-----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, HNfpSXMNgCUukQ50zVmtpgIDABTLNLXvSn6VDKjDEOw2cwdGeLq5I3x6yBgOYB04 Ig9LGvrGc+hYCiUzek+geA== 0000006342-96-000008.txt : 19960216 0000006342-96-000008.hdr.sgml : 19960216 ACCESSION NUMBER: 0000006342-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANCHOR NATIONAL LIFE INSURANCE CO CENTRAL INDEX KEY: 0000006342 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 860198983 STATE OF INCORPORATION: CA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-47472 FILM NUMBER: 96520034 BUSINESS ADDRESS: STREET 1: 1 SUNAMERICA CENTER STREET 2: C/O THOMAS B PHILLIPS CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 3107726056 MAIL ADDRESS: STREET 1: 1 SUN AMERICA CENTER CITY: LOS ANGELES STATE: CA ZIP: 90067 FORMER COMPANY: FORMER CONFORMED NAME: ANCHOR LIFE INSURANCE CO DATE OF NAME CHANGE: 19600201 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------------- ------------------ Commission File No. 33-47472 --------- ANCHOR NATIONAL LIFE INSURANCE COMPANY -------------------------------------- (Exact name of registrant as specified in its charter) Incorporated in California 86-0198983 -------------------------- ---------- (IRS Employer Identification No.) 1 SunAmerica Center, Los Angeles, California 90067-6022 Registrant's telephone number, including area code: (310) 772-6000 INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS Yes x No --- --- THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANTS COMMON STOCK ON FEBRUARY 14, 1996 WAS AS FOLLOWS: Common Stock (par value $1,000 per share) 3,511 shares ANCHOR NATIONAL LIFE INSURANCE COMPANY INDEX Page Number(s) Part I - Financial Information Consolidated Balance Sheet - December 31, 1995 and September 30, 1995 3 - 4 Consolidated Income Statement - Three Months Ended December 31, 1995 and 1994 5 Consolidated Statement of Cash Flows - Three Months Ended December 31, 1995 and 1994 6 - 7 Note to Consolidated Financial Statements 8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 19 Part II - Other Information 20 ANCHOR NATIONAL LIFE INSURANCE COMPANY PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET (Unaudited) December 31, September 30, 1995 1995 -------------- -------------- ASSETS Investments: Cash and short-term investments $ 127,286,000 $ 249,209,000 Bonds, notes and redeemable preferred stocks: Available for sale, at fair value (amortized cost: December 1995, $1,633,937,000; September 1995, $1,500,062,000) 1,648,656,000 1,489,213,000 Held for investment, at amortized cost (fair value: September 1995, $165,004,000) --- 157,901,000 Mortgage loans 92,909,000 94,260,000 Common stocks, at fair value (cost: December 1995, $5,173,000; September 1995, $6,576,000) 3,312,000 4,097,000 Real estate 40,899,000 55,798,000 Other invested assets 51,356,000 64,430,000 -------------- -------------- Total investments 1,964,418,000 2,114,908,000 Variable annuity assets 5,418,534,000 5,230,246,000 Receivable from brokers for sales of securities 18,000,000 --- Accrued investment income 15,575,000 14,192,000 Deferred acquisition costs 379,922,000 383,069,000 Other assets 47,891,000 41,282,000 -------------- -------------- TOTAL ASSETS $7,844,340,000 $7,783,697,000 ============== ============== 3 ANCHOR NATIONAL LIFE INSURANCE COMPANY PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET (Continued) (Unaudited) December 31, September 30, 1995 1995 -------------- -------------- LIABILITIES AND SHAREHOLDER'S EQUITY Reserves, payables and accrued liabilities: Reserves for fixed annuity contracts $1,473,964,000 $1,497,052,000 Reserves for guaranteed investment contracts 277,167,000 277,095,000 Payable to brokers for purchases of securities --- 155,861,000 Income taxes currently payable 21,469,000 15,720,000 Other liabilities 59,829,000 58,204,000 -------------- -------------- Total reserves, payables and accrued liabilities 1,832,429,000 2,003,932,000 -------------- -------------- Variable annuity liabilities 5,418,534,000 5,230,246,000 -------------- -------------- Subordinated notes payable to Parent 34,000,000 34,000,000 -------------- -------------- Deferred income taxes 72,934,000 73,459,000 -------------- -------------- Shareholder's equity: Common Stock 3,511,000 3,511,000 Additional paid-in capital 280,263,000 252,876,000 Retained earnings 197,172,000 191,346,000 Net unrealized gains (losses) on debt and equity securities available for sale 5,497,000 (5,673,000) -------------- -------------- Total shareholder's equity 486,443,000 442,060,000 -------------- -------------- TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $7,844,340,000 $7,783,697,000 ============== ============== See notes to financial statements. 4 ANCHOR NATIONAL LIFE INSURANCE COMPANY PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS (Continued) CONSOLIDATED INCOME STATEMENT (Unaudited)
