,119 6,113,472 ----------- ----------- Total $41,038,296 $39,716,124 =========== =========== 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 10.0 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 20.0 percent, grading to zero over a period of 0 to 19 years. Interest rates on corporate-owned life insurance are guaranteed at 3.0 or F-19 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.7 Future Life Policy Benefits and Policyholder Contract Deposits (continued) 4.0 percent, depending on policy form, and the weighted average rate credited in 2006 was 4.46 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 policyholders' benefits in the consolidated statement of income. The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to policyholders' benefits, if actual experience or other evidence suggests that earlier assumptions should be revised. 2.9 Premium Recognition 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. 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 F-20 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.9 Premium Recognition (continued) charges and are included in other income in the consolidated statement of income. 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. Variable annuity and variable universal life 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 $5.0 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 $10.0 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 reinsured benefits, both paid and pending, which is recoverable from the reinsurer. Total reinsurance recoverables on ceded reinsurance contracts are included in accounts receivable. Reinsurance premiums are recognized over the life of the reinsured policies using assumptions consistent with those used to account for the underlying policies. 2.11 Participating Policy Contracts Participating life insurance accounted for approximately 2 percent of life insurance in force at December 31, 2006. 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 $49.4 million, $56.4 million and $60.8 million in 2006, 2005 and 2004, respectively, and were included as part of policyholders' benefits in the consolidated statement of income. 2.12 Income Taxes For the tax years ending December 31, 2006, 2005 and 2004, 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 F-21 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.12 Income Taxes (continued) 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. 2.13 Recently Issued Accounting Standards FSP FAS 115-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments," replaces the measurement and recognition guidance set forth in Emerging Issue Task Force Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" and codifies certain existing guidance on impairment and accretion of income in periods subsequent to an other-than-temporary impairment, where appropriate. The Company's adoption of FSP FAS 115-1 on January 1, 2006 did not have a material effect on the Company's consolidated financial condition or results of operations. On April 13, 2006, the Financial Accounting Standards Board ("FASB") issued FSP FIN 46(R)-6, "Determining the Variability to be Considered in Applying FASB Interpretation No. 46(R)" ("FIN 46(R)-6"). FIN 46(R)-6 affects the identification of which entities are variable interest entities (VIEs) through a "by design" approach in identifying and measuring the variable interests of the VIE and its primary beneficiary. The requirements became effective beginning in the third quarter of 2006 and are to be applied to all new VIEs with which the Company becomes involved. The new requirements need not be applied to entities that have previously been F-22 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.13 Recently Issued Accounting Standards (continued) analyzed under FIN 46(R) unless a reconsideration event occurs. The adoption of this guidance did not have a material effect on the Company's consolidated financial condition or results of operations. In July 2003, the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position 03-1 "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" ("SOP 03-01"). This statement was effective as of January 1, 2004 and requires the Company to recognize a liability for GMDB, as discussed in note 2.8, 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. 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," which superseded APB Opinion No. 25, "Accounting for Stock Issued to Employees" and amended FAS 95, "Statement of Cash Flows." 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 consistently 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. AIG adopted the provisions of the revised FAS 123R and its related interpretative guidance on January 1, 2006. The impact of adopting FAS 123R was not material to the consolidated financial position or results of operations of AIG or the Company. At the June 2005 meeting, the EITF reached a consensus with respect to Issue No. 04-5, "Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights" (formerly, "Investor's Accounting for an Investment in a Limited Partnership When the Investor Is the Sole F-23 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.13 Recently Issued Accounting Standards (continued) General Partner and the Limited Partners Have Certain Rights"). The Issue addresses what rights held by the limited partner(s) preclude consolidation in circumstances in which the sole general partner would consolidate the limited partnership in accordance with generally accepted accounting principles absent the existence of the rights held by the limited partner(s). Based on that consensus, the EITF also agreed to amend the consensus in Issue No. 96-16, "Investor's Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholders Have Certain Approval or Veto Rights." The guidance in this Issue was effective after June 29, 2005 for general partners of all new limited partnerships formed and for existing limited partnerships for which the partnership agreements are modified. For general partners in all other limited partnerships, the guidance in this Issue was effective beginning January 1, 2006. The effect of the adoption of this EITF Issue was not material to the Company's consolidated financial condition or results of operations. On June 29, 2005, FASB issued Statement 133 Implementation Issue No. B38, "Embedded Derivatives: Evaluation of Net Settlement with Respect to the Settlement of a Debt Instrument through Exercise of an Embedded Put Option or Call Option." This implementation guidance relates to the potential settlement of the debtor's obligation to the creditor that would occur upon exercise of the put option or call option, which meets the net settlement criterion in FAS 133 paragraph 9(a). The effective date of the implementation guidance was January 1, 2006. The adoption of this guidance did not have a material effect on the Company's consolidated financial condition or results of operations. On June 29, 2005, FASB issued Statement 133 Implementation Issue No. B39, "Application of Paragraph 13(b) to Call Options That Are Exercisable Only by the Debtor." The conditions in FAS 133 paragraph 13(b) do not apply to an embedded call option in a hybrid instrument containing a debt host contract if the right to accelerate the settlement of the debt can be exercised only by the debtor (issuer/borrower). This guidance does not apply to other embedded derivative features that may be present in the same hybrid instrument. The effective date of the implementation guidance was January 1, 2006. The adoption of this guidance did not have a material effect on the Company's consolidated financial condition or results of operations. On February 16, 2006, the FASB issued FAS No. 155, "Accounting for Certain Hybrid Financial Instruments" ("FAS 155"), an amendment of FAS 140 and FAS 133. FAS 155 permits the Company to elect to measure any hybrid financial instrument at fair value (with changes in fair value recognized in earnings) if the hybrid instrument contains an embedded derivative that would otherwise be required to be bifurcated and accounted for separately under FAS 133. The election to measure the hybrid instrument at fair value is made on an instrument-by-instrument basis and is irrevocable. The Company elected to early adopt FAS 155 effective January 1, 2006 F-24 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.13 Recently Issued Accounting Standards (continued) and apply FAS 155 fair value measurement to certain investments in its available for sale portfolio that existed at December 31, 2005. The effect of this adoption resulted in a $4.9 million aftertax ($7.5 million pretax) increase to retained earnings as of January 1, 2006. FUTURE APPLICATION OF ACCOUNTING STANDARDS On September 19, 2005, the AICPA issued SOP 05-1, "Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts" ("SOP 05-1"). SOP 05-1 provides guidance on accounting for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in FAS 97. The SOP defines an internal replacement as a modification in product benefits, features, rights, or coverage that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. The effective date of the implementation guidance is January 1, 2007. The Company does not expect the implementation of SOP 05-1 to have a material effect on its consolidated financial condition or consolidated results of operations. On July 13, 2006, the FASB issued FASB Interpretation 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" ("FIN 48"), which clarifies the accounting for uncertainty in income tax positions. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of an income tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and additional disclosures. The effective date of this implementation guidance is January 1, 2007, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The implementation of FIN 48 is not material to the Company's consolidated financial condition. On July 13, 2006, the FASB issued FASB Staff Position (FSP) No. FAS 13-2, Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction ("FSP 13-2"). FSP 13-2 addresses how a change or projected change in the timing of cash flows relating to income taxes generated by a leveraged lease transaction affects the accounting for the lease by the lessor. The FSP is effective for fiscal years beginning after December 15, 2006. The Company expects to record an adjustment of $50 million, net of tax, to the beginning balance of retained earnings as of January 1, 2007 to reflect the cumulative effect of this change in accounting. F-25 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.13 Recently Issued Accounting Standards (continued) In September 2006, the FASB issued FAS No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently assessing the effect of implementing this guidance. In February 2007, the FASB issued FAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("FAS 159"). FAS 159 permits entities to choose to measure at fair value many financial instruments and certain other items that are not currently required to be measured at fair value. Subsequent changes in fair value for designated items will be required to be reported in earnings in the current period. FAS 159 also establishes presentation and disclosure requirements for similar types of assets and liabilities measured at fair value. FAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently assessing the effect of implementing this guidance, which directly depends on the nature and extent of eligible items elected to be measured at fair value, upon initial application of the standard on January 1, 2008. 3. Investments 3.1 Investment Income Investment income by type of investment was as follows for the years ended December 31: 2006 2005 2004 ---------- ---------- ---------- (In Thousands) Investment income: Fixed maturities $3,393,034 $3,265,962 $3,101,785 Equity securities 2,852 3,435 8,070 Mortgage loans on real estate 287,872 273,270 229,921 Investment real estate 10,475 9,903 10,265 Policy loans 103,191 100,787 99,421 Other long-term investments 165,395 32,396 82,767 Short-term investments 35,420 28,263 16,697 ---------- ---------- ---------- Gross investment income 3,998,239 3,714,016 3,548,926 Investment expenses 35,419 80,130 63,577 ---------- ---------- ---------- Net investment income $3,962,820 $3,633,886 $3,485,349 ---------- ---------- ---------- F-26 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.1 Investment Income (continued) The carrying value of investments that produced no investment income during 2006 was less than 0.1 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. During 2006, 2005 and 2004, investment income from other long-term investments is primarily related to gains or losses associated with various partnership interests. F-27 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: 2006 2005 2004 --------- --------- --------- (In Thousands) Fixed maturities: Gross gains $ 125,224 $ 204,217 $ 270,273 Gross losses (341,900) (329,543) (256,398) --------- --------- --------- Total fixed maturities (216,676) (125,326) 13,875 Equity securities: Gross gains 17,272 36,750 12,999 Gross losses (1,424) (23) (5,958) Partnerships: Gross gains 5,000 2,000 0 Gross losses (21,847) (6,464) (20,818) Derivatives: Gross gains 2,000 5,162 1,000 Gross losses (46,720) 0 (32,852) Other : Gross gains 11,752 39,909 0 Gross losses (39,011) (4,859) (31,683) --------- --------- --------- Net realized investment gains (losses) before tax (289,654) (52,851) (63,437) Income tax benefit (99,042) (18,498) (22,203) --------- --------- --------- Net realized investment gains (losses) after tax $(190,612) $ (34,353) $ (41,234) ========= ========= ========= During 2006, 2005 and 2004, the Company's realized losses included write-downs of $222.3 million, $121.6 million and $63.1 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 judgment of the Company's management and a continual review of its investments as discussed in Note 2. F-28 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, 2006 and 2005:
Less than 12 Months 12 Months or More Total -------------------- --------------------- --------------------- (In Thousands) Unrealized Unrealized Unrealized December 31, 2006 Fair Value Losses Fair Value Losses Fair Value Losses - ----------------- ---------- ---------- ----------- ---------- ----------- ---------- Fixed maturity securities Corporate securities: Investment- grade $4,493,731 $(100,697) $ 5,835,318 $(194,125) $10,329,049 $(294,822) Below investment-grade 319,848 (20,308) 251,021 (11,808) 570,869 (32,116) Mortgage-backed securities 1,259,556 (15,702) 6,642,120 (121,012) 7,901,676 (136,714) U.S. government obligations 9,408 (126) 5,094 (730) 14,502 (856) Foreign governments 10,164 (6,225) -- -- 10,164 (6,225) State and political subdivisions 320,831 (5,074) 1,049,115 (35,459) 1,369,946 (40,533) Collateralized bonds 38,013 (987) 21,169 (1,331) 59,182 (2,318) Redeemable preferred stocks 30,492 (5,081) -- 30,492 (5,081) Equity securities 5,931 (1,048) -- -- 5,931 (1,048) ---------- --------- ----------- --------- ----------- --------- Total $6,487,974 $(155,248) $13,803,837 $(364,465) $20,291,811 $(519,713) ========== ========= =========== ========= =========== =========
F-29 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.3 Fixed Maturity and Equity Securities (continued)
Less than 12 Months 12 Months or More Total --------------------- -------------------- --------------------- (In Thousands) Unrealized Unrealized Unrealized December 31, 2005 Fair Value Losses Fair Value Losses Fair Value Losses - ----------------- ----------- ---------- ---------- ---------- ----------- ---------- Fixed maturity securities Corporate securities: Investment- grade 6,047,418 (131,287) 467,666 (25,151) 6,515,084 (156,438) Below investment-grade 899,747 (60,173) 208,079 (19,281) 1,107,826 (79,454) Mortgage-backed securities 7,391,729 (119,489) 271,009 (8,492) 7,662,738 (127,981) U.S. government obligations 4,175 (200) 2,080 (477) 6,255 (677) Foreign governments 94,476 (6,565) 0 0 94,476 (6,565) State and political subdivisions 710,303 (17,311) 101,000 (7,000) 811,303 (24,311) Collateralized bonds 14,566 (933) 11,690 (792) 26,256 (1,725) Equity securities 2,794 (172) 1,742 (1,476) 4,536 (1,648) ----------- --------- ---------- -------- ----------- --------- Total $15,165,208 $(336,130) $1,063,266 $(62,669) $16,228,474 $(398,799) =========== ========= ========== ======== =========== =========
F-30 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.3 Fixed Maturity and Equity Securities (continued) The Company regularly reviews its investments for possible impairments based on the criteria discussed in Note 2. The determination that a security has incurred an other-than-temporary decline in value and the amount of any loss recognition requires the judgment of the Company's management and a continual review of its investments. As of December 31, 2006, all of the unrealized losses in the table shown above were considered to be temporary based on the results of this review. Fixed maturity and equity securities classified as available-for-sale are reported at fair value. Amortized cost and fair value at December 31, 2006 and 2005 were as follows:
Gross Gross Amortized Unrealized Unrealized Cost Gain Loss Fair Value ----------- ---------- ---------- ----------- (In Thousands) December 31, 2006 Fixed maturity securities: Corporate securities: Investment-grade $28,818,873 $1,078,472 $(294,822) $29,602,523 Below investment-grade 3,512,776 208,715 (32,116) 3,689,375 Mortgage-backed securities 12,799,496 158,103 (136,714) 12,820,885 U.S. government obligations 175,439 29,639 (856) 204,222 Foreign governments 709,116 87,008 (6,225) 789,899 State and political subdivisions 3,482,069 91,640 (40,533) 3,533,176 Collateralized bonds 99,611 1,740 (2,318) 99,033 Redeemable preferred stocks 75,273 2,211 (5,081) 72,403 ----------- ---------- --------- ----------- Total fixed maturity securities $49,672,653 $1,657,528 $(518,665) $50,811,516 =========== ========== ========= =========== Equity securities $ 43,908 $ 41,454 $ (1,048) $ 83,314 =========== ========== ========= =========== Separate account seed money $ -- $ -- $ -- $ -- =========== ========== ========= =========== Investment in AIG $ 8,597 $ 49,459 $ -- $ 58,056 =========== ========== ========= ===========
F-31 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 Cost Gain Loss Fair Value ----------- ---------- ---------- ----------- (In Thousands) December 31, 2005 Fixed maturity securities: Corporate securities: Investment-grade $28,425,624 $1,510,483 $(156,438) $29,779,669 Below investment-grade 3,504,754 145,856 (79,454) 3,571,156 Mortgage-backed securities 12,632,632 113,801 (127,981) 12,618,452 U.S. government obligations 175,470 34,052 (677) 208,845 Foreign governments 750,686 93,689 (6,565) 837,810 State and political subdivisions 3,256,136 125,314 (24,311) 3,357,139 Collateralized bonds 83,537 1,875 (1,725) 83,687 Redeemable preferred stocks 53,808 13,196 -- 67,004 ----------- ---------- --------- ----------- Total fixed maturity securities $48,882,647 $2,038,266 $(397,151) $50,523,762 =========== ========== ========= =========== Equity securities $ 33,457 $ 34,552 $ (1,648) $ 66,361 =========== ========== ========= =========== Separate account seed money $ 64,000 $ 3,000 $ -- $ 67,000 =========== ========== ========= =========== Investment in AIG $ 8,597 $ 46,680 $ -- $ 55,277 =========== ========== ========= ===========
F-32 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, 2006 were as follows: 2006 2005 2004 ---------- ---------- ---------- (In Thousands) ---------------------------------- Gross unrealized gains $1,748,441 $2,122,498 $2,988,563 Gross unrealized losses (519,713) (398,799) (165,639) DPAC and other fair value adjustments (148,357) (316,972) (587,095) Deferred federal income taxes (380,906) (497,287) (792,305) ---------- ---------- ---------- Net unrealized gains on securities $ 699,465 $ 909,440 $1,443,524 ========== ========== ========== The contractual maturities of fixed maturity securities at December 31, 2006 were as follows: 2006 ----------------------- Amortized Market Cost Value ----------- ----------- (In Thousands) Fixed maturity securities, excluding mortgage-backed securities: Due in one year or less $ 507,531 $ 516,401 Due after one year through five years 4,623,762 4,821,659 Due after five years through ten years 11,368,512 11,597,441 Due after ten years 20,373,352 21,055,130 Mortgage-backed securities 12,799,496 12,820,885 ----------- ----------- Total fixed maturity securities $49,672,653 $50,811,516 =========== =========== 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 $16.4 billion, $29.5 billion and $28.7 billion, during 2006, 2005 and 2004, respectively. At December 31, 2006, $47.6 million of bonds, at amortized cost, were on deposit with regulatory authorities in accordance with statutory requirements. F-33 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, 2006 and 2005: Outstanding Percent of Percent Amount Total Nonperforming ----------- ---------- ------------- (In thousands) December 31, 2006 Geographic distribution: South Atlantic $1,031,455 21.0% 0.0% Pacific 1,105,137 22.4 0.0 Mid-Atlantic 1,243,973 25.3 0.0 East North Central 501,226 10.2 2.6 Mountain 196,097 4.0 0.0 West South Central 310,326 6.3 0.0 East South Central 241,600 4.9 0.0 West North Central 96,157 2.0 11.5 New England 174,664 3.6 0.0 Canada 21,786 0.4 0.0 Allowance for losses (4,206) (0.1) 0.0 ---------- ----- Total $4,918,215 100.0% 0.5% ========== ===== Property type: Office $2,035,908 41.4% 24 Retail 1,147,946 23.4 0 Industrial 467,101 9.5 0 Apartments 778,821 15.8 0 Hotel/motel 179,171 3.6 0 Other 313,474 6.4 0 Allowance for losses (4,206) (0.1) 0 ---------- ----- Total $4,918,215 100.0% 0.5% ========== ===== F-34 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 thousands) December 31, 2005 Geographic distribution: South Atlantic $ 862,100 23.3% 0.0% Pacific 722,290 19.5 0.0 Mid-Atlantic 854,126 23.1 0.0 East North Central 395,301 10.7 8.9 Mountain 129,504 3.5 0.0 West South Central 235,138 6.4 0.0 East South Central 202,805 5.5 0.0 West North Central 104,233 2.8 21.6 New England 172,029 4.7 0.0 Canada 22,363 .6 0.0 Allowance for losses (4,679) (0.1) 0.0 ---------- ----- Total $3,694,210 100.0% 2.1% ========== ===== Property type: Office $1,435,719 38.9% 5.6% Retail 1,044,521 28.3 0.2 Industrial 426,077 11.4 0.0 Apartments 520,486 14.1 0.0 Hotel/motel 65,667 1.8 0.0 Other 206,419 5.6 0.0 Allowance for losses (4,679) (0.1) 0.0 ---------- ----- Total $3,694,210 100.0% 2.1% ========== ===== Impaired mortgage loans on real estate and related interest income is not material. F-35 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 4. Deferred Policy Acquisitions Costs, Cost of Insurance Purchased and Sales Inducements The following reflects deferred policy acquisition costs and cost of insurance purchased 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: 2006 2005 2004 ---------- ---------- ---------- (In Thousands) Balance at January 1 $3,972,384 $3,260,541 $2,913,067 Capitalization 921,193 833,211 719,346 Accretion of interest/amortization (188,138) (375,941) (279,149) Effect of unrealized (gains) losses on securities 99,677 259,223 (80,598) Effect of realized (gains) losses on securities 71,884 (4,650) (12,125) ---------- ---------- ---------- Balance at December 31 $4,877,000 $3,972,384 $3,260,541 ========== ========== ========== The Company adjusts DAC amortization ("a DAC unlocking") when estimates of current or future gross profits on FAS 97 products to be realized are revised. In 2006, DAC amortization was decreased by $134 million due to the combination of DAC and system migration of deferred annuities and interest sensitive life products. A roll forward of the cost of insurance purchased ("CIP") for the years ended December 31 follows: 2006 2005 2004 -------- -------- -------- (In Thousands) Balance at January 1 $335,899 $324,920 $338,520 Deferral of renewal commissions 0 0 3,623 Accretion of interest/amortization (5,970) (9,561) (30,316) Effect of unrealized (gains) losses on securities 18,449 23,672 12,725 Effect of realized (gains) losses on securities 3,091 (3,132) 368 -------- -------- -------- Balance at December 31 $351,469 $335,899 $324,920 ======== ======== ======== CIP amortization expected to be recorded in each of the next five years, from 2007 through 2011, is $12.9 million, $12.5 million, $11.6 million, $8.3 million, and $7.0 million, respectively. F-36 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 4. Deferred Policy Acquisitions Costs, Cost of Insurance Purchased and Sales Inducements (continued) Activity in sales inducement for the years ended December 31 follows: 2006 2005 2004 ------- ------- ------- (In Thousands) Balance at January 1 $46,960 $27,692 $20,000 Deferrals 41,681 21,284 8,741 Accretion of interest/amortization (4,513) (2,016) (1,049) Effect of unrealized (gains) losses on securities (2,000) -- -- Effect of realized (gains) losses on securities -- -- -- ------- ------- ------- Balance at December 31 $82,128 $46,960 $27,692 ======= ======= ======= 5. Reserves for Guaranteed Benefits Details concerning the Company's guaranteed minimum death benefit exposure including a return of net deposits plus a minimum return as of December 31, 2006 were as follows: 2006 2005 ------- ------- (In Millions) Account value $46,877 $45,297 Net amount at risk /(a)/ 1,322 1,801 Average attained age of contract holders 56 54 Range of guaranteed minimum return rates 0.00%-3.00% 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: F-37 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 5. Reserves for Guaranteed Benefits (continued) 2006 2005 ---- ---- (In Millions) Balance at January 1 $ 7 $10 Guaranteed benefits incurred 4 5 Guaranteed benefits paid (6) (8) ------ ------ Balance at December 31 $ 5 $ 7 ====== ====== The following assumptions and methodology were used to determine the reserve for guaranteed benefits at December 31, 2006 and December 31, 2005: . 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%. 6. Other Assets Other assets consisted of the following: December 31 ----------------- 2006 2005 -------- -------- (In Thousands) Goodwill $ 37,951 $ 39,765 Computer software, net 72,566 96,184 Accounts receivable from brokers 53,960 14,582 Prepaid expenses 37,875 39,304 Property and equipment, net 60,012 45,366 Other assets 37,083 25,725 -------- -------- Total other assets $299,447 $260,926 ======== ======== F-38 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 7. Federal Income Taxes 7.1 Tax Liabilities Income tax liabilities were as follows: December 31 --------------------- 2006 2005 ---------- ---------- (In Thousands) Current tax receivables $ 52,860 $ 14,032 Net deferred tax liabilities 1,280,317 1,389,968 ---------- ---------- Income tax payable $1,333,177 $1,404,000 ========== ========== The components of deferred tax liabilities and assets at December 31 were as follows: 2006 2005 ----------- ---------- (In Thousands) Deferred tax liabilities applicable to: Deferred policy acquisition costs $ 1,418,736 $1,236,446 Basis differential of investments 218,891 215,648 Net unrealized gains on debt and equity securities available for sale 380,906 497,287 Capitalized EDP 25,305 24,144 Prepaid expenses 5,102 12,814 Other 239,478 143,258 ----------- ---------- Total deferred tax liabilities 2,288,418 2,129,597 Deferred tax assets applicable to: Policy reserves (1,003,225) (713,177) Other (4,876) (26,452) ----------- ---------- Total deferred tax assets (1,008,101) (739,629) ----------- ---------- Net deferred tax liabilities $ 1,280,317 $1,389,968 =========== ========== 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 January 1, 2005 the Company had F-39 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 7. Federal Income Taxes (continued) 7.1 Tax Liabilities (continued) 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 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. During 2005, the Company distributed cash dividends in excess of $382 million, thereby eliminating its policyholders' surplus account and its exposure to federal income taxation. 7.2 Tax Expense Components of income tax expense (benefit) for the years ended December 31 were as follows: 2006 2005 2004 -------- --------- -------- (In Thousands) Income tax at statutory percentage of GAAP pretax income $512,820 $ 561,589 $513,629 Non-conventional fuel source credits (89,803) (142,767) (96,202) Dividends received deduction (24,419) (28,583) (19,828) Prior year corrections 7,113 (10,989) (8,241) Other credits, taxes and settlements (13,406) 1,331 2,760 -------- --------- -------- Income tax expense $392,305 $ 380,581 $392,118 ======== ========= ======== F-40 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 8. Transactions With Affiliates Notes receivable from affiliates were as follows:
December 31, 2006 December 31, 2005 -------------------- -------------------- Par Value Book Value Par Value Book Value --------- ---------- --------- ---------- (In Thousands) American General Corporation, 9.375%, due 2008 $ 4,725 $ 4,297 $ 4,725 $ 4,091 Transatlantic Holdings Inc., Promissory notes, 5.75%, due 2015 164,000 163,358 164,000 163,202 AGC Life, Promissory notes, 5.02%, due 2010 116,000 116,000 116,000 116,000 American General Corporation, Promissory notes, 5.57%, due 2011 415,000 415,000 415,000 415,000 Castle Trust 2, Asset backed notes, 5.26%, due 2026 36,944 36,021 41,453 41,449 Castle Trust 2, Asset backed notes, 8.26%, due 2026 13,155 13,563 13,929 13,924 -------- -------- -------- -------- Total notes receivable from affiliates $749,824 $748,239 $755,107 $753,666 ======== ======== ======== ========
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 $69.9 million, $66.9 million and $67.5 million for such services in 2006, 2005 and 2004, respectively. Accounts payable for such services at December 31, 2006 and 2005 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 $354.8 million, $329.2 million and $337.0 million for such services and rent in 2006, 2005 and 2004, respectively. Accounts receivable for rent and services at December 31, 2006 and 2005 were not material. As a matter of Company policy, derivative contracts are generally executed with AIG F-41 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 8. Transactions With Affiliates (continued) 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 totaled $340,000 at December 31, 2006 and $345,000 at December 31, 2005. The Company believes 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-42 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 8. Transactions With Affiliates (continued) Department). In early 2005, the Company discussed this Cut-through Agreement with the Department and a reserve was established under these contracts that would not exceed $300 million without the consent of the Department. In 2006, the Company again discussed the Cut-through Agreement with the Department. The Company requested that the maximum allowed reserve be increased to $500 million. The reserves recorded by AIGC, related to these contracts, totaled $362 million at December 31, 2006 and $231 million at December 31, 2005. The Company believes the probability of loss under this agreement is remote. On December 7, 2005, the Company acquired 5.75% Senior Notes due December 14, 2015, issued by Transatlantic Holdings, Inc., an affiliate of the Company, at a cost of $163.2 million. Other affiliates of the Company are holders of the same class of securities. 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, 2006, 2005 and 2004. Effective May 31, 2006, ownership of American General Securities, Inc. (AGSI) was transferred from American General Equity Services Corp. (AGESC), a wholly owned subsidiary of the Company, to AIG Advisor Group, Inc., an indirect wholly owned subsidiary of AIG, through a series of related party dividends and contributions within AIG-owned companies. On September 25, 2006, the Company purchased 27% of a nonaffiliated Mortgage Loan at its estimated fair market value of $8,767,005, from SunAmerica Life Insurance Company (an affiliate), which included a purchase premium of $492,885. American Home Assurance Company ("American Home"), an indirect wholly owned subsidiary of AIG, has terminated the General Guarantee Agreement dated March 3, 2003 ("the Guarantee") with respect to prospectively issued policies and contracts issued by the Company. The Guarantee terminated on December 29, 2006 at 4:00 p.m. Eastern Time ("Point of Termination"). Pursuant to its terms, the Guarantee does not apply to any group or individual policy, contract or certificate issued after the Point of Termination. The Guarantee will continue to cover the F-43 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 8. Transactions With Affiliates (continued) policies, contracts and certificates with a date of issuance earlier than the Point of Termination until all insurance obligations under such policies, contracts and certificates are satisfied in full. American Home's audited statutory financial statements are filed with the SEC in the Company's registration statements for its variable products. 9. 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. 10.Derivative Financial Instruments 10.1 Use of Derivative Financial Instruments The Company's use of derivative financial instruments is generally limited to interest rate swaps, currency swaps, S&P 500 index options and Treasury note and U.S. long bond futures as economic hedges of certain financial assets and liabilities as follows: Derivative Instrument Economically 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 The Company believes that such hedging activities have been and remain economically effective, but do not currently qualify for hedge accounting. 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, derivatives contracts purchased by the Company require no up-front cash payment and provide for net settlement. F-44 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 10.Derivative Financial Instruments (continued) 10.2 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 economic 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 Insurance Division to prevent and detect such mismatches. 10.3 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. Swap agreements have terms of two to twenty-two years. Interest rate and currency swap agreements related to investment securities at December 31 were as follows: 2006 2005 ------ ------ (In Millions) Interest rate swap agreements: Notional amount $1,275 $1,320 Fair value (15) (6) Currency swap agreements : Notional amount $ 772 602 Fair Value (97) (57) F-45 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 10.Derivative Financial Instruments (continued) 10.4 Index Options S&P 500 index options (puts and calls) are purchased as economic 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 economically match option purchases to policy liabilities. Contracts outstanding at December 31 were as follows: 2006 2005 -------------- -------------- Fair Fair Notional Value Notional Value -------- ----- -------- ----- (In Millions) Calls: One-year (or less) contracts $319 $26 $310 $10 Two-year contracts 41 4 32 3 10.5 Futures The Company purchases and sells short futures (Treasury note and U.S. long bond) to offset interest rate exposures on certain bonds purchased for the trading portfolio. All futures positions are closed out at the end of each quarter with the realized gains and losses recorded as a component of operating earnings. F-46 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 11.Fair Value of Financial Instruments Carrying amounts and fair values for certain of the Company's financial instruments at December 31 are presented below.
2006 2005 ---------------- ---------------- Fair Carrying Fair Carrying Value Amount Value Amount ------- -------- ------- -------- (In Millions) Assets Cash $ 247 $ 247 $ 222 $ 222 Fixed maturity and equity securities 51,198 51,198 50,739 50,739 Mortgage loans on real estate 5,041 4,918 4,841 3,694 Policy loans 1,840 1,820 1,823 1,775 Short-term investments 42 42 84 84 Derivative assets 32 32 13 13 Partnerships 3,483 3,483 2,657 2,657 Separate account seed money -- -- 67 67 Investment in ultimate Parent Company 58 58 55 55 Notes receivable from affiliates 748 748 754 754 Securities lending collateral 17,345 17,345 15,901 15,901 Assets held in separate accounts 30,272 30,272 27,163 27,163 Liabilities Investment contracts 32,752 35,343 32,512 34,556 Dividend accumulations 884 884 898 898 Derivative liabilities 114 114 66 66 Securities lending payable 17,345 17,345 15,901 15,901 Liabilities related to separate accounts 30,272 30,272 27,163 27,163
The following methods and assumptions were used to estimate the fair value of financial instruments: Cash and Short-Term Investments Carrying value is considered to be a reasonable estimate of fair value. F-47 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 11.Fair Value of Financial Instruments (continued) 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. Fair values for equity securities were 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 AIG The fair value of the investment in the AIG is based on quoted market prices of AIG common stock. Securities Lending Collateral / Securities Lending Payable Carrying value is considered to be a reasonable estimate of fair value. 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. F-48 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 11.Fair Value of Financial Instruments (continued) Derivative Financial Instruments Fair value of derivative liabilities is based on the use of valuation models that utilize, among other things, current interest, foreign exchange and volatility rates, as applicable Investment Contracts Fair value of insurance investment contracts was estimated using cash flows discounted at market interest rates. Dividend Accumulation Fair value of dividend accumulation is the accumulated value of dividend to be paid to the policyholder with interest. Notes Receivable from Affiliates Fair value of promissory notes and asset backed notes from affiliates were based on quoted market prices, where available. For investments not actively traded, fair value was 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. 12.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. F-49 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 12.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 unfunded investment commitments totaling $521.2 million of which $412.8 million was committed to fund limited partnership investments. The company also had $108.4 million in commitments relating to mortgage loans at December 31, 2006. 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, 2006 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. 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. The maximum aggregate amount of the commitment is currently $145.0 million. Such loans may take F-50 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 12.Commitments and Contingencies (continued) 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 annually to extend the commitment termination date. Effective October 28, 2006, the termination date was extended to October 27, 2007. The Company originally received annual facility fees of 0.045%. However, effective as of October 29, 2004, the facility fee was changed to 0.040%. Effective October 28, 2006 the facility fee was changed to .030%. No loans were funded during 2006 or 2005. AGL owns interests in certain limited liability companies (LLCs) which invested in six coal synthetic fuel production facilities. The sale of coal synthetic fuel produced by these six facilities generated income tax credits. Since acquiring the facilities, AGL has recognized approximately $541 million of synfuel tax credits through December 31, 2006. By letters dated February 17, 2006, the IRS field agents have advised the LLCs that all six production facilities were placed in service before July 1, 1998 and that they will withdraw the 60-day letters issued to the LLCs. The Company generates income tax credits as a result of investing in synthetic fuel under section production. Tax credits generated from the production and sale of synthetic fuel under the Internal Revenue Code are subject to an annual phase-out provision that is based on the average wellhead price of domestic crude oil. The price range within which the tax credits are phased-out was originally established in 1980 and is adjusted annually for inflation. Depending on the price of domestic crude oil for a particular year, all or a portion of the tax credits generated in that year might be eliminated. The Company evaluates the production levels of its synthetic fuel production facilities in light of the risk of phase-out of the associated tax credits. As a result of fluctuating domestic crude oil prices, the Company evaluates and adjusts production levels when appropriate in light of this risk. Regardless of the oil prices, the tax credits expire after 2007. 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 risk from the 1996 underwriting year. Prior to 2006, net premiums and losses retained by the Company, after retro-cessions to various quota share reinsurers, were 100% retro-ceded to another AIG subsidiary, American General Assurance Company ("AGAC"). During 2006, the agreement with AGAC terminated and the F-51 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 12.Commitments and Contingencies (continued) retrocession was recaptured. On February 9, 2006, AIG announced that it has reached a resolution of claims and matters under investigation with the United States Department of Justice ("DOJ"), the Securities and Exchange Commission ("SEC"), the Office of the New York Attorney General ("NYAG") and the New York State Department of Insurance ("DOI"). The settlements resolve outstanding litigation filed by the SEC, NYAG and DOI against AIG and conclude negotiations with these authorities and the DOJ in connection with the accounting, financial reporting and insurance brokerage practices of AIG and its subsidiaries, as well as claims relating to the underpayment of certain workers compensation premium taxes and other assessments. As a result of the settlement, the Company obtained temporary permission from the SEC to continue to provide its variable products. It is expected that a permanent exemptive order will be granted, although there is no assurance the SEC will issue the order. Accordingly, no assurance can be given that any further changes in circumstances for AIG will not impact the Company. Various federal, state and other regulatory agencies are reviewing certain transactions and practices of the Company and its affiliates in connection with industry-wide and other inquiries. 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 consolidated financial position, results of operations or cash flows of the Company. F-52 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 13.Reinsurance Reinsurance transactions for the years ended December 31, 2006, 2005 and 2004 were as follows:
Percentage Ceded to Assumed From of Amount Other Other Assumed Gross Amount Companies Companies Net Amount to Net ------------ ------------ ------------ ----------- ---------- (In Thousands) December 31, 2006 Life insurance in force $589,468,232 $495,146,951 $2,816,826 $97,138,107 2.90% ============ ============ ========== =========== Premiums: Life insurance and annuities 3,366,468 525,132 12,259 2,853,595 0.43% Accident and health insurance 27,548 1,659 196 26,085 0.75% ------------ ------------ ---------- ----------- Total premiums $ 3,394,016 $ 526,791 $ 12,455 $ 2,879,680 0.43% ============ ============ ========== =========== December 31, 2005 Life insurance in force $502,899,091 $408,690,675 $3,081,688 $97,290,104 3.17% ============ ============ ========== =========== Premiums: Life insurance and annuities 3,200,493 456,696 14,397 2,758,194 0.52% Accident and health insurance 25,590 2,926 1,927 24,591 7.84% ------------ ------------ ---------- ----------- Total premiums $ 3,226,083 $ 459,622 $ 16,324 $ 2,782,785 0.59% ============ ============ ========== =========== 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 2,903,136 395,625 9,307 2,516,818 0.37% Accident and health insurance 25,374 2,999 1,129 23,504 4.80% ------------ ------------ ---------- ----------- Total premiums $ 2,928,510 $ 398,624 $ 10,436 $ 2,540,322 0.41% ============ ============ ========== ===========
Reinsurance recoverable on paid losses was approximately $32.9 million, and $44.7 million, at December 31, 2006 and 2005, respectively. Reinsurance recoverable on unpaid losses was approximately $139.6 million, and $114.5 million at December 31, 2006 and 2005, respectively. F-53 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 13.Reinsurance (continued) Total reinsurance recoverables are included in Accounts Receivable on the Consolidated Balance Sheet. In December 2002, the Company entered into a coinsured/modified coinsurance agreement with AIG Life Insurance Company of Bermuda ("AIGB"), an affiliate. 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. 14.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 Insurance Company. The Company paid $200 million, $440 million and $300 million in dividends on common stock to AGC Life in 2006, 2005 and 2004, respectively. The Company also paid $680,000 in dividends on preferred stock to AGC Life in 2006, 2005 and 2004. In addition, the Company paid a stock dividend of $7.5 million to the Parent Company during 2006. 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, 2006, approximately $10.4 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 $4.6 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 AGC Life 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-54 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 15.Subsequent Event On February 28, 2007, the Company acquired Matrix Direct, Inc. ("Matrix Direct"), a direct marketer of life insurance, from Protective Life Corporation. The transaction was accounted for as a stock purchase of all of the outstanding capital stock of Matrix Direct. Although the acquisition cost is not material, less than .2% of the Company's equity, the Company will have the opportunity to further expand its sales of life insurance through this acquisition, as well as apply its direct marketing expertise to a more diverse set of products. F-55 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. (22) (2)Form of Selling Group Agreement. (23) (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 "AIG Income Advantage VUL/sm/" Flexible Premium Variable Universal Life Insurance Policy, Policy Form No. 07704. (Filed herewith) (2)Specimen form of Monthly Guarantee Premium Rider for First 20 Years, Form No. 04720. (7) (3)Specimen form of Monthly Guarantee Premium Rider to Age 100, Form No. 04700. (7) (4)Specimen form of Extension of Maturity Date Rider, Accumulation Value version (Maturity Extension Rider), Form No. 99110. (25) (5)Specimen form of Extension of Maturity Date Rider, Death Benefit version (Maturity Extension Rider), Form No. 99111. (25) (6)Specimen form of Guaranteed Minimum Withdrawal Benefit Rider, Form No. 05270. (28) (7)Specimen form of No Tobacco Use Incentive Endorsement, Form No. AGLC101287-2004. (7) C-1 (8)Form of Accidental Death Benefit Rider, Form No. 82012. (31) (9)Form of Children's Insurance Benefit Rider, Term Life Insurance, Form No. 82410. (31) (10)Form of Term Life Insurance Benefit Rider, Providing Annually Renewable Term Insurance (Spouse Term Rider), Form No. 88390. (31) (11)Form of Terminal Illness Accelerated Benefit Rider (Terminal Illness Rider), Form No. 91401. (31) (12)Form of Waiver of Monthly Deduction Rider, Form No. 82001. (31) (13)Form of Overloan Protection Rider, Form No. 07620. (34) (14)Form of Term Life Insurance Benefit Rider Providing Annually Renewable Term Insurance (Enhanced Early Cash Value Term Rider), Form No. 07017. (35). (e)Applications. (1)Specimen form of Life Insurance Application--Part A, Form No. AGLC100565-2006. (36) (2)Specimen form of Life Insurance Application (Simplified, Guaranteed, or Medically Underwritten) - Part A, Form No. AGLC102503-2007. (35) (3)Specimen form of Life Insurance Application--Part B, Form No. AGLC100566-2006. (36) (4)Form of Variable Universal Life Insurance Supplemental Application, Form No. AGLC102625-2007. (Filed herewith) (5)Form of Service Request Form, Form No. AGLC102769 Rev0907. (Filed herewith) (6)Form of Cash Disbursement Request Form, Form No. AGLC0109 Rev0904. (29) (7)Form of Assignment Form, Form No. AGLC0205 Rev0904. (29) (8)Form of Electronic Funds Authorization Form, Form No. AGLC0220 Rev0904. (29) (9)Form of Name and Address Change Form, Form No. AGLC0222 Rev0904. (29) (10)Form of Change of Ownership Form, Form No. AGLC0013 Rev0705. (29) C-2 (11)Form of Cash Surrender Request Form, Form No. AGLC0112 Rev0403. (29) (12)Form of Change of Beneficiary Form, Form No. AGLC0108 Rev0904. (29) (13)Specimen form of Limited Temporary Life Insurance Agreement, Form No. AGLC101431-2006. (36) (14)Specimen form of Limited Temporary Life Insurance Agreement Receipt, Form No. AGLC101432-2006. (36) (15)Form of Reinstatement or Reduction of Premium Rate Application for Life Insurance Form, Form No. AGLC 100440-2002. (29) (16)Form of In-Force Change Application Form, Form No. AGLC 100386-2002. (29) (17)Form of Service Request Form, Form No. AGLC0107 Rev0904. (29) (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, restated as of June 8, 2005. (3) (g)Reinsurance Contracts. (1)Form of Reinsurance Agreement between American General Life Insurance Company and General & Cologne Life Re of America. (33) (2)Form of Reinsurance Agreement between American General Life Insurance Company and Munich American Reassurance Company. (33) (3)Form of Reinsurance Agreement between American General Life Insurance Company and RGA Reinsurance Company. (33) (4)Form of Reinsurance Agreement between American General Life Insurance Company and Swiss Re Life & Health America, Inc. (33) C-3 (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 No. 4 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. (15) (1)(c) Form of Amendment No. 6 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. (24) (1)(d) Form of Amendment No. 10 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 Equity Services Corporation. (36) (2)(a) Form of Participation Agreement by and among The Alger American Fund, American General Life Insurance Company and Fred Alger & Company, Incorporated. (14) (3)(a) Form of Shareholder Services Agreement by and between American General Life Insurance Company and American Century Investment Management, Inc. (13) (3)(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. (27) (4)(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. (16) (5)(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) C-4 (5)(b) Form of Fourth Amendment to Fund Participation Agreement dated June 1, 1998 between American General Life Insurance Company, each of Dreyfus Variable Investment Fund, The Dreyfus Socially Responsible Growth Fund, Inc., Dreyfus Stock Index Fund, Inc., and Dreyfus Investment Portfolios effective as of October 1, 2007. (Filed herewith) (6)(a) Form of Amended and Restated Participation Agreement among Variable Insurance Products Funds, Fidelity Distributors Corporation and American General Life Insurance Company. (Filed herewith) (7)(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. (26) (7)(b) Form of Amendment No. 3 to 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 March 31, 2006. (30) (7)(c) Form of Amendment No. 4 to 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. (36) (8)(a) Form of Participation Agreement by and between American General Life Insurance Company and J.P. Morgan Series Trust II dated October 2, 2000. (16) (8)(b) Form of Amendment No. 2 to Participation Agreement by and between American General Life Insurance Company and J.P. Morgan Series Trust II effective as of October 1, 2007. (Filed herewith) (9)(a) Form of Fund Participation Agreement by and between American General Life Insurance Company and JPMorgan Insurance Trust effective as of October 1, 2007. (Filed herewith) (10)(a) Form of Fund Participation Agreement by and between American General Life Insurance Company and Janus Aspen Series. (16) (10)(b) Form of Amendment No. 6 to Fund Participation Agreement by and between American General Life Insurance Company and Janus Aspen Series. (36) C-5 (11)(a) Form of Participation Agreement Among MFS Variable Insurance Trust, American General Life Insurance Company and Massachusetts Financial Services Company. (6) (11)(b) Form of Amendment No. 5 to Participation Agreement by and among MFS Variable Insurance Trust, American General Life Insurance Company and Massachusetts Financial Services Company. (16) (11)(c) Form of Amendment No. 12 to Participation Agreement by and among MFS Variable Insurance Trust, American General Life Insurance Company and Massachusetts Financial Services Company. (36) (11)(d) Form of Letter Amendment to the Participation Agreement by and among MFS Variable Insurance Trust, American General Life Insurance Company and Massachusetts Financial Services Company. (33) (12)(a) Sales Agreement by and between American General Life Insurance Company, Neuberger & Berman Advisors Management Trust and Neuberger & Berman Management Incorporated. (13) (12)(b) Form of Assignment and Modification Agreement to Fund Participation Agreement (formerly known as Sales Agreement) by and between Neuberger & Berman Management Incorporated and American General Life Insurance Company. (13) (12)(c) Form of Amendment to Fund Participation Agreement by and between Neuberger Berman Management Inc., Neuberger Berman Advisers Management Trust and American General Life Insurance Company. (32) (12)(d) Form of Amendment No. 2 to Fund Participation Agreement by and between Neuberger Berman Management Inc., Neuberger Berman Advisers Management Trust and American General Life Insurance Company. (36) (13)(a) Form of Participation Agreement by and among American General Life Insurance Company, Oppenheimer Variable Account Funds, and OppenheimerFunds, Inc. (18) (13)(b) Form of Amendment No. 3 to Participation Agreement by and among American General Life Insurance Company, Oppenheimer Variable Account Funds, and OppenheimerFunds, Inc. (36) (14)(a) Form of Participation Agreement by and between American General Life Insurance Company, PIMCO Variable Insurance Trust and PIMCO Funds Distributor LLC. (16) C-6 (14)(b) Form of Amendment No. 1 to Participation Agreement by and between American General Life Insurance Company, PIMCO Variable Insurance Trust and Allianz Global Investors Distributors LLC. (29) (14)(c) Form of Amendment No. 2 to Participation Agreement by and between American General Life Insurance Company, PIMCO Variable Insurance Trust and Allianz Global Investors Distributors LLC. (Filed herewith) (15)(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. (26) (15)(b) Form of Amendment No. 2 to 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. (36) (16)(a) Form of Participation Agreement Among Putnam Variable Trust, Putnam Mutual Funds Corp., and American General Life Insurance Company. (6) (16)(b) Form of Amendment No. 1 to Participation Agreement Among Putnam Variable Trust, Putnam Mutual Funds Corp. and American General Life Insurance Company. (18) (17)(a) Form of Participation Agreement by and between SunAmerica Series Trust and American General Life Insurance Company. (17) (17)(b) Form of Addendum to Fund Participation Agreement For Class A Shares by and between SunAmerica Series Trust and American General Life Insurance Company. (27) (17)(c) Form of Amendment to Participation Agreement by and between SunAmerica Series Trust and American General Life Insurance Company, dated July 2, 2003. (21) (18)(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) (18)(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) C-7 (18)(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. (16) (18)(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. (15) (18)(e) Form of Amendment Four 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. (21) (18)(f) Form of Amendment Seventh 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. (36) (19)(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) (19)(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) (19)(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. (15) (19)(d) Form of Amendment Eight 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. (4) (19)(e) Form of Amendment No. 12 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 Equity Services Corporation. (36) C-8 (20)(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. (16) (20)(b) Form of Third Amendment to Participation Agreement by and between Vanguard Variable Insurance Funds, The Vanguard Group, Inc., Vanguard Marketing Corporation and American General Life Insurance Company. (36) (21)(a) Form of Amended and Restated Administrative Services Agreement between American General Life Insurance Company and A I M Advisors, Inc. (27) (22)(a) Form of Service Agreement Class O between Fred Alger Management, Inc. and American General Life Insurance Company. (14) (23)(a) Form of Administrative Services Agreement by and between American General Life Insurance Company and Credit Suisse Asset Management, LLC. (16) (24)(a) Form of Administrative Services Agreement dated as of August 11, 1998, between American General Life Insurance Company and The Dreyfus Corporation. (37) (24)(b) Form of Agreement Addendum between American General Life Insurance Company and The Dreyfus Corporation dated November 17, 1999. (38) (24)(c) Form of Amendment No. 3 to Administrative Services Agreement dated as of August 11, 1998, between American General Life Insurance Company and The Dreyfus Corporation effective as of October 1, 2007. (Filed herewith) (25)(a) Form of Amended and Restated Service Contract by and between Fidelity Distributors Corporation and American General Equity Services Corporation, effective May 1, 2006. (32) (26)(a) Form of Service Agreement by and between Fidelity Investments Institutional Operations Company, Inc. and American General Life Insurance Company. (16) (26)(b) Form of First Amendment to Service Agreement by and between Fidelity Investments Institutional Operations Company, Inc. and American General Life Insurance Company. (32) C-9 (27)(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. (11) (27)(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. (19) (27)(c) Form of Amendment No. 7 to Administrative Services Agreement by and among American General Life Insurance Company and Franklin Templeton Services, LLC. (36) (28)(a) Form of Administrative Services Letter Agreement by and between American General Life Insurance Company and JPMorgan Chase Bank (relating to J.P. Morgan Series Trust II), effective May 1, 2003. (14) (28)(b) Form of Amendment No. 1 to Administrative Services Letter Agreement by and between American General Life Insurance Company and J.P. Morgan Funds Management, Inc. (formerly known as JPMorgan Chase Bank) (relating to J.P. Morgan Series Trust II), effective as of October 1, 2007. (Filed herewith) (29)(a) Form of Administrative Services Letter Agreement by and between American General Life Insurance Company and J.P. Morgan Funds Management, Inc. (relating to JPMorgan Insurance Trust), effective as of October 1, 2007. (Filed herewith) (30)(a) Form of Distribution and Shareholder Services Agreement by and between Janus Distributors, Inc. and American General Life Insurance Company. (16) (31)(a) Form of Administrative Services Agreement by and between American General Life Insurance Company and Neuberger & Berman Management Incorporated. (13) (32)(a) Form of Administrative Services Agreement by and among American General Life Insurance Company and OppenheimerFunds, Inc. (18) (32)(b) Form of Amendment No. 1 to Administrative Services Agreement by and among American General Life Insurance Company and OppenheimerFunds, Inc. (29) (32)(c) Form of Amendment No. 3 to Administrative Services Agreement by and among American General Life Insurance Company and OppenheimerFunds, Inc. (36) C-10 (33)(a) Form of Services Agreement by and between American General Life Insurance Company and Pacific Investment Management, LLC. (16) (34)(a) Form of PIMCO Variable Insurance Trust Services Agreement by and between American General Life Insurance Company and PIMCO Variable Insurance Trust. (16) (35)(a) Form of Marketing and Administrative Services Support Agreement between American General Life Insurance Company and Putnam Retail Management Limited Partnership. (30) (36)(a) Form of Administrative Services Agreement by and between SunAmerica Asset Management Corp. and American General Life Insurance Company. (17) (36)(b) Form of Amendment No. 4 to Administrative Services Agreement by and between AIG SunAmerica Asset Management Corp. and American General Life Insurance Company. (36) (37)(a) Form of Administrative Services Agreement between Van Kampen Asset Management Inc. and American General Life Insurance Company dated January 1, 2000. (18) (37)(b) Form of Amendment No. 6 to Administrative Services Agreement between Van Kampen Asset Management Inc. and American General Life Insurance Company. (36) (38)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between AIM and American General Life Insurance Company. (33) (39)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Alger and American General Life Insurance Company. (33) (40)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between American Century and American General Life Insurance Company. (33) (41)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Credit Suisse and American General Life Insurance Company. (33) (42)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Dreyfus and American General Life Insurance Company. (33) (43)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Fidelity and American General Life Insurance Company. (33) C-11 (44)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Franklin Templeton and American General Life Insurance Company. (33) (45)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between J.P. Morgan and American General Life Insurance Company. (33) (46)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between JPMorgan Insurance Trust and American General Life Insurance Company. (Filed herewith) (47)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Janus and American General Life Insurance Company. (33) (48)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between MFS and American General Life Insurance Company. (33) (49)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Neuberger Berman and American General Life Insurance Company. (33) (50)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Oppenheimer and American General Life Insurance Company. (33) (51)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between PIMCO and American General Life Insurance Company. (33) (52)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Pioneer and American General Life Insurance Company. (33) (53)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Putnam and American General Life Insurance Company. (33) (54)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between SunAmerica and American General Life Insurance Company. (33) (55)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between VALIC and American General Life Insurance Company. (33) (56)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Van Kampen and American General Life Insurance Company. (33) (57)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between Vanguard and American General Life Insurance Company. (33) C-12 (i)Administrative Contracts. (1)(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. (12) (1)(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. (12) (1)(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. (12) (1)(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. (12) (1)(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. (12) (1)(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. (12) (1)(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. (27) (j)Other Material Contracts. None. (k)Legal Opinion. (1)Opinion and Consent of Lauren W. Jones, Esq., Deputy General Counsel of American General Life Companies, LLC. (Filed herewith) C-13 (l)Actuarial Opinion. (1)Opinion and Consent of American General Life Insurance Company's actuary. (Filed herewith) (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 as of May 1, 2007. (33) (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. 11 to Form N-6 Registration Statement (File No. 333-43264) of American General Life Insurance Company Separate Account VL-R filed on August 12, 2005. (4)Incorporated by reference to Pre-Effective Amendment No. 1 of Form S-6 Registration Statement (File No. 333-82982) of American General Life Insurance Company Separate Account VL-R filed on May 13, 2002. (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. C-14 (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. 1 to Form N-6 Registration Statement (File No. 333-118318) of American General Life Insurance Company Separate Account VL-R filed on December 17, 2004. (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 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. (12)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. (13)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. (14)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. (15)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. (16)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. C-15 (17)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. (18)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. (19)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. (20)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. (21)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. (22)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. (23)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. (24)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. (25)Incorporated by reference to initial filing of Form N-6 Registration Statement (File No. 333-118318) of American General Life Insurance Company Separate Account VL-R filed on August 18, 2004. (26)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. (27)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. C-16 (28)Incorporated by reference to initial filing of Form N-6 Registration Statement (File No. 333-129552) of American General Life Insurance Company Separate Account VL-R filed on November 8, 2005. (29)Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-6 Registration Statement (File No. 333-129552) of American General Life Insurance Company Separate Account VL-R filed on March 30, 2006. (30)Incorporated by reference to Post-Effective Amendment No. 1 to Form N-6 Registration Statement (File No. 333-129552) of American General Life Insurance Company Separate Account VL-R filed on May 1, 2006. (31)Incorporated by reference to Post-Effective Amendment No. 6 to Form N-6 Registration Statement (File No. 333-118318) of American General Life Insurance Company Separate Account VL-R filed on December 12, 2006. (32)Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-6 Registration Statement (File No. 333-137817) of American General Life Insurance Company Separate Account VL-R filed on December 14, 2006. (33)Incorporated by reference to Post-Effective Amendment No. 7 to Form N-6 Registration Statement (File No. 333-118318) of American General Life Insurance Company Separate Account VL-R filed on May 1, 2007. (34)Incorporated by reference to Post-Effective Amendment No. 2 to Form N-6 Registration Statement (File No. 333-137817) of American General Life Insurance Company Separate Account VL-R filed on May 1, 2007. (35)Incorporated by reference to initial filing of Form N-6 Registration Statement (File No. 333-144594) of American General Life Insurance Company Separate Account VL-R filed on July 16, 2007. (36)Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-6 Registration Statement (File No. 333-143072) of American General Life Insurance Company Separate Account VL-R filed on August 22, 2007. (37)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. (38)Incorporated by reference to Post-Effective Amendment No. 6 to Form N-6 Registration Statement (File No. 333-80191) of American General Life Insurance Company Separate Account VL-R filed on June 10, 2004. C-17 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 and Chairman of the Board of Directors 2929 Allen Parkway Houston, TX 77019 M. Bernard Aidinoff Director Sullivan and Cromwell 125 Broad Street New York, NY 10004 Mary Jane B. Fortin Director, Executive Vice President and Chief 2929 Allen Parkway Financial Officer Houston, TX 77019 David L. Herzog Director 70 Pine Street New York, NY 10270 Richard A. Hollar Director, Chairman-Life Profit Center and 750 West Virginia Street Independent Distribution and Chief Executive Milwaukee, WI 53204 Officer-Life Profit Center and Independent Distribution Royce G. Imhoff, II Director, President-Independent Distribution 2929 Allen Parkway Houston, TX 77019 David W. O'Leary Director, President-Specialty Markets Group and 2929 Allen Parkway Chief Executive Officer-Specialty Markets Group Houston, TX 77019 Gary D. Reddick Director 2929 Allen Parkway Houston, TX 77019 Christopher J. Swift Director 2929 Allen Parkway Houston, TX 77019 James W. Weakley Director, President-AIG Benefit Solutions Profit 2929 Allen Parkway Center and Chief Executive Officer-AIG Benefit Houston, TX 77019 Solutions Profit Center C-18 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ----------------------------------------------------- Matthew E. Winter Director, President and Chief Executive Officer 2929 Allen Parkway Houston, TX 77019 Thomas L. Booker President-Annuity Profit Center 2727 Allen Parkway Houston, TX 77019 Richard C. Schuettner President-AIG Life Brokerage Profit Center 750 West Virginia Street Milwaukee, WI 53204 James P. Steele President-Structured Settlements 205 E. 10th Street Amarillo, TX 79101 Don M. Ward President-Financial Institution Marketing Group 2929 Allen Parkway Houston, TX 77019 David R. Armstrong Executive Vice President-AIG Benefit Solutions & AIG 3600 Route 66 Financial Institution Solutions Profit Center Neptune, NJ 07754 Rebecca G. Campbell Executive Vice President-Human Resources 2929 Allen Parkway Houston, TX 77019 Rodney N. Hook Executive Vice President-AIG Benefit Solutions 3600 Route 66 Profit Center and Chief Risk Officer-AIG Benefit Neptune, NJ 07754 Solutions Profit Center Gary Parker Executive Vice President and Chief Product Officer 2929 Allen Parkway Houston, TX 77019 Dan E. Trudan Executive Vice President-Individual Product 750 West Virginia St. Operations Milwaukee, WI 53204 Steven D. Anderson Senior Vice President-Life Profit Center & 2727 Allen Parkway Independent Distribution and Chief Financial Houston, TX 77019 Officer-Life Profit Center & Independent Distribution C-19 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ----------------------------------------------------- Erik A. Baden Senior Vice President-Strategic Marketing and 2727 Allen Parkway Business Development Houston, TX 77019 Wayne A. Barnard Senior Vice President, Illustration Actuary 2929 Allen Parkway Houston, TX 77019 Robert M. Beuerlein Senior Vice President and Chief and Appointed Actuary 2727-A Allen Parkway Houston, TX 77019 Jeffrey H. Carlson Senior Vice President and Chief Information Officer 2727 Allen Parkway Houston, TX 77019 James A. Galli Senior Vice President and Chief Business Development 830 Third Avenue Officer New York, NY 10022 Robert M. Goldbloom Senior Vice President-Terminal Funding Annuities 80 Pine Street New York, NY 10005 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 Kyle L. Jennings Senior Vice President and General Counsel 2929 Allen Parkway Houston, TX 77019 Althea R. Johnson Senior Vice President 2929 Allen Parkway Houston, TX 77019 Glen D. Keller Senior Vice President 2727 Allen Parkway Houston, TX 77019 C-20 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------------------- Frank A. Kophamel Senior Vice President 2727-A Allen Parkway Houston, TX 77019 Stephen Kennedy Senior Vice President 750 West Virginia Street Milwaukee, WI 53204 Simon J. Leech Senior Vice President 2727-A Allen Parkway Houston, TX 77019 Charles L. Levy Senior Vice President and Medical Director 2727 Allen Parkway Houston, TX 77019 Kent D. Major Senior Vice President 2727-A Allen Parkway Houston, TX 77019 Edmund D. McClure Senior Vice President American General Center 2000 American General Way Brentwood, TN 37027 Richard D. McFarland Senior Vice President 2727 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 Lawrence J. O'Brien Senior Vice President, Chief Marketing Officer - 2929 Allen Parkway Independent Agency Group Houston, TX 77019 William J. Packer Senior Vice President 3600 Route 66 Neptune, NJ 07754 C-21 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------------------- John W. Penko Senior Vice President 2727 Allen Parkway Houston, TX 77019 Dennis H. Roberts Senior Vice President, Chief Distribution Officer - 2727 Allen Parkway Independent Agency Group Houston, TX 77019 Robert E. Steele Senior Vice President 205 E. 10th Street Amarillo, TX 79101 Frederic R. Yopps Senior Vice President 750 West Virginia St. Milwaukee, WI 53204 Chris Ayers Vice President 2727-A 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 Timothy H. Bolden Vice President and Chief Compliance Officer 2727-A Allen Parkway Houston, TX 77019 Laura J. Borowski Vice President 750 West Virginia St. Milwaukee, WI 53204 James B. Brown Vice President 2727 Allen Parkway Houston, TX 77019 C-22 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------------------- David W. Butterfield Vice President 3600 Route 66 Neptune, NJ 07754 Valerie A. Childrey Vice President and Medical Director 750 West Virginia Street Milwaukee, WI 53204 Mark E. Childs Vice President 2727 Allen Parkway Houston, TX 77019 Robert M. Cicchi Vice President 2727 Allen Parkway Houston, TX 77019 James Cortiglia Vice President 3600 Route 66 Neptune, NJ 07754 Steven A. Dmytrack Vice President 2929 Allen Parkway Houston, TX 77019 Elizabeth Dobbs Vice President 2727 Allen Parkway Houston, TX 77019 Douglas M. Donnenfield Vice President 750 West Virginia Street Milwaukee, WI 53204 Timothy M. Donovan Vice President 2727 Allen Parkway Houston, TX 77019 Farideh N. Farrokhi Vice President and Assistant Secretary 2727-A Allen Parkway Houston, TX 77019 John T. Fieler Vice President and Medical Director 2727-A Allen Parkway Houston, TX 77019 C-23 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------------------- Patrick S. Froze Vice President 750 West Virginia Street Milwaukee, WI 53204 Brad J. Gabel Vice President 750 West Virginia Street Milwaukee, WI 53204 Frederick J. Garland, Jr. Vice President 2727 Allen Parkway Houston, TX 77019 Liza Glass Vice President 2727-A Allen Parkway Houston, TX 77019 Leo W. Grace Vice President and Assistant Secretary 2727 Allen Parkway Houston, TX 77019 Richard L. Gravette Vice President and Assistant Treasurer 2727-A Allen Parkway Houston, TX 77019 Kenneth J. Griesemer Vice President 6363 Forest Park Road Dallas, TX 75235 Daniel J. Gutenberger Vice President and Medical Director 70 Pine Street New York, NY 10270 Joel H. Hammer Vice President 70 Pine Street New York, NY 10270 D. Leigh Harrington Vice President 2727 Allen Parkway Houston, TX 77019 Keith C. Honig Vice President 1 SunAmerica Center Los Angeles, CA 90067 C-24 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------------------- Stephen D. Howard Vice President 2929 Allen Parkway Houston, TX 77019 Janna M. Hubble Vice President 2929 Allen Parkway Houston, TX 77019 Walter P. Irby Vice President and Chief Financial Officer-Specialty 2727 Allen Parkway Marketing Group Houston, TX 77019 Sharla A. Jackson Vice President 205 E. 10th Street Amarillo, TX 79101 Gary J. Kleinman Vice President and Real Estate Investment Officer 70 Pine Street New York, NY 10270 Michael J. Krugel Vice President 750 West Virginia Street Milwaukee, WI 53204 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 W. Larry Mask Vice President, Real Estate Investment Officer and 2727 Allen Parkway Assistant Secretary Houston, TX 77019 Melvin C. McFall Vice President 2727 Allen Parkway Houston, TX 77019 C-25 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------------------- Beverly A. Meyer Vice President 750 West Virginia Street Milwaukee, WI 53204 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 Michael R. Murphy Vice President 750 West Virginia Street Milwaukee, WI 53204 David W. Napoli Vice President 2727 Allen Parkway Houston, TX 77019 Carl T. Nichols Vice President and Medical Director 205 E. 10th Street Amarillo, TX 79101 Deanna D. Osmonson Vice President and Chief Privacy Officer 2727 Allen Parkway Houston, TX 77019 Rembert R. Owen, Jr. Vice President, Real Estate Investment Officer and 2929 Allen Parkway Assistant Secretary Houston, TX 77019 Lori J. Payne Vice President 2727 Allen Parkway Houston, TX 77019 Cathy A. Percival Vice President and Medical Director 2727 Allen Parkway Houston, TX 77019 C-26 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------------------- Andrew J. Rasey Vice President 2727 Allen Parkway Houston, TX 77019 Rodney E. Rishel Vice President American General Center 2000 American General Way Brentwood, TN 37027 Terri Robbins Vice President 175 Water Street New York, NY 10038 Walter J. Rudecki, Jr. Vice President 2929 Allen Parkway Houston, TX 77019 John Rugel Vice President 750 West Virginia Street Milwaukee, WI 53204 Dale W. Sachtleben Vice President #1 Franklin Square Springfield, IL 62713 Richard W. Scott Vice President and Chief Investment Officer 70 Pine Street New York, NY 10270 Michael C. Sibley Vice President Walnut Glen Tower 8144 Walnut Hill Lane Dallas, TX 75231 T. Clay Spires Vice President and Tax Officer 2929 Allen Parkway Houston, TX 77019 Dale A. Stewart Vice President and General Auditor 2727-A Allen Parkway Houston, TX 77019 C-27 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------------------- Gregory R. Thornton Vice President #1 Franklin Square Springfield, IL 62713 Veronica Torralba Vice President 2929 Allen Parkway Houston, TX 77019 Sarah Van Beck Vice President 2727-A Allen Parkway Houston, TX 77019 Christian D. Weiss Vice President #1 Franklin Square Springfield, IL 62713 Cynthia P. Wieties Vice President 2727 Allen Parkway Houston, TX 77019 Elizabeth M. Tuck Secretary 70 Pine Street New York, NY 10270 Lauren W. Jones Assistant Secretary 2929 Allen Parkway Houston, TX 77019 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"). See footnotes to table below at end of Item 28. Table of subsidiaries of AIG can be found as Exhibit 21 in Form 10-K, SEC file number 001-08787, accession number 0000950123-07-003026, filed March 1, 2007. C-28 Subsidiaries of AIG Percentage of Voting Securities Jurisdiction of held by Incorporation Immediate or Organization Parent/(1)/ --------------- ---------- American International Group, Inc./(2) / Delaware /(3)/ AIG Capital Corporation Delaware 100 AIG Capital India Private Limited India 99/(4)/ AIG Global Asset Management Company (India) Private Limited India 99/(5)/ AIG Consumer Finance Group, Inc. Delaware 100 AIG Bank Polska S.A. Poland 99.92 AIG Credit S.A. Poland 100 Compania Financiera Argentina S.A. Argentina 100 AIG Equipment Finance Holdings, Inc. Delaware 100 AIG Commercial Equipment Finance, Inc. Delaware 100 AIG Commercial Equipment Finance Company Canada Canada 100 AIG Rail Services, Inc. Delaware 100 AIG Finance Holdings, Inc. New York 100 AIG Finance (Hong Kong) Limited Hong Kong 100 AIG Global Asset Management Holdings Corp. Delaware 100 AIG Asset Management Services, Inc. Delaware 100 Brazos Capital Management, L.P. Delaware 100 AIG Capital Partners, Inc. Delaware 100 AIG Equity Sales Corp. New York 100 AIG Global Investment Corp. New Jersey 100 AIG Securities Lending Corp. Delaware 100 AIG Global Real Estate Investment Corp. Delaware 100 International Lease Finance Corporation California 67.23/(6)/ AIG Credit Corp. Delaware 100 A.I. Credit Consumer Discount Corp. Pennsylvania 100 A.I. Credit Corp. New Hampshire 100 AICCO, Inc. Delaware 100 AICCO, Inc. California 100 AIG Credit Corp. of Canada Canada 100 Imperial Premium Funding, Inc. Delaware 100 AIG Egypt Insurance Company, S.A.E. Egypt 89.98 AIG Federal Savings Bank USA 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/(7)/ AIG Funding, Inc. Delaware 100 AIG Global Trade & Political Risk Insurance Company New Jersey 100 AIG Israel Insurance Company Ltd. Israel 100 AIG Life Holdings (International) LLC Delaware 100 AIG Star Life Insurance Co., Ltd. Japan 100 C-29 Subsidiaries of AIG Percentage of Voting Securities Jurisdiction of held by Incorporation Immediate or Organization Parent/(1)/ --------------- ---------- American International Reinsurance Company, Ltd. Bermuda 100 AIG Life Edison Insurance Company Japan 90/(8)/ 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 AIG Life Insurance Company Delaware 79/(9)/ AIG Life Insurance Company of Puerto Rico Puerto Rico 100 AIG Life Insurance Company (Switzerland) Ltd. Switzerland 100 AIG Liquidity Corp. Delaware 100 AIG Private Bank Ltd. Switzerland 100 AIG Property Casualty Insurance Group, Inc. Delaware 100 AIG Commercial Insurance Group, Inc. Delaware 100 AIG Aviation, Inc. Georgia 100 AIG Casualty Company Pennsylvania 100 AIG Risk Management, Inc. New York 100 AIU Insurance Company New York 52/(10)/ American Home Assurance Company New York 100 AIG Domestic Claims, Inc. Delaware 50/(11)/ AIG Hawaii Insurance Company Hawaii 100 American Pacific Insurance Company Hawaii 100 American International Insurance Company New York 50/(12)/ AIG Advantage Insurance Company Minnesota 100 American International Insurance Company of California California 100 American International Insurance Company of New Jersey New Jersey 100 American International Realty Corp. Delaware 31.5/(13)/ Pine Street Real Estate Holdings Corp. New Hampshire 31.47/(14)/ Transatlantic Holdings, Inc. Delaware 33.34/(15)/ Transatlantic Reinsurance Company New York 100 Putnam Reinsurance Company New York 100 Trans Re Zurich Switzerland 100 American International Surplus Lines Agency, Inc. New Jersey 100 Audubon Insurance Company Louisiana 100 Agency Management Corporation Louisiana 100 The Gulf Agency, Inc. Alabama 100 Audubon Indemnity Company Mississippi 100 Commerce and Industry Insurance Company New York 100 Commerce and Industry Insurance Company of Canada Canada 100 The Insurance Company of the State of Pennsylvania Pennsylvania 100 Landmark Insurance Company California 100 National Union Fire Insurance Company of Pittsburgh, Pa Pennsylvania 100 American International Specialty Lines Insurance Company Alaska 70/(16)/ Lexington Insurance Company Delaware 70/(17)/ C-30 Subsidiaries of AIG