Three Months Ended December 31, ------------------------------- 1995 1994 ------------- ------------- Investment income $ 38,653,000 $ 28,245,000 ------------- ------------- Interest expense on: Fixed annuity contracts (18,936,000) (16,666,000) Guaranteed investment contracts (4,272,000) --- Senior indebtedness (195,000) (16,000) Subordinated notes payable to Parent (633,000) (595,000) ------------- ------------- Total interest expense (24,036,000) (17,277,000) ------------- ------------- NET INVESTMENT INCOME 14,617,000 10,968,000 ------------- ------------- NET REALIZED INVESTMENT LOSSES (12,800,000) (4,791,000) ------------- ------------- Fee income: Variable annuity fees 24,290,000 20,357,000 Asset management fees 6,503,000 7,025,000 Net retained commissions 6,295,000 4,626,000 ------------- ------------- TOTAL FEE INCOME 37,088,000 32,008,000 ------------- ------------- Other income and expenses: Surrender charges 1,261,000 1,457,000 General and administrative expenses (16,997,000) (12,686,000) Amortization of deferred acquisition costs (12,846,000) (11,942,000) Other, net (1,048,000) 1,180,000 ------------- ------------- TOTAL OTHER INCOME AND EXPENSES (29,630,000) (21,991,000) ------------- ------------- PRETAX INCOME 9,275,000 16,194,000 Income tax expense (3,449,000) (5,607,000) ------------- ------------- NET INCOME $ 5,826,000 $ 10,587,000 ============= =============
See notes to financial statements. 5 ANCHOR NATIONAL LIFE INSURANCE COMPANY PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS (Continued) CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Three Months Ended December 31, ------------------------------- 1995 1994 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 5,826,000 $ 10,587,000 Adjustments to reconcile net income to net cash provided by operating activities: Interest credited to: Fixed annuity contracts 18,936,000 16,666,000 Guaranteed investment contracts 4,272,000 --- Net realized investment losses 12,800,000 4,791,000 Accretion of net discounts on investments (1,669,000) (1,658,000) Amortization of goodwill 293,000 292,000 Provision for deferred income taxes (6,541,000) (1,323,000) Change in: Accrued investment income (3,683,000) (1,135,000) Deferred acquisition costs (5,853,000) (1,291,000) Other assets (6,902,000) (4,568,000) Income taxes payable 5,749,000 7,401,000 Other liabilities 428,000 (51,000) Other, net 85,000 153,000 ------------ ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 23,741,000 29,864,000 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of: Bonds, notes and redeemable preferred stocks available for sale (230,071,000) (82,598,000) Other investments, excluding short-term investments (2,698,000) (4,102,000) Sales of: Bonds, notes and redeemable preferred stocks available for sale 186,979,000 43,732,000 Real estate --- 31,269,000 Other investments, excluding short-term investments 1,397,000 269,000 Redemptions and maturities of: Bonds, notes and redeemable preferred stocks available for sale 44,872,000 15,400,000 Bonds, notes and redeemable preferred stocks held for investment 71,000 5,313,000 Other investments, excluding short-term investments 4,086,000 7,328,000 ------------ ------------ NET CASH PROVIDED BY INVESTING ACTIVITIES 4,636,000 16,611,000 ------------ ------------ 6 ANCHOR NATIONAL LIFE INSURANCE COMPANY PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS (Continued) CONSOLIDATED STATEMENT OF CASH FLOWS (Continued) (Unaudited) Three Months Ended December 31, ------------------------------- 1995 1994 ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Premium receipts on fixed annuity contracts $ 62,536,000 $ 59,979,000 Net exchanges to (from) the fixed accounts of variable annuity contracts (36,865,000) 38,242,000 Withdrawal payments on: Fixed annuity contracts (60,577,000) (68,459,000) Guaranteed investment contracts (4,200,000) --- Claims and annuity payments on fixed annuity contracts (7,202,000) (7,106,000) Net receipts from (repayments of) other short-term financings (131,379,000) 28,567,000 Capital contribution received 27,387,000 --- ------------ ------------ NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (150,300,000) 51,223,000 ------------ ------------ NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS (121,923,000) 97,698,000 CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 249,209,000 157,438,000 ------------ ------------ CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $127,286,000 $255,136,000 ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid on indebtedness $ 661,000 $ 340,000 ============ ============ Income taxes paid (recovered) $ 4,247,000 $ (537,000) ============ ============ See notes to financial statements. 7 ANCHOR NATIONAL LIFE INSURANCE COMPANY PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation --------------------- Anchor National Life Insurance Company (the "Company") is an indirect wholly owned subsidiary of SunAmerica Inc. (the "Parent"). In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company's consolidated financial position as of December 31, 1995 and September 30, 1995, and the results of its consolidated operations and its consolidated cash flows for the three months ended December 31, 1995 and 1994. The results of operations for the three months ended December 31, 1995 are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended September 30, 1995, contained in the Company's Annual Report on Form 10-K. Certain items have been reclassified to conform to the current period's presentation. 