Percentage of Voting Securities Jurisdiction of held by Incorporation Immediate or Organization Parent/(1)/ --------------- ---------- AIG Centennial Insurance Company Pennsylvania 100 AIG Auto Insurance Company of New Jersey New Jersey 100 AIG Preferred Insurance Company Pennsylvania 100 AIG Premier Insurance Company Pennsylvania 100 AIG Indemnity Insurance Company Pennsylvania 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 Casualty Company California 100 21st Century Insurance Company California 100 21st Century Insurance Company of the Southwest Texas 100 Starr Excess Liability Insurance Company, Ltd. Delaware 100 Starr Liability Insurance International Ltd. Ireland 100 New Hampshire Insurance Company Pennsylvania 100 AI Network Corporation Delaware 100 AIG Europe, S.A. France 70.48/(19)/ American International Pacific Insurance Company Colorado 100 American International South Insurance Company Pennsylvania 100 Granite State Insurance Company Pennsylvania 100 Illinois National Insurance Co. Illinois 100 New Hampshire Indemnity Company, Inc. Pennsylvania 100 AIG National Insurance Company, Inc. New York 100 New Hampshire Insurance Services, Inc. New Hampshire 100 Risk Specialists Companies, Inc. Delaware 100 AIG Marketing, Inc. Delaware 100 American International Insurance Company of Delaware Delaware 100 Hawaii Insurance Consultants, Inc. Hawaii 100 AIG Retirement Services, Inc. Delaware 100 SunAmerica Life Insurance Company Arizona 100 SunAmerica Investments, Inc. Georgia 70/(20)/ AIG Advisor Group, Inc. Maryland 100 Advantage Capital Corporation New York 100 American General Securities Incorporated Texas 100 FSC Securities Corporation Delaware 100 Royal Alliance Associates, Inc. Delaware 100 SunAmerica Securities, Inc. Delaware 100 AIG SunAmerica Life Assurance Company Arizona 100 AIG SunAmerica Asset Management Corp. Delaware 100 AIG SunAmerica Capital Services, Inc. Delaware 100 First SunAmerica Life Insurance Company New York 100 AIG Technologies, Inc. New Hampshire 100 AIG Trading Group, Inc. Delaware 100 AIG International, Inc. Delaware 100 AIGTI, Inc. Delaware 100
C-31 Subsidiaries of AIG
Percentage of Voting Securities Jurisdiction of held by Incorporation Immediate or Organization Parent/(1)/ --------------- ---------- AIU Holdings, LLC Delaware 100 AIG Central Europe & CIS Insurance Holdings Corporation Delaware 100 AIG Bulgaria Insurance and Reinsurance Company EAD Bulgaria 100 AIG Czech Republic pojistovna, as Czech Republic 100 AIG Kazakhstan Insurance Company, S.A. Kazakhstan 88.87 AIG Memsa, Inc. Delaware 100 AIG Hayleys Investment Holdings (Private) Ltd. Sri Lanka 80 Hayleys AIG Insurance Company, Ltd. Sri Lanka 100 AIG Iraq Delaware 100 AIG Lebanon, S.A.L Lebanon 100 AIG Libya, Inc. Libya 100 AIG Sigora A.S Turkey 100 Tata AIG General Insurance Company Limited India 26 AIU Africa Holdings, Inc. Delaware 100 AIG Kenya Insurance Company, Limited Kenya 100 AIU North America, Inc. New York 100 American General Corporation Texas 100 AGC Life Insurance Company Missouri 100 AIG Life Holdings (Canada), ULC Canada 100 AIG Assurance Canada Canada 100 AIG Life Insurance Company of Canada Canada 100 AIG Life of Bermuda, Ltd. Bermuda 100 American General Life and Accident Insurance Company Tennessee 100 American General Life Insurance Company Texas 100 AIG Annuity Insurance Company Texas 100 AIG Enterprise Services, LLC Delaware 100 American General Annuity Service Corporation Texas 100 American General Life Companies, LLC Delaware 100 American General Property Insurance Company Tennessee 51.85/(21)/ American General Property Insurance Company of Florida Florida 100 The United State Life Insurance Company in the City of New York New York 100 The Variable Annuity Life Insurance Company Texas 100 VALIC Retirement Services Company Texas 100 American General Assurance Company Illinois 100 American General Indemnity Company Illinois 100 American General Bancassurance Services, Inc. Illinois 100 American General Finance, Inc. Indiana 100 American General Auto Finance, Inc. Delaware 100 American General Finance Corporation Indiana 100 Merit Life Insurance Co. Indiana 100 MorEquity, Inc. Nevada 100 Wilmington Finance, Inc. Delaware 100 Yosemite Insurance Company Indiana 100 CommoLoCo, Inc. Puerto Rico 100 American General Financial Services of Alabama, Inc. Delaware 100
C-32 Subsidiaries of AIG
Percentage of Voting Securities Jurisdiction of held by Incorporation Immediate or Organization Parent/(1)/ -------------------- ---------- American General Investment Management Corporation Delaware 100 American General Realty Investment Corporation Texas 100 Knickerbocker Corporation Texas 100 American International Life Assurance Company of New York New York 77.52/(22)/ American International Underwriters Corporation New York 100 American International Underwriters Overseas, Ltd. Bermuda 100 A.I.G. Colombia Seguros Generales S.A. Colombia 100 AIG Brasil Companhia de Seguros Brazil 50 AIG Direct Marketing Company Ltd. Taiwan 100 Central Insurance Company Limited Taiwan 100 AIG Europe (Ireland) Limited Ireland 100 AIG Europe (UK) Limited England 100 AIG General Insurance (Thailand) Company Limited Thailand 100 AIG General Insurance (Vietnam) Company Limited Vietnam 100 AIG MEMSA Insurance Company Ltd. United Arab Emirates 100 AIG Takaful B.S.C. Bahrain 100 American International Insurance Company of Puerto Rico Puerto Rico 100 American International Underwriters GmBH Germany 100 La Meridional Compania Argentina de Seguros Argentina 100 La Seguridad de Centroamerica Compania de Seguros S.A. Guatemala 100 Richmond Insurance Company Limited Bermuda 100 Underwriters Adjustment Company Panama 100 American Life Insurance Company Delaware 100 AIG Life (Bulgaria) Z.D.A.D. Bulgaria 100 ALICO, S.A. France 100 First American Polish Life Insurance and Reinsurance Company, S.A. Poland 100 Inversiones Interamericana S.A. (Chile) Chile 100 Pharaonic American Life Insurance Company Egypt 71.63 Unibanco AIG Seguros S.A. Brazil 47.80/(23)/ American Security Life Insurance Company, Ltd. Lichtenstein 100 Delaware American Life Insurance Company Delaware 100 HSB Group, Inc. Delaware 100 The Hartford Steam Boiler Inspection and Insurance Company Connecticut 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 Mt. Mansfield Company, Inc. Vermont 100 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 Philam Insurance Company, Inc. Philippines 100 United Guaranty Corporation North Carolina 36.31/(24)/ A.I.G. Mortgage Holdings Israel, Ltd. Israel 82.12
C-33 Subsidiaries of AIG
Percentage of Voting Securities Jurisdiction of held by Incorporation Immediate or Organization Parent/(1)/ --------------- ---------- E.M.I.-Ezer Mortgage Insurance Company, Limited Israel 100 AIG United Guaranty Agenzia DI Assicurazione S.R.L Italy 100 AIG United Guaranty Insurance (Asia) Limited Hong Kong 100 AIG United Guaranty Re, Ltd. Ireland 100 United Guaranty Insurance Company North Carolina 100 United Guaranty Mortgage Insurance Company North Carolina 100 United Guaranty Mortgage Insurance Company Canada Canada 100 United Guaranty Mortgage Insurance Company of North Carolina North Carolina 100 United Guaranty Partners Insurance Company Vermont 80 United Guaranty Residential Insurance Company North Carolina 75.03/(25)/ United Guaranty Credit Insurance Company North Carolina 100 United Guaranty Insurance Company of North Carolina North Carolina 100 United Guaranty Mortgage Indemnity Company North Carolina 100 United Guaranty Residential Insurance Company of North Carolina North Carolina 100 United Guaranty Services, Inc. North Carolina 100
- -------- (1)Percentages include directors' qualifying shares. (2)All subsidiaries listed are consolidated in the accompanying financial statements. 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. (3)The common stock is owned approximately 14.1 percent by C.V. Starr & Co., Inc., Edward E. Matthews, Maurice R. and Corinne P. Greenberg Joint Tenancy Company, LLC, Starr International Company, Inc., The Maurice R. Greenberg and Corinne P. Greenberg Family Foundation, Inc. and the Universal Foundation, Inc. (4)Also owned 1 percent by AIG Global Investment Corp. (5)Also owned 1 percent by AIG Capital Corporation. (6)Also owned 32.77 percent by National Union Fire Insurance Company of Pittsburgh, Pa. (7)Also owned 10 percent by AIG Matched Funding Corp. (8)Also owned 10 percent by a subsidiary of American Life Insurance Company. (9)Also owned 21 percent by Commerce and Industry 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 the Pittsburgh, Pa., and 8 percent by AIG Casualty Company. (11)Also owned 50 percent by The Insurance Company of the State of Pennsylvania. (12)Also owned 25 percent by Commerce and Industry Insurance Company and 25 percent by AIU Insurance Company. (13)Also owned by 11 other AIG subsidiaries. (14)Also owned by 11 other AIG Subsidiaries. (15)Also owned 25.85 percent by AIG. (16)Also owned 20 percent by the Insurance Company of the State of Pennsylvania and 10 percent by AIG Casualty Company. (17)Also owned 20 percent by the Insurance Company of the State of Pennsylvania and 10 percent by AIG Casualty Company. (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 held together with AIG companies. (20)Also owned 30 percent by AIG Retirement Services, Inc. (21)Also owned 48.15 percent by American General Life and Accident Insurance Company. (22)Also owned 22.48 percent by American Home Assurance Company. (23)Also owned 1.7 percent by American International Underwriters Overseas, Ltd. and 0.48 percent by American Home Assurance Company. C-34 (24)Also owned 45.88 percent by National Union Fire Insurance Company of Pittsburgh, Pa., 16.95% by New Hampshire Insurance Company and 0.86 percent by The Insurance Company of the State of Pennsylvania. (25)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 Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Except as otherwise required by applicable law: (a) The company shall have the 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, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or on behalf of the company) by reason of the fact that he is or was director, officer, or employee or agent of the company, or is or was serving at the request of the company as director, officer, employee or agent of another company or enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding; provided that he (1) acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the company; and, (2) with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, by itself, create a presumption that the person did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was lawful. (b) The company shall have the 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, suit or proceeding by or on behalf of the company to procure a judgment in the company's favor, by reason of the fact that he is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another company or enterprise, against expenses (including attorney's fees), judgments and amounts paid in C-35 settlement actually and reasonably incurred by him in connection with the defense or settlement of such action, suit or proceeding; provided that he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the company, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the company unless and only to the extent that the court in which such action, suit or proceeding was brought or any other court of competent jurisdiction shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity. (c) To the extent that a director, officer, or employee or agent of the company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs (a) and (b) above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith. (d) Any indemnification under paragraphs (a) and (b) above (unless ordered by a court or made pursuant to a determination by a court as hereinafter provided) shall be made by the company upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances and he has met the applicable standard of conduct set forth in paragraphs (a) and (b). Such determination shall be made (1) by the Board by a majority of a quorum consisting of directors who were not parties to such action, suit or proceeding (disinterested), or (2) by a committee of disinterested directors designated by majority vote of disinterested directors, even though less than a quorum, or (3) by independent legal counsel in a written opinion, and such legal counsel was selected by a majority vote of a quorum of the disinterested directors, or (4) by the stockholders. In the absence of a determination that indemnification is proper, the director, officer or employee may apply to the court conducting the proceeding or another court of competent jurisdiction which shall determine whether the director, officer, employee or agent has met the applicable standard of conduct set forth in paragraphs (a) and (b). If the court shall so determine, indemnification shall be made under paragraph (a) or (b) as the case may be. (e) Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the company in advance of the final disposition of such action, suit or proceeding as authorized by the Board in the manner provided in paragraph (d) upon receipt of a written instrument acceptable to the Board by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the company as authorized in this section. (f) The indemnification provided by the company's By-Laws shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any agreement, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit or the heirs, executors and administrators of such a person. C-36 (g) The company shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another company, or enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the company would have the power to indemnify him against such liability under the provisions of the company's By-Laws. 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 - ------------------ ---------------------------------------------------- Matthew E. Winter 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 David W. O'Leary Director, President and Chief Executive Officer 2929 Allen Parkway Houston, TX 77019 Larry E. Blews Vice President and Chief Compliance Officer 2727-A Allen Parkway Houston, TX 77019 Robert F. Herbert, Jr. Vice President 2727-A Allen Parkway Houston, TX 77019 C-37 Name and Principal Positions and Offices with Underwriter Business Address American General Equity Services Corporation - ------------------ ------------------------------------------------------ Deanna D. Osmonson Vice President and Anti-Money Laundering Compliance 2727 Allen Parkway Officer Houston, TX 77019 T. Clay Spires Vice President and Tax Officer 2727-A Allen Parkway Houston, TX 77019 Rhonda Washington Treasurer and Controller 2727 Allen Parkway Houston, TX 77019 Elizabeth M. Tuck Secretary 70 Pine Street New York, NY 10270 Amy Marie Cinquegrana Assistant Secretary 70 Pine Street New York, NY 10270 Sarah L. Hosker Assistant Secretary 70 Pine Street New York, NY 10270 Lauren W. Jones Assistant Secretary 2929 Allen Parkway Houston, TX 77019 John D. Fleming Assistant Treasurer 2929 Allen Parkway Houston, TX 77019 Barbara J. Moore Assistant Tax Officer 2919 Allen Parkway Houston, TX 77019 (c) Compensation From the Registrant.
Net Underwriting Compensation on Events Name of Principal Discounts and Occasioning the Deduction Brokerage Other Underwriter Commissions of a Deferred Sales Load Commissions Compensation - ----------------- ---------------- ------------------------- ----------- ------------ American General Equity 0 0 0 0 Services Corporation
C-38 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-39 POWERS OF ATTORNEY Each person whose signature appears below hereby appoints Robert F. Herbert, Jr., Gary W. Parker 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, 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 2nd day of October, 2007. 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 AGL - 1 Pursuant to the requirements of the Securities Act of 1933, this amended Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date - --------- ----------------------------- --------------- RODNEY O. MARTIN, JR. Director and Chairman of the October 2, 2007 - ----------------------------- Board of Directors RODNEY O. MARTIN, JR. MATTHEW E. WINTER Director, President and Chief October 2, 2007 - ----------------------------- Executive Officer MATTHEW E. WINTER MARY JANE B. FORTIN Director, Executive Vice October 2, 2007 - ----------------------------- President and Chief Financial MARY JANE B. FORTIN Officer M. BERNARD AIDINOFF Director October 2, 2007 - ----------------------------- M. BERNARD AIDINOFF DAVID L. HERZOG Director October 2, 2007 - ----------------------------- DAVID L. HERZOG RICHARD A. HOLLAR Director October 2, 2007 - ----------------------------- RICHARD A. HOLLAR ROYCE G. IMHOFF II Director October 2, 2007 - ----------------------------- ROYCE G. IMHOFF II AGL - 2 Signature Title Date - --------- ----------------------------- --------------- DAVID W. O'LEARY Director October 2, 2007 - ----------------------------- DAVID W. O'LEARY GARY D. REDDICK Director October 2, 2007 - ----------------------------- GARY D. REDDICK CHRISTOPHER J. SWIFT Director October 2, 2007 - ----------------------------- CHRISTOPHER J. SWIFT Director - ----------------------------- JAMES W. WEAKLEY AGL - 3 EXHIBIT INDEX Item 26.Exhibits (d)(1) Specimen form of (AIG Income Advantage VULsm" Flexible Premium Variable Universal Life Insurance Policy, Policy Form No. 07704. (e)(4) Specimen form of Variable Universal Life Insurance Supplemental Application, Form No. AGLC102625-2007. (e)(5) Form of Service Request Form, Form No. AGLC102769 Rev0907. (h)(5)(b) Form of Fourth Amendment to Fund Participation Agreement dated June 1, 1998 between American General Life Insurance Company, each of Dreyfus Variable Investment Fund, The Dreyfus Socially Responsible Growth Fund, Inc., Dreyfus Stock Index Fund, and Dreyfus Investment Portfolios effective October 1, 2007. (h)(6)(a) Form of Amended and Restated Participation Agreement among Variable Insurance Products Funds, Fidelity Distributors Corporation and American General Life Insurance Company. (h)(8)(b) Form of Amendment No. 2 to Participation Agreement by and between American General Life Insurance Company and J.P. Morgan Series Trust II effective as of October 1, 2007. (h)(9)(a) Form of Fund Participation Agreement by and between American General Life Insurance Company and JPMorgan Insurance Trust effective as of October 1, 2007. (h)(14)(c) Form of Amendment No. 2 to Participation Agreement by and between American General Life Insurance Company, PIMCO Variable Insurance Trust and Allianz Global Investors Distributors LLC. (h)(24)(c) Form of Amendment No. 3 to Administrative Services Agreement dated as of August 11, 1998, between American General Life Insurance Company and The Dreyfus Corporation effective as of October 1, 2007. E-1 (h)(28)(b) Form of Amendment No. 1 to Administrative Services Letter Agreement by and between American General Life Insurance Company and J.P. Morgan Funds Management, Inc. (formerly known as JPMorgan Chase Bank) (relating to J.P. Morgan Series Trust II), effective as of October 1, 2007. (h)(29)(a) Form of Administrative Services Letter Agreement by and between American General Life Insurance Company and J.P. Morgan Funds Management, Inc. (relating to JPMorgan Insurance Trust), effective as of October 1, 2007. (h)(46)(a) Form of SEC Rule 22c-2 Information Sharing Agreement between JPMorgan Insurance Trust and American General Life Insurance Company. (k)(1) Opinion and Consent of Lauren W. Jones, Esq., Deputy General Counsel of American General Life Companies, LLC. (l)(1) Opinion and Consent of American General Life Insurance Company's actuary. (n)(1) Consent of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP. E-2 EX-99.(D)(1) 3 dex99d1.txt SPECIMEN FORM OF POLICY EXHIBIT (d)(1) AMERICAN GENERAL LIFE Insurance Company A STOCK COMPANY Home Office: Houston, Texas 2727-A Allen Parkway P. O. Box 1931 POLICY NUMBER: Houston, Texas 77251 (713) 522-1111 WE WILL PAY THE DEATH BENEFIT PROCEEDS to the Beneficiary if the Insured dies prior to the Maturity Date and while this policy is in force. Payment will be made after We receive due proof of the Insured's death, and will be subject to the terms of this policy. The method for determining the amount payable is stated in the Death Benefit Proceeds provision. WE WILL PAY THE CASH SURRENDER VALUE of this policy to the Owner on the Maturity Date if the Insured is living on that date and if this policy is in force. THE AMOUNT OR DURATION OF THE DEATH BENEFIT PROCEEDS AND THE ACCUMULATION VALUES PROVIDED BY THIS POLICY WHEN BASED ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. ACCUMULATION VALUES MAY INCREASE OR DECREASE. The consideration for this policy is the application and payment of the first premium. The first premium must be paid on or before delivery of this policy. This is a FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY. An adjustable Death Benefit is payable upon the Insured's death prior to the Maturity Date and while this policy is in force. Investment results are reflected in policy benefits. ACCUMULATION VALUES and CASH VALUES are flexible and will be based on the amount and frequency of premiums paid and the investment results of the Separate Account. NON-PARTICIPATING--NOT ELIGIBLE FOR DIVIDENDS. NOTICE OF TEN DAY RIGHT TO EXAMINE POLICY You may return this policy within 10 days after delivery if You are not satisfied with it for any reason. The policy may be returned to Us or to the registered representative through whom it was purchased. Upon surrender of this policy within the ten day period, it will be deemed void from the Date of Issue, and We will refund the greater of: (1) any premiums received by Us; or (2) Your Accumulation Value as of the first Valuation Date occurring on or next following the date on which Your request is received plus any charges that have been deducted. SIGNED AT THE HOME OFFICE ON THE DATE OF ISSUE. /s/ Elizabeth M. Tuck /s/ Rodney O. Martin, Jr. - --------------------------------------- -------------------------------------- Secretary President FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY READ YOUR POLICY CAREFULLY 07704 INDEX Annual Report.................... 20 Monthly Administration Fee....... 11 Cash Surrender Value............. 10 Owner............................ 4 Cash Value....................... 10 Payment Options.................. 17-19 Change of Ownership or Policy Loans..................... Beneficiary.................... 17 15-16 Changing the Death Benefit Option 7 Policy Values.................... 9-13 Changing the Specified Amount.... 6 Premium Expense Charge........... 4 Contract......................... 4 Premium Payments................. 4-5 Cost of Insurance Rate Table..... 22-23 Reinstatement.................... 21 Date of Issue.................... 4 Separate Account Provisions...... 7-9 Death Benefit and Death Benefit Specified Amount................. Options........................ 5-6 6 Death Benefit Corridor Rates..... 34-35 Suicide.......................... 19 Dollar Cost Averaging............ 14-15 Surrender Charges................ 24-29 General Account.................. 9 Surrender, Full and Partial...... 12 General Provisions............... Suspension and Deferral of 19-21 Payments....................... 15 Grace Period..................... 12 Transfer Provision............... 13-15 Incontestability................. 19 Valuation of Assets.............. 7 Investments of the Separate Valuation Dates.................. Account........................ 7 8 Maturity Date.................... 3 Valuation Units.................. 8 When This Policy Terminates...... 20 Company Reference. "We", "Our", "Us", or "Company" mean American General Life Insurance Company. "You", "Your". The words "You" or "Your" mean the Owner of this policy. Home Office. Our office at 2727-A Allen Parkway, Houston, Texas 77019; Mailing Address P.O. Box 4880, Houston, Texas 77210-4880. Payment Processing Center. Our center for processing premium payments at #1 Franklin Square, Springfield, IL 62713-0001; Mailing Address P.O. Box 0842, Carol Stream, IL 60132-0842. Written, In Writing. A written request or notice in acceptable form and content, which is signed and dated, and received at Our Home Office. Premium Class. We may offer any or all of the following Premium Classes. The Premium Class of this policy is shown on the Policy Schedule as one or a combination of the following terms: Preferred Plus. The term "Preferred Plus" means the cost of insurance is based on the Insured being an exceptional mortality risk and a non-user of tobacco and other products that contain nicotine. Preferred. The term "Preferred" means the cost of insurance is based on the Insured being a better than average mortality risk. Standard. The term "Standard" means the cost of insurance is based on the Insured being an average mortality risk. Simplified. The term "Simplified" means the cost of insurance is based on the Insured qualifying for simplified issue underwriting. Guaranteed. The term "Guaranteed" means the cost of insurance is based on the Insured qualifying for guaranteed issue underwriting. Tobacco. The term "Tobacco" means the cost of insurance is based on the Insured being a user of tobacco or other products that contain nicotine. Non-Tobacco. The term "Non-Tobacco" means the cost of insurance is based on the Insured being a non-user of tobacco and other products that contain nicotine. Juvenile. The term "Juvenile" means the Insured's age nearest birthday was 17 or less on the Date of Issue. Cost of insurance rates stated in Juvenile policies for insurance ages 18 and above are rates for users of tobacco or other products that contain nicotine. (Rates are not classified on the basis of the Insured being a user or non-user of tobacco or other products that contain nicotine at ages 0 through 17.) Prior to the policy anniversary nearest the Insured's 18/th/ birthday a request for Non-Tobacco rates may be submitted. See page 23, "Rates on Policy Anniversary Nearest Insured's 18/th/ Birthday." Special. The term "Special" means "Substandard" or "Rated". This means an extra amount is being charged due to the Insured's health, occupation or avocation. NOTICE This Policy Is A Legal Contract Between The Policy Owner And The Company 07704 Page 2 POLICY SCHEDULE INSURED JOHN DOE POLICY NUMBER: 0000000000 ------- -------- -------------------- ------------ INSURANCE AGE...................... 35 DATE OF ISSUE: JULY 1, 2007 BASE COVERAGE...................... $50,000 MATURITY DATE: JULY 1 2072 SUPPLEMENTAL COVERAGE.............. $ 0 INITIAL SPECIFIED AMOUNT........... $50,000 DEATH BENEFIT OPTION 1 THIS IS A [SEX DISTINCT] POLICY BASIC POLICY MONTHLY COST YEARS PAYABLE - ------------ ---------------- ------------- VARIABLE UNIVERSAL LIFE......... SEE PAGE 24 65 PREMIUM CLASS:.................. PREFERRED PLUS/NON-TOBACCO INITIAL PREMIUM:................ $952.39 PLANNED PERIODIC PREMIUM:....... $952.39 PAYABLE ANNUALLY MONTHLY DEDUCTION DAY:.......... 1/st/ DAY OF EACH MONTH MINIMUM DEATH BENEFIT AMOUNT (AFTER A DECREASE IN SPECIFIED AMOUNT):........................ [$50,000] MINIMUM PARTIAL SURRENDER:...... [$500.00] MINIMUM VALUE THAT MAY BE RETAINED IN A DIVISION AFTER A PARTIAL SURRENDER............... [$500.00] ANNUAL EFFECTIVE MONTHLY ---------------- ------------- GUARANTEED INTEREST RATE:....... 3.0% 0.2466% MORTALITY TABLE:................ COMPOSITE 1980 COMMISSIONERS STANDARD ORDINARY MALE OR FEMALE MORTALITY TABLE DEATH BENEFIT COMPLIANCE TEST:.. [GUIDELINE PREMIUM] COVERAGE MAY EXPIRE PRIOR TO THE MATURITY DATE SHOWN WHERE EITHER NO PREMIUMS ARE PAID FOLLOWING PAYMENT OF THE INITIAL PREMIUM, OR SUBSEQUENT PREMIUMS ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH DATE. THIS IS A (STATE NAME) CONTRACT 07704 Page 3 POLICY SCHEDULE CONTINUED - POLICY NUMBER 0000000000 CHARGES DEDUCTED FROM THE SEPARATE ACCOUNT MORTALITY AND EXPENSE CHARGE. DEDUCTIONS FROM THE SEPARATE ACCOUNT WILL BE MADE AT AN ANNUAL RATE NOT TO EXCEED THE RATES STATED BELOW. THE ACTUAL DEDUCTION WILL BE MADE ON A DAILY BASIS. THE INITIAL CURRENT RATE ON A DAILY BASIS IS [0.0005474 %] POLICY YEARS CURRENT ANNUAL RATE GUARANTEED ANNUAL RATE ------------ ------------------- ---------------------- 1-10.......................... [0.20%] 0.70% 11-20......................... [0.00%] 0.35% THEREAFTER.................... [0.00%] 0.15% EXPENSE CHARGES PREMIUM TAX (IF APPLICABLE). DEPENDING ON THE LAWS OF THE JURISDICTION IN WHICH THIS POLICY WAS ISSUED, AND SUBJECT TO FUTURE CHANGES IN RESIDENCE, A PERCENTAGE OF EACH PREMIUM MAY BE DEDUCTED FOR PREMIUM TAX. PREMIUM TAX RATES ARE SUBJECT TO CHANGE. THE PREMIUM TAX RATE FOR THIS POLICY ON THE DATE OF ISSUE IS [0%]. CURRENT GUARANTEED ------- ---------- PREMIUM EXPENSE CHARGE: (ADJUSTABLE PREMIUM EXPENSE CHARGE PERCENTAGE)..................................... [5.0%] 7.5% CURRENT GUARANTEED ------- ---------- MONTHLY ADMINISTRATION FEE:.......................... [$10.00] $10.00 MONTHLY EXPENSE CHARGE FOR THE FIRST THREE YEARS:.... [$28.00] BASIC POLICY CHARGES AND FEES COST OF INSURANCE CHARGES. GUARANTEED MAXIMUM COST OF INSURANCE RATES PER $1,000 OF NET AMOUNT AT RISK ARE SHOWN ON PAGE 24. SURRENDER CHARGES. SURRENDER CHARGES WILL APPLY IF THE POLICY IS SURRENDERED OR THE INITIAL BASE COVERAGE IS REDUCED DURING THE SURRENDER CHARGE PERIOD FOLLOWING THE DATE OF ISSUE. SURRENDER CHARGES WILL ALSO APPLY DURING THE SURRENDER CHARGE PERIOD FOLLOWING AN INCREASE IN BASE COVERAGE. SURRENDER CHARGES APPLICABLE TO THIS POLICY APPEAR ON PAGES 25 AND 26. 07704 Page 3A Contract. Your policy is a legal contract that You have entered into with Us. You have paid the first premium and have submitted an application, a copy of which is attached. In return, We promise to provide the insurance coverage described in this policy. The entire contract consists of: 1. The base policy; 2. The riders that add benefits to the base policy, if any; 3. Endorsements, if any; and 4. The attached copy of Your application, and any amendments or supplemental applications. Date of Issue. The Date of Issue of this policy is the date on which the first premium is due. The Date of Issue is also the date from which all policy years, anniversaries, and Monthly Deduction dates are determined Owner. The Owner is as stated in the application unless later changed. During the Insured's lifetime, the Owner may exercise every right the policy confers or We allow (subject to the rights of any assignee of record). You may have multiple Owners of this policy. In that case, the authorizations of all Owners are required for all policy changes except for transfers, premium allocations and deduction allocations. We will accept the authorization of one Owner for transfers and changes in premium and deduction allocations. The Owner and the Insured may be the same person but do not have to be. If an Owner dies while the policy is in force and the Insured is living, ownership rights pass on to a successor Owner recorded in Our records, if any; otherwise ownership rights pass to the estate of the Owner. PREMIUM PAYMENTS All premiums after the first are payable in advance. Premium payments are flexible. This means You may choose the amount and frequency of payments. The actual amount and frequency of premium payments will affect the Cash Values and the amount and duration of insurance. Please refer to the Policy Values Provision section for a detailed explanation. Planned Periodic Premiums. The amount and frequency of the Planned Periodic Premiums You selected are shown on the Policy Schedule. You may request a change in the amount and frequency. We may limit the amount of any increase. (See "Maximum Premium"). Unscheduled Additional Premiums. You may pay additional premiums at any time before the Maturity Date shown on the Policy Schedule. We may limit the number and amount of additional premiums. (See "Maximum Premium" and "Maximum Net Amount at Risk"). Maximum Premium. We reserve the right to refund any premium that would cause this policy to fail to qualify as life insurance under the Death Benefit Compliance Test selected, and under applicable tax laws. The test selected is shown on the Policy Schedule. Maximum Net Amount at Risk. We reserve the right to refund any premium that would cause an immediate increase in the Net Amount at Risk unless the Insured is living and provides evidence of insurability satisfactory to Us. We may automatically effect a partial surrender or reduce the Death Benefit, both of which may have federal tax consequences, if the Net Amount at Risk exceeds Our limitations. Net Amount at Risk is the excess of the Death Benefit over the Accumulation Value of the policy. Premium Expense Charge. The Premium Expense Charge is calculated by multiplying the premium paid (after the deduction of any state premium tax) by the Premium Expense Charge Percentage. The Premium Expense Charge Percentage is adjustable, but will never be more than the guaranteed Premium Expense Charge Percentage shown on the Policy Schedule. 07704 Page 4 Net Premium. The term Net Premium as used in this policy means "The premium paid, less any applicable state premium tax and less the Premium Expense Charge" except as follows: No Premium Expense Charge will be deducted if the source of the premium is Cash Surrender Values applied from another policy issued by the Company. (We refer to this as an internal rollover). Allocation of Net Premiums. The initial allocation of Net premiums is shown in the application for this policy and will remain in effect until changed by Written notice from the Owner. The percentage allocation for future Net Premiums may be changed at any time by Written notice. The initial Net Premium will be allocated to the money market investment option on the later of the following dates: 1. The Date of Issue; or 2. The date all requirements needed to place the policy in force have been satisfied, including underwriting approval and receipt in the Home Office of the necessary premium. The initial Net Premium will remain in the money market investment option until the first Valuation Date following the 15/th/ day after it was applied. Any additional Net Premiums received prior to the first Valuation date which follows the 15/th/ day after the initial Net Premium was applied will be allocated to the money market investment option until such Valuation Date. At that time, We will transfer the Accumulation Value to the selected investment option(s). Each Net Premium received after such Valuation Date will be applied directly to the selected investment option(s) as of the Business Day received. Changes in the allocation of Net Premiums will be effective on the date We receive the Owner's notice. The allocation may be 100% to any available option or may be divided among several available options in whole percentage points totaling 100%. Where to Pay. You may make Your payments to Us at Our Home Office, Our Payment Processing Center or to an authorized agent. All premium checks must be made payable to the Company. A receipt signed by an officer of the Company will be furnished upon request. DEATH BENEFIT AND DEATH BENEFIT OPTIONS Death Benefit Proceeds. If the Insured dies prior to the Maturity Date and while this policy is in force, We will pay the Death Benefit Proceeds to the Beneficiary. The Death Benefit Proceeds will be subject to: 1. The Death Benefit Option in effect on the date of death; and 2. Any increases or decreases made to the Specified Amount. The Initial Specified Amount is shown on the Policy Schedule. Guidelines for changing the Death Benefit Option or the Specified Amount will be found in "Changing Your Insurance Policy." Any premium received after the date of death will be refunded and will not be included in the Accumulation Value for purposes of calculating the Death Benefit Amount. The Death Benefit Proceeds will be the Death Benefit Amount, after reversing any premium received after the date of death, less any outstanding policy loans and will be subject to the other provisions of the "Beneficiary and Proceeds" section. Death Benefit Compliance Test. Death Benefit Compliance Tests are used to determine if a policy will qualify as life insurance under applicable tax laws. There are two compliance tests which may be used: The Guideline Premium Test and the Cash Value Accumulation Test. The test which You selected when this policy was issued is shown on the Policy Schedule. You cannot change Your election of the Death Benefit Compliance Test after the Date of Issue. Death Benefit Option. The Death Benefit Option which You have chosen is shown on the Policy Schedule as either Option 1, 2 or 3. 07704 Page 5 Option 1. If You have chosen Option 1, the Death Benefit Amount will be the greater of: 1. The Specified Amount on the date of death; or 2. The Accumulation Value on the date of death multiplied by the applicable Death Benefit Corridor Rate. Option 2. If You have chosen Option 2, the Death Benefit Amount will be the greater of: 1. The Specified Amount plus the Accumulation Value on the date of death; or 2. The Accumulation Value on the date of death multiplied by the applicable Death Benefit Corridor Rate. Option 3. If You have chosen Option 3, the Death Benefit Amount will be the amount payable under Option 1 plus the sum of all premiums paid for this policy, including premiums for any riders, less any amounts waived by the Company under a waiver of monthly deduction benefit, except as follows: Premium payments after a partial surrender will not increase the Death Benefit Amount until the sum of premiums paid from the date of the partial surrender exceeds the amount of the partial surrender. Death Benefit Corridor Rates are shown in the table for the Death Benefit Compliance Test which You selected. Specified Amount. The Specified Amount is the total of two types of coverage: Base Coverage and Supplemental Coverage. Base Coverage is subject to Surrender Charges and a 3 year Monthly Expense Charge, but Supplemental Coverage is not. If Supplemental Coverage has been included as a part of the Specified Amount, charges for the Specified Amount will be lower than if the same Specified Amount had been issued without Supplemental Coverage. However, if Supplemental Coverage is included the premium may be higher for various rider(s) attached to Your policy. The amounts of Base Coverage, Supplemental Coverage (if any) and the Initial Specified Amount are shown on the Policy Schedule. CHANGING YOUR INSURANCE POLICY You may request a change in the Specified Amount or Death Benefit Option, subject to Our underwriting requirements, at any time except that a decrease in the Specified Amount may not become effective prior to the end of the first policy year. Your request must be submitted to Our Home Office In Writing. Increasing the Specified Amount. We will require an application and evidence of insurability satisfactory to Us for any increase in the Specified Amount. The proportion of Base to Supplemental Coverage following an increase may be in any proportion as long as Base Coverage is at least 10% of the total Specified Amount. An increase will be effective on the Monthly Deduction Day on or next following the date the application for increase is approved by Us. The effective date will appear in an endorsement to this policy. Decreasing the Specified Amount. Any decrease will go into effect on the Monthly Deduction Day following the Business Day We receive the request. The Death Benefit Amount remaining in effect after any decrease cannot be less than the greater of: 1. The Minimum Death Benefit Amount shown on the Policy Schedule; and 2. Any Death Benefit Amount required to qualify this policy as life insurance under applicable tax laws. Any such decrease will be applied in the following order: 1. Against the Specified Amount provided by the most recent increase, with the decrease applying first to the entire Supplemental Coverage portion of such increase, if any, followed by the Base Coverage portion; 2. Against the next most recent increases successively, with the decrease of each prior increase applying first to the entire Supplemental Coverage portion of such increase, if any, followed by the Base Coverage portion; 07704 Page 6 3. Against the Specified Amount provided under the original application, with the decrease applying first to the entire Supplemental Coverage portion of such amount, if any, followed by the Base Coverage portion. Any reduction in Base Coverage will be subject to any applicable Surrender Charges on a pro-rata basis with the Surrender Charge prior to the reduction in Base Coverage being reduced proportionately. However, if such charge is greater than the Accumulation Value, the Specified Amount decrease will not be allowed. Changing the Death Benefit Option. You may request a change from Option 1 to Option 2, from Option 2 to Option 1 or from Option 3 to Option 1. 1. If You request a change from Option 1 to Option 2: The new Specified Amount will be the Specified Amount, prior to change, less the Accumulation Value as of the effective date of the change, but not less than zero. Any such decrease in Specified Amount will be subject to the same guidelines and restrictions as outlined in the Decreasing the Specified Amount provision. 2. If You request a change from Option 2 to Option 1: The new Specified Amount will be the Specified Amount prior to the change plus the Accumulation Value as of the effective date of the change. The entire increase in the Specified Amount will be applied to the last coverage added (either Base or Supplemental) which has not been removed. For the purpose of this calculation, if the Base and Supplemental Coverages were issued on the same date, We will consider the Supplemental Coverage to have been issued later. 3. If You request a change from Option 3 to Option 1: The Specified Amount will remain unchanged. We will not require evidence of insurability for a change in the Death Benefit Option. The change will go into effect on the Monthly Deduction Day following the date We receive Your request for change. Changing the Terms of Your Policy. Any change in the terms of Your policy must be approved by the President, a Vice President, an Administrative Officer or the Secretary of the Company. No agent has the authority to make any changes or waive any of the terms of Your policy. SEPARATE ACCOUNT PROVISIONS Separate Account. Separate Account VL-R is a segregated investment account established by the Company under Texas law to separate the assets funding the variable benefits for the class of policies to which this policy belongs from the other assets of the Company. That portion of the assets of the Separate Account equal to the policy liabilities shall not be chargeable with liabilities arising out of any other business We may conduct. Income, gains and losses, whether or not realized from assets allocable to the Separate Account are credited to or charged against such Account without regard to Our other income, gains or losses. Investments of the Separate Account. The Separate Account is segmented into Divisions. Each Division invests in a single investment option. Net Premiums will be applied to the Separate Account and allocated to one or more Divisions. The assets of the Separate Account are invested in the investment option(s) listed on the application for this policy. From time to time, We may add additional Divisions. We may also discontinue offering one or more Divisions as provided in the "Rights Reserved by Us" provision. You may make a change in investment selections by filing a Written change form with Our Home Office. You may make transfers to the additional Divisions subject to the rules stated in the "Transfer Provision" section and any new rules or limitations which may apply to such additional Divisions. If shares of any of the investment options become unavailable for investment by the Separate Account, or the Company's Board of Directors deems further investment in these shares inappropriate, the Company may limit further purchase of the shares or may substitute shares of another investment option for shares already purchased under this policy as provided in the "Rights Reserved by Us" provision. Valuation of Assets. The assets of the Separate Account are valued as of each Valuation Date at their fair market value in accordance with Our established procedures. The Separate Account Value as of any Valuation Date prior to the Maturity Date is the sum of Your account values in each Division of the Separate Account as of that date. 07704 Page 7 Valuation Units. In order to determine policy values in the Divisions We use Valuation Units which are calculated separately for each Division. The Valuation Unit value for each Division will vary to reflect the investment experience of the applicable investment option. The Valuation Unit for a Division will be determined on each Valuation Date for the Division by multiplying the Valuation Unit value for the Division on the preceding Valuation Date by the Net Investment Factor for that Division for the current Valuation Date. Net Investment Factor. The Net Investment Factor for each Division is determined by dividing (1) by (2) and subtracting (3), where: (1) is the net asset value per share of the applicable investment option as of the current Valuation Date (plus any per share amount of any dividend or capital gains distribution paid by the investment option since the last Valuation Date); and (2) is the net asset value per share of the shares held in the Division as determined at the end of the previous Valuation Date; and (3) is a factor representing the Mortality and Expense Charge. The net asset value of an investment option's shares held in each Division shall be the value reported to Us by that investment option. Valuation Dates. Valuation of the various Divisions will occur on each Business Day during each month. If the underlying investment option is unable to value or determine the Division's investment in an investment option due to any of the reasons stated in the "Suspension and Deferral of Payments" provision, the Valuation Date for the Division with respect to the unvalued portion shall be the first Business Day that the assets can be valued or determined. Business Day. A Business Day is each day during which the New York Stock Exchange is open for business. We will treat any information or Written communications we receive after the close of a Business Day to have been received as of the next Business Day. For the purpose of collecting daily charges, a Business Day immediately preceded by one or more non-business calendar days will include those non-business days as part of that Business Day. For example, a Business Day which falls on a Monday will consist of a Monday and the immediately preceding Saturday and Sunday. Minimum Value. The Minimum Value that may be retained in a Division after a partial surrender or transfer is shown on the Policy Schedule. If a partial surrender causes the balance in any Division to drop below such minimum amount, the Company reserves the right to transfer the remaining balance to the Money Market Division. If a transfer causes the balance in any Division to drop below the minimum amount, the Company reserves the right to transfer the remaining balance in proportion to the transfer request. Change of Investment Advisor or Investment Objective. Unless otherwise required by law or regulation, the investment advisor or any investment objective may not be changed without Our consent. If required, approval of or change of any investment objective will be filed with the Insurance Department of the state where this policy is being delivered. Rights Reserved by Us. Upon notice to You, this policy may be modified by Us, but only if such modification is necessary to: 1. Operate the Separate Account in any form permitted under the Investment Company Act of 1940 or in any other form permitted by law; 2. Transfer any assets in any Division to another Division, or to one or more other separate accounts; 3. Add, combine or remove Divisions in the Separate Account, or combine the Separate Account with another separate account; 4. Make any new Division available to You on a basis to be determined by Us; 5. Substitute for the shares held by any Division the shares of another Division or the shares of another investment company or any other investment permitted by law; 07704 Page 8 6. Make any changes as required by the Internal Revenue Code, or by any other applicable law, regulation or interpretation in order to continue treatment of this policy as life insurance; 7. Make any changes required to comply with the requirements of any underlying investment option; or 8. Make other changes in this policy that in Our judgment are necessary or appropriate to ensure that this policy continues to qualify for tax treatment as life insurance, or that do not reduce any Cash Surrender Value, Death Benefit Amount, Accumulation Value or other accrued rights or benefits. When required by law, We will obtain Your approval of changes and We will obtain approval from any appropriate regulatory authority. GENERAL ACCOUNT The General Account is a fixed account within Our general assets which We have established for: 1. Any amounts transferred from the Divisions as a result of a loan; or 2. Any amounts the Owner allocated to such Account. The guaranteed interest rate used in calculating Accumulation Values of amounts allocated to the General Account is shown on the Policy Schedule. We can use interest rates greater than the guaranteed rates to calculate Accumulation Values of amounts allocated to the General Account. Interest applied to that portion of the General Account equal to a policy loan will be at an annual effective rate of 3.0%. POLICY VALUES PROVISION Accumulation Value. The Accumulation Value of Your policy is the total of all values in the Divisions of the Separate Account and in the General Account. The Accumulation Value reflects: 1. Net Premiums paid; 2. Monthly Deductions; 3. The investment experience of the Divisions selected less the Mortality and Expense Charge; 4. Amounts allocated to the General Account, including interest earned on amounts in the General Account; 5. Deductions due to partial surrenders and any charges for partial surrenders; and 6. Deductions, if any, resulting from decreases in Specified Amount. Net Premiums are allocated, in accordance with Your instructions, to the General Account or allocated to the selected Divisions of the Separate Account and converted to Valuation Units. On each Monthly Deduction Day, a Monthly Deduction will be made by reducing the unloaned portion of the General Account or redeeming Valuation Units from each applicable Division in the same ratio as the allocation of policy deductions in effect on the Monthly Deduction Day. You must state In Writing in advance how Monthly Deductions should be made if other than this method is to be used. If the unloaned portion of the General Account or the balance in any Division of the Separate Account is insufficient to make a Monthly Deduction in this manner, We will cancel Valuation Units from each applicable Division and reduce the unloaned portion of the General Account in the same ratio the Monthly Deduction bears to the unloaned Accumulation Value of Your policy. The Accumulation Value in any Division is determined by multiplying the value of a Valuation Unit by the number of Valuation Units held under the policy in that Division. 