2. Reclassification of Securities Held for Investment -------------------------------------------------- On December 1, 1995, the Company reassessed the appropriateness of classifying a portion of its portfolio of bonds, notes and redeemable preferred stock as held for investment (the "Held for Investment Portfolio"). This reassessment was made pursuant to the provisions of "Special Report: A Guide to Implementation of Statement 115 on Accounting for Certain Investments in Debt and Equity Securities," issued by the Financial Accounting Standards Board in November 1995. As a result of its reassessment, the Company reclassified all of its Held for Investment Portfolio as available for sale. At December 1, 1995, the amortized cost of the Held for Investment Portfolio aggregated $157,830,000 and its fair value was $166,215,000. Upon reclassification, the resulting net unrealized gain of $8,385,000 was credited to Net Unrealized Gains (Losses) on Debt and Equity Securities Available for Sale in the shareholder's equity section of the balance sheet. 8 ANCHOR NATIONAL LIFE INSURANCE COMPANY PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of financial condition and results of operations of Anchor National Life Insurance Company (the "Company") for the three months ended December 31, 1995 ("Fiscal 1996") and December 31, 1994 ("Fiscal 1995"). RESULTS OF OPERATIONS NET INCOME totaled $5.8 million in Fiscal 1996, compared with $10.6 million in Fiscal 1995. PRETAX INCOME totaled $9.3 million in Fiscal 1996 and $16.2 million in Fiscal 1995. This $6.9 million decline primarily resulted from increased net realized investment losses and general and administrative expenses, partially offset by an increase in net investment income and fee income. NET INVESTMENT INCOME, which is the spread between the income earned on invested assets and the interest paid on fixed annuities and other interest-bearing liabilities, increased to $14.6 million in Fiscal 1996 from $11.0 million in Fiscal 1995. These amounts represent net investment spreads of 3.00% on average invested assets (computed on a daily basis) of $1.95 billion in Fiscal 1996 and 2.78% on average invested assets of $1.58 billion in Fiscal 1995. Net investment spreads include the effect of income earned on the excess of average invested assets over average interest-bearing liabilities, which excess amounted to $133.2 million in Fiscal 1996 and $91.5 million in Fiscal 1995. The difference between the Company's yield on average invested assets and the rate paid on average interest-bearing liabilities was 2.65% in Fiscal 1996 and 2.51% in Fiscal 1995. Investment income totaled $38.7 million in Fiscal 1996, compared with $28.2 million in Fiscal 1995. Investment income increased in Fiscal 1996 as a result of an increase in investment yield on a higher level of average invested assets. The yield on average invested assets increased to 7.95% in Fiscal 1996 from 7.17% in Fiscal 1995. Over the last nine fiscal quarters, the Company's quarterly investment yields on average invested assets have ranged from 7.17% to 8.79%; however, there can be no assurance that the Company will achieve similar yields in future periods. The increased investment yield in Fiscal 1996 primarily resulted from increased partnership income, which amounted to $1.4 million in Fiscal 1996, compared with $0.3 million in Fiscal 1995. This partnership income represents a yield of 11.60% on related average assets of $48.7 million in Fiscal 1996, compared with 2.81% on related average assets of $48.6 million in Fiscal 1995. Total interest expense aggregated $24.0 million in Fiscal 1996 and $17.3 million in Fiscal 1995. The average rate paid on all interest-bearing liabilities was 5.30% (5.10% on fixed annuity contracts) in Fiscal 1996, compared with 4.66% (4.60% on fixed annuity contracts) in Fiscal 1995. Interest-bearing liabilities averaged $1.81 billion during Fiscal 1996, compared with $1.48 billion during Fiscal 1995. 9 The increase in the average rate paid on all interest-bearing liabilities during Fiscal 1996 primarily resulted from increased average crediting rates on the Company's fixed annuity contracts. Average fixed annuity crediting rates were 5.10% in Fiscal 1996 and 4.60% in Fiscal 1995. The higher average crediting rate on fixed annuity contracts in Fiscal 1996 reflects the crediting rates on contracts issued and repriced during the 1995 calendar year. In response to prevailing interest rates, these crediting rates were generally greater than those on fixed annuities outstanding in Fiscal 1995. The growth in average invested assets to $1.95 billion in Fiscal 1996 from $1.58 billion primarily reflects sales of the Company's fixed-rate products, consisting of both fixed accounts of variable annuity products and guaranteed investment contracts ("GICs"). Since December 31, 1994, fixed annuity premiums have aggregated $249.1 million. These premiums for the fixed accounts of variable annuity products totaled $62.5 million in Fiscal 1996, compared with $58.8 million in Fiscal 1995. During 1995, the Company issued GICs totaling $275.0 million, which guarantee the payment of principal and interest at variable rates for a term of one year. The Company's GICs that are purchased by asset management firms permit withdrawals with notice of 90 days. Contracts that are purchased by banks or state and local governmental authorities may permit scheduled book value withdrawals subject to terms of the underlying indenture or agreement. In pricing GICs, the Company analyzes cash flow information and prices accordingly so that it is compensated for possible withdrawals prior to maturity (see "Financial Condition and Liquidity"). NET REALIZED INVESTMENT LOSSES totaled $12.8 million in Fiscal 1996 and $4.8 million in Fiscal 1995. These amounts represent 2.63% and 1.22%, respectively, of average invested assets. Net realized investment losses include impairment writedowns of $14.9 million in Fiscal 1996 and $1.8 million in Fiscal 1995. Therefore, net gains from sales of investments totaled $2.1 million in Fiscal 1996, compared with $3.0 million of net losses in Fiscal 1995. Net gains in Fiscal 1996 include $2.7 million of net gains realized on $110.4 million of sales of bonds. These bond sales include $50.9 million of sales of mortgage-backed securities ("MBSs"), $33.7 million of sales of high- yield investments, and $15.0 million of sales of senior secured loans, all of which were primarily made to maximize total return. Net losses in Fiscal 1995 include $4.2 million of net losses realized on $46.3 million of sales of bonds. These bond sales include approximately $18.5 million of sales of certain collateralized mortgage obligations ("CMOs") and asset-backed securities, $17.6 million of sales of high yield investments and $10.0 million of sales of U.S. Treasury securities, all which were primarily made to maximize total return. Impairment writedowns in Fiscal 1996 reflect $14.9 million of provision applied to certain real estate owned in Arizona on December 31, 1995. Prior to that date, the statutory carrying value of this real estate had been guaranteed by the Company's ultimate Parent, SunAmerica Inc. ("SunAmerica"). On December 31, 1995, SunAmerica made a capital contribution to the Company through the Company's direct parent in exchange for the termination of its guaranty with respect to this real estate. Accordingly, the Company reduced the carrying value of this real estate to estimated fair value to reflect the termination of the guaranty. SunAmerica continues to guarantee the statutory carrying value of the Company's other real estate owned in Arizona. 10 Impairment writedowns in Fiscal 1995 include $1.8 million of additional provisions applied to certain interest-only strips ("IOs"). IOs, a type of MBS used as an asset-liability matching tool to hedge against rising interest rates, are investment grade securities that give the holder the right to receive only the interest payments on a pool of underlying mortgage loans. At December 31, 1995, the amortized cost of the IOs held by the Company was $4.9 million and their fair value was $7.1 million. VARIABLE ANNUITY FEES are based on the market value of assets supporting variable annuity contracts in separate accounts. Such fees increased to $24.3 million in Fiscal 1996 from $20.4 million in Fiscal 1995. This increase reflects growth in average variable annuity assets, principally due to increased market values and the receipt of variable annuity premiums, partially offset by surrenders. Variable annuity assets averaged $5.29 billion during Fiscal 1996 and $4.41 billion during Fiscal 1995. Variable annuity premiums, which exclude premiums allocated to the fixed accounts of variable annuity products, totaled $209.5 million in Fiscal 1996 and $101.8 million in Fiscal 1995. This increase in premiums can be attributed, in part, to a heightened demand for equity and bond investments, principally as a result of generally improved market performance in the 1995 calendar year. The Company has encountered increased competition in the variable annuity marketplace during recent years and anticipates that the market will remain highly competitive for the foreseeable future. ASSET MANAGEMENT FEES, which include investment advisory fees and 12b-1 distribution fees, are based on the market value of assets managed in mutual funds and private accounts by SunAmerica Asset Management Corp. Such fees totaled $6.5 million on average assets managed of $2.15 billion in Fiscal 1996 and $7.0 million on average assets managed of $2.10 billion in Fiscal 1995. Asset management fees are not proportionate to average assets managed primarily due to changes in product mix. Sales of mutual funds, excluding sales of money market accounts, amounted to $36.3 million in Fiscal 1996, compared with $29.5 million in Fiscal 1995. Redemptions of mutual funds, excluding redemptions of money market accounts, amounted to $97.6 million in Fiscal 1996, compared with $140.5 million in Fiscal 1995. NET RETAINED COMMISSIONS are primarily derived from commissions on the sales of nonproprietary investment products by the Company's broker-dealer subsidiary, after deducting the substantial portion of such commissions that is passed on to registered representatives. Net retained commissions totaled $6.3 million in Fiscal 1996 and $4.6 million in Fiscal 1995. Broker-dealer sales (mainly general securities, mutual funds and annuities) totaled $1.75 billion in Fiscal 1996 and $991.2 million in Fiscal 1995. Net retained commissions are not proportionate to sales primarily due to differences in sales mix. SURRENDER CHARGES on fixed and variable annuities totaled $1.3 million in Fiscal 1996 and $1.5 million in Fiscal 1995. Surrender charges generally are assessed on annuity withdrawals at declining rates during the first five to seven years of the contract. Withdrawal payments, which include surrenders and lump-sum annuity benefits, totaled $215.1 million in Fiscal 1996 and $212.5 million in Fiscal 1995. These payments represent 12.8% and 14.7%, respectively, of average fixed and variable annuity reserves. Withdrawals include variable annuity payments from the separate accounts totaling $154.5 million in Fiscal 1996 and $144.0 million in Fiscal 1995. Although variable 11 annuity surrenders have increased, principally as a result of growth in the variable annuity separate accounts, variable annuity withdrawal rates have declined. Variable annuity surrenders represent 11.7% and 13.1%, respectively, of average variable annuity liabilities in Fiscal 1996 and Fiscal 1995. The decrease in fixed annuity surrenders to $60.6 million in Fiscal 1996 from $68.4 million in Fiscal 1995, results primarily from unusually high surrenders in Fiscal 1995, principally due to policies coming off surrender charge restrictions and a greater volume of surrenders on a closed block of business in Fiscal 1995. Management anticipates that withdrawal rates will remain relatively stable for the foreseeable future and the Company's investment portfolio has been structured to provide sufficient liquidity for anticipated withdrawals. GENERAL AND ADMINISTRATIVE EXPENSES totaled $17.0 million in Fiscal 1996, compared with $12.7 million in Fiscal 1995. General and administrative expenses in Fiscal 1996 include expenses related to a national advertising campaign, as well as additional administrative expenses relating to a growing block of business. General and administrative expenses remain closely controlled through a company-wide cost containment program and represent approximately 1% of average total assets. AMORTIZATION OF DEFERRED ACQUISITION COSTS totaled $12.8 million in Fiscal 1996 and $11.9 million in Fiscal 1995. This increase was primarily due to additional fixed and variable annuity and mutual fund sales and the subsequent amortization of related deferred commissions and other acquisition costs. INCOME TAX EXPENSE totaled $3.4 million in Fiscal 1996 and $5.6 million in Fiscal 1995, representing effective tax rates of 37% and 35%, respectively. FINANCIAL CONDITION AND LIQUIDITY SHAREHOLDER'S EQUITY increased by $44.3 million to $486.4 million at December 31, 1995 from $442.1 million at September 30, 1995, primarily as a result of a $27.3 million cash contribution of capital and $5.8 million of net income recorded in Fiscal 1996. Shareholder's equity at December 31, 1995 was also favorably impacted by the recording of a $5.5 million net unrealized gain on debt and equity securities available for sale, an $11.2 million improvement over the $5.7 million net unrealized loss recorded at September 30, 1995. TOTAL ASSETS increased by $60.6 million to $7.84 billion at December 31, 1995 from $7.78 billion at September 30, 1995, principally due to a $188.3 million increase in the separate account for variable annuities, offset by a $150.5 million decline in invested assets. INVESTED ASSETS at December 31, 1995 totaled $1.96 billion, compared with $2.11 billion in September 30, 1995. This $150.5 million decrease primarily resulted from a $173.9 million reduction in amounts payable to brokers. The Company manages most of its invested assets internally. The Company's general investment philosophy is to hold fixed maturity assets for long-term investment. Thus, it does not have a trading portfolio. Effective December 1, 1995, pursuant to guidelines issued by the Financial Accounting Standards Board, the Company determined that all of its portfolio of bonds, notes and redeemable preferred stocks (the "Bond Portfolio") is available 12 to be sold in response to changes in market interest rates, changes in prepayment risk, the Company's need for liquidity and other similar factors. Accordingly, the Company does not presently classify a portion of its Bond Portfolio as held for investment. THE BOND PORTFOLIO had an aggregate fair value that exceeded its amortized cost by $14.7 million at December 31, 1995. At September 30, 1995, the amortized cost of the Bond Portfolio was $3.7 million above its fair value (including $10.8 