07704 Page 9 The value of the Valuation Units equal to the amount being borrowed from the Separate Account will be transferred to the General Account as of the Business Day that We receive the Written loan request. Valuation Units are surrendered to reflect a partial surrender as of the Business Day that We receive the Written request for partial surrender. On the Date of Issue. The Accumulation Value on the Date of Issue is: 1. The Net Premium received; less 2. The Monthly Deduction for the first policy month (See "How We Calculate a Monthly Deduction"). The first deduction day is the Date of Issue. The Monthly Deduction Day is shown on the Policy Schedule. On Each Monthly Deduction Day. On each Monthly Deduction Day after the Date of Issue, We will determine the Accumulation Value as follows: 1. We will take the Accumulation Value as of the last Monthly Deduction Day; 2. Add the interest earned for the month on the excess of the General Account value on the last Monthly Deduction Day over any partial surrenders and transfers made from the General Account since the last Monthly Deduction Day; 3. Add any investment gain (or subtract any investment loss) on the Divisions of the Separate Account since the last Monthly Deduction Day as measured by the change in the value of the Valuation Units; 4. Add all Net Premiums received since the last Monthly Deduction Day; 5. Subtract any partial surrender made and any charges for partial surrenders since the last Monthly Deduction Day; and 6. Subtract the Monthly Deduction for the policy month following the Monthly Deduction Day. (See "How We Calculate a Monthly Deduction"). On Any Valuation Date Other Than A Monthly Deduction Day. The Accumulation Value on any Valuation Date other than a Monthly Deduction Day will be the sum of: 1. The value of the General Account as of the last Monthly Deduction Day; 2. Less any partial surrenders and any charges for partial surrenders since the last Monthly Deduction Day; 3. Plus all Net Premiums received since the last Monthly Deduction Day; and 4. Plus the sum of the values of the Divisions of the Separate Account as of the last Monthly Deduction Day, plus the amount of any investment gain (or minus any investment loss) on the Divisions since the last Monthly Deduction Day as measured by the change in the value of the Valuation Units. Cash Value. The Cash Value of this policy will be equal to the Accumulation Value less the Surrender Charge, if any. Cash Surrender Value. The Cash Surrender Value of this policy will be equal to the Cash Value less any outstanding policy loans and accrued loan interest. Monthly Deductions May Be Made Only if There Is Sufficient Value. A Monthly Deduction may be made only if the Cash Surrender Value (Accumulation Value less policy loans and accrued loan interest during the first 5 policy years) is equal to or greater than the Monthly Deduction. If the value on a Monthly Deduction Day is not sufficient to meet the Monthly Deduction for the current month, this policy will be subject to the "Grace Period" provision. 07704 Page 10 Surrender Charge. The Surrender Charge applies only to the Base Coverage portion of the Specified Amount. The Surrender Charge for the amount of Base Coverage on the Date of Issue will apply if such Base Coverage is surrendered or reduced during the Surrender Charge Period. Surrender Charges for any increases in Base Coverage will apply if such increases are surrendered or reduced during the Surrender Charge Period of each increase. The Surrender Charge Period will vary according to the Insured's age at issue (or age on the date of an increase) as shown in the Table of Surrender Charges per $1,000 of Base Coverage. You may make a request for surrender at any time during the Insured's lifetime before the Maturity Date. The amount being surrendered or reduced will terminate on the Valuation Date on or next following the date We receive the Written request for surrender or reduction. How We Calculate a Monthly Deduction. Each Monthly Deduction includes: 1. The cost of insurance provided by the base policy; and 2. The cost of insurance for benefits provided by riders, if any; and 3. The Monthly Administration Fee; and 4. During the first 3 policy years, a Monthly Expense Charge. (A Monthly Expense Charge also applies to the amount of any increase in Base Coverage during the first 3 policy years following such increase.) Account Value Enhancement. At the beginning of the 21st policy year (and at the beginning of each policy year thereafter), this policy will be eligible for an Account Value Enhancement ("Enhancement"). The Enhancement amount will be calculated at the end of the policy year by multiplying the unloaned Accumulation Value by the Enhancement Percentage. The Enhancement amount will be allocated using the premium allocation percentages in effect at that time. The annual report that We will send to the Owner for the 20th policy year will indicate the Enhancement Percentage, if any, which will be applied at the end of the 21st policy year. Each annual report that follows will indicate the Enhancement Percentage, if any, for the next policy year. The same Enhancement Percentage will be applied to all policies with the same calendar year of issue and the same policy year. How We Calculate the Cost of Insurance for the Base Policy. We calculate the cost of insurance at the beginning of each policy month on the Monthly Deduction Day. The cost of insurance is determined as follows: 1. Reduce the Death Benefit Amount by the amount of Accumulation Value on the Monthly Deduction Day before the cost of insurance deduction is taken, and after any applicable rider charges, the Monthly Expense Charge, if any, and the Monthly Administration Fee are deducted; 2. Multiply the difference by the cost of insurance rate per $1,000 of Net Amount at Risk as provided in the "Cost of Insurance Rate" provision; and 3. Divide the result by 1000. Net Amount at Risk is an amount equal to the Death Benefit Amount under the base policy less the Accumulation Value. Cost of Insurance for Benefits Provided by Riders. The cost of insurance for benefits provided by riders will be as stated on the Policy Schedule or in an endorsement to this policy. Monthly Administration Fee. An administration fee will be deducted monthly. The amount of the Monthly Administration Fee may be adjusted, but will never be greater than the guaranteed Monthly Administration Fee shown on the Policy Schedule. Monthly Expense Charge. A Monthly Expense Charge will be deducted during the first 3 policy years for the initial amount of Base Coverage, and during the first 3 policy years following any increase in Base Coverage. The Monthly Expense Charge for the first 3 policy years for the initial amount of Base Coverage is shown on the Policy Schedule. The Monthly Expense Charge for the first 3 policy years for any increase in Base Coverage will be provided in an endorsement to this policy. Any decrease in Base Coverage will not change the Monthly Expense Charge then in effect. 07704 Page 11 Cost of Insurance Rate. The cost of insurance rate for the Initial Specified Amount, and for each Specified Amount increase, is based on the Insured's: 1. Gender (if this policy was issued on a Sex Distinct basis); 2. Age nearest birthday on each policy anniversary; and 3. Premium Class associated with the Initial Specified Amount and each increase in the Specified Amount. A table of guaranteed monthly cost of insurance rates is included in this policy. We can use cost of insurance rates that are lower than the guaranteed rates. Any change in rates will apply to all policies in the same rate class as this policy. The rate class of this policy is determined on its Date of Issue according to: 1. The calendar year of issue and policy year; 2. The plan of insurance; 3. The amount of insurance; and 4. The age, gender and Premium Class of the Insured if this policy was issued on a Sex Distinct basis or the age and Premium Class if this policy was issued on a Gender Neutral basis. Changes in Rates, Charges and Fees. This policy does not participate in Our profits or surplus. Any redetermination of the cost of insurance rates, interest rates used in calculating Accumulation Values of amounts allocated to the General Account, Mortality and Expense Charges, Premium Expense Charge Percentage, Enhancement Percentage or Monthly Administration Fee will be based on Our future expectations as to investment earnings, mortality, persistency, expenses, reinsurance costs, and state and federal taxes. We will not change these rates or charges in order to recoup any prior losses. Grace Period. The Grace Period is the 61-day period that follows a Monthly Deduction Day or an annual policy loan interest due date if: 1. There is not enough Cash Surrender Value (Accumulation Value less policy loans and accrued loan interest during the first 5 policy years) to pay the amount due; and 2. The requirements, if applicable, of any Monthly Guarantee Premium Rider attached to the policy have not been met. There is no Grace Period for the Initial Monthly Deduction. If the amount required to keep Your policy in force is not paid by the end of the Grace Period, this policy will terminate without value. However, We will give You at least 31 days notice prior to termination that Your policy is in the Grace Period and advise You of the amount of premium required to keep Your policy in force. Such 31 days prior notice will be sent to You at Your last known address, and to the assignee of record, if any. If death occurs during the Grace Period, Monthly Deductions through the policy month in which death occurred will be deducted from the proceeds. If We receive a surrender request within 31 days after the Grace Period commences, the Cash Surrender Value payable will not be less than the Cash Surrender Value on the Monthly Deduction Day the Grace Period commenced. The Monthly Deduction for the policy month following such Monthly Deduction Day will not be subtracted in the calculation of such Cash Surrender Value. Full Surrender. You may return Your policy to Us and request its Cash Surrender Value at any time during the Insured's lifetime before the Maturity Date. The Cash Surrender Value will be determined as of the Business Day We receive the policy and the Written request for surrender. The Company may delay payment if the Suspension and Deferral of Payments Provision is in effect. Partial Surrender. At any time after the first policy year, You may request withdrawal of a portion of the Cash Surrender Value of the policy. Your request must be made In Writing during the Insured's lifetime before the Maturity Date. The minimum partial surrender is shown on the Policy Schedule. 07704 Page 12 Valuation Units are surrendered to reflect a partial surrender as of the Business Day We receive the Written request for partial surrender. A partial surrender will result in a reduction of the Accumulation Value, Cash Value, and the Death Benefit Amount. The Accumulation and Cash Values will be reduced by the amount of partial surrender benefit. The reduced Death Benefit Amount will be determined in accordance with the "Death Benefit Option" provision. If Your Death Benefit Option is Option 1 or Option 3, the Specified Amount will be reduced by the amount of the partial surrender. If Your Death Benefit Option is Option 2, the Specified Amount will not be reduced by the amount of the partial surrender. The reduction in Specified Amount will be subject to the same guidelines and restrictions as outlined in the "Decreasing the Specified Amount" provision. (The reduced amount will not be less than zero.) The Death Benefit Amount remaining after this reduction must be no less than the Minimum Death Benefit Amount after a Decrease in Specified Amount shown on the Policy Schedule. A partial surrender will result in the cancellation of Valuation Units from each applicable Division and reduction of the unloaned portion of the General Account in the same ratio as the Allocation of Policy Deductions in effect on the date of partial surrender. If the number of Valuation Units in any Division or in the unloaned portion of the General Account is insufficient to make a partial surrender in this manner, We will cancel Valuation Units from each applicable Division and reduce the unloaned portion of the General Account in the ratio the partial surrender request bears to the Cash Surrender Value of Your policy. You must state In Writing in advance how partial surrenders should be made if other than this method is to be used. In addition to the amounts shown in the Table of Surrender Charges, there will also be a charge for each partial surrender not to exceed the lesser of 2.0% of the amount withdrawn or $25. Any partial surrender that causes a reduction in Base Coverage will be subject to any applicable Surrender Charges on a pro-rata basis, and the remaining Surrender Charges will be reduced proportionately. The Company may delay payment if the Suspension and Deferral of Payments Provision is in effect. Continuation of Insurance Coverage if Amount or Frequency of Premium Payments is Reduced or if Premium Payments Are Discontinued. If You reduce the amount or frequency of premium payments, or if You discontinue payment of premiums and do not surrender this policy, We will continue making Monthly Deductions (as long as there is sufficient value to make such deductions) until the Maturity Date. This policy will remain in force until the earliest of the following dates: 1. The Maturity Date (if there is sufficient value to make Monthly Deductions to that date); 2. Full surrender of the policy; 3. The end of the Grace Period; or 4. Death of the Insured. TRANSFER PROVISION Transfer of Accumulation Value. Transfers will be made as of the Business Day We receive the Written transfer request, subject to the restrictions that follow. If You elect to use the transfer privilege, We will not be liable for a transfer made in accordance with Your instructions. We reserve the right to terminate, suspend or modify the transfer privilege, and to charge a $25 fee for each transfer in excess of 12 in a policy year. Transfers under the Dollar Cost Averaging or Automatic Rebalancing programs will not count toward the 12 free transfers. The policy is not designed for professional market timing organizations or other entities using programmed or frequent transfers involving large amounts. We are required by law to monitor all Owners' policies for market timing, and have established procedures to detect potential violations. We will monitor all policies to determine if an Owner requests: 1. An exchange into or out of a variable investment option, except the money market investment option, within 2 calendar weeks of an earlier exchange out of or into that same variable investment option; or 2. Exchanges into and out of, or out of and into, the same variable investment option, except the money market investment option, more than twice in any one calendar quarter. 07704 Page 13 If either of the above transactions occurs, We will suspend such Owner's same day or overnight delivery transfer privileges with notice to prevent market timing efforts. Such notice of suspension will take the form of either a letter mailed to the Owner's last known address, or a telephone call from Us informing the Owner that effective immediately, all same day or overnight delivery transfer privileges have been suspended. The suspension of transfer privileges will last for no more than 6 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. Our procedures will be followed in all circumstances and We will treat all Owners the same. Transfer of Accumulation Value (Separate Account). You may transfer all or part of Your interest in a Division of the Separate Account subject to the following: 1. The minimum amount which may be transferred is $500. 2. If the entire amount in a Division of the Separate Account is not being transferred the minimum which must remain is $500. Transfers between Separate Account Divisions result in the redemption of Valuation Units in one Division and the purchase of Valuation Units in the Division to which the transfer is made. We will not honor Your request for a transfer if the Separate Account is unable to purchase shares of an investment option for any reason. Transfer of Accumulation Value (General Account). A transfer from the General Account to a Division of the Separate Account may be made during the 60 day period following each policy anniversary. The amount that may be transferred will be the greatest of the following amounts: 1. Twenty-five percent (25%) of the unloaned portion of the General Account as of the policy anniversary; 2. The total dollar amount withdrawn from the General Account during the prior policy year (whether the amount withdrawn was a partial surrender for cash or was being transferred to the Separate Account); or 3. $500. Transfer of Accumulation Value (Separate Account) on the Maturity Date. The value of each of the Separate Account Divisions will be transferred to the General Account on the Maturity Date, and the resulting Cash Surrender Value paid to the Owner if the Insured is living on that date. If the underlying investment option cannot be valued, or We cannot determine the Division's investment in an investment option on the scheduled Maturity Date, the unvalued portion shall be valued and transferred on the first Business Day that the assets can be valued or determined. Transfer of Your interest in a Separate Account Division on the Maturity Date will not be subject to a Transfer Fee. Our right to defer payment of values allocated to the General Account for up to 6 months will not apply to values transferred to the General Account under this provision. Telephone Transfer and Allocation Privilege. If We have on file a completed telephone authorization form for telephone transactions, We will allow transfers and the percentage allocation for future Net Premiums and policy deductions to be changed by telephone at any time. We will honor instructions for Telephone Transactions from any person who provides the correct information. There is a risk of possible loss to You if unauthorized persons use this service in Your name. Under Telephone Transactions, We are not liable for any acts or omissions based upon instructions that We reasonably believe to be genuine, including losses arising from errors in the communication of telephone instructions. Dollar Cost Averaging. Dollar Cost Averaging (DCA) is an automatic transfer of funds made periodically prior to the Maturity Date in accordance with Instructions from the Owner. DCA transfers will be made in accordance with the Transfer provisions, except as provided below: 1. DCA transfers may be made: a) On any day of the month except the 29/th/, 30/th/ or 31/st/; b) On a monthly, quarterly, semi-annual or annual basis; and c) From one Separate Account Division to one or more of the other Separate Account Divisions. (The General Account is not eligible for DCA). 07704 Page 14 2. DCA may be elected only if the Accumulation Value at the time of election is $5,000 or more. 3. The minimum amount of each DCA transfer is $100, or the remaining amount in the Separate Account Division from which the DCA transfer is being made, if less. 4. DCA may not begin prior to the first Valuation Date following the 15/th/ day after the initial Net Premium is applied. 5. DCA will end when there is no longer any value in the Separate Account Division from which DCA transfers were being made, or when You request that DCA end. 6. While DCA is active, amounts applied to the DCA Separate Account Division will be available for future dollar cost averaging in accordance with the current DCA request. 7. There is no charge for DCA. 8. DCA is not available if Automatic Rebalancing is active. Automatic Rebalancing. Automatic Rebalancing occurs when funds are transferred by the Company among the Separate Account Divisions so that the values in each Division match the premium allocation percentages then in effect. You may choose Automatic Rebalancing on a quarterly, semi-annual or annual basis if Your Accumulation Value is $5,000 or more. The date Automatic Rebalancing occurs will be based on the Date of Issue of Your policy. 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. After Automatic Rebalancing is elected, it will continue until We are notified In Writing that it is to be discontinued. There is no charge for Automatic Rebalancing. Automatic Rebalancing is not available if DCA is active. SUSPENSION AND DEFERRAL OF PAYMENTS PROVISION We reserve the right to defer payment of any Death Benefit Amount, loan or other distribution that comes from that portion of Your Accumulation Value that is allocated to Separate Account VL-R, if: 1. The New York Stock Exchange is closed other than customary weekend and holiday closings, or trading on the New York Stock Exchange is restricted: 2. An emergency exists, as a result of which disposal of securities is not reasonably practicable or it is not reasonably practicable to fairly determine the Accumulation Value; or 3. The U.S. Securities and Exchange Commission (SEC) by order permits the delay for the protection of Owners. As to amounts allocated to the General Account, We may defer payment of any Cash Surrender Value withdrawal or loan amount for up to 6 months, or the period allowed by law, whichever is less, after We receive the request In Writing. Written notice of both the imposition and termination of any such suspension will be given to the Owners, assignees of record and any irrevocable Beneficiaries. Payments which were due to have been made and which were deferred following the suspension of the calculation of the Cash Surrender Value will be made within thirty (30) days following the lifting of the suspension, and will be calculated based on the Valuation Date which immediately follows termination of the suspension. POLICY LOANS You may borrow from Us at any time while this policy is in force, an amount which is equal to or less than the policy's loan value. The policy's loan value will be the Cash Surrender Value less an amount equal to 3 Monthly Deductions. We reserve the right to limit at any time the amount available for a loan to 90% of the Accumulation Value. The minimum amount of each loan is $500 or, if less, the entire remaining loan value. The value of the Valuation Units equal to the amount You borrow from the Separate Account will be transferred to the General Account as of the Business Day that We receive Your Written loan request. 07704 Page 15 Obtaining a Loan. You may obtain a policy loan by Written request and assignment of the policy as sole security for the loan. The Company may delay processing the loan requested if the Suspension and Deferral of Payments Provision is in effect. Effect of a Loan. When a loan is made, an amount equal to the amount being borrowed from the Separate Account will be transferred to the General Account. A loan will result in cancellation of units from each applicable Division and reduction of the unloaned portion of the General Account according to the allocation of the policy deductions then in effect. The resulting amount will be added to the loaned portion of the General Account. If the number of Valuation Units in any Division or unloaned portion of the General Account is insufficient for a loan to be made in this manner, We will cancel Valuation Units from each applicable Division and reduce the unloaned portion of the General Account in the same ratio the loan bears to the unloaned Accumulation Value of Your policy. You must state in Writing in advance which Division units are to be canceled if a different method is to be used. Repayment of a loan will first be allocated to the General Account until You have repaid any loaned amounts that were allocated to the General Account. You may tell Us how to allocate repayments above that amount. If You do not tell Us, an amount equal to the loan repayment will be transferred from the General Account to the Divisions in the same ratio currently in effect for the allocation of Net Premiums. A loan, whether or not repaid, will have a permanent effect on the Cash Surrender Values and on the death benefits. If not repaid, any indebtedness will reduce the amount of Death Benefit Proceeds and the amount available upon surrender of the policy. Loan Interest. Except for Preferred Loans, loan interest will accrue daily at an annual effective rate of 3.75% due at the end of each policy year. Unpaid loan interest will be deducted at the end of each policy year from the investment options according to the allocation of policy deductions then in effect, and added to the loaned portion of the General Account. You must state In Writing in advance how unpaid loan interest should be deducted if other than this method is to be used. If the number of Valuation Units in any Division or unloaned portion of the General Account is insufficient to deduct unpaid loan interest in this manner, We will cancel Valuation Units from each applicable Division and reduce the unloaned portion of the General Account in the same ratio the unpaid loan interest bears to the unloaned Accumulation Value of Your policy. We will credit interest monthly on the loaned portion of the General Account at an annual effective rate of 3.0%. Preferred Loans. A "Preferred Loan" is a policy loan that is made at a net cost to the Owner that is less than the net cost of other policy loans. By "net cost" We mean the amount of interest charged for the loan less interest credited to the amount of the Accumulation Value offset by a loan. Starting on the tenth policy anniversary, this policy will be eligible for "Preferred Loans" subject to the following guidelines: 1. The maximum amount eligible for Preferred Loans during a policy year is restricted to the lesser of the following values on the first day of such policy year: a. The policy loan value; or b. 10% of the Accumulation Value. 2. When a Preferred Loan is made, interest will accrue daily at an annual effective rate of not less than 3.00% nor more than 3.25% due at the end of each policy year. How You May Repay a Policy Loan. You may repay all or part of a policy loan at any time, except that: 1. Repayment may be made only while this policy is in force and prior to the death of the Insured; 2. A partial repayment must be at least $100.00; and 3. At the time You repay all or part of a policy loan, You must specify the payment is to repay all or part of the policy loan. Except as provided in the Grace Period provision, at any time Your policy loan exceeds the Cash Value, this policy will lapse. However, We must mail at least 31 days prior notice to Your last known address and to the assignee of record, if any. 07704 Page 16 We Can Delay Payment. We can delay lending You money for up to 6 months, or the period allowed by law, whichever is less. However, We cannot delay lending You money if the amount is to be used to pay a premium to Us. BENEFICIARY AND PROCEEDS Beneficiary. The Beneficiary as named in the application, or later changed by You, will receive the proceeds upon the death of the Insured. Unless You have stated otherwise, proceeds will be paid as follows: 1. If any Beneficiary dies before the Insured, that Beneficiary's interest will pass to any other Beneficiaries according to their respective interests. 2. If no Beneficiary survives the Insured, proceeds will be paid to You, as Owner, if You are then living; otherwise proceeds will be paid to Your estate. Common Disaster. If We cannot determine whether a Beneficiary or the Insured died first in a common disaster, We will assume that the Beneficiary died first. Proceeds will be paid on this basis unless an endorsement to this policy provides otherwise. Proceeds. Proceeds mean the amount payable on: 1. The Maturity Date; 2. Exercise of the full surrender benefit; or 3. The Insured's death. The proceeds on the Maturity Date will be the Cash Surrender Value. The proceeds on the Insured's death will be the Death Benefit Amount less any outstanding policy loans. All proceeds and partial surrender benefits are subject to the provisions of the "Payment Options" section and the other provisions of this policy. CHANGE OF OWNERSHIP OR BENEFICIARY You may change the Owner or the Beneficiary at any time during the lifetime of the Insured unless the previous designation provides otherwise. To do so, send a Written request to Our Home Office in a form acceptable to Us. The change will go into effect when We have recorded the change. However, after the change is recorded, it will be deemed effective as of the date of Your Written request for change. The change will be subject to any payment made or action taken by Us before the request is recorded. PAYMENT OPTIONS Instead of being paid in one sum, all or part of the proceeds may be applied under any of the Payment Options described below. In addition to these options, other methods of payment may be chosen with Our consent. Payment Contract. When proceeds become payable under a Payment Option, a Payment Contract will be issued to each payee. The Payment Contract will state the rights and benefits of the payee. It will also name those who are to receive any balance unpaid at the death of the payee. Election of Options. The Owner may elect or change any Payment Option while the Insured is living, subject to the provisions of this policy. This election or change must be In Writing. Within 60 days after the Insured's death, a payee entitled to proceeds in one sum may elect to receive proceeds under any option, subject to the limitations stated in the "Availability of Options" provision. Option 1. Payments for a Specified Period: Equal monthly payments will be made for a specified period. The Option 1 Table in this policy shows the monthly income for each $1,000 of proceeds applied. Option 2. Payments of a Specified Amount: Equal monthly payments of a specified amount will be made. Each payment must be at least $60 a year for each $1,000 of proceeds applied. Payments will continue until the amount applied, with interest, has been paid in full. 07704 Page 17 Option 3. Monthly Payments for Life with Period Certain: Equal monthly payments will be made for a specified period, and will continue after that period for as long as the payee lives. The specified period may be 10, 15 or 20 years. The Option 3 Table in this policy shows the monthly income for each $1,000 of proceeds applied. If issued on a Sex Distinct basis, tables are based on the Annuity 2000 Male or Female Tables adjusted by projection scale G (adjusted by 50% of projection scale G for females and 100% of projection scale G for males) for 20 years, with interest at the rate of 2% per year. If issued on a Gender Neutral basis, tables are based on the Annuity 2000 Male and Female Tables adjusted by projection scale G (adjusted by 50% of projection scale G for females and 100% of projection scale G for males) for 20 years, with Gender Neutral rates based on 60% female and 40% male, and interest at the rate of 2% per year. At the time payments are to begin under this option, the payee may choose one of the following: 1. Monthly payments based on the Option 3 Table; or 2. Monthly payments equal to a monthly annuity based on Our single premium immediate annuity rates then in use. Option 4 Proceeds Left at Interest. Proceeds may be left on deposit with Us for any period up to 30 years. Interest earned on the proceeds may be: 1. Left on deposit to accumulate at the rate of 2% compounded annually; or 2. Paid in installments at the rate for each $1,000 of proceeds of $20 annually, $9.95 semiannually, $4.96 quarterly or $1.65 monthly. Upon the death of the payee, or at the end of the specified period, any balance left on deposit will be paid in a lump sum or under Options 1, 2 or 3. Interest Rates. The guaranteed rate of interest for proceeds held under Payment Options 1, 2, 3 and 4 is 2% compounded annually. We may credit interest at a higher rate. The amount of any increase will be determined by Us. Payments. The first payment under Options 1, 2 and 3 will be made when the claim for settlement has been approved. Payments after the first will be made according to the manner of payment chosen. Interest under Option 4 will be credited from the date of death and paid or added to the proceeds as provided in the Payment Contract. Availability of Options. If the proposed payee is not a natural person, payment options may be chosen only with Our consent. If this policy is assigned, We will have the right to pay the assignee in one sum the amount to which the assignee is entitled. Any balance will be applied according to the option chosen. The amount to be applied under any one option must be at least $2,000. The payment elected under any one option must be at least $20. If the total policy proceeds are less than $2,000 payment will be made in a lump sum. Evidence That Payee is Alive. Before making any payment under a Payment Option, We may ask for proof that the payee is alive. If proof is requested, no payment will be made or considered due until We receive proof. Death of a Payee. If a payee dies, any unpaid balance will be paid as stated in the Payment Contract. If there is no surviving payee named in the Payment Contract, We will pay the estate of the payee: 1. Under Options 1 and 3: The value as of the remaining payments for the specified period as of the date We receive Written notification of death, discounted at the rate of interest used in determining the amount of the monthly payment. 2. Under Options 2 and 4, the balance of any proceeds remaining unpaid with accrued interest, if any. Withdrawal of Proceeds Under Options 1 or 2. If provided in the Payment Contract, a payee will have the right to withdraw the entire unpaid balance under Options 1 or 2. Under Option 1, the amount will be the value of the remaining payments for the specified period discounted at the rate of interest used in determining monthly income. Under Option 2, the amount will be the entire unpaid balance. 07704 Page 18 Withdrawal of Proceeds Under Option 4. A payee will have the right to withdraw proceeds left under Option 4 subject to the following rules: 1. The amount to be withdrawn must be $500 or more; 2. A partial withdrawal must leave a balance on deposit of $1,000 or more. Withdrawals May Be Deferred. We may defer payment of any withdrawal for up to 6 months from the date We receive a withdrawal request. Assignment. Payment Contracts may not be assigned. Change in Payment. The right to make any change in payment is available only if it is provided in the Payment Contract. Claims of Creditors. To the extent permitted by law, proceeds will not be subject to any claims of a Beneficiary's creditors. GENERAL PROVISIONS Assigning Your Policy. During the lifetime of the Insured, You may assign this policy as security for an obligation. We will not be bound by an assignment unless it is received In Writing at Our Home Office. Two copies of the assignment must be submitted. We will retain one copy and return the other. We will not be responsible for the validity of any assignment. Incontestability. We rely on the statements made in the application for the policy and any amendments of application, supplemental applications, and applications for any reinstatements or increases in Specified Amount. These statements, in the absence of fraud, are considered representations and not warranties. No statement may be used in defense of a claim unless it is in such applications. Except as stated below, We cannot contest this policy after it has been in force during the Insured's lifetime for 2 years from the Date of Issue. Exceptions: 1. We cannot contest any claim related to an increase in Specified Amount after such increase has been in effect for 2 years during the Insured's lifetime from the date of issue of such increase. 2. If this policy is reinstated, We cannot contest this policy after it has been in force during the Insured's lifetime for 2 years from the date of reinstatement. We can contest a reinstatement or an increase in Specified Amount for a 2-year period following the date of an increase or reinstatement solely on the basis of the information furnished in the application for such reinstatement or increase. This 2-year limitation does not apply to benefits provided by any Disability or Accidental Death Benefit rider, or to the nonpayment of premium. Suicide Exclusion. If the Insured takes his or her own life, while sane or insane, within 2 years from the Date of Issue, We will limit the Death Benefit Proceeds to the premiums paid less any policy loans and less any partial surrenders paid. If there are any increases in the Specified Amount (see "Changing Your Insurance Policy") a new 2-year period shall apply to each increase beginning on the date of each increase. The Death Benefit Proceeds will be the costs of insurance associated with each increase. When the laws of the state in which this policy is delivered require less than this 2-year period, the period will be as stated in such laws. 07704 Page 19 Age or Gender Incorrectly Stated (Age Incorrectly Stated if Issued on a Gender Neutral Basis). If the: (1) age or gender of the Insured (if this policy was issued on a Sex Distinct basis); or (2) age of the Insured (if this policy was issued on a Gender Neutral basis) has been misstated to Us, We will adjust the excess of the Death Benefit Amount over the Accumulation Value on the date of death to that which would have been purchased by the Monthly Deduction for the policy month of death at the correct cost of insurance rate. By age, We mean age nearest birthday as of the Date of Issue. Statutory Basis of Policy Values. The Cash Values of the policy are not less than the minimum values required by the law of the state where this policy is delivered. The calculation of the Cash Values includes a charge for the cost of insurance, as shown in the Table of Guaranteed Monthly Cost of Insurance Rates and for the General Account interest at the guaranteed annual interest rate shown on the Policy Schedule. Calculation of minimum Cash Values, nonforfeiture benefits and Guaranteed Cost of Insurance rates are based on the Mortality Table shown on the Policy Schedule for the appropriate gender (if this policy was issued on a Sex Distinct basis) and age nearest birthday. A detailed statement of the method of computing values has been filed with the state insurance department where required. No Dividends. This policy will not pay dividends. It will not participate in any of Our surplus or earnings. Annual Report. We will send You at least once a year, without charge, an annual report which will show a summary of all transactions since the last report, including: 1. Premiums paid; 2. Transfers; 3. Expense charges deducted; 4. The cost of insurance deducted; 5. Partial surrender benefits deducted including partial surrender fees; 6. The amount of any outstanding policy loans; 7. Separate Account Unit Values; 8. The current Cash Surrender and Accumulation Values; and 9. The Death Benefit Amount. When This Policy Terminates. This policy will terminate if: 1. You request that this policy be terminated; 2. The Insured dies; 3. The policy matures; or 4. The Grace Period ends and there is insufficient Cash Surrender Value (Accumulation Value less policy loans and accrued loan interest during the first 5 policy years) to cover a Monthly Deduction. 07704 Page 20 Reinstatement. "Reinstating" means placing Your policy in force after it has terminated at the end of the Grace Period. We will reinstate this policy if We receive: 1. Your Written request within 5 years after the end of the Grace Period and before the Maturity Date; and 2. Evidence of insurability satisfactory to Us; and 3. Payment of enough premium to keep the reinstated policy in force for two months; and 4. Payment or reinstatement of any indebtedness. The reinstated policy will be in force from the Monthly Deduction Day on or following the date We approve the reinstatement application. The original Surrender Charge schedule will apply to a reinstated policy. The Accumulation Value at the time of reinstatement will be: 1. The Surrender Charge deducted at the time of lapse (such charge not being greater than the Accumulation Value at the time of lapse before the Surrender Charge was applied); plus 2. The Net Premium allocated in accordance with the premium allocation percentages at the time of lapse unless the reinstatement application provides otherwise, using Unit Values as of the date of reinstatement; plus 3. Any loan repaid or reinstated; less 4. The Monthly Deduction for one month. The dollar amount of any Surrender Charge reinstated will be the same as the dollar amount of Surrender Charge at the time of lapse, and will be reinstated into the Divisions and the General Account from which it was deducted at the time of lapse using Unit Values as of the date of reinstatement. If a person other than the Insured is covered by a rider attached to this policy, coverage will be reinstated according to that rider. Rates on Policy Anniversary Nearest Insured's 18/th/ Birthday (For Insured's age 17 or Less on Date of Issue). If the Insured's age, nearest birthday, is 17 or less on the Date of Issue of this policy, Tobacco rates will be used starting on the policy anniversary nearest the Insured's 18/th/ birthday, except as follows. Prior to the anniversary nearest the Insured's 18/th/ birthday, a Written statement signed by the Insured, may be submitted to the Company requesting that Non-Tobacco rates be made effective. The statement must include the date the Insured last used tobacco or other products that contain nicotine, or state that the Insured has never used tobacco or other products that contain nicotine, whichever applies. If the request is approved, Non-Tobacco rates will be made effective on the policy anniversary nearest the Insured's 18/th/ birthday. Otherwise, Tobacco rates will apply. We will send a notice to the Owner at least 30 days prior to the policy anniversary nearest the Insured's 18/th/ birthday that a request for Non-Tobacco rates may be submitted. 07704 Page 21 AMERICAN GENERAL LIFE Insurance Company A Stock Company This is a FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICY. An adjustable Death Benefit is payable upon the Insured's death prior to the Maturity Date and while this policy is in force. Investment results are reflected in policy benefits. ACCUMULATION VALUES and CASH VALUES are flexible and will be based on the amount and frequency of premiums paid and the investment results of the Separate Account. NON-PARTICIPATING-NOT ELIGIBLE FOR DIVIDENDS. For Information, Service or to make a Complaint Contact your Servicing Agent, or Our VUL Administrative Center 2727-A Allen Parkway P.O. Box 4880 Houston, Texas 77210-4880 1-888-325-9315 07704 EX-99.(E)(4) 4 dex99e4.txt FORM OF VARIABLE UNIVERSAL LIFE INSURANCE SUPPLEMENTAL APPLICATION EXHIBIT (e)(4) [LOGO] AIG American General AIG Income Advantage VUL Variable Universal Life Insurance Supplemental Application American General Life Insurance Company, ("AGL") A member company of American International Group, Inc. Home Office: Houston, Texas - -------------------------------------------------------------------------------- (This supplement must accompany the appropriate application for life insurance.) The supplement and the application will be attached to and made a part of the policy. - -------------------------------------------------------------------------------- Applicant Information -- Supplement to the application on the life of - -------------------------------------------------------------------------------- ----------------------------- ---------------------------------------- Name of proposed insured Date of application for life insurance - -------------------------------------------------------------------------------- Initial Allocation Percentages - -------------------------------------------------------------------------------- Investment Options In the "Premium Allocation" column, indicate how each premium received is to be allocated. In the "Deduction Allocation" column, indicate which investment options are to be used for the deduction of monthly account charges. Total allocations in each column must equal 100%. Use whole percentages only.