million of net unrealized losses on the portion of the portfolio that was designated as available for sale). The net unrealized gains on the Bond Portfolio since September 30, 1995 principally reflect the lower relative prevailing interest rates at December 31, 1995 and their corresponding effect on the fair value of the Bond Portfolio. Approximately $1.63 billion or 99.8% of the Bond Portfolio (at amortized cost) at December 31, 1995 was rated by Standard and Poor's Corporation ("S&P"), Moody's Investors Service ("Moody's") or under comparable statutory rating guidelines established by the National Association of Insurance Commissioners ("NAIC") and implemented by either the NAIC or the Company. At December 31, 1995, approximately $1.50 billion (at amortized cost) was rated investment grade by one or both of these agencies or under the NAIC guidelines, including $1.24 billion of U.S. government/agency securities and MBSs. At December 31, 1995, the Bond Portfolio included $131.6 million (fair value, $125.5 million) of bonds not rated investment grade by S&P, Moody's or the NAIC. Based on their December 31, 1995 amortized cost, these non- investment-grade bonds accounted for 1.68% of the Company's total assets and 6.74% of invested assets. Non-investment-grade securities generally provide higher yields and involve greater risks than investment-grade securities because their issuers typically are more highly leveraged and more vulnerable to adverse economic conditions than investment-grade issuers. In addition, the trading market for these securities is usually more limited than for investment-grade securities. The Company intends that its holdings of such securities not exceed current levels, but its policies may change from time to time, including in connection with any possible acquisition. The Company had no material concentrations of non-investment-grade securities at December 31, 1995. The table on the following page summarizes the Company's rated bonds by rating classification as of December 31, 1995. 13 Summary of Rated Bonds (In thousands) Issues not rated by S&P(Moody's) Issues Rated by S&P(Moody's) By NAIC Category Total - ---------------------------------------------- ----------------------------------- ----------------------------------
Estimated NAIC Estimated Percent of Estimated S&P (Moody's) Amortized fair category Amortized fair Amortized invested fair category(1) cost value (2) cost value cost assets(3) value - --------------- ---------- ---------- -------- ---------- ----------- ---------- --------- ---------- AAA+ to A- (Aaa to A3) $1,036,159 $1,048,720 1 $275,887 $282,840 $1,312,046 67.23% $1,331,560 BBB+ to BBB- (Baa1 to Baa3) 34,869 35,569 2 151,502 152,252 186,371 9.55 187,821 BB+ to BB- (Ba1 to Ba3) 101 101 3 16,437 16,270 16,538 0.85 16,371 B+ to B- (B1 to B3) 74,434 70,656 4 35,513 35,279 109,947 5.63 105,935 CCC+ to C- (Caa to C) 4,457 2,580 5 - - 4,457 0.23 2,580 D - - 6 633 633 633 0.03 633 ---------- ---------- ---------- ---------- ---------- ---------- TOTAL RATED ISSUES $1,150,020 $1,157,626 $479,972 $487,274 $1,629,992 $1,644,900 ========== ========== ========== ========== ========== ========== (1) S&P rates debt securities in eleven rating categories, from AAA (the highest) to D (in payment default). A plus (+) or minus (-) indicates the debt's relative standing within the rating category. A security rated BBB- or higher is considered investment grade. Moody's rates debt securities in nine rating categories, from Aaa (the highest) to C (extremely poor prospects of attaining real investment standing). The number 1, 2 or 3 (with 1 the highest and 3 the lowest) indicates the debt's relative standing within the rating category. A security rated Baa3 or higher is considered investment grade. Issues are categorized based on the higher of the S&P or Moody's rating if rated by both agencies. (2) Bonds and short-term promissory instruments are divided into six quality categories for NAIC rating purposes, ranging from 1 (highest) to 5 (lowest) for nondefaulted bonds plus one category, 6, for bonds in or near default. These six categories correspond with the S&P(Moody's) rating groups listed above, with categories 1 and 2 considered investment grade. A substantial portion of the assets in the NAIC categories were rated by the Company based on its implementation of NAIC rating guidelines. (3) At amortized cost.
14 SENIOR SECURED LOANS ("Secured Loans") are included in the Bond Portfolio and their amortized cost aggregated $93.7 million at December 31, 1995. Secured Loans are senior to subordinated debt and equity, and are secured by assets of the issuer. At December 31, 1995, Secured Loans consisted of loans to 29 borrowers spanning 10 industries, with 32% of these assets (at amortized cost) concentrated in the leisure industry and with no other industry concentration constituting more than 11% of these assets. While the trading market for Secured Loans is more limited than for publicly traded corporate debt issues, management believes that participation in these transactions has enabled the Company to improve its investment yield. Although, as a result of restrictive financial covenants, Secured Loans involve greater risk of technical default than do publicly traded investment-grade securities, management believes that the risk of loss upon default for its Secured Loans is mitigated by their financial covenants and senior secured positions. The majority of the Company's Secured Loans are not rated by S&P or Moody's. MORTGAGE LOANS aggregated $92.9 million at December 31, 1995 and consisted of 14 first mortgage loans with an average loan balance of approximately $6.6 million, collateralized by properties located in 8 states. Approximately 24% of the portfolio was office, 22% was hotel, 18% was retail, 18% was multifamily residential and 18% was other types. At December 31, 1995, approximately 22% of the portfolio was secured by properties located in Colorado, approximately 18% by properties located in New Jersey and approximately 17% by properties in California. No more than 13% of the portfolio was secured by properties in any other single state. At December 31, 1995, there was one loan with an outstanding balance of $20 million or more, which loan aggregated approximately 22% of the portfolio. At December 31, 1995, approximately 34% of the mortgage loan portfolio consisted of loans with balloon payments due before January 1, 1999. At December 31, 1995, there were no loans delinquent by more than 90 days. There were no loans foreclosed upon and transferred to real estate in the balance sheet during Fiscal 1996. Approximately 65% of the mortgage loans in the portfolio at December 31, 1995 were seasoned loans underwritten to the Company's standards and purchased at or near par from another financial institution which was downsizing its portfolio. Such loans generally have higher average interest rates than loans that could be originated today. The balance of the mortgage loan portfolio has been originated by the Company under strict underwriting standards. Commercial mortgage loans on properties such as offices, hotels and shopping centers generally represent a higher level of risk than do mortgage loans secured by multifamily residences. This greater risk is due to several factors, including the larger size of such loans and the effects of general economic conditions on these commercial properties. However, due to the seasoned nature of the Company's mortgage loans and its strict underwriting standards, the Company believes that it has reduced the risk attributable to its mortgage loan portfolio while maintaining attractive yields. At December 31, 1995, mortgage loans having an aggregate carrying value of $23.3 million had been restructured. Of this amount, $16.5 million was restructured during fiscal 1995 and $6.8 million was restructured during fiscal 1992. No mortgage loans were restructured during Fiscal 1996. 15 REAL ESTATE aggregated $40.9 million at December 31, 1995 and consisted of non-income producing land in the Phoenix, Arizona metropolitan area. Of this amount, the Company has undertaken to dispose of $28.4 million during the next year, either to affiliated or nonaffiliated parties; and SunAmerica Inc., the ultimate parent, has guaranteed that the Company will receive its statutory carrying value of these assets. OTHER INVESTED ASSETS aggregated $51.4 million at December 31, 1995, including $35.6 million of investments in limited partnerships and an aggregate of $15.8 million of miscellaneous investments, including policy loans, CMO residuals and leveraged leases. The Company's limited partnership interests primarily include partnerships that are accounted for by using the cost method of accounting and that invest mainly in equity securities. ASSET-LIABILITY MATCHING is utilized by the Company to minimize the risks of interest rate fluctuations and disintermediation. The Company believes that its fixed-rate liabilities should be backed by a portfolio principally composed of fixed maturities that generate predictable rates of return. The Company does not have a specific target rate of return. Instead, its rates of return vary over time depending on the current interest rate environment, the slope of the yield curve, the spread at which fixed maturities are priced over the yield curve and general competitive conditions within the industry. Its portfolio strategy is designed to achieve adequate risk-adjusted returns consistent with its investment objectives of effective asset-liability matching, liquidity and safety. The Company designs its fixed-rate products and conducts its investment operations in order to closely match the duration of the assets in its investment portfolio to its annuity and GIC obligations. The Company seeks to achieve a predictable spread between what it earns on its assets and what it pays on its liabilities by investing principally in fixed maturities. The Company's fixed-rate products incorporate surrender charges or other limitations on when contracts can be surrendered for cash to encourage persistency. Approximately 54% of the Company's fixed annuity reserves had surrender penalties