PREMIUM DEDUCTION PREMIUM DEDUCTION ALLOCATION ALLOCATION ALLOCATION ALLOCATION ---------- ---------- ---------- ---------- AGL Declared Fixed Interest Account (301) ______% ______% Neuberger Berman Advisers Management Trust AIM Variable Insurance Funds AMT Socially Responsive (724/772-G) ______% ______% AIM V.I. Global Real Estate* (701/749-G) ______% ______% AMT Mid-Cap Growth (725/773-G) ______% ______% AIM V.I. International Growth* (700/748-G) ______% ______% Oppenheimer Variable Account Funds The Alger American Fund Oppenheimer Balanced (726/774-G) ______% ______% Alger American Leveraged AllCap (702/750-G) ______% ______% Oppenheimer Global Securities* (727/775-G) ______% ______% Alger American MidCap Growth (703/751-G) ______% ______% PIMCO Variable Insurance Trust American Century Variable Portfolios, Inc. PIMCO VIT VP Value (704/752-G) ______% ______% CommodityRealReturn Strategy* (728/776-G) ______% ______% Credit Suisse Trust PIMCO VIT Real Return (729/777-G) ______% ______% Small Cap Core I* (705/753-G) ______% ______% PIMCO VIT Short-Term (730/778-G) ______% ______% Dreyfus Variable Investment Fund PIMCO VIT Total Return (731/779-G) ______% ______% Dreyfus VIF International Value* (706/754-G) ______% ______% PIMCO VIT Global Bond (732/780-G) ______% ______% Fidelity Variable Insurance Products Pioneer Variable Contracts Trust VIP Asset Manager (707/755-G) ______% ______% Pioneer Mid Cap Value VCT (733/781-G) ______% ______% VIP Contrafund (708/756-G) ______% ______% Putnam Variable Trust VIP Equity-Income (709/757-G) ______% ______% Putnam VT Diversified Income (734/782-G) ______% ______% VIP Freedom 2020 (710/758-G) ______% ______% Putnam VT Small Cap Value* (735/783-G) ______% ______% VIP Freedom 2025 (711/759-G) ______% ______% SunAmerica Series Trust VIP Freedom 2030 (712/760-G) ______% ______% ST Aggressive Growth (736/784-G) ______% ______% VIP Growth (713/761-G) ______% ______% ST Balanced (737/785-G) ______% ______% VIP Mid Cap (714/762-G) ______% ______% VALIC Company I Franklin Templeton Variable Insurance Products Trust International Equities* (738/786-G) ______% ______% VIP Franklin Small Cap Value Mid Cap Index (739/787-G) ______% ______% Securities* (715/763-G) ______% ______% Money Market I (740/788-G) ______% ______% VIP Mutual Shares Securities (716/764-G) ______% ______% Nasdaq-100(R)Index (741/789-G) ______% ______% Janus Aspen Series Science and Technology (742/790-G) ______% ______% Forty (717/765-G) ______% ______% Small Cap Index* (743/791-G) ______% ______% International Growth* (718/766-G) ______% ______% Stock Index (744/792-G) ______% ______% Mid Cap Growth (719/767-G) ______% ______% Van Kampen Life Investment Trust JP Morgan Asset Management Van Kampen LIT Growth and Income (745/793-G) ______% ______% JP Morgan Insurance Trust Vanguard Variable Insurance Fund Government Bond (720/768-G) ______% ______% Vanguard High Yield Bond (746/794-G) ______% ______% JP Morgan Series Trust II Vanguard REIT Index (747/795-G) ______% ______% International Equity* (721/769-G) ______% ______% MFS Variable Insurance Trust Other: ________________________ ______% ______% MFS VIT New Discovery* (722/770-G) ______% ______% 100% 100% MFS VIT Research (723/771-G) ______% ______% * If you select the Guaranteed Minimum Withdrawal Benefit (GMWB) rider this investment option is designated as a Restricted Fund.
- -------------------------------------------------------------------------------- AGLC102625-2007 Page 1 of 4 - -------------------------------------------------------------------------------- Dollar Cost Averaging (DCA) - -------------------------------------------------------------------------------- Dollar Cost ($5,000 Minimum Beginning Accumulation Value) An amount can be Averaging (DCA) systematically transferred from any one investment option and directed to one or more of the investment options below. The AGL Declared Fixed Interest Account is not available for DCA. Please refer to the prospectus for more information on the DCA option. NOTE: DCA is not available if the Automatic Rebalancing option or GMWB Rider have been chosen. Day of the month for transfers:______________ (Choose a day of the month between 1-28.) Frequency of transfers: [ ] Monthly [ ] Quarterly [ ] Semiannually [ ] Annually DCA to be made from the following investment option: ______________________________ Transfer $__________________ ($100 minimum, Whole Dollars Only) AIM Variable Insurance Funds Neuberger Berman Advisers Management Trust AIM V.I. Global Real Estate (701) $ ________ AMT Socially Responsive (724) $ ________ AIM V.I. International Growth (700) $ ________ AMT Mid-Cap Growth (725) $ ________ The Alger American Fund Oppenheimer Variable Account Funds Alger American Leveraged AllCap (702) $ ________ Oppenheimer Balanced (726) $ ________ Alger American MidCap Growth (703) $ ________ Oppenheimer Global Securities (727) $ ________ American Century Variable Portfolios, Inc. PIMCO Variable Insurance Trust American Century VP Value (704) $ ________ PIMCO VIT Credit Suisse Trust CommodityRealReturn Strategy* (728) $ ________ Small Cap Core I (705) $ ________ PIMCO VIT Real Return (729) $ ________ Dreyfus Variable Investment Fund PIMCO VIT Short-Term (730) $ ________ Dreyfus VIF International Value (706) $ ________ PIMCO VIT Total Return (731) $ ________ Fidelity Variable Insurance Products PIMCO VIT Global Bond (732) $ ________ VIP Asset Manager (707) $ ________ Pioneer Variable Contracts Trust VIP Contrafund (708) $ ________ Pioneer Mid Cap Value VCT (733) $ ________ VIP Equity-Income (709) $ ________ Putnam Variable Trust VIP Freedom 2020 (710) $ ________ Putnam VT Diversified Income (734) $ ________ VIP Freedom 2025 (711) $ ________ Putnam VT Small Cap Value (735) $ ________ VIP Freedom 2030 (712) $ ________ SunAmerica Series Trust VIP Growth (713) $ ________ ST Aggressive Growth (736) $ ________ VIP Mid Cap (714) $ ________ ST Balanced (737) $ ________ Franklin Templeton Variable Insurance Products Trust VALIC Company I VIP Franklin Small Cap Value International Equities (738) $ ________ Securities (715) $ ________ Mid Cap Index (739) $ ________ VIP Mutual Shares Securities (716) $ ________ Money Market I (740) $ ________ Janus Aspen Series Nasdaq-100(R)Index (741) $ ________ Forty (717) $ ________ Science and Technology (742) $ ________ International Growth (718) $ ________ Small Cap Index (743) $ ________ Mid Cap Growth (719) $ ________ Stock Index (744) $ ________ JP Morgan Asset Management Van Kampen Life Investment Trust JP Morgan Insurance Trust Van Kampen LIT Growth and Income (745) $ ________ Government Bond (720) $ ________ Vanguard Variable Insurance Fund JP Morgan Series Trust II Vanguard High Yield Bond (746) $ ________ International Equity (721) $ ________ Vanguard REIT Index (747) $ ________ MFS Variable Insurance Trust Other: ___________________ $ ________ MFS VIT New Discovery (722) $ ________ MFS VIT Research (723) $ ________
- -------------------------------------------------------------------------------- Automatic Rebalancing - -------------------------------------------------------------------------------- Automatic ($5,000 Minimum Beginning Accumulation Value) Variable Rebalancing division assets will be automatically rebalanced based on the premium percentages designated on Page 1 of this form. If the AGL Declared Fixed Interest Account has been designated for premium allocation, the rebalancing will be based on the proportion allocated to the variable divisions. Please refer to the prospectus for more information on the Automatic Rebalancing option. Check Here for Automatic Rebalancing Frequency: [ ] Quarterly [ ] Semiannually [ ] Annually NOTE: Automatic Rebalancing is not available if the DCA option has been chosen. Automatic Rebalancing is required if the GMWB Rider has been selected. - -------------------------------------------------------------------------------- AGLC102625-2007 Page 2 of 4 - -------------------------------------------------------------------------------- Modified Endowment Contract - -------------------------------------------------------------------------------- Contract If any premium payment causes the policy to be classified as a modified endowment contract under Section 7702A of the Internal Revenue Code, there may be potentially adverse tax consequences. Such consequences include: (1) withdrawals or loans being taxed to the extent of gain; and (2) a 10% penalty tax on the taxable amount. In order to avoid modified endowment status, I request any excess premium that could cause such status to be refunded. [ ] YES [ ] NO - -------------------------------------------------------------------------------- Authorization for Transactions - -------------------------------------------------------------------------------- Initial I (or we, if Joint Owners), hereby authorize AGL to act on appropriate telephone instructions or e-service instructions, if elected, to box here: transfer values among the variable divisions and the AGL Declared Fixed Interest Account and to change allocations for future premium payments and monthly deductions given by: [ ] Policy Owner(s)- if Joint Owners, either of us acting independently. [ ] Policy Owner(s) or the Agent/Registered Representative who is appointed to represent AGL and the firm authorized to service my policy. AGL and any person designated by this authorization will not be responsible for any claim, loss or expense based upon telephone instructions and e-service instructions received and acted on in good faith, including losses due to telephone instructions or e-service communication errors. AGL's liability for erroneous transfers and allocations, unless clearly contrary to instructions received, will be limited to correction of the allocations on a current basis. If an error, objection or other claim arises due to a telephone instruction or e-service instruction, I will notify AGL in writing within five working days from receipt of confirmation of the transaction from AGL. I understand that this authorization is subject to the terms and provisions of my variable universal life insurance policy and its related prospectus. This authorization will remain in effect until my written notice of its revocation is received by AGL at its home office. - -------------------------------------------------------------------------------- Suitability - -------------------------------------------------------------------------------- All questions 1. Have you, the Proposed Insured or Owner (if must different), received the variable universal life be answered. insurance policy prospectus and the investment choices brochure describing the investment options? [ ] yes [ ] no 2. Do you understand and acknowledge: a. THAT THE POLICY APPLIED FOR IS VARIABLE, EMPLOYS THE USE OF SEGREGATED ACCOUNTS WHICH MEANS THAT YOU NEED TO RECEIVE AND UNDERSTAND CURRENT PROSPECTUSES FOR THE POLICY AND THE UNDERLYING ACCOUNTS? [ ] yes [ ] no b. THAT ANY BENEFITS, VALUES OR PAYMENTS BASED ON PERFORMANCE OF THE SEGREGATED ACCOUNTS MAY VARY: AND (1) ARE NOT GUARANTEED BY THE COMPANY, ANY OTHER INSURANCE COMPANY, THE U.S. GOVERNMENT OR ANY STATE GOVERNMENT? [ ] yes [ ] no (2) ARE NOT FEDERALLY INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, FEDERAL OR STATE? [ ] yes [ ] no c. THAT IN ESSENCE, ALL RISK IS BORNE BY THE OWNER EXCEPT FOR FUNDS PLACED IN THE AGL DECLARED FIXED INTEREST ACCOUNT? [ ] yes [ ] no d. THAT THE POLICY IS DESIGNED TO PROVIDE LIFE INSURANCE COVERAGE AND TO ALLOW FOR THE ACCUMULATION OF VALUES IN THE SEGREGATED ACCOUNTS? [ ] yes [ ] no e. THE AMOUNT OR DURATION OF THE DEATH BENEFIT MAY INCREASE OR DECREASE, DEPENDING ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT? [ ] yes [ ] no f. THE POLICY VALUES MAY INCREASE OR DECREASE, DEPENDING ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, THE AGL DECLARED FIXED INTEREST ACCOUNT ACCUMULATION, AND CERTAIN EXPENSE DEDUCTIONS? [ ] yes [ ] no 3. Do you believe the Policy you selected meets your insurance and investment objectives and your anticipated financial needs? [ ] yes [ ] no - -------------------------------------------------------------------------------- AGLC102625-2007 Page 3 of 4 - -------------------------------------------------------------------------------- Electronic Delivery Consent - -------------------------------------------------------------------------------- American General Life Insurance Company ("AGL") is capable of providing contract and investment option prospectuses, supplements, statements of additional information, and reports via e-mail or CD-ROM. In order to verify your e-mail receipt of these documents, we must obtain your consent to this type of delivery format. This consent authorizes AGL, with respect to AGL's variable universal life insurance policies, to deliver the following communications via e-mail or CD-ROM: . Contract prospectuses and supplements . Investment option prospectuses and supplements . Statements of additional information . Annual and semi-annual investment option reports This consent to delivery by e-mail or CD-ROM has no expiration date. You may change or cancel your consent at any time by writing to us at American General Life Insurance Company, P.O. Box 4880, Houston, Texas, 77210-4880, Attn: Policy Owner Services. You may also receive a paper copy of any communication at no additional charge by writing to us at the above address. In order to participate in this delivery method you must have access to the following: . A personal computer with CD-ROM hardware and software . Browser software, such as Microsoft Internet Explorer, Netscape Communicator, or equivalent . Communication access to the Internet Should you wish to print materials that have been delivered via e-mail or CD-ROM, you must also have access to a printer. Materials will be published using Portable Document Format (PDF). In order to view PDF documents, you must have Adobe Acrobat Reader software, which is available for download free-of-charge from http://www.adobe.com/products/acrobat/readstep2.html. We reserve the right to mail paper copies instead of providing electronic delivery. In the event that e-mail delivery is unsuccessful, we will mail paper copies. You must notify us every time you change your e-mail address. Your e-mail address will be used solely for AGL's database management regarding the electronic delivery of the communications listed above. Your e-mail address will not be sold or distributed to third parties. By signing this consent, I acknowledge that I have read and understand all of the above-mentioned terms and conditions of this enrollment. I consent to receive electronic delivery of the documents specified above. ----------------------- -------------------------------------- Signature of Owner Please provide your e-mail address If you prefer CD-ROM delivery, please check here [ ] - -------------------------------------------------------------------------------- Signatures - -------------------------------------------------------------------------------- Signatures ---------------------------------------------------------------- Signed at (city, state) ---------------------------------------------------------------- Print name of Broker/Dealer X ----------------------------- --------------------- ------------ Registered representative State license # Date X --------------------------------------------------- ------------ Primary proposed insured Date X --------------------------------------------------- ------------ Owner (If different from Proposed Insured) Date X --------------------------------------------------- ------------ Joint Owner (If applicable) Date - -------------------------------------------------------------------------------- AGLC102625-2007 Page 4 of 4 EX-99.(E)(5) 5 dex99e5.txt FORM OF SERVICE REQUEST FORM EXHIBIT (e)(5) SERVICE REQUEST AIG INCOME ADVANTAGE VUL(SM) AMERICAN GENERAL LIFE AIG Income Advantage VUL(SM) - Fixed Option MFS Variable Insurance Trust . Division 301 - AGL Declared Fixed Interest Account . Division 722/770-G - MFS VIT New Discovery . Division 723/771-G - MFS VIT Research AIG Income Advantage VUL(SM) - Variable Divisions Neuberger Berman Advisers Management Trust AIM Variable Insurance Funds . Division 724/772-G - AMT Socially Responsive . Division 700/748-G - AIM V.I. International Growth . Division 725/773-G - AMT Mid-Cap Growth . Division 701/749-G - AIM V.I. Global Real Estate Oppenheimer Variable Account Funds The Alger American Fund . Division 726/774-G - Oppenheimer Balanced . Division 702/750-G - Alger American Leveraged AllCap . Division 727/775-G - Oppenheimer Global Securities . Division 703/751-G - Alger American MidCap Growth PIMCO Variable Insurance Trust American Century Variable Portfolios, Inc. . Division 728/776-G - PIMCO VIT . Division 704/752-G - VP Value CommodityRealReturnStrategy Credit Suisse Trust . Division 729/777-G - PIMCO VIT Real Return . Division 705/753-G - Small Cap Core I . Division 730/778-G - PIMCO VIT Short-Term . Division 731/779-G - PIMCO VIT Total Return Dreyfus Variable Investment Fund . Division 732/780-G - PIMCO VIT Global Bond . Division 706/754-G - Dreyfus VIF International Value Pioneer Variable Contracts Trust Fidelity Variable Insurance Products . Division 733/781-G - Pioneer Mid Cap Value VCT . Division 707/755-G - VIP Asset Manager Putnam Variable Trust . Division 708/756-G - VIP Contrafund . Division 734/782-G - Putnam VT Diversified Income . Division 709/757-G - VIP Equity-Income . Division 735/783-G - Putnam VT Small Cap Value . Division 710/758-G - VIP Freedom 2020 . Division 711/759-G - VIP Freedom 2025 SunAmerica Series Trust . Division 712/760-G - VIP Freedom 2030 . Division 736/784-G - ST Aggressive Growth . Division 713/761-G - VIP Growth . Division 737/785-G - ST Balanced . Division 714/762-G - VIP Mid Cap VALIC COMPANY I Franklin Templeton Variable Insurance Products Trust . Division 738/786-G - International Equities . Division 715/763-G - VIP Franklin Small Cap . Division 739/787-G - Mid Cap Index Value Securities . Division 740/788-G - Money Market I . Division 716/764-G - VIP Mutual Shares Securities . Division 741/789-G - Nasdaq-100(R) Index . Division 742/790-G - Science and Technology Janus Aspen Series . Division 743/791-G - Small Cap Index . Division 717/765-G - Forty . Division 744/792-G - Stock Index . Division 718/766-G - International Growth . Division 719/767-G - Mid Cap Growth Van Kampen Life Investment Trust . Division 745/793-G - Van Kampen LIT Growth JP Morgan Asset Management and Income . Division 720/768-G - JP Morgan Insurance Trust Government Bond Vanguard Variable Insurance Fund . Division 721/769-G - JP Morgan Series Trust II . Division 746/794-G - Vanguard High Yield Bond International Equity . Division 747/795-G - Vanguard REIT Index
AGLC102769 Rev0907 [LOGO] AIG American General Variable Universal Life Insurance Service Request Complete and return this request to: Variable Universal Life Operations American General Life Insurance Company ("AGL") PO Box 4880 . Houston, TX. 77210-4880 A member company of American International Group Inc. (800) 340-2765 or Hearing Impaired (TDD) (888) 436-5258 . Fax: (713) 620-6653 - ------------------------------------------------------------------------------------------------------------------------------------ [ ] POLICY 1. POLICY #: _________________________________________ INSURED: _______________________________________ IDENTIFICATION ADDRESS: ____________________________________________________________________ New Address (yes) (no) COMPLETE THIS SECTION FOR ALL REQUESTS. Primary Owner (If other than an insured): _______________________________________ Address: _____________________________________________________________________ New Address (yes) (no) Primary Owner's S.S. No. or Tax I.D. No. _____________ Phone Number: ( ) ___________-____________ Joint Owner (If applicable): _________________________________________________ Address: _____________________________________________________________________ New Address (yes) (no) - ------------------------------------------------------------------------------------------------------------------------------------ [ ] NAME CHANGE 2. Change Name Of: (Circle One) Insured Owner Payor Beneficiary Complete this section if Change Name From: (First, Middle, Last) Change Name To: (First, Middle, Last) the name of one of the Insured, Owner, Payor or _________________________________________________ _________________________________________________ Beneficiary has changed. (Please note, this does Reason for Change: (Circle One) Marriage Divorce Correction Other (Attach copy of legal proof) not change the Insured, Owner, Payor or Beneficiary designation). - ------------------------------------------------------------------------------------------------------------------------------------ [ ] CHANGE IN ALLOCATION 3. INVESTMENT DIVISION PREM % DED % PERCENTAGES (301) AGL Declared Fixed Interest Account ______ ______ Use this section to indicate how premiums or AIM Variable Insurance Funds monthly deductions are to (700/748-G) AIM V.I. International Growth* ______ ______ be allocated. Total (701/749-G) AIM V.I. Global Real Estate* ______ ______ allocation in each column must equal 100%; whole The Alger American Fund numbers only. (702/750-G) Alger American Leveraged AllCap ______ ______ (703/751-G) Alger American MidCap Growth ______ ______ American Century Variable Portfolios, Inc. (704/752-G) VP Value ______ ______ Credit Suisse Trust (705/753-G) Small Cap Core I* ______ ______ Dreyfus Variable Investment Fund (706/754-G) Dreyfus VIF International Value* ______ ______ Fidelity Variable Insurance Products (707/755-G) VIP Asset Manager ______ ______ (708/756-G) VIP Contrafund ______ ______ (709/757-G) VIP Equity-Income ______ ______ (710/758-G) VIP Freedom 2020 ______ ______ (711/759-G) VIP Freedom 2025 ______ ______ (712/760-G) VIP Freedom 2030 ______ ______ (713/761-G) VIP Growth ______ ______ (714/762-G) VIP Mid Cap ______ ______ Franklin Templeton Variable Insurance Products Trust (715/763-G) VIP Franklin Small Cap Value Securities* ______ ______ (716/764-G) VIP Mutual Shares Securities ______ ______ Janus Aspen Series (717/765-G) Forty ______ ______ (718/766-G) International Growth* ______ ______ (719/767-G) Mid Cap Growth ______ ______ JP Morgan Asset Management (720/768-G) JP Morgan Insurance Trust Government Bond ______ ______ (721/769-G) JP Morgan Series Trust II International Equity* ______ ______ MFS Variable Insurance Trust (722/770-G) MFS VIT New Discovery ______ ______ (723/771-G) MFS VIT Research ______ ______ Neuberger Berman Advisers Management Trust (724/772-G) AMT Socially Responsive ______ ______ (725/773-G) AMT Mid-Cap Growth ______ ______ Oppenheimer Variable Account Funds (726/774-G) Oppenheimer Balanced ______ ______ (727/775-G) Oppenheimer Global Securities* ______ ______ PIMCO Variable Insurance Trust (728/776-G) PIMCO VIT CommodityRealReturnStrategy* ______ ______ (729/777-G) PIMCO VIT Real Return ______ ______ (730/778-G) PIMCO VIT Short-Term ______ ______ (731/779-G) PIMCO VIT Total Return ______ ______ (732/780-G) PIMCO VIT Global Bond ______ ______ Pioneer Variable Contracts Trust (733/781-G) Pioneer Mid Cap Value VCT ______ ______ Putnam Variable Trust (734/782-G) Putnam VT Diversified Income ______ ______ (735/783-G) Putnam VT Small Cap Value* ______ ______ SunAmerica Series Trust (736/784-G) ST Aggressive Growth ______ ______ (737/785-G) ST Balanced ______ ______ VALIC Company I (738/786-G) International Equities* ______ ______ (739/787-G) Mid Cap Index ______ ______ (740/788-G) Money Market I ______ ______ (741/789-G) Nasdaq-100(R) Index ______ ______ (742/790-G) Science and Technology ______ ______ (743/791-G) Small Cap Index* ______ ______ (744/792-G) Stock Index ______ ______ Van Kampen Life Investment Trust (745/793-G) Van Kampen LIT Growth and Income ______ ______ Vanguard Variable Insurance Fund (746/794-G) Vanguard High Yield Bond ______ ______ (747/795-G) Vanguard REIT Index ______ ______ Other:_______________________ ______ ______ 100% 100% * If you have the Guaranteed Minimum Withdrawal Benefit (GMWB) Rider this investment option is designated as a Restricted Fund. - ------------------------------------------------------------------------------------------------------------------------------------
AGLC102769 Page 2 of 5 Rev0907 - ------------------------------------------------------------------------------------------------------------------------------------ [ ] MODE OF PREMIUM 4. Indicate frequency and premium amount desired: $_______ Annual $_______ Semi-Annual $______ Quarterly PAYMENT/BILLING METHOD CHANGE $_________ Monthly (Bank Draft Only) Use this section to Indicate billing method desired: ______ Direct Bill ______ Pre-Authorized Bank Draft change the billing (attach a Bank Draft Authorization Form frequency and/or method and "Void" Check) of premium payment. Note, however, that AGL will Start Date: ______/ ______/ ______ not bill you on a direct monthly basis. Refer to your policy and its related prospectus for further information concerning minimum premiums and billing options. - ------------------------------------------------------------------------------------------------------------------------------------ [ ] LOST POLICY 5. I/we hereby certify that the policy of insurance for the listed policy has been ________ LOST _______ CERTIFICATE DESTROYED ________ OTHER. Complete this section if Unless I/we have directed cancellation of the policy, I/we request that a: applying for a Certificate of Insurance ______ Certificate of Insurance at no charge or duplicate policy to replace a lost or ______ Full duplicate policy at a charge of $25 misplaced policy. If a full duplicate policy is be issued to me/us. If the original policy is located, I/we will return the Certificate or duplicate being requested, a check policy to AGL for cancellation. or money order for $25 payable to AGL must be submitted with this request. - ------------------------------------------------------------------------------------------------------------------------------------ [ ] DOLLAR COST 6. Day of the month for transfers ________ (Chose a day of the month between 1-28) AVERAGING (DCA) Frequency of transfers: _______ Monthly _______ Quarterly _______ Semi-Annually _______ Annually ($5,000 MINIMUM DCA to be made from the following investment option: __________________________________________ BEGINNING ACCUMULATION Transfer: $__________________________ ($100 minimum, whole dollars only) VALUE) (301) AGL Declared Fixed Interest Account $ __________ An amount can be systematically AIM Variable Insurance Funds transferred from any one (700) AIM V.I. International Growth* $ __________ investment option and (701) AIM V.I. Global Real Estate* $ __________ directed to one or more of the investment options The Alger American Fund below. The AGL Declared (702) Alger American Leveraged AllCap $ __________ Fixed Interest Account is (703) Alger American MidCap Growth $ __________ not available for DCA. Please refer to the American Century Variable Portfolios, Inc. prospectus for more (704) VP Value $ __________ information on the DCA option. Credit Suisse Trust (705) Small Cap Core I* $ __________ NOTE: DCA is not available if the Dreyfus Variable Investment Fund Automatic Rebalancing (706) Dreyfus VIF International Value* $ __________ option or GMWB rider have been chosen. Fidelity Variable Insurance Products (707) VIP Asset Manager $ __________ (708) VIP Contrafund $ __________ (709) VIP Equity-Income $ __________ (710) VIP Freedom 2020 $ __________ (711) VIP Freedom 2025 $ __________ (712) VIP Freedom 2030 $ __________ (713) VIP Growth $ __________ (714) VIP Mid Cap $ __________ Franklin Templeton Variable Insurance Products Trust (715) VIP Franklin Small Cap Value Securities* $ __________ (716) VIP Mutual Shares Securities $ __________ Janus Aspen Series (717) Forty $ __________ (718) International Growth* $ __________ (719) Mid Cap Growth $ __________ JP Morgan Asset Management (720) JP Morgan Insurance Trust Government Bond $ __________ (721) JP Morgan Series Trust II International Equity* $ __________ MFS Variable Insurance Trust (722) MFS VIT New Discovery $ __________ (723) MFS VIT Research $ __________ Neuberger Berman Advisers Management Trust (724) AMT Socially Responsive $ __________ (725) AMT Mid-Cap Growth $ __________ Oppenheimer Variable Account Funds (726) Oppenheimer Balanced (727) Oppenheimer Global Securities* $ __________ PIMCO Variable Insurance Trust (728) PIMCO VIT CommodityRealReturnStrategy* $ __________ (729) PIMCO VIT Real Return $ __________ (730) PIMCO VIT Short-Term $ __________ (731) PIMCO VIT Total Return $ __________ (732) PIMCO VIT Global Bond $ __________ Pioneer Variable Contracts Trust (733) Pioneer Mid Cap Value VCT $ __________ Putnam Variable Trust (734) Putnam VT Diversified Income $ __________ (735) Putnam VT Small Cap Value* $ __________ SunAmerica Series Trust (736) ST Aggressive Growth $ __________ (737) ST Balanced $ __________ VALIC Company I (738) International Equities* $ __________ (739) Mid Cap Index $ __________ (740) Money Market I $ __________ (741) Nasdaq-100(R) Index $ __________ (742) Science and Technology $ __________ (743) Small Cap Index* $ __________ (744) Stock Index $ __________ Van Kampen Life Investment Trust (745) Van Kampen LIT Growth and Income $ __________ Vanguard Variable Insurance Fund (746) Vanguard High Yield Bond $ __________ (747) Vanguard REIT Index $ __________ Other:___________________________ $ __________ _________ INITIAL HERE TO REVOKE DCA ELECTION. - ------------------------------------------------------------------------------------------------------------------------------------
AGLC102769 Page 3 of 5 Rev0907 - ------------------------------------------------------------------------------------------------------------------------------------ [ ] AUTOMATIC REBALANCING 7. Indicate frequency: _____ Quarterly _____ Semi-Annually _____ Annually ($5,000 minimum (Division Name or Number) (Division Name or Number) accumulation value) Use __________%: __________________________________ __________%: __________________________________ this section to apply for or make changes to __________%: __________________________________ __________%: __________________________________ Automatic Rebalancing of the variable divisions. __________%: __________________________________ __________%: __________________________________ Please refer to the prospectus for more __________%: __________________________________ __________%: __________________________________ information on the Automatic Rebalancing __________%: __________________________________ __________%: __________________________________ Option. __________%: __________________________________ __________%: __________________________________ Note: Automatic Rebalancing is not __________%: __________________________________ __________%: __________________________________ available if the Dollar Cost Averaging option has __________%: __________________________________ __________%: __________________________________ been chosen. Automatic Rebalancing is required if __________%: __________________________________ __________%: __________________________________ the GMWB Rider has been chosen. __________%: __________________________________ __________%: __________________________________ __________%: __________________________________ __________%: __________________________________ __________ INITIAL HERE TO REVOKE AUTOMATIC REBALANCING ELECTION. - ------------------------------------------------------------------------------------------------------------------------------------ [ ] AUTHORIZATION FOR 8. I (or we, if Joint Owners) hereby authorize AGL to act on telephone instructions or e-service TRANSACTIONS instructions, if elected, to transfer values among the Variable Divisions and AGL Declared Fixed Interest Account and to change allocations for future premium payments and monthly deductions. Complete this section if you are applying for or Initial the designation you prefer: revoking current telephone or e-service ______ Policy Owner(s) only - If Joint Owners, either one acting independently. privileges. ______ Policy Owner(s) or Agent/Registered Representative who is appointed to represent AGL and the firm authorized to service my policy. AGL and any persons designated by this authorization will not be responsible for any claim, loss or expense based upon telephone instructions or e-service instructions received and acted on in good faith, including losses due to telephone instructions or e-service communication errors. AGL's liability for erroneous transfers and allocations, unless clearly contrary to instructions received, will be limited to correction of the allocations on a current basis. If an error, objection or other claim arises due to a telephone instruction or e-service instruction, I will notify AGL in writing within five working days from receipt of confirmation of the transaction from AGL. I understand that this authorization is subject to the terms and provisions of my variable universal life insurance policy and its related prospectus. This authorization will remain in effect until my written notice of its revocation is received by AGL in its home office. ______ INITIAL HERE TO REVOKE TELEPHONE PRIVILEGE AUTHORIZATION. ______ INITIAL HERE TO REVOKE E-SERVICE PRIVILEGE AUTHORIZATION. - ------------------------------------------------------------------------------------------------------------------------------------ [ ] CORRECT AGE 9. Name of Insured for whom this correction is submitted: ______________________________ Use this section to Correct DOB: ______/ _____/ ______ correct the age of any person covered under this policy. Proof of the correct date of birth must accompany this request. - ------------------------------------------------------------------------------------------------------------------------------------ [ ] TRANSFER OF 10. (Division Name or Number) (Division Name or Number) ACCUMULATED VALUES Transfer $ _______ or _________% from _____________________________ to ____________________________. Use this section if you want to move money Transfer $ _______ or _________% from _____________________________ to ____________________________. between divisions. The minimum amount for Transfer $ _______ or _________% from _____________________________ to ____________________________. transfers is $500.00. Withdrawals from the AGL Transfer $ _______ or _________% from _____________________________ to ____________________________. Declared Fixed Interest Account to a Variable Transfer $ _______ or _________% from _____________________________ to ____________________________. Division may only be made within the 60 days after Transfer $ _______ or _________% from _____________________________ to ____________________________. a contract anniversary. See transfer limitations Transfer $ _______ or _________% from _____________________________ to ____________________________. outlined in prospectus. If a transfer causes the Transfer $ _______ or _________% from _____________________________ to ____________________________. balance in any division to drop below $500, AGL Transfer $ _______ or _________% from _____________________________ to ____________________________. reserves the right to transfer the remaining Transfer $ _______ or _________% from _____________________________ to ____________________________. balance. Amounts to be transferred should be indicated in dollar or percentage amounts, maintaining consistency throughout. - ------------------------------------------------------------------------------------------------------------------------------------
AGLC102769 Page 4 of 5 Rev0907 - ------------------------------------------------------------------------------------------------------------------------------------ [ ] REQUEST FOR 11. ________ I request a partial surrender of $ ____________ or ______% of the net cash surrender value. PARTIAL SURRENDER/ POLICY LOAN ________ I request a loan in the amount of $_______________. Use this section to apply ________ I request the maximum loan amount available from my policy. for a partial surrender from or policy loan Unless you direct otherwise below, proceeds are allocated according to the deduction allocation against policy values. percentages in effect, if available; otherwise they are taken pro-rata from the AGL Declared Fixed For detailed information Interest Account and Variable Divisions in use. concerning these two options please refer to ____________________________________________________________________________________________________ your policy and its related prospectus. If ____________________________________________________________________________________________________ applying for a partial surrender, be sure to ____________________________________________________________________________________________________ complete the Notice of Withholding section of this Service Request in addition to this section. - ------------------------------------------------------------------------------------------------------------------------------------ [ ] NOTICE OF 12. The taxable portion of the distribution you receive from your variable universal life insurance WITHHOLDING policy is subject to federal income tax withholding unless you elect not to have withholding apply. Withholding of state income tax may also be required by your state of residence. You may elect not Complete this section if to have withholding apply by checking the appropriate box below. If you elect not to have you have applied for a withholding apply to your distribution or if you do not have enough income tax withheld, you may be partial surrender in responsible for payment of estimated tax. You may incur penalties under the estimated tax rules, if Section 11. your withholding and estimated tax are not sufficient. Check one: I do want income tax withheld from this distribution. ------ I do not want income tax withheld from this distribution. ------ If no election is made, we are REQUIRED to withhold Federal Income Tax (if applicable). - ------------------------------------------------------------------------------------------------------------------------------------ ___________________________________________________________________________________________________ [ ] AFFIRMATION/ SIGNATURE 13. CERTIFICATION: Under penalties of perjury, I certify: (1) that the number shown on this form is my correct taxpayer identification number and; (2) that I am not subject to backup withholding under Complete this section for Section 3406(a)(1)(C) of the Internal Revenue Code. ALL requests. The Internal Revenue Service does not require your consent to any provision of this document other than the certification required to avoid backup withholding. ___________________________________________________________________________________________________ Dated at _____________________________ this _________ day of ______________________, _____________. (City, State) X X ------------------------------------------------- ------------------------------------------------ SIGNATURE OF OWNER SIGNATURE OF WITNESS X X ------------------------------------------------- ------------------------------------------------ SIGNATURE OF JOINT OWNER SIGNATURE OF WITNESS X X ------------------------------------------------- ------------------------------------------------ SIGNATURE OF ASSIGNEE SIGNATURE OF WITNESS - ------------------------------------------------------------------------------------------------------------------------------------
AGLC102769 Page 5 of 5 Rev0907 EX-99.(H)(5)(B) 6 dex99h5b.txt DREYFUS FOURTH AMENDMENT TO FUND PARTICIPATION AGREEMENT EFFECTIVE AS OF 10-1-07 EXHIBIT (h)(5)(b) FOURTH AMENDMENT TO FUND PARTICIPATION AGREEMENT The Fund Participation Agreement dated June 1, 1998 (the "Agreement") between American General Life Insurance Company ("Insurance Company") and each of Dreyfus Variable Investment Fund, The Dreyfus Socially Responsible Growth Fund, Inc., Dreyfus Stock Index Fund, Inc. (formerly known as "Dreyfus Life and Annuity Index Fund, Inc. [d/b/a Dreyfus Stock Index Fund]"), and Dreyfus Investment Portfolios is hereby amended as follows: 1. Exhibit A to the Agreement, a revised copy of which is attached hereto, is hereby amended to add Dreyfus Variable Investment Fund International Value Portfolio effective as of October 1, 2007. 2. That certain Amendment to Fund Participation Agreement effective October 31, 2003 ("Amendment") contained certain inaccuracies pertaining to (i) the date of the Agreement as referenced in the first paragraph which is hereby corrected to June 1, 1998 and (ii) separate account designations in paragraph 1.12 as set forth in paragraph (2) of the Amendment. The parties to the Agreement as referenced above hereby agree that the Amendment is applicable to the Agreement dated June 1, 1998. In addition, paragraph 1.12 is hereby deleted in its entirety and replaced with the following in order to correct the separate account designations: "'Separate Account' shall mean the American General Life Insurance Company Separate Account VL-R and the American General Life Insurance Company Separate Account D, both separate accounts established by Insurance Company in accordance with the laws of the State of Texas." 3. The New York Stock Exchange and National Association of Securities Dealers, Inc. have been consolidated into a new self-regulatory body called Financial Industry Regulatory Authority. Any and all references to New York Stock Exchange or NYSE and National Association of Securities Dealers, Inc. or NASD in the Agreement shall be changed to Financial Industry Regulatory Authority or FINRA, as appropriate. 4. American General Equity Services Corporation ("AGESC"), a Delaware corporation, is registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, and under any appropriate regulatory requirements of State law, and is a member in good standing of Financial Industry Regulatory Authority ("FINRA"), and is an affiliate of American General Securities Incorporated ("AGSI") and Insurance Company. AGESC ultimately replaced AGSI as distributor of the Contracts pursuant to a Distribution Agreement dated October 1, 2002. Therefore, all references to American General Securities Incorporated or AGSI in the Agreement shall be changed to American General Equity Services Corporation or AGESC, as appropriate, effective as of such date. 1 5. All other terms and provisions of the Agreement not amended herein shall remain in full force and effect. IN WITNESS WHEREOF, the parties have hereunto affixed their respective authorized signatures, intending that this Fourth Amendment be effective as of the 1st day of October, 2007. AMERICAN GENERAL LIFE INSURANCE COMPANY ATTEST: By: By: ------------------------------- ------------------------------- Name: Name: ------------------------------- ------------------------------- Title: Title: ------------------------------- ------------------------------- (Corporate Seal) ON BEHALF OF THOSE DREYFUS FUNDS LISTED ABOVE AS PARTIES TO THE AGREEMENT By: ------------------------- Name: Michael A. Rosenberg ------------------------- Title: Secretary ------------------------- 2 EXHIBIT A LIST OF PARTICIPATING FUNDS (as of October 1, 2007) Dreyfus Investment Portfolios MidCap Stock Portfolio Dreyfus Variable Investment Fund Developing Leaders Portfolio (formerly Small Cap Portfolio) International Value Portfolio Quality Bond Portfolio The Dreyfus Socially Responsible Growth Fund, Inc. 3 EX-99.(H)(6)(A) 7 dex99h6a.txt FIDELITY AMENDED AND RESTATED PA EXHIBIT (h)(6)(a) AMENDED AND RESTATED PARTICIPATION AGREEMENT Among VARIABLE INSURANCE PRODUCTS FUNDS, FIDELITY DISTRIBUTORS CORPORATION and AMERICAN GENERAL LIFE INSURANCE COMPANY THIS AMENDED AND RESTATED AGREEMENT, made and entered into as of the __ day of ____ , 2007 by and among American General Life Insurance Company, (hereinafter the "Company"), a Texas corporation, on its own behalf and on behalf of each segregated asset account of the Company set forth on Schedule A hereto as may be amended from time to time (each such account hereinafter referred to as the "Account"); and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the "Underwriter"), a Massachusetts corporation; and each of VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II, VARIABLE INSURANCE PRODUCTS FUND III and VARIABLE INSURANCE PRODUCTS FUND IV and VARIABLE INSURANCE PRODUCTS FUND V each an unincorporated business trust organized under the laws of the Commonwealth of Massachusetts (each referred to hereinafter as the "Fund"). RECITALS WHEREAS, each Fund engages in business as an open-end management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts (collectively, the "Variable Insurance Products") and qualified pension and retirement plans within the meaning of Treasury Regulation section 1.817-5(f)(3)(iii) ("Qualified Plans") to be offered by insurance companies which have entered into participation agreements with the Fund and the Underwriter (hereinafter "Participating Insurance Companies"); and WHEREAS, the beneficial interest in each Fund is divided into several series of shares, each representing the interest in a particular managed portfolio of securities and other assets, any one or more of which may be made available under this Agreement, as may be amended from time to time by mutual agreement of the parties hereto (each such series hereinafter referred to as a "Portfolio"); and 1 WHEREAS, each Fund has obtained an order from the Securities and Exchange Commission, dated October 15, 1985 (File No. 812-6102) or September 17, 1986 (File No. 812-6422), granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended, (hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15) thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive Order"); and WHEREAS, each Fund is registered as an open-end management investment company under the 1940 Act and its shares are registered under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly registered as an investment adviser under the federal Investment Advisers Act of 1940 and any applicable state securities law; and WHEREAS, the variable life insurance and/or variable annuity products identified on Schedule A hereto ("Contracts") have been or will be registered by the Company under the 1933 Act, unless such Contracts are exempt from registration thereunder; and WHEREAS, each Account is a duly organized, validly existing segregated asset account, established by resolution of the Board of Directors of the Company, on the date shown for such Account on Schedule A hereto, to set aside and invest assets attributable to the aforesaid Contracts; and WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act, unless such Account is exempt from registration thereunder; and WHEREAS, the Underwriter is registered as a broker dealer with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good standing of the Financial Industry Regulatory Authority (hereinafter "FINRA"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in the Portfolios on behalf of each Account to fund certain of the aforesaid Contracts and the Underwriter is authorized to sell such shares to each Account at net asset value; 2 AGREEMENT NOW, THEREFORE, in consideration of their mutual promises, the Company, the Underwriter and each Fund agree as follows: ARTICLE A. Amendment and Restatement; Form of Agreement This agreement shall amend and supersede the following Agreements as of the date stated above among the Funds, Underwriter and Company with respect to all investments by the Company or its separate accounts in each Fund prior to the date of this Agreement, as though identical separate agreements had been executed by the parties hereto on the dates as indicated below. 1. Participation Agreement dated 10/02/2000 among Company , Underwriter and Variable Insurance Product Fund. 2. Participation Agreement dated 10/02/2000 among Company ,Underwriter and Variable Insurance Product Fund II 3. Participation Agreement dated 04/30/2003 among Company ,Underwriter and Variable Insurance Product Fund III In addition, the parties hereby amend and restate their agreements herein. Although the parties have executed this Agreement in the form of a Master Participation Agreement for administrative convenience, this Agreement shall create a separate participation agreement for each Fund, as though the Company and the Underwriter had executed a separate, identical form of participation agreement with each Fund. No rights, responsibilities or liabilities of any Fund shall be attributed to any other Fund. ARTICLE I. Sale of Fund Shares 1.1. The Underwriter agrees to sell to the Company those shares of the Fund which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1, the Company shall be the designee of the Fund for receipt of such orders from each Account and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives notice of such order by 9:00 a.m. Boston time on the next following Business Day. Beginning within three months of the effective date of this Agreement, the Company agrees that all order for the purchase and redemption of Fund shares on behalf of the Accounts will be placed by the Company with the Funds or their transfer agent by electronic transmission. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the Securities and Exchange Commission. 3 1.2. The Fund agrees to make its shares available indefinitely for purchase at the applicable net asset value per share by the Company and its Accounts on those days on which the Fund calculates its net asset value pursuant to rules of the Securities and Exchange Commission and the Fund shall use reasonable efforts to calculate such net asset value on each day which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Portfolio. 1.3. The Fund and the Underwriter agree that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts and Qualified Plans. No shares of any Portfolio will be sold to the general public. 1.4. The Fund and the Underwriter will not sell Fund shares to any insurance company, separate account or Qualified Plan unless an agreement containing provisions substantially the same as Articles I, III, V, VII and Section 2.5 of Article II of this Agreement is in effect to govern such sales. 1.5. The Fund agrees to redeem for cash, on the Company's request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. For purposes of this Section 1.5, the Company shall be the designee of the Fund for receipt of requests for redemption from each Account and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives notice of such request for redemption on the next following Business Day. This section shall not apply to VIP Fund shares or share classes that are subject to redemption fees. The Company shall not purchase or redeem VIP Fund shares that are subject to redemption fees, including shares of Portfolios or share classes that later become subject to redemption fees, in the absence of an additional written agreement signed by all parties. 1.6. The Company agrees that purchases and redemptions of Portfolio shares offered by the then current prospectus of the Fund shall be made in accordance with the provisions of such prospectus. The Company agrees that all net amounts available under the Contracts shall be invested in the Fund, in such other Funds advised by the Adviser as may be mutually agreed to in writing by the parties hereto, or in the Company's general account, provided that such amounts may also be invested in an investment company other than the Fund if (a) such other investment company, or series thereof, has investment objectives or policies that are substantially different from the investment objectives and policies of all the Portfolios of the Fund; or (b) the Company gives the Fund and the Underwriter 45 days written notice of its intention to make such other investment company available as a funding vehicle for the Contracts; or (c) such other investment company was available as a funding vehicle for the Contracts prior to the date of this Agreement and the Company so informs the Fund and Underwriter prior to their signing this Agreement (a list of such funds appearing on Schedule C to this Agreement); or (d) the Fund or Underwriter consents to the use of such other investment company. 4 1.7. The Company shall pay for Fund shares on the next Business Day after an order to purchase Fund shares is made in accordance with the provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal funds so wired, such funds shall cease to be the responsibility of the Company and shall become the responsibility of the Fund. 1.8. Issuance and transfer of the Fund's shares will be by book entry only. Stock certificates will not be issued to the Company or any Account. Shares ordered from the Fund will be recorded in an appropriate title for each Account or the appropriate subaccount of each Account. 1.9. The Fund shall furnish same day notice (by wire or telephone, followed by written confirmation) to the Company of any income, dividends or capital gain distributions payable on the Fund's shares. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Portfolio shares in additional shares of that Portfolio. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Fund shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.10. The Fund shall make the net asset value per share for each Portfolio available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated (normally by 6:30 p.m. Boston time) and shall use its best efforts to make such net asset value per share available by 7 p.m. Boston time. 1.11. The parties agree that the Contracts are not intended to serve as vehicles for frequent transfers among the Portfolios in response to short-term stock market fluctuations. A. Accordingly, the Company represents and warrants that: (a) all purchase and redemption orders it provides under this Article I shall result solely from Contract Owner transactions fully received and recorded by the Company before the time as of which each applicable VIP Portfolio net asset value was calculated (currently 4:00 p.m. e.s.t); (b) it will comply with its policies and procedures designed to prevent excessive trading as approved by the Fund, or will comply with the Fund's policies and procedures regarding excessive trading as set forth in the Fund's prospectus; (c) any annuity contract forms or variable life insurance policy forms not in use at the time of execution of this Agreement, but added to in the future via amendment of Schedule A hereto, will contain language reserving to the Company the right to refuse to accept instructions from persons that engage in market timing or other excessive or disruptive trading activity. 1.12 A. Company agrees to comply with its obligations under applicable anti-money laundering ("AML") laws, rules and regulations, including but not limited to its obligations under the United States Bank Secrecy Act of 1970, as amended (by the USA PATRIOT Act of 2001 and other laws), and the rules, regulations and official guidance issued thereunder (collectively, the "BSA"). 5 B. The Company agrees to undertake inquiry and due diligence regarding the customers to whom the Company offers and/or sells Portfolio shares or on whose behalf the Company purchases Portfolio shares and that the inquiry and due diligence is reasonably designed to determine that the Company is not prohibited from dealing with any such customer by (i) any sanction administered by the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury (collectively, the "Sanctions"); or (ii) any of the Special Measures. C. The Company hereby represents, covenants and warrants to the Fund and the Underwriter that: (a) None of the Company's employees who are authorized in connection with their employment to transact business with the Fund or Underwriter in accounts in the Company's name, in any nominee name maintained for the Company, or for which the Company serves as financial institution of record are designated or targeted under any of the Sanctions or Special Measures and that no transactions placed in any such accounts by any of the Company's authorized employees will contravene any of the Sanctions or Special Measures; (b) As the Sanctions or Special Measures are updated, the Company shall periodically review them to confirm that none of the Company's employees that are authorized to transact business with the Fund or Underwriter are designated or targeted under any of the Sanctions or Special Measures; and (c) The Company, including any of the Company's affiliates, does not maintain offices in any country or territory to which any of the Sanctions or Special Measures prohibit the export of services or other dealings. D. The Company agrees to notify the Fund and the Underwriter or the Portfolios' transfer agent promptly when and if it learns that the establishment or maintenance of any account holding, or transaction in or relationship with a holder of, Portfolio shares pursuant to this Agreement violates or appears to violate any of the Sanctions or Special Measures. ARTICLE II. Representations and Warranties 2.1. The Company represents and warrants that the Contracts are or will be registered under the 1933 Act or are exempt from registration thereunder; that the Contracts will be issued and sold in compliance in all material respects with all applicable Federal and State laws and that the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account prior to any issuance or sale thereof as a segregated asset account under Section _____ of the Texas Insurance Code 6 and that each Account is either registered or exempt from registration as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts. 2.2. The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of the State of Texas and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund shall amend the Registration Statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund or the Underwriter. 2.3. The Fund represents that it is currently qualified as a Regulated Investment Company under Subchapter M of the Internal Revenue Code of 1986, as amended, (the "Code") and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4. The Company represents that the Contracts are currently treated as endowment, life insurance or annuity insurance contracts, under applicable provisions of the Code and that it will make every effort to maintain such treatment and that it will notify the Fund and the Underwriter immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5. (a) With respect to Initial Class shares, the Fund currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make such payments in the future. The Fund has adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no payments for distribution expenses. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a board of trustees, a majority of whom are not interested persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. (b) With respect to Service Class shares and Service Class 2 shares, the Fund has adopted Rule 12b-1 Plans under which it makes payments to finance distribution expenses. The Fund represents and warrants that it has a board of trustees, a majority of whom are not interested persons of the Fund, which has formulated and approved each of its Rule 12b-1 Plans to finance distribution expenses of the Fund and that any changes to the Fund's Rule 12b-1 Plans will be approved by a similarly constituted board of trustees. 2.6. The Fund makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states except that the Fund represents that the Fund's investment policies, fees and expenses are and shall at all times remain in compliance with the laws of the State of Texas and the Fund and the Underwriter represent that their respective operations are and shall at all 7 times remain in material compliance with the laws of the State of Texas to the extent required to perform this Agreement. 2.7. The Underwriter represents and warrants that it is a member in good standing of the FINRA and is registered as a broker-dealer with the SEC. The Underwriter further represents that it will sell and distribute the Fund shares in accordance with the laws of the Commonwealth of Massachusetts and all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act, and the 1940 Act. 2.8. The Fund represents that it is lawfully organized and validly existing under the laws of the Commonwealth of Massachusetts and that it does and will comply in all material respects with the 1940 Act. 2.9. The Underwriter represents and warrants that the Adviser is and shall remain duly registered in all material respects under all applicable federal and state securities laws and that the Adviser shall perform its obligations for the Fund in compliance in all material respects with the laws of the Commonwealth of Massachusetts and any applicable state and federal securities laws. 2.10. The Fund and Underwriter represent and warrant that all of their directors, officers, employees, investment advisers, and other individuals/entities dealing with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.11. The Company represents and warrants that all of its directors, officers, employees, investment advisers, and other individuals/entities dealing with the money and/or securities of the Fund are covered by a blanket fidelity bond or similar coverage for the benefit of the Fund, and that said bond is issued by a reputable bonding company, includes coverage for larceny and embezzlement, and is in an amount not less than $5 million. The Company agrees to make all reasonable efforts to see that this bond or another bond containing these provisions is always in effect, and agrees to notify the Fund and the Underwriter in the event that such coverage no longer applies. ARTICLE III. Prospectuses and Proxy Statements; Voting 3.1. The Underwriter shall provide the Company with as many printed copies of the Fund's current prospectus and Statement of Additional Information as the Company may reasonably request. If requested by the Company in lieu thereof, the Fund shall provide camera-ready film containing the Fund's prospectus and Statement of Additional Information, and such other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus and/or Statement of Additional Information for the Fund is amended during the year) to have the prospectus, private offering memorandum or other disclosure document ("Disclosure Document") for the Contracts and the Fund's prospectus printed together in one document, and to have the Statement of Additional 8 Information for the Fund and the Statement of Additional Information for the Contracts printed together in one document. Alternatively, the Company may print the Fund's prospectus and/or its Statement of Additional Information in combination with other fund companies' prospectuses and statements of additional information. Except as provided in the following three sentences, all expenses of printing and distributing Fund prospectuses and Statements of Additional Information shall be the expense of the Company. For prospectuses and Statements of Additional Information provided by the Company to its existing owners of Contracts in order to update disclosure annually as required by the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the Company chooses to receive camera-ready film in lieu of receiving printed copies of the Fund's prospectus, the Fund will reimburse the Company in an amount equal to the product of A and B where A is the number of such prospectuses distributed to owners of the Contracts, and B is the Fund's per unit cost of typesetting and printing the Fund's prospectus. The same procedures shall be followed with respect to the Fund's Statement of Additional Information. The Company agrees to provide the Fund or its designee with such information as may be reasonably requested by the Fund to assure that the Fund's expenses do not include the cost of printing any prospectuses or Statements of Additional Information other than those actually distributed to existing owners of the Contracts. 3.2. The Fund's prospectus shall state that the Statement of Additional Information for the Fund is available from the Underwriter or the Company (or in the Fund's discretion, the Prospectus shall state that such Statement is available from the Fund). 3.3. The Fund, at its expense, shall provide the Company with copies of its proxy statements, reports to shareholders, and other communications (except for prospectuses and Statements of Additional Information, which are covered in Section 3.1) to shareholders in such quantity as the Company shall reasonably require for distributing to Contract owners. 3.4. If and to the extent required by law the Company shall: (i) solicit voting instructions from Contract owners; (ii) vote the Fund shares in accordance with instructions received from Contract owners; and (iii) vote Fund shares for which no instructions have been received in a particular separate account in the same proportion as Fund shares of such portfolio for which instructions have been received in that separate account, so long as and to the extent that the Securities and Exchange Commission continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners. The Company reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law. Participating Insurance Companies shall be responsible for assuring that each of their separate accounts participating in the Fund calculates voting privileges in a manner consistent with the standards set forth on Schedule B attached hereto and incorporated herein by this reference, which standards will also be provided to the other Participating Insurance Companies. 9 3.5. The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular the Fund will either provide for annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the Securities and Exchange Commission's interpretation of the requirements of Section 16(a) with respect to periodic elections of trustees and with whatever rules the Commission may promulgate with respect thereto. ARTICLE IV. Sales Material and Information 4.1. The Company shall furnish, or shall cause to be furnished, to the Fund or its designee, each piece of sales literature or other promotional material in which the Fund or its investment adviser or the Underwriter is named, at least fifteen Business Days prior to its use. No such material shall be used if the Fund or its designee reasonably objects to such use within fifteen Business Days after receipt of such material. 4.2. The Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus for the Fund shares, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee or by the Underwriter, except with the permission of the Fund or the Underwriter or the designee of either. 4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause to be furnished, to the Company or its designee, each piece of sales literature or other promotional material in which the Company and/or its separate account(s), is named at least fifteen Business Days prior to its use. No such material shall be used if the Company or its designee reasonably objects to such use within fifteen Business Days after receipt of such material. 4.4. The Fund and the Underwriter shall not give any information or make any representations on behalf of the Company or concerning the Company, each Account, or the Contracts other than the information or representations contained in a registration statement or Disclosure Document for the Contracts, as such registration statement or Disclosure Document may be amended or supplemented from time to time, or in published reports for each Account which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company. 4.5. The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, Statements of Additional Information, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Fund or its shares, contemporaneously with the filing of such document with the Securities and Exchange Commission or other regulatory authorities. 10 4.6. The Company will provide to the Fund at least one complete copy of all registration statements, Disclosure Documents, Statements of Additional Information, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no action letters, and all amendments to any of the above, that relate to or affect the Fund, the Contracts or each Account, contemporaneously with the filing of such document with the SEC or other regulatory authorities or, if a Contract and its associated Account are exempt from registration, at the time such documents are first published. 4.7. For purposes of this Article IV, the phrase "sales literature or other promotional material" includes, but is not limited to, any of the following that refer to the Fund or any affiliate of the Fund: advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, and registration statements, Disclosure Documents, Statements of Additional Information, shareholder reports, and proxy materials. ARTICLE V. Fees and Expenses 5.1. The Fund and Underwriter shall pay no fee or other compensation to the Company under this agreement, except that if the Fund or any Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then the Underwriter may make payments to the Company or to the underwriter for the Contracts if and in amounts agreed to by the Underwriter in writing and such payments will be made out of existing fees otherwise payable to the Underwriter, past profits of the Underwriter or other resources available to the Underwriter. No such payments shall be made directly by the Fund. 5.2. All expenses incident to performance by the Fund under this Agreement shall be paid by the Fund. The Fund shall see to it that all its shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent deemed advisable by the Fund, in accordance with applicable state laws prior to their sale. The Fund shall bear the expenses for the cost of registration and qualification of the Fund's shares, preparation and filing of the Fund's prospectus and registration statement, proxy materials and reports, setting the prospectus in type, setting in type and printing the proxy materials and reports to shareholders (including the costs of printing a prospectus that constitutes an annual report), the preparation of all statements and notices required by any federal or state law, and all taxes on the issuance or transfer of the Fund's shares. 5.3. The Company shall bear the expenses of distributing the Fund's prospectus and reports to owners of Contracts issued by the Company. The Fund shall bear the costs of soliciting Fund proxies from Contract owners, including the costs of mailing proxy materials and tabulating proxy voting instructions, not to exceed the costs charged by any service provider engaged by the Fund for this 11 purpose. The Fund and the Underwriter shall not be responsible for the costs of any proxy solicitations other than proxies sponsored by the Fund. ARTICLE VI. Diversification 6.1. The Fund will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund will at all times comply with Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts and any amendments or other modifications to such Section or Regulations. In the event of a breach of this Article VI by the Fund, it will take all reasonable steps (a) to notify Company of such breach and (b) to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Regulation 1.817-5. ARTICLE VII. Potential Conflicts 7.1. The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2. The Company will report any potential or existing conflicts of which it is aware to the Board. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order, by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Board whenever contract owner voting instructions are disregarded. 7.3. If it is determined by a majority of the Board, or a majority of its disinterested trustees, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the disinterested trustees), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (1), withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Fund, or submitting the question whether such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract 12 owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2), establishing a new registered management investment company or managed separate account. 7.4. If a material irreconcilable conflict arises because of a decision by the Company to disregard contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the affected Account's investment in the Fund and terminate this Agreement with respect to such Account; provided, however that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Any such withdrawal and termination must take place within six (6) months after the Fund gives written notice that this provision is being implemented, and until the end of that six month period the Underwriter and Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 7.5. If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account's investment in the Fund and terminate this Agreement with respect to such Account within six months after the Board informs the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. Until the end of the foregoing six month period, the Underwriter and Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination, provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Board. 7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the 13 extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. Indemnification 8.1. Indemnification By The Company 8.1(a). The Company agrees to indemnify and hold harmless the Fund and each trustee of the Board and officers and each person, if any, who controls the Fund within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of, or investment in, the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the Disclosure Documents for the Contracts or contained in the Contracts or sales literature for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in any Disclosure Document relating to the Contracts or in the Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Fund not supplied by the Company, or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund Shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon and in conformity with information furnished to the Fund by or on behalf of the Company; or (iv) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or 14 (v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof. 8.1(b). The Company shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Fund, whichever is applicable. 8.1(c). The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Company to such party of the Company's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1(d). The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund Shares or the Contracts or the operation of the Fund. 8.2. Indemnification by the Underwriter 8.2(a). The Underwriter agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Underwriter) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of, or investment in, the Fund's shares or the Contracts and: 15 (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or prospectus or sales literature of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Underwriter or Fund by or on behalf of the Company for use in the registration statement or prospectus for the Fund or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature for the Contracts not supplied by the Underwriter or persons under its control) or wrongful conduct of the Fund, Adviser or Underwriter or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Disclosure Document or sales literature covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund; or (iv) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement); or (v) arise out of or result from any material breach of any representation and/or warranty made by the Underwriter in this Agreement or arise out of or result from any other material breach of this Agreement by the Underwriter; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. 8.2(b). The Underwriter shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to each Company or the Account, whichever is applicable. 16 8.2(c). The Underwriter shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Underwriter in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Underwriter of any such claim shall not relieve the Underwriter from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Underwriter will be entitled to participate, at its own expense, in the defense thereof. The Underwriter also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Underwriter to such party of the Underwriter's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Underwriter will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.2(d). The Company agrees promptly to notify the Underwriter of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of each Account. 8.3. Indemnification By the Fund 8.3(a). The Fund agrees to indemnify and hold harmless the Company, and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Fund) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements result from the gross negligence, bad faith or willful misconduct of the Board or any member thereof, are related to the operations of the Fund and: (i) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including a failure to comply with the diversification requirements specified in Article VI of this Agreement);or (ii) arise out of or result from any material breach of any representation and/or warranty made by the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Fund; as limited by and in accordance with the provisions of Sections 8.3(b) and 8.3(c) hereof. 8.3(b). The Fund shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as 17 such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company, the Fund, the Underwriter or each Account, whichever is applicable. 8.3(c). The Fund shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Fund in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Fund of any such claim shall not relieve the Fund from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Fund will be entitled to participate, at its own expense, in the defense thereof. The Fund also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Fund to such party of the Fund's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Fund will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.3(d). The Company and the Underwriter agree promptly to notify the Fund of the commencement of any litigation or proceedings against it or any of its respective officers or directors in connection with this Agreement, the issuance or sale of the Contracts, with respect to the operation of either Account, or the sale or acquisition of shares of the Fund. ARTICLE IX. Applicable Law 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts. 9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the Securities and Exchange Commission may grant (including, but not limited to, the Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE X. Termination 10.1. This Agreement shall continue in full force and effect until the first to occur of: (a) termination by any party for any reason by sixty (60) days advance written notice delivered to the other parties; or 18 (b) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio based upon the Company's determination that shares of such Portfolio are not reasonably available to meet the requirements of the Contracts; or (c) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event any of the Portfolio's shares are not registered, issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by the Company; or (d) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event that such Portfolio ceases to qualify as a Regulated Investment Company under Subchapter M of the Code or under any successor or similar provision, or if the Company reasonably believes that the Fund may fail to so qualify; or (e) termination by the Company by written notice to the Fund and the Underwriter with respect to any Portfolio in the event that such Portfolio fails to meet the diversification requirements specified in Article VI hereof; or (f) termination by either the Fund or the Underwriter by written notice to the Company, if either one or both of the Fund or the Underwriter respectively, shall determine, in their sole judgment exercised in good faith, that the Company and/or its affiliated companies has suffered a material adverse change in its business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or (g) termination by the Company by written notice to the Fund and the Underwriter, if the Company shall determine, in its sole judgment exercised in good faith, that either the Fund or the Underwriter has suffered a material adverse change in its business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or (h) termination by the Fund or the Underwriter by written notice to the Company, if the Company gives the Fund and the Underwriter the written notice specified in Section 1.6(b) hereof and at the time such notice was given there was no notice of termination outstanding under any other provision of this Agreement; provided, however any termination under this Section 10.1(h) shall be effective forty five (45) days after the notice specified in Section 1.6(b) was given. 10.2. Notwithstanding any termination of this Agreement, the Fund and the Underwriter shall at the option of the Company, continue to make available additional shares of the Fund pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts shall be permitted to reallocate investments in the Fund, 19 redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.2 shall not apply to any terminations under Article VII and the effect of such Article VII terminations shall be governed by Article VII of this Agreement. 10.3. The provisions of Articles II (Representations and Warranties), VIII (Indemnification), IX (Applicable Law) and XII (Miscellaneous) shall survive termination of this Agreement. In addition, all other applicable provisions of this Agreement shall survive termination as long as shares of the Fund are held on behalf of Contract owners in accordance with section 10.2, except that the Fund and Underwriter shall have no further obligation to make Fund shares available in Contracts issued after termination. 10.4. The Company shall not redeem Fund shares attributable to the Contracts (as opposed to Fund shares attributable to the Company's assets held in the Account) except (i) as necessary to implement Contract Owner initiated or approved transactions, or (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a "Legally Required Redemption") or (iii) as permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon request, the Company will promptly furnish to the Fund and the Underwriter the opinion of counsel for the Company (which counsel shall be reasonably satisfactory to the Fund and the Underwriter) to the effect that any redemption pursuant to clause (ii) above is a Legally Required Redemption. Furthermore, except in cases where permitted under the terms of the Contracts, the Company shall not prevent Contract Owners from allocating payments to a Portfolio that was otherwise available under the Contracts without first giving the Fund or the Underwriter 90 days notice of its intention to do so. ARTICLE XI. Notices Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Fund: 82 Devonshire Street Boston, Massachusetts 02109 Attention: Treasurer If to the Company: American General Life Insurance Company ---------------------------------- Attention: ---------------------- 20 If to the Underwriter: 82 Devonshire Street Boston, Massachusetts 02109 Attention: Treasurer ARTICLE XII. Miscellaneous 12.1 All persons dealing with the Fund must look solely to the property of the Fund for the enforcement of any claims against the Fund as neither the Board, officers, agents or shareholders assume any personal liability for obligations entered into on behalf of the Fund. 12.2 Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. 12.3 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.5 If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.6 Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the FINRA and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Notwithstanding the generality of the foregoing, each party hereto further agrees to furnish the California Insurance Commissioner with any information or reports in connection with services provided under this Agreement which such Commissioner may request in order to ascertain whether the insurance operations of the Company are being conducted in a manner consistent with the California Insurance Regulations and any other applicable law or regulations. 12.7 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 12.8. This Agreement or any of the rights and obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto; provided, however, that the Underwriter may assign this Agreement or any rights or obligations hereunder to any affiliate of or 21 company under common control with the Underwriter, if such assignee is duly licensed and registered to perform the obligations of the Underwriter under this Agreement. The Company shall promptly notify the Fund and the Underwriter of any change in control of the Company. 12.9. The Company shall furnish, or shall cause to be furnished, to the Fund or its designee copies of the following reports: (a) the Company's annual statement (prepared under statutory accounting principles) and annual report (prepared under generally accepted accounting principles ("GAAP"), if any), as soon as practical and in any event within 90 days after the end of each fiscal year; (b) the Company's quarterly statements (statutory) (and GAAP, if any), as soon as practical and in any event within 45 days after the end of each quarterly period: (c) any financial statement, proxy statement, notice or report of the Company sent to stockholders and/or policyholders, as soon as practical after the delivery thereof to stockholders; (d) any registration statement (without exhibits) and financial reports of the Company filed with the Securities and Exchange Commission or any state insurance regulator, as soon as practical after the filing thereof; (e) any other report submitted to the Company by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company, as soon as practical after the receipt thereof. 22 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative. AMERICAN GENERAL LIFE INSURANCE COMPANY By: ----------------------------- Name: ----------------------------- Its: ----------------------------- VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND II VARIABLE INSURANCE PRODUCTS FUND III VARIABLE INSURANCE PRODUCTS FUND IV, and VARIABLE INSURANCE PRODUCTS FUND V By: ----------------------------- Name: Kimberley Monasterio Their: Treasurer FIDELITY DISTRIBUTORS CORPORATION By: ----------------------------- Name: Bill Loehning Title: Executive Vice President Date: ----------------------------- 23 Schedule A Separate Accounts and Associated Contracts Name of Separate Account and Policy Form Numbers of Contracts Date Established by Board of Funded By Separate Account Directors American General Life Insurance 91010 - Variety Plus VA Company Separate Account D (November 13, 91011 - Variety Plus VA 1973) 93020 - Variety Plus VA 93021 - Variety Plus VA 98020 - Platinum Investor VA 03017 - Platinum Investor Immediate VA American General Life Insurance 99301 - Corporate America VUL Company Separate Account VL-R (May 6, 1997) 97600 - Platinum Investor I VUL 97610 - Platinum Investor II VUL 00600 - Platinum Investor III VUL 04604 - Platinum Investor IV VUL 99206 - Platinum Investor Survivor VUL 01206 - Platinum Investor Survivor II VUL 02600 - Platinum Investor PLUS VUL 03601 - Platinum Investor FlexDirector VUL 05604 - Platinum Investor VIP (2007) VUL 05604 - Platinum Investor VIP VUL (original) 99301 - AIG Corporate Investor VUL 07704- AIG Income Advantage VUL American General Life Insurance T1735 - EquiBuilder II VUL Company Separate Account VUL-2 (April 9, T1735 - EquiBuilder III VUL 1991) American General Life Insurance T1575 - The Chairman VA Company Separate Account VA-1 (May 22, T1575Z - The Chairman VA 1996) American General Life Insurance 98075 Company Separate Account VL-U LIS (October 98070 19, 1998)
24 SCHEDULE B PROXY VOTING PROCEDURE The following is a list of procedures and corresponding responsibilities for the handling of proxies relating to the Fund by the Underwriter, the Fund and the Company. The defined terms herein shall have the meanings assigned in the Participation Agreement except that the term "Company" shall also include the department or third party assigned by the Insurance Company to perform the steps delineated below. 1. The number of proxy proposals is given to the Company by the Underwriter as early as possible before the date set by the Fund for the shareholder meeting to facilitate the establishment of tabulation procedures. At this time the Underwriter will inform the Company of the Record, Mailing and Meeting dates. This will be done verbally approximately two months before meeting. 2. Promptly after the Record Date, the Company will perform a "tape run", or other activity, which will generate the names, addresses and number of units which are attributed to each contract owner/policyholder (the "Customer") as of the Record Date. Allowance should be made for account adjustments made after this date that could affect the status of the Customers' accounts as of the Record Date. Note: The number of proxy statements is determined by the activities described in Step #2. The Company will use its best efforts to call in the number of Customers to Fidelity, as soon as possible, but no later than two weeks after the Record Date. 3. The Fund's Annual Report no longer needs to be sent to each Customer by the Company either before or together with the Customers' receipt of a proxy statement. Underwriter will provide the last Annual Report to the Company pursuant to the terms of Section 3.3 of the Agreement to which this Schedule relates. 4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is provided to the Company by the Fund. The Company, at its expense, shall produce and personalize the Voting Instruction Cards. The Legal Department of the Underwriter or its affiliate ("Fidelity Legal") must approve the Card before it is printed. Allow approximately 2-4 business days for printing information on the Cards. Information commonly found on the Cards includes: a. name (legal name as found on account registration) b. address c. Fund or account number d. coding to state number of units e. individual Card number for use in tracking and verification of votes (already on Cards as printed by the Fund) (This and related steps may occur later in the chronological process due to possible uncertainties relating to the proposals.) 5. During this time, Fidelity Legal will develop, produce, and the Fund will pay for the Notice of Proxy and the Proxy Statement (one document). Printed and folded notices and 25 statements will be sent to Company for insertion into envelopes (envelopes and return envelopes are provided and paid for by the Insurance Company). Contents of envelope sent to Customers by Company will include: a. Voting Instruction Card(s) b. One proxy notice and statement (one document) c. return envelope (postage pre-paid by Company) addressed to the Company or its tabulation agent d. "urge buckslip" - optional, but recommended. (This is a small, single sheet of paper that requests Customers to vote as quickly as possible and that their vote is important. One copy will be supplied by the Fund.) e. cover letter - optional, supplied by Company and reviewed and approved in advance by Fidelity Legal. 6. The above contents should be received by the Company approximately 3-5 business days before mail date. Individual in charge at Company reviews and approves the contents of the mailing package to ensure correctness and completeness. Copy of this approval sent to Fidelity Legal. 7. Package mailed by the Company. * The Fund must allow at least a 15-day solicitation time to the Company as the shareowner. (A 5-week period is recommended.) Solicitation time is calculated as calendar days from (but not including) the meeting, counting backwards. 8. Collection and tabulation of Cards begins. Tabulation usually takes place in another department or another vendor depending on process used. An often used procedure is to sort Cards on arrival by proposal into vote categories of all yes, no, or mixed replies, and to begin data entry. Note: Postmarks are not generally needed. A need for postmark information would be due to an insurance company's internal procedure and has not been required by Fidelity in the past. 9. Signatures on Card checked against legal name on account registration which was printed on the Card. Note: For Example, If the account registration is under "Bertram C. Jones, Trustee," then that is the exact legal name to be printed on the Card and is the signature needed on the Card. 10. If Cards are mutilated, or for any reason are illegible or are not signed properly, they are sent back to Customer with an explanatory letter, a new Card and return envelope. The mutilated or illegible Card is disregarded and considered to be not received for purposes of vote tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible) of the procedure are 26 "hand verified," i.e., examined as to why they did not complete the system. Any questions on those Cards are usually remedied individually. 11. There are various control procedures used to ensure proper tabulation of votes and accuracy of that tabulation. The most prevalent is to sort the Cards as they first arrive into categories depending upon their vote; an estimate of how the vote is progressing may then be calculated. If the initial estimates and the actual vote do not coincide, then an internal audit of that vote should occur. This may entail a recount. 12. The actual tabulation of votes is done in units which is then converted to shares. (It is very important that the Fund receives the tabulations stated in terms of a percentage and the number of shares.) Fidelity Legal must review and approve tabulation format. 13. Final tabulation in shares is verbally given by the Company to Fidelity Legal on the morning of the meeting not later than 10:00 a.m. Boston time. Fidelity Legal may request an earlier deadline if required to calculate the vote in time for the meeting. 14. A Certification of Mailing and Authorization to Vote Shares will be required from the Company as well as an original copy of the final vote. Fidelity Legal will provide a standard form for each Certification. 15. The Company will be required to box and archive the Cards received from the Customers. In the event that any vote is challenged or if otherwise necessary for legal, regulatory, or accounting purposes, Fidelity Legal will be permitted reasonable access to such Cards. 16. All approvals and "signing-off" may be done orally, but must always be followed up in writing. 27 SCHEDULE C Other investment companies currently available under variable annuities or variable life insurance issued by the Company: 28 EX-99.(H)(8)(B) 8 dex99h8b.txt J.P. MORGAN SERIES TRUST II PA AMENDMENT NO. 2 EXHIBIT (h)(8)(b) Amendment No. 2 to Participation Agreement between J.P. Morgan Series Trust II and American General Life Insurance Company The participation agreement, dated as of October 2, 2000, by and among J.P. Morgan Series Trust II and American General Life Insurance Company (the "Agreement") is hereby amended as follows: 1. Schedule 1 of this Agreement is hereby deleted in its entirety and replaced with Schedule 1 attached hereto. All other terms and provisions of the Agreement not amended herein shall remain in full force and effect. Effective Date as of October 1, 2007. J.P. Morgan Series Trust II By: ------------------------------- Name: ------------------------------- Title: ------------------------------- American General Life Insurance Company By: ------------------------------- Name: ------------------------------- Title: ------------------------------- Attest: By: ------------------------------- Name: ------------------------------- Title ------------------------------- [CORPORATE SEAL] 1 SCHEDULE I Name of Series J.P. Morgan Small Company Portfolio J.P. Morgan Mid Cap Value Portfolio J.P. Morgan International Equity Portfolio 2 EX-99.(H)(9)(A) 9 dex99h9a.txt PARTICIPATION AGREEMENT BETWEEN AGL AND JPMORGAN INSURANCE TRUST EXHIBIT (h)(9)(a) FUND PARTICIPATION AGREEMENT This Agreement is entered into as of the ___ day of October, 2007, between American General Life Insurance Company ("Insurance Company"), a life insurance company organized under the laws of the State of Texas, and JPMorgan Insurance Trust ("Fund"), a Massachusetts business trust, with respect to the Fund's portfolio or portfolios set forth on Schedule I hereto, as such Schedule may be revised from time to time (the "Series"; if there are more than one Series to which this Agreement applies, the provisions herein shall apply severally to each such Series). ARTICLE I 1. DEFINITIONS 1.1. "Act" shall mean the Investment Company Act of 1940, as amended. 1.2. "Board" shall mean the Board of Trustees of the Fund having the responsibility for management and control of the Fund. 1.3. "Business Day" shall mean any day for which the Fund calculates net asset value per share as described in the Fund's Prospectus. 1.4. "Commission" shall mean the Securities and Exchange Commission. 1.5. "Contract" shall mean a variable annuity or variable life insurance contract that uses the Fund as an underlying investment medium. Individuals who participate under a group Contract are "Participants". 1.6. "Contractholder" shall mean any entity that is a party to a Contract with a Participating Company. 1.7. "Disinterested Board Members" shall mean those members of the Board that are not deemed to be "interested persons" of the Fund, as defined by the Act. 1.8. "Participating Companies" shall mean any insurance company (including Insurance Company), which offers variable annuity and/or variable life insurance contracts to the public and which has entered into an agreement with the Fund for the purpose of making Fund shares available to serve as the underlying investment medium for the aforesaid Contracts. 1.9. "Plans" shall mean qualified pension and retirement benefit plans. 1.10. "Prospectus" shall mean the Fund's current prospectus and statement of additional information, as most recently filed with the Commission, with respect to the Series. 1.11. "Separate Account" shall mean the separate accounts listed on Schedule II hereto, separate accounts established by Insurance Company in accordance with the laws of the State of Texas. 1.12. "Software Program" shall mean the software program used by the Fund for providing Fund and account balance information including net asset value per share. 1.13. "Insurance Company's General Account(s)" shall mean the general account(s) of Insurance Company and its affiliates which invest in the Fund. ARTICLE II 2. REPRESENTATIONS 2.1 Insurance Company represents and warrants that (a) it is an insurance company duly organized and in good standing under applicable law; (b) it has legally and validly established the Separate Account pursuant to the Texas Insurance Code for the purpose of offering to the public certain individual variable annuity contracts; (c) it has registered the Separate Account as a unit investment trust under the Act to serve as the segregated investment account for the Contracts; (d) each Separate Account is eligible to invest in shares of the Fund without such investment disqualifying the Fund as an investment medium for insurance company separate accounts supporting variable annuity contracts or variable life insurance contracts; and (e) each Separate Account shall comply with all applicable legal requirements. 2.2 Insurance Company represents and warrants that (a) the Contracts will be described in a registration statement filed under the Securities Act of 1933, as amended ("1933 Act"); (b) the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws; and (c) the sale of the Contracts shall comply in all material respects with state insurance law requirements. Insurance Company agrees to inform the Fund promptly of any investment restrictions imposed by state insurance law and applicable to the Fund. 2.3 Insurance Company represents and warrants that the income, gains and losses, whether or not realized, from assets allocated to the Separate Account are, in accordance with the applicable Contracts, to be credited to or charged against such Separate Account without regard to other income, gains or losses from assets allocated to any other accounts of Insurance Company. Insurance Company represents and warrants that the assets of the Separate Account are and will be kept separate from Insurance Company's General Account and any other separate accounts Insurance Company may have, and will not be charged with liabilities from any business that Insurance Company may conduct or the liabilities of any companies affiliated with Insurance Company. 2.4 Fund represents that the Fund is registered with the Commission under the Act as an open-end management investment company and possesses, and shall maintain, all legal and regulatory licenses, approvals, consents and/or exemptions required for the Fund to operate and offer its shares as an underlying investment medium for Participating Companies. The Fund has established five portfolios and may in the future establish other portfolios. 2.5 Fund represents that it is currently qualified as a Regulated Investment Company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify Insurance Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.6 Insurance Company represents and agrees that the Contracts are currently, and at the time of issuance will be, treated as life insurance policies or annuity contracts, whichever is appropriate, under applicable provisions of the Code, and that it will make every effort to maintain such treatment and that it will notify the Fund and its investment adviser immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. Insurance Company agrees that any prospectus offering a Contract that is a "modified endowment contract," as that term is defined in Section 7702A of the Code, will identify such Contract as a modified endowment contract (or policy). 2.7 Fund agrees that the Fund's assets shall be managed and invested in a manner that complies with the requirements of Section 817(h) of the Code. 2.8 Insurance Company agrees that the Fund shall be permitted (subject to the other terms of this Agreement) to make Series' shares available to other Participating Companies and contractholders and to Plans. 2.9 Fund represents and warrants that any of its trustees, officers, employees, investment advisers, and other individuals/entities who deal with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than that required by Rule 17g-1 under the Act. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.10 Insurance Company represents and warrants that all of its employees and agents who deal with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage in an amount not less than the coverage required to be maintained by the Fund. The aforesaid Bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.11 Insurance Company agrees that the Fund's investment adviser shall be deemed a third party beneficiary under this Agreement and may enforce any and all rights conferred by virtue of this Agreement. ARTICLE III 3. FUND SHARES 3.1 The Contracts funded through the Separate Account will provide for the investment of certain amounts in the Series' shares. 3.2 Fund agrees to make the shares of its Series available for purchase at the then applicable net asset value per share by Insurance Company and the Separate Account on each Business Day pursuant to rules of the Commission. Notwithstanding the foregoing, the Fund may refuse to sell the shares of any Series to any person, or suspend or terminate the offering of the shares of any Series if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, necessary and in the best interests of the shareholders of such Series. 3.3 Fund agrees that shares of the Fund will be sold only to Participating Companies and their separate accounts and to the general accounts of those Participating Companies and their affiliates and to Plans. No shares of any Series will be sold to the general public. 3.4 Fund shall use its best efforts to provide closing net asset value, dividend and capital gain information for each Series available on a per-share and Series basis to Insurance Company by 7:00 p.m. Eastern Time on each Business Day. Any material errors in the calculation of net asset value, dividend and capital gain information shall be reported immediately upon discovery to Insurance Company. Non-material errors will be corrected in the next Business Day's net asset value per share for the Series in question. 3.5 At the end of each Business Day, Insurance Company will use the information described in Sections 3.2 and 3.4 to calculate the Separate Account unit values for the day. Using this unit value, Insurance Company will process the day's Separate Account transactions received by it by the close of trading on the floor of the New York Stock Exchange (currently 4:00 p.m. Eastern time) to determine the net dollar amount of Series shares which will be purchased or redeemed at that day's closing net asset value per share for such Series. The net purchase or redemption orders will be transmitted to the Fund by Insurance Company by 8:30 a.m. Eastern Time on the Business Day next following Insurance Company's receipt of that information. Subject to Sections 3.6 and 3.8, all purchase and redemption orders for Insurance Company's General Accounts shall be effected at the net asset value per share of the relevant Series next calculated after receipt of the order by the Fund or its Transfer Agent. 3.6 Fund appoints Insurance Company as its agent for the limited purpose of accepting orders for the purchase and redemption of shares of each Series for the Separate Account. Fund will execute orders for any Series at the applicable net asset value per share determined as of the close of trading on the day of receipt of such orders by Insurance Company acting as agent ("effective trade date"), provided that the Fund receives notice of such orders by 8:30 a.m. Eastern Time on the next following Business Day and, if such orders request the purchase of Series shares, the conditions specified in Section 3.8, as applicable, are satisfied. A redemption or purchase request for any Series that does not satisfy the conditions specified above and in Section 3.8, as applicable, will be effected at the net asset value computed for such Series on the Business Day immediately preceding the next following Business Day upon which such conditions have been satisfied. 3.7 Insurance Company will make its best efforts to notify Fund in advance of any unusually large purchase or redemption orders. 3.8 If Insurance Company's order requests the purchase of Series shares, Insurance Company will pay for such purchases by wiring Federal Funds to Fund or its designated custodial account on the day the order is transmitted. Insurance Company shall transmit to the Fund payment in Federal Funds by the close of the Federal Reserve wire system on the Business Day the Fund receives the notice of the order pursuant to Section 3.5. Fund will execute such orders at the applicable net asset value per share determined as of the close of trading on the effective trade date if Fund receives payment in Federal Funds by the close of the Federal Reserve wire system on the Business Day the Fund receives the notice of the order pursuant to Section 3.5. If payment in Federal Funds for any purchase is not received on such Business Day, Insurance Company shall promptly upon the Fund's request, reimburse the Fund for any charges, costs, fees, interest or other expenses incurred by the Fund in connection with any advances to, or borrowings or overdrafts by, the Fund, or any similar expenses incurred by the Fund, as a result of portfolio transactions effected by the Fund based upon such purchase request. If Insurance Company's order requests the redemption of Series shares valued at or greater than $1 million dollars, the Fund may wire such amount to Insurance Company within seven days of the order. 3.9 Fund has the obligation to ensure that Series shares are registered with applicable federal agencies at all times. 3.10 Fund will confirm each purchase or redemption order made by Insurance Company. Transfer of Series shares will be by book entry only. No share certificates will be issued to Insurance Company. Insurance Company will record shares ordered from Fund in an appropriate title for the corresponding account. 3.11 Fund shall credit Insurance Company with the appropriate number of shares. 3.12 On each ex-dividend date of the Fund or, if not a Business Day, on the first Business Day thereafter, Fund shall communicate to Insurance Company the amount of dividend and capital gain, if any, per share of each Series. All dividends and capital gains of any Series shall be automatically reinvested in additional shares of the relevant Series at the applicable net asset value per share of such Series on the payable date. Fund shall, on the day after the payable date or, if not a Business Day, on the first Business Day thereafter, notify Insurance Company of the number of shares so issued. ARTICLE IV 4. STATEMENTS AND REPORTS 4.1 Fund shall provide monthly statements of account as of the end of each month for all of Insurance Company's accounts by the fifteenth (15th) Business Day of the following month. 4.2 Fund shall distribute to Insurance Company copies of the Fund's Prospectuses, proxy materials, notices, periodic reports and other printed materials (which the Fund customarily provides to its shareholders) in quantities as Insurance Company may reasonably request for distribution to each Contractholder and Participant. 4.3 Fund will provide to Insurance Company at least one complete copy of all registration statements, Prospectuses, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Fund or its shares, contemporaneously with the filing of such document with the Commission or other regulatory authorities. 4.4 Insurance Company will provide to the Fund at least one copy of all registration statements, Prospectuses, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Contracts or the Separate Account, contemporaneously with the filing of such document with the Commission. ARTICLE V 5. EXPENSES 5.1 The charge to the Fund for all expenses and costs of the Series, including but not limited to management fees, administrative expenses and legal and regulatory costs, will be made in the determination of the relevant Series' daily net asset value per share so as to accumulate to an annual charge at the rate set forth in the Fund's Prospectus. Excluded from the expense limitation described herein shall be brokerage commissions and transaction fees and extraordinary expenses. 5.2 Except as provided in this Article V and, in particular in the next sentence, Insurance Company shall not be required to pay directly any expenses of the Fund or expenses relating to the distribution of its shares. Insurance Company shall pay the following expenses or costs: a. Such amount of the production expenses of any Fund materials, including the cost of printing the Fund's Prospectus, or marketing materials for prospective Insurance Company Contractholders and Participants as the Fund's investment adviser and Insurance Company shall agree from time to time. b. Distribution expenses of any Fund materials or marketing materials for prospective Insurance Company Contractholders and Participants. c. Distribution expenses of Fund materials or marketing materials for Insurance Company Contractholders and Participants. Except as provided herein, all other Fund expenses shall not be borne by Insurance Company. ARTICLE VI 6. EXEMPTIVE RELIEF 6.1 Insurance Company has reviewed a copy of the order dated December 1996 of the Securities and Exchange Commission under Section 6(c) of the Act and, in particular, has reviewed the conditions to the relief set forth in the related Notice. As set forth therein, Insurance Company agrees to report any potential or existing conflicts promptly to the Board, and in particular whenever contract voting instructions are disregarded, and recognizes that it will be responsible for assisting the Board in carrying out its responsibilities under such application. Insurance Company agrees to carry out such responsibilities with a view to the interests of existing Contractholders. 6.2 If a majority of the Board, or a majority of Disinterested Board Members, determines that a material irreconcilable conflict exists with regard to Contractholder investments in the Fund, the Board shall give prompt notice to all Participating Companies. If the Board determines that Insurance Company is responsible for causing or creating said conflict, Insurance Company shall at its sole cost and expense, and to the extent reasonably practicable (as determined by a majority of the Disinterested Board Members), take such action as is necessary to remedy or eliminate the irreconcilable material conflict. Such necessary action may include, but shall not be limited to: a. Withdrawing the assets allocable to the Separate Account from the Series and reinvesting such assets in a different investment medium, or submitting the question of whether such segregation should be implemented to a vote of all affected Contractholders; and/or b. Establishing a new registered management investment company. 6.3 If a material irreconcilable conflict arises as a result of a decision by Insurance Company to disregard Contractholder voting instructions and said decision represents a minority position or would preclude a majority vote by all Contractholders having an interest in the Fund, Insurance Company may be required, at the Board's election, to withdraw the Separate Account's investment in the Fund. 6.4 For the purpose of this Article, a majority of the Disinterested Board Members shall determine whether or not any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to bear the expense of establishing a new funding medium for any Contract. Insurance Company shall not be required by this Article to establish a new funding medium for any Contract if an offer to do so has been declined by vote of a majority of the Contractholders materially adversely affected by the irreconcilable material conflict. 6.5 No action by Insurance Company taken or omitted, and no action by the Separate Account or the Fund taken or omitted as a result of any act or failure to act by Insurance Company pursuant to this Article VI shall relieve Insurance Company of its obligations under, or otherwise affect the operation of, Article V. ARTICLE VII 7. VOTING OF FUND SHARES 7.1 Fund shall provide Insurance Company with copies at no cost to Insurance Company, of the Fund's proxy material, reports to shareholders and other communications to shareholders in such quantity as Insurance Company shall reasonably require for distributing to Contractholders or Participants. Insurance Company shall: (a) solicit voting instructions from Contractholders or Participants on a timely basis and in accordance with applicable law; (b) vote the Series shares in accordance with instructions received from Contractholders or Participants; and (c) vote Series shares for which no instructions have been received in the same proportion as Series shares for which instructions have been received. Insurance Company agrees at all times to votes its General Account shares in the same proportion as Series shares for which instructions have been received from Contractholders or Participants. Insurance Company further agrees to be responsible for assuring that voting Series shares for the Separate Account is conducted in a manner consistent with other Participating Companies. 7.2 Insurance Company agrees that it shall not, without the prior written consent of the Fund and its investment adviser, solicit, induce or encourage Contractholders to (a) change or supplement the Fund's current investment adviser or (b) change, modify, substitute, add to or delete the Fund from the current investment media for the Contracts. ARTICLE VIII 8. MARKETING AND REPRESENTATIONS 8.1 The Fund or its underwriter shall periodically furnish Insurance Company with the following documents, in quantities as Insurance Company may reasonably request: a. Current Prospectus and any supplements thereto; b. other marketing materials. Expenses for the production of such documents shall be borne by Insurance Company in accordance with Section 5.2 of this Agreement. 8.2 Insurance Company shall designate certain persons or entities which shall have the requisite licenses to solicit applications for the sale of Contracts. No representation is made as to the number or amount of Contracts that are to be sold by Insurance Company. Insurance Company shall make reasonable efforts to market the Contracts and shall comply with all applicable federal and state laws in connection therewith. 8.3 Insurance Company shall furnish, or shall cause to be furnished, to the Fund, each piece of sales literature or other promotional material in which the Fund, its investment adviser or the administrator is named, at least fifteen Business Days prior to its use. No such material shall be used unless the Fund approves such material. Such approval (if given) must be in writing and shall be presumed not given if not received within ten Business Days after receipt of such material. The Fund shall use all reasonable efforts to respond within ten days of receipt. 8.4 Insurance Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund or any Series in connection with the sale of the Contracts other than the information or representations contained in the registration statement or Prospectus, as may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund. 8.5 Fund shall furnish, or shall cause to be furnished, to Insurance Company, each piece of the Fund's sales literature or other promotional material in which Insurance Company or the Separate Account is named, at least fifteen Business Days prior to its use. No such material shall be used unless Insurance Company approves such material. Such approval (if given) must be in writing and shall be presumed not given if not received within ten Business Days after receipt of such material. Insurance Company shall use all reasonable efforts to respond within ten days of receipt. 8.6 Fund shall not, in connection with the sale of Series shares, give any information or make any representations on behalf of Insurance Company or concerning Insurance Company, the Separate Account, or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as may be amended or supplemented from time to time, or in published reports for the Separate Account which are in the public domain or approved by Insurance Company for distribution to Contractholders or Participants, or in sales literature or other promotional material approved by Insurance Company. 8.7 For purposes of this Agreement, the phrase "sales literature or other promotional material" or words of similar import include, without limitation, advertisements (such as material published, or designed for use, in a newspaper, magazine or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures or other public media), sales literature (such as any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, or reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, registration statements, prospectuses, statements of additional information, shareholder reports and proxy materials, and any other material constituting sales literature or advertising under National Association of Securities Dealers, Inc. rules, the Act or the 1933 Act. ARTICLE IX 9. INDEMNIFICATION 9.1 Insurance Company agrees to indemnify and hold harmless the Fund, its investment adviser, any sub-investment adviser of a Series, and their affiliates, and each of their directors, trustees, officers, employees, agents and each person, if any, who controls or is associated with any of the foregoing entities or persons within the meaning of the 1933 Act (collectively, the "Indemnified Parties" for purposes of Section 9.1), against any and all losses, claims, damages or liabilities joint or several (including any investigative, legal and other expenses reasonably incurred in connection with, and any amounts paid in settlement of, any action, suit or proceeding or any claim asserted) for which the Indemnified Parties may become subject, under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect to thereof) (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in information furnished by Insurance Company for use in the registration statement or Prospectus or sales literature or advertisements of the Fund or with respect to the Separate Account or Contracts, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) arise out of or as a result of conduct, statements or representations (other than statements or representations contained in the Prospectus and sales literature or advertisements of the Fund) of Insurance Company or its agents, with respect to the sale and distribution of Contracts for which Series shares are an underlying investment; (iii) arise out of the wrongful conduct of Insurance Company or persons under its control with respect to the sale or distribution of the Contracts or Series shares; (iv) arise out of Insurance Company's incorrect calculation and/or untimely reporting of net purchase or redemption orders; or (v) arise out of any breach by Insurance Company of a material term of this Agreement or as a result of any failure by Insurance Company to provide the services and furnish the materials or to make any payments provided for in this Agreement. Insurance Company will reimburse any Indemnified Party in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that with respect to clauses (i) and (ii) above Insurance Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any untrue statement or omission or alleged omission made in such registration statement, prospectus, sales literature, or advertisement in conformity with written information furnished to Insurance Company by the Fund specifically for use therein; and provided, further, that Insurance Company shall not be liable for special, consequential or incidental damages. This indemnity agreement will be in addition to any liability which Insurance Company may otherwise have. 9.2 The Fund agrees to indemnify and hold harmless Insurance Company and each of its directors, officers, employees, agents and each person, if any, who controls Insurance Company within the meaning of the 1933 Act against any losses, claims, damages or liabilities to which Insurance Company or any such director, officer, employee, agent or controlling person may become subject, under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (1) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or Prospectus or sales literature or advertisements of the Fund; (2) arise out of or are based upon the omission to state in the registration statement or Prospectus or sales literature or advertisements of the Fund any material fact required to be stated therein or necessary to make the statements therein not misleading; or (3) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or Prospectus or sales literature or advertisements with respect to the Separate Account or the Contracts and such statements were based on information provided to Insurance Company by the Fund; and the Fund will reimburse any legal or other expenses reasonably incurred by Insurance Company or any such director, officer, employee, agent or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Fund will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or omission or alleged omission made in such Registration Statement, Prospectus, sales literature or advertisements in conformity with written information furnished to the Fund by Insurance Company specifically for use therein; and provided, further, that the Fund shall not be liable for special, consequential or incidental damages. This indemnity agreement will be in addition to any liability which the Fund may otherwise have. 9.3 The Fund shall indemnify and hold Insurance Company harmless against any and all liability, loss, damages, costs or expenses which Insurance Company may incur, suffer or be required to pay due to the Fund's (1) incorrect calculation of the daily net asset value, dividend rate or capital gain distribution rate of a Series; (2) incorrect reporting of the daily net asset value, dividend rate or capital gain distribution rate; and (3) untimely reporting of the net asset value, dividend rate or capital gain distribution rate; provided that the Fund shall have no obligation to indemnify and hold harmless Insurance Company if the incorrect calculation or incorrect or untimely reporting was the result of incorrect information furnished by Insurance Company or information furnished untimely by Insurance Company or otherwise as a result of or relating to a breach of this Agreement by Insurance Company; and provided, further, that the Fund shall not be liable for special, consequential or incidental damages. 9.4 Promptly after receipt by an indemnified party under this Article of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Article, notify the indemnifying party of the commencement thereof. The omission to so notify the indemnifying party will not relieve the indemnifying party from any liability under this Article IX, except to the extent that the omission results in a failure of actual notice to the indemnifying party and such indemnifying party is damaged solely as a result of the failure to give such notice. In case any such action is brought against any indemnified party, and it notified the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and to the extent that the indemnifying party has given notice to such effect to the indemnified party and is performing its obligations under this Article, the indemnifying party shall not be liable for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, other than reasonable costs of investigation. Notwithstanding the foregoing, in any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent. A successor by law of the parties to this Agreement shall be entitled to the benefits of the indemnification contained in this Article IX. 9.5 Insurance Company shall indemnify and hold the Fund, its investment adviser and any sub-investment adviser of a Series harmless against any tax liability incurred by the Fund under Section 851 of the Code arising from purchases or redemptions by Insurance Company's General Accounts or the account of its affiliates. ARTICLE X 10. COMMENCEMENT AND TERMINATION 10.1 This Agreement shall be effective as of the date hereof and shall continue in force until terminated in accordance with the provisions herein. 10.2 This Agreement shall terminate without penalty as to one or more Series at the option of the terminating party: a. At the option of Insurance Company or the Fund at any time from the date hereof upon 180 days' notice, unless a shorter time is agreed to by the parties; b. At the option of Insurance Company, if shares of any Series are not reasonably available to meet the requirements of the Contracts as determined by Insurance Company. Prompt notice of election to terminate shall be furnished by Insurance Company, said termination to be effective ten days after receipt of notice unless the Fund makes available a sufficient number of shares to meet the requirements of the Contracts within said ten-day period; c. At the option of Insurance Company, upon the institution of formal proceedings against the Fund by the Commission, National Association of Securities Dealers or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in Insurance Company's reasonable judgment, materially impair the Fund's ability to meet and perform the Fund's obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by Insurance Company with said termination to be effective upon receipt of notice; d. At the option of the Fund, upon the institution of formal proceedings against Insurance Company by the Commission, National Association of Securities Dealers or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in the Fund's reasonable judgment, materially impair Insurance Company's ability to meet and perform Insurance Company's obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by the Fund with said termination to be effective upon receipt of notice; e. At the option of the Fund, if the Fund shall determine, in its sole judgment reasonably exercised in good faith, that Insurance Company has suffered a material adverse change in its business or financial condition or is the subject of material adverse publicity and such material adverse change or material adverse publicity is likely to have a material adverse impact upon the business and operation of the Fund or its investment adviser, the Fund shall notify Insurance Company in writing of such determination and its intent to terminate this Agreement, and after considering the actions taken by Insurance Company and any other changes in circumstances since the giving of such notice, such determination of the Fund shall continue to apply on the sixtieth (60th) day following the giving of such notice, which sixtieth day shall be the effective date of termination; f. Upon termination of the Investment Advisory Agreement between the Fund and its investment adviser or its successors unless Insurance Company specifically approves the selection of a new Fund investment adviser. The Fund shall promptly furnish notice of such termination to Insurance Company; g. In the event the Fund's shares are not registered, issued or sold in accordance with applicable federal law, or such law precludes the use of such shares as the underlying investment medium of Contracts issued or to be issued by Insurance Company. Termination shall be effective immediately upon such occurrence without notice; h. At the option of the Fund upon a determination by the Board in good faith that it is no longer advisable and in the best interests of shareholders for the Fund to continue to operate pursuant to this Agreement. Termination pursuant to this Subsection (h) shall be effective upon notice by the Fund to Insurance Company of such termination; i. At the option of the Fund if the Contracts cease to qualify as annuity contracts or life insurance policies, as applicable, under the Code, or if the Fund reasonably believes that the Contracts may fail to so qualify; j. At the option of either party to this Agreement, upon another party's breach of any material provision of this Agreement; k. At the option of the Fund, if the Contracts are not registered, issued or sold in accordance with applicable federal and/or state law; or l. Upon assignment of this Agreement, unless made with the written consent of the non-assigning party. Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2f or 10.2k herein shall not affect the operation of Article V of this Agreement. Any termination of this Agreement shall not affect the operation of Article IX of this Agreement. 10.3 Notwithstanding any termination of this Agreement pursuant to Section 10.2 hereof, the Fund and its investment adviser may, at the option of the Fund, continue to make available additional Series shares for so long as the Fund desires pursuant to the terms and conditions of this Agreement as provided below, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, if the Fund so elects to make additional Series shares available, the owners of the Existing Contracts or Insurance Company, whichever shall have legal authority to do so, shall be permitted to reallocate investments in the Series, redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. In the event of a termination of this Agreement pursuant to Section 10.2 hereof, the Fund, as promptly as is practicable under the circumstances, shall notify Insurance Company whether the Fund will continue to make Series shares available after such termination. If Series shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect and thereafter either the Fund or Insurance Company may terminate the Agreement, as so continued pursuant to this Section 10.3, upon prior written notice to the other party, such notice to be for a period that is reasonable under the circumstances but, if given by the Fund, need not be for more than six months. ARTICLE XI 11. AMENDMENTS 11.1 Any other changes in the terms of this Agreement shall be made by agreement in writing between Insurance Company and Fund. ARTICLE XII 12. NOTICE 12.1 Each notice required by this Agreement shall be given by certified mail, return receipt requested, to the appropriate parties at the following addresses: Insurance Company: American General Life Insurance Company 2727-A Allen Parkway Houston, Texas 77019 Attn: General Counsel Fund: JPMorgan Insurance Trust c/o Morgan Guaranty Trust Company 245 Park Avenue, 3/rd/ Floor New York, New York 10167 Attention: Kathleen H. Tripp Notice shall be deemed to be given on the date of receipt by the addresses as evidenced by the return receipt. ARTICLE XIII 13. MISCELLANEOUS 13.1 This Agreement has been executed on behalf of the Fund by the undersigned officer of the Fund in his capacity as an officer of the Fund. The obligations of this Agreement shall only be binding upon the assets and property of the Fund and shall not be binding upon any Trustee, officer or shareholder of the Fund individually. ARTICLE XIV 14. LAW 14.1 This Agreement shall be construed in accordance with the internal laws of the State of New York, without giving effect to principles of conflict of laws. IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly executed and attested as of the date first above written. AMERICAN GENERAL LIFE INSURANCECOMPANY By: ------------------------------- Its: ------------------------------- JPMORGAN INSURANCE TRUST By: ------------------------------- Its: ------------------------------- SCHEDULE I Name of Series JPMorgan Insurance Trust Government Bond Portfolio SCHEDULE II Name of Separate Accounts American General Life Insurance Company Separate Account VL-R EX-99.(H)(14)(C) 10 dex99h14c.txt PIMCO PA AMENDMENT EXHIBIT (h)(14)(c) AMENDMENT NO. 2 TO PARTICIPATION AGREEMENT American General Life Insurance Company, PIMCO Variable Insurance Trust, and Allianz Global Investors Distributors LLC, hereby amend the Participation Agreement dated as of October 2, 2000 as follows: Schedule A is hereby deleted in its entirety and replaced with the Schedule A attached hereto. IN WITNESS WHEREOF, the parties have hereunto affixed their respective authorized signatures, intending that this Amendment No. 2 be effective as of the 1st day of October, 2007. AMERICAN GENERAL LIFE INSURANCE COMPANY ATTEST: By: ------------------------------- By: ------------------------------- Name: ------------------------------- Name: ------------------------------- Title: ------------------------------- Title: ------------------------------- (Corporate Seal) PIMCO VARIABLE INSURANCE TRUST By: ------------------------------- Name: ------------------------------- Title: ------------------------------- ALLIANZ GLOBAL INVESTORS DISTRIBUTORS LLC By: ------------------------------- Name: ------------------------------- Title: ------------------------------- 1 SCHEDULE A (as of October 1, 2007) PIMCO Variable Insurance Trust Portfolios: CommodityRealReturn Strategy Portfolio - Administrative Class Shares Short-Term Portfolio - Administrative Class Shares Real Return Portfolio - Administrative Class Shares Total Return Portfolio - Administrative Class Shares Global Bond Portfolio (Unhedged) - Administrative Class Shares Segregated Asset Accounts: American General Life Insurance Company Separate Account D (Est. Nov. 19, 1973) American General Life Insurance Company Separate Account VL-R (Est. May 6, 1997) American General Life Insurance Company Separate Account VL-U LIS (Est. Oct. 19, 1998) 2 EX-99.(H)(24)(C) 11 dex99h24c.txt DREYFUS AA AMENDMENT NO. 3 EXHIBIT (h)(24)(c) AMENDMENT NO. 3 Amendment No. 3 made as of October 1, 2007, to that certain Agreement dated as of the 11th day of August, 1998 and any other Amendments and Addendums thereto, by and between The Dreyfus Corporation ("Dreyfus"), a New York corporation, and American General Life Insurance Company ("Client"), a Texas corporation. Capitalized terms used but not defined in this Amendment shall have the meanings assigned to them in the Agreement unless the context requires otherwise. WHEREAS, Dreyfus and Client desire to amend the Agreement in order to add the Dreyfus Variable Investment Fund International Value Portfolio to Schedule A of the Agreement; NOW, THEREFORE, Dreyfus and Client hereby agree to amend the Agreement by replacing Schedule A with the revised Schedule A attached hereto. EXECUTED, on the date or dates set forth below to be effective as of the date first above written. AMERICAN GENERAL LIFE INSURANCE COMPANY ATTEST: By: ------------------------------- By: ------------------------------- Name: ------------------------------- Name: ------------------------------- Title: ------------------------------- Title: ------------------------------- Date: ------------------------------- Date: ------------------------------- (Corporate Seal) THE DREYFUS CORPORATION By: ------------------------------- Name: Gary R. Pierce ------------------------------- Title: Controller ------------------------------- Date: ------------------------------- SCHEDULE A (as of October 1, 2007) Fee at an Annual Rate as a Percentage of the Average Daily Net Asset Value of Fund Shares (held on Behalf of Client Fund Name Share Class Customers) - --------- ----------- -------------------------------- Dreyfus Investment Portfolios MidCap Stock Portfolio Initial __% Dreyfus Variable Investment Fund Developing Leaders Portfolio Initial __% International Value Portfolio Initial __% Quality Bond Portfolio Initial __% The Dreyfus Socially Responsible Growth Fund, Inc. Initial __% EX-99.(H)(28)(B) 12 dex99h28b.txt JPMORGAN CHASE BANK LETTER AGREEMENT AMENDMENT NO. 1 EXHIBIT (h)(28)(b) Amendment No. 1 to Letter Agreement between JPMorgan Chase Bank and American General Life Insurance Company The letter agreement, dated as of May 1, 2003, by and among JPMorgan Chase Bank and American General Life Insurance Company (the "Agreement") is hereby amended as follows: Section 2(a) is hereby deleted in its entirety and replaced with the following: (a) In consideration of the anticipated administrative and shareholder servicing expense savings resulting from the Company's services set forth above, Morgan agrees to pay the Company a fee (the "Fee"), computed daily and paid monthly in arrears, equal to the following percent of the average daily net asset value of the shares of the Portfolios held in the subaccounts of the Accounts: JPMorgan Small Company Portfolio __% JPMorgan Mid Cap Value Portfolio __% JPMorgan International Equity Portfolio __% All other terms and provisions of the Agreement not amended herein shall remain in full force and effect. Effective Date as of October 1, 2007. J.P. Morgan Funds Management Inc. (formerly JPMorgan Chase Bank) By: ------------------------------- Name: ------------------------------- Title: ------------------------------- American General Life Insurance Attest: Company By: ----------------------------- By: ----------------------------- Name: ----------------------------- Name: ----------------------------- Title: ----------------------------- Title ----------------------------- [CORPORATE SEAL] EX-99.(H)(29)(A) 13 dex99h29a.txt J.P. MORGAN FUNDS MANAGEMENT, INC. (RELATING TO JPMORGAN INSUR. TRUST) EXHIBIT (h)(29)(a) [Letterhead American General Life Insurance Company] October 1, 2007 J.P. Morgan Funds Management, Inc. 245 Park Avenue, 3rd Floor New York, New York 10167 Gentlemen: This letter sets forth the agreement between American General Life Insurance Company (the "Company") and J.P. Morgan Funds Management, Inc. ("Morgan") concerning certain administrative services. 1. Administrative Services and Expenses. Administrative services for the Company's Separate Accounts (the "Accounts") which invest in the JPMorgan Insurance Trust (the "Fund") pursuant to the Participation Agreement among the Company and the Fund, dated October 1, 2007 (the "Participation Agreement"), and for purchasers of variable annuity and variable life insurance contracts (the "Contracts") issued through the Accounts, are the responsibility of the Company. Certain administrative services for the Fund in which the Accounts invest, and shareholder services for purchasers of shares of the Fund, are the responsibility of Morgan. Morgan recognizes the Company as the sole shareholder of record of shares of Portfolios offered by the Fund (the "Portfolios") purchased under the Participation Agreement on behalf of the Accounts. Morgan further recognizes that it will derive a substantial savings in administrative and shareholder servicing expenses by virtue of having the Company as the shareholder of record of shares of the Fund purchased under the Participation Agreement, rather than multiple shareholders having record ownership of such shares. The administrative and shareholder servicing expenses for which Morgan will derive such savings are set forth in Schedule A to this letter agreement. 2. Expense Payments. (a) In consideration of the anticipated administrative and shareholder servicing expense savings resulting from the Company's services set forth above, Morgan agrees to pay the Company a fee (the "Fee"), computed daily and paid monthly in arrears, equal to the following percent of the average daily net asset value of the shares of the Portfolios held in the subaccounts of the Accounts: JPMorgan Insurance Trust Government Bond Portfolio __% (b) As soon as practicable after the end of each month, the Company will send Morgan, at the address and in the manner set forth in the Participation Agreement, a statement of the average daily net asset value for the preceding month of the shares of each such Portfolio as to which the fee stated in this Paragraph 2 is calculated, together with a statement of the amount of such fee. For purposes of this paragraph 2, the average daily net asset value of the shares of the Fund will be based on the net asset values reported by such Fund to the Company. 3. Nature of Payments. The parties to this letter agreement recognize and agree that Morgan's payments to the Company relate to administrative and shareholder services only and do not constitute payment in any manner for investment advisory services or for costs of distribution of Contracts or of shares of the Fund, and that these payments are not otherwise related to investment advisory or distribution services or expenses. The amount of administrative and shareholder servicing expense payments made by Morgan to the Company pursuant to Paragraph 2 of this letter agreement will not be deemed to be conclusive with respect to actual administrative and shareholder servicing expenses or savings of Morgan. 4. Representations. The Company represents and warrants that in performing the services and receiving the compensation described in this letter agreement it will comply with all applicable laws, rules and regulations. 5. Term. This letter agreement will remain in full force and effect for so long as any assets of the Fund are attributable to amounts invested by the Company under the Participation Agreement, unless terminated in accordance with Paragraph 6 of this letter agreement. Fees will continue to be due and payable with respect to the shares attributable to existing Contracts for only so long as such payments comply with applicable laws, rules and regulations. 6. Termination. This letter agreement will be terminated upon mutual agreement of the parties hereto in writing. 7. Amendment. This letter agreement may be amended only upon mutual agreement of the parties hereto in writing. 8. Counterparts. This letter may be executed in counterparts, each of which will be deemed an original but all of which will together constitute one and the same instrument. If this letter agreement is consistent with your understanding of the matters we discussed concerning administrative and shareholder servicing expenses payments, please sign below and return a signed copy to us. Very truly yours, AMERICAN GENERAL LIFE INSURANCE COMPANY By: --------------------------------- Name: --------------------------------- Title: --------------------------------- Acknowledged and Agreed: J.P. MORGAN FUNDS MANAGEMENT, INC. By: ------------------------------- Name: ------------------------------- Title: ------------------------------- Attachment: Schedule A SCHEDULE A Maintenance of Books and Records .. Record issuance of shares .. Record transfers (via net purchase orders) .. Reconciliation and balancing of the separate account at the fund level in the general ledger, at various banks and within systems interface Communication with the Fund .. Purchase Orders - Determination of net amount available for investment by the Fund - Deposit of receipts at the Fund's custodian (generally by wire transfer) - Notification of the custodian of the estimated amount required to pay dividend or distribution .. Redemption Orders - Determination of net amount required for redemptions by the Fund - Notification of the custodian and Fund of cash required to meet payments - Cost of share redemption .. Daily pricing Processing Distributions from the Fund .. Process ordinary dividends and capital gains .. Reinvest the Fund's distributions Report .. Periodic information reporting to the Fund Fund-related Contractowner Services .. Financial consultant's advice to contractowners with respect to Fund inquiries (not including information about performance or related to sales) .. Communications to contractowners regarding Fund and subaccount performance Other Administrative Support .. Providing other administrative support for the Fund as mutually agreed between the Company and the Fund or the Adviser .. Relieving the Fund of other usual or incidental administrative services provided to individual contractowners EX-99.(H)(46)(A) 14 dex99h46a.txt SEC RULE 22C-2 AGREEMENT BETWEEN JPMORGAN INSURANCE TRUST & AGL EXHIBIT (h)(46)(a) Rule 22c-2 Information Sharing and Restricted Trading Agreement AGREEMENT entered into as of October __, 2007, or such other compliance date mandated by Rule 22c-2 of the Investment Company Act of 1940 ("Rule 22c-2"), whichever shall last occur, by and between JPMorgan Insurance Trust ("Fund") and American General Life Insurance Company ("Intermediary"). This Agreement is an addendum to the Participation Agreement dated October __, 2007, between Fund and American General Life Insurance Company. This Agreement changes the terms of the Participation Agreement only to the extent specifically so required by this Agreement. As used in this Agreement, the following terms shall have the following meanings, unless a different meaning is clearly required by the contexts: "Shareholders" shall mean those contract or policy owners of the Intermediary who maintain an interest in an Account with the Funds. The term not does include any "excepted funds" as defined in SEC Rule 22c-2(b) under the Investment Company Act of 1940./1/ "Shares" shall mean the interests of Shareholders corresponding to the redeemable securities of record issued by the Fund under the Investment Company Act of 1940 that are held by the Intermediary. "Shareholder-Initiated Transfer Purchase" means a transaction that is initiated or directed by a Shareholder that results in a transfer of assets within a contract to a Fund, but does not include transactions that are executed: (i) automatically pursuant to a contractual or systematic program or enrollment such as transfer of assets within a contract to a Fund as a result of "dollar cost averaging" programs, insurance company approved asset allocation programs, or automatic rebalancing programs; (ii) pursuant to a contract death benefit; (iii) one-time step-up in contract value pursuant to a contract death benefit; (iv) allocation of assets to a Fund through a contract as a result of payments such as loan repayments, scheduled contributions, retirement plan salary reduction contributions, or planned premium payments to the contract; or (v) pre-arranged transfers at the conclusion of a required free look period. "Shareholder-Initiated Transfer Redemption" means a transaction that is initiated or directed by a Shareholder that results in a transfer of assets within a contract out of a Fund, but does not include transactions that are executed: (i) automatically pursuant to a contractual or systematic program or enrollments such as transfers of assets within a - -------- /1/ As defined in SEC Rule 22c-2(b), term "excepted fund" means any: (1) money market fund; (2) fund that issues securities that are listed on a national exchange; and (3) fund that affirmatively permits short-term trading of its securities, if its prospectus clearly and prominently discloses that the fund permits short-term trading of its securities and that such trading may result in additional costs for the fund. contract out of a Fund as a result of annuity payouts, loans, systematic withdrawal programs, insurance company approved asset allocation programs and automatic rebalancing programs; (ii) as a result of any deduction of charges or fees under a contract; (iii) within a contract out of a Fund as a result of scheduled withdrawals or surrenders from a contract; or (iv) as a result of payment of a death benefit from a contract. "Promptly", as used in Section 1.3, unless otherwise defined, shall mean as soon as practicable as agreed to by the parties at the time of the Intermediary's receipt of the request for information from the Fund, or its designee. "Written" shall include electronic writings and facsimile transmissions. "Fund" includes JPMorgan Distribution Services, Inc., which is the Fund's principal underwriter, the Fund's transfer agent and the series of the Fund listed in the Agreement. WHEREAS, the Intermediary offers or otherwise makes available the Funds to or for contract and/or policy owners of Intermediary; WHEREAS, pursuant to Rule 22c-2, Fund is required to enter into a shareholder information agreement with every intermediary who holds shares of the Funds in omnibus accounts and submits orders directly to Fund's transfer agent or to a registered clearing agency; WHEREAS, this Agreement sets forth the terms and conditions for information sharing for the Fund and Intermediary in accordance with Rule 22c-2; and WHEREAS, this Agreement shall inure to the benefit of and shall be binding upon the undersigned and each such entity shall be either a Fund or Intermediary for purposes of this Agreement (the Fund and the Intermediary shall be collectively referred to herein as the "Parties" and individually as a "Party"); NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Fund and Intermediary hereby agree as follows: Shareholder Information 1. Agreement to Provide Information. Intermediary agrees to provide the Fund, upon written request, the taxpayer identification number ("TIN"), or an equivalent identifying number such as a contract or policy identification number, of any or all Shareholder(s) of the Funds, and the amount, date and transaction type (purchase, redemption, transfer, or exchange) of every purchase, redemption, transfer, or exchange of Shares held through an Account maintained by the Intermediary with the Fund during the period covered by the request. Unless otherwise specifically requested by the Fund, the Intermediary shall only be required to provide information relating to Shareholder-Initiated Transfer Purchases or Shareholder-Initiated Transfer Redemptions. Shareholder Information requests must be directed to the Intermediary's representatives as identified in Appendix A to this Agreement. Intermediary's anti-market timing policies and procedures and Fund's policies established for the purpose of eliminating or reducing any dilution of the value of the outstanding shares of the Funds, are attached to and made a part of this Agreement. Written information requests must be received via overnight mail, and any timing requirements will start from the date of Intermediary's receipt of the request. 1.1 Period Covered by Request. Requests must set forth a specific period to be examined, not to exceed 180 days from the date of the request, and which period shall end more than 10 business days preceding Intermediary's receipt of the written request. 1.2 Timing of Requests. Notwithstanding paragraph 1.1 above, Fund requests for Shareholder information may be made no more frequently than quarterly. The Fund may request Shareholder information more frequently than quarterly as the Fund deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any market timing and abusive trading practices. The Fund will not request Shareholder information for time periods that overlap time periods covered in any earlier requests from the Fund for Shareholder information. 1.3 Form and Timing of Response. Intermediary agrees to transmit the requested information that is on its books and records to the Fund or its designee promptly, but in any event not later than 10 business days after receipt of a request. If the requested information is not on the Intermediary's books and records, Intermediary agrees to use its best efforts to promptly provide or arrange to provide to the Fund the requested information from Shareholders who hold an account with an indirect intermediary. Responses required by this paragraph must be communicated in writing and in a format mutually agreed upon by the Parties. Information regarding transactions that are not Shareholder-Initiated Transfer Purchases or Shareholder-Initiated Transfer Redemptions will not be provided in Shareholder Information sent to the Fund Agent; therefore, the Shareholder Information provided for a certain period will not be equal to the omnibus trades made during that same period. 1.4 Limitations on Use of Information. The Fund agrees not to use the Shareholder Information received for any purpose (i) other than as necessary to comply with the provisions of Rule 22c-2 or to fulfill other regulatory or legal requirements, nor (ii) for any purpose not permitted under the privacy provisions of Title V of the Gramm-Leach-Bliley Act and comparable state laws, including, but not limited to marketing or any other similar purpose without the prior written consent of Intermediary. 2. Agreement to Restrict Trading. Intermediary agrees to execute written instructions from Fund to restrict or prohibit further purchases or exchanges of Shares by a Shareholder that has been identified by Fund as having engaged in transactions of the Fund's Shares (directly or indirectly through the Intermediary's Account) that violate policies established or utilized by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding Shares issued by the Fund. The Fund will only request a restriction on trading for a Shareholder after that Shareholder has been identified by the Fund as having potentially engaged in transactions of Fund Shares (directly or indirectly through the Intermediary's Account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the Fund. Restriction of Trading requests must be directed to the Intermediary's representatives as identified in Appendix A to this Agreement. 2.1 Form of Instructions for Restriction of Trading. Restriction of trading instructions must include the TIN or an equivalent identifying number of the Shareholder(s) or Account(s) or other agreed upon information to which the instruction relates. 2.2 Timing of Response. Intermediary agrees to execute Fund's instructions as soon as reasonably practicable, but not later than 10 business days after Fund Agent's instructions are received by the Intermediary. 2.3 Confirmation by Intermediary. Intermediary agrees to provide confirmation to Fund that Fund's instructions have been executed. Intermediary agrees to provide confirmation as soon as reasonably practicable, but not later than fifteen business days after the instructions have been executed. Intermediary also agrees to provide notice to Fund within the same amount of time in the event Intermediary cannot or has not executed such instructions. 2.4 Force Majeure. Either Party is excused from performance and shall not be liable for any delay in performance or non-performance, in whole or in part, caused by the occurrence of any event or contingency beyond the control of the Parties including, but not limited to, work stoppages, fires, civil disobedience, riots, rebellions, natural disasters, acts of God, acts of war or terrorism, actions or decrees of governmental bodies, and similar occurrences. The Party who has been so affected shall, if physically possible, promptly give written notice to the other Party and shall use its best efforts to resume performance. Upon receipt of such notice, all obligations under this Agreement shall be immediately suspended for the duration of such event or contingency. 2.5 Best Efforts and Good Faith. Both Parties mutually agree to act in good faith, utilizing their best efforts to timely and effectively execute the shareholder information sharing provisions of Rule 22c-2. Good faith and best efforts means attempting to process all relevant requests in a timely manner, or in the event such requests cannot be met within the time provisions of this agreement, to make best efforts to fulfill such requests as soon as reasonably practicable. Also, if Intermediary is aware of a possible delay in the fulfillment of a request, Intermediary will provide notice of the impending delay as soon as possible after the impending delay is discovered. In all other respects, this Agreement is controlled by the Participation Agreement between the Parties. IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed as of the date first above written. JPMORGAN INSURANCE TRUST By: Attest: -------------------------------- ----------------------------- Name: Name: -------------------------------- ----------------------------- Title: Title: -------------------------------- ----------------------------- AMERICAN GENERAL LIFE INSURANCE COMPANY By: Attest: -------------------------------- ----------------------------- Name: Name: -------------------------------- ----------------------------- Title: Title: -------------------------------- ----------------------------- Appendix A Representatives of the Intermediary Requests for Shareholder Information or Trading Restrictions must be directed to: Jennifer Powell Senior Counsel AIG American General 2929 Allen Parkway, A30-25 Houston, TX 77019 (713) 831-4954 and to: Michael McArthur Variable Products Accounting AIG American General 2727-A Allen Parkway Houston, TX 77019 (713) 831-3504 Appendix B Market Timing Policies of the Intermediary 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, other than the money market investment option, within two calendar weeks of an earlier exchange into that same variable investment option; . an exchange into a variable investment option, other than the money market investment option, within two calendar weeks of an earlier exchange out of that same variable investment option; or . exchanges into or out of the same variable investment option, other than the money market investment option, more than twice in any one calendar quarter. If any 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 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. A Policy owner's first violation of this policy will result in the suspension of Policy transfer privileges for ninety days. A Policy owner's subsequent violations of this policy will result in the suspension of Policy transfer privileges for 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. Restrictions initiated by the Funds. 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 instruct us to reject a Policy owner's transfer request. Additionally, a Fund may instruct us to restrict all purchases or transfers by a particular Policy owner, whether into or out of the Fund. We will follow the Fund's instructions. Please read the Funds' prospectuses and supplements for information about restrictions that may be initiated by the Funds. EX-99.(K)(1) 15 dex99k1.txt LEGAL OPINION & CONSENT EXHIBIT (k)(1) [AIG AMERICAN GENERAL LOGO] 2929 Allen Parkway (A30-25), Houston, Texas 77019 Lauren W. Jones Deputy General Counsel Direct Line (713) 831-8470 FAX (713) 620-3878 E-mail: Laurie_Jones@aigag.com October 1, 2007 American General Life Insurance Company 2727-A Allen Parkway Houston, TX 77019 Re: American General Life Insurance Company and American General Life Insurance Company Separate Account VL-R AIG Income Advantage VUL(SM) File No. 333-144594 and No. 811-08561 Dear Ladies and Gentlemen: As Deputy General Counsel of American General Life Companies, LLC, I have acted as counsel to American General Life Insurance Company (the "Company") in connection with the filing of Pre-Effective Amendment No. 1 to the Registration Statement on Form N-6, File Nos. 333-144594 and 811-08561 ("Registration Statement"), for the Company's Separate Account VL-R ("Separate Account VL-R") with the Securities and Exchange Commission. The Registration Statement relates to the proposed issuance by the Company of AIG Income Advantage VUL flexible premium variable life insurance policies (the "Policies"). Net premiums received under the Policies are allocated by the Company to Separate Account VL-R to the extent directed by owners of the Policies. Net premiums under other policies that may be issued by the Company may also be allocated to Separate Account VL-R. The Policies are designed to provide a death benefit and are to be offered in the manner described in the prospectus and the prospectus supplements included in the Registration Statement. The Policies will be sold only in jurisdictions authorizing such sales. In connection with rendering this opinion, I have examined and am familiar with originals or copies, certified or otherwise identified to my satisfaction, of the corporate records of the Company and all such other documents as I have deemed necessary or appropriate as a basis for the opinion expressed herein and have assumed that prior to the issuance or sale of any Policies, the Registration Statement, as finally amended, will be effective. Based on and subject to the foregoing and the limitations, qualifications, exceptions and assumptions set forth herein, I am of the opinion that: American General Life Insurance Company October 1, 2007 Page 2 1. The Company is a corporation duly organized and validly existing under the laws of the State of Texas. 2. Separate Account VL-R was duly established and is maintained by the Company pursuant to the laws of the State of Texas, under which income, gains and losses, whether or not realized, from assets allocated to Separate Account VL-R, are, in accordance with the Policies, credited to or charged against Separate Account VL-R without regard to other income, gains or losses of the Company. 3. Assets allocated to Separate Account VL-R will be owned by the Company. The Company is not a trustee with respect thereto. The Policies provide that the portion of the assets of Separate Account VL-R equal to the reserves and other Policy liabilities with respect to Separate Account VL-R will not be chargeable with liabilities arising out of any other business the Company may conduct. The Company reserves the right to transfer assets of Separate Account VL-R in excess of such reserves and other Policy liabilities to the general account of the Company. 4. When issued and sold as described above, the Policies (including any units of Separate Account VL-R duly credited thereunder) will be duly authorized and will constitute validly issued and binding obligations of the Company in accordance with their terms. I am admitted to the bar in the State of Texas, and I do not express any opinion as to the laws of any other jurisprudence. This opinion is being furnished in accordance with the requirements of Item 601(b)(5), Regulation S-K of the Securities Act of 1933 and I hereby consent to the use of this opinion as an exhibit to the Registration Statement. Sincerely, LAUREN W. JONES EX-99.(L)(1) 16 dex99l1.txt ACTUARIAL OPINION & CONSENT EXHIBIT (l)(1) [LOGO] AIG AMERICAN GENERAL Wayne Barnard, FSA, MAAA Senior Vice President October 1, 2007 American General Life Insurance Company 2727-A Allen Parkway Houston, TX 77019 Re: American General Life Insurance Company and American General Life Insurance Company Separate Account VL-R AIG Income Advantage VUL(sm) File No. 333-144594 and No. 811-08561 Ladies and Gentlemen: This opinion is furnished in connection with the filing of the Registration Statement on Form N-6, File Nos. 333-144594 and 811-08561, by American General Life Insurance Company Separate Account VL-R (the "Separate Account") and American General Life Insurance Company ("AGL") covering an indefinite number of units of interests in the Separate Account. Net premiums received under AGL's AIG Income Advantage VUL(sm) flexible premium variable life insurance policies (the "Policies") to be offered by AGL may be allocated by AGL to the Separate Account as described in the Prospectus forming a part of the Registration Statement. I am familiar with the Policies' provisions. I am also familiar with the description contained in the Prospectus. In my opinion: The table of cost of insurance rates, set forth under "Tables of Charges" in the Prospectus, contains both the current and guaranteed rates to be used for these Policies for persons of illustrative ages. These rates have not been designed so as to make the relationship between current and guaranteed rates more favorable for persons of the ages illustrated than for persons at other ages or different gender. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to my name under the heading "Actuarial Expert" in the Statement of Additional Information. Very truly yours, /s/ WAYNE A. BARNARD ------------------------------ Wayne A. Barnard Senior Vice President American General Life Companies, LLC Member of American International Group, Inc. 2929 Allen Parkway . Houston, TX 77019-2155 . 713.831.3246 . Fax 713.620.3317 . wayne_barnard@aigag.com EX-99.(N)(1) 17 dex99n1.txt PRICEWATERHOUSECOOPERS LLP CONSENT EXHIBIT (n)(1) CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the use in the Statement of Additional Information constituting part of this Pre-Effective Amendment No. 1 to the Registration Statement on Form N-6 of our report dated April 6, 2007 relating to the financial statements and financial highlights of American General Life Insurance Company Separate Account VL-R and our report dated April 27, 2007 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. PRICEWATERHOUSECOOPERS LLP Houston, Texas October 1, 2007 -----END PRIVACY-ENHANCED MESSAGE-----