or other restrictions at December 31, 1995. As part of its asset-liability matching discipline, the Company conducts detailed computer simulations that model its fixed-maturity assets and liabilities under commonly used stress-test interest rate scenarios. Based on the results of these computer simulations, the investment portfolio has been constructed with a view to maintaining a desired investment spread between the yield on portfolio assets and the rate paid on its reserves under a variety of possible future interest rate scenarios. At December 31, 1995, the weighted average life of the Company's investments was approximately four years and the duration was approximately three years. Weighted average life is defined as the average time to receipt of all principal, incorporating the effects of scheduled amortization and expected prepayments, weighted by book value. Duration is a common measure for the price sensitivity of a fixed-income security or portfolio to changes in interest rates. It is the weighted average time to receipt of all expected cash flows, both principal and interest, including the effects of scheduled amortization and expected prepayments, in which the weight attached to each year of receipt is the proportion of the present value of cash to be received during that year to the total present value of the portfolio. 16 The Company also seeks to provide liquidity by using reverse repurchase agreements ("Reverse Repos"), Dollar Rolls and by investing in MBSs. It also seeks to enhance its spread income by using Reverse Repos and Dollar Rolls. Reverse Repos involve a sale of securities and an agreement to repurchase the same securities at a later date at an agreed upon price and are generally over- collateralized. Dollar Rolls are similar to Reverse Repos except that the repurchase involves securities that are only substantially the same as the securities sold and the arrangement is not collateralized, nor is it governed by a repurchase agreement. MBSs are generally investment-grade securities collateralized by large pools of mortgage loans. MBSs generally pay principal and interest monthly. The amount of principal and interest payments may fluctuate as a result of prepayments of the underlying mortgage loans. There are risks associated with some of the techniques the Company uses to provide liquidity, enhance its spread income and match its assets and liabilities. The primary risk associated with Dollar Rolls and Reverse Repos is counterparty risk. The Company believes, however, that the counterparties to its Dollar Rolls and Reverse Repos are financially responsible and that the counterparty risk associated with those transactions is minimal. Counterparty risk associated with Dollar Rolls is further mitigated by the Company's participation in an MBS trading clearinghouse. The sell and buy transactions that are submitted to this clearinghouse are marked to market on a daily basis and each participant is required to over-collateralize its net loss position by 30% with either cash, letters of credit or government securities. The primary risk associated with MBSs is that a changing interest rate environment might cause prepayment of the underlying obligations at speeds slower or faster than anticipated at the time of their purchase. INVESTED ASSETS EVALUATION routinely includes a review by the Company of its portfolio of debt securities. Management identifies monthly those investments that require additional monitoring and carefully reviews the carrying value of such investments at least quarterly to determine whether specific investments should be placed on a nonaccrual basis and to determine declines in value that may be other than temporary. In making these reviews for bonds, management principally considers the adequacy of collateral (if any), compliance with contractual covenants, the borrower's recent financial performance, news reports and other externally generated information concerning the creditor's affairs. In the case of publicly traded bonds, management also considers market value quotations, if available. For mortgage loans, management generally considers information concerning the mortgaged property and, among other things, factors impacting the current and expected payment status of the loan and, if available, the current fair value of the underlying collateral. The carrying values of bonds that are determined to have declines in value that are other than temporary are reduced to net realizable value and no further accruals of interest are made. The valuation allowances on mortgage loans are based on losses expected by management to be realized on transfers of mortgage loans to real estate, on the disposition and settlement of mortgage loans and on mortgage loans that management believes may not be collectible in full. Accrual of interest is suspended when principal and interest payments on mortgage loans are past due more than 90 days. DEFAULTED INVESTMENTS, comprising all investments (at amortized cost) that are in default as to the payment of principal or interest, totaled $5.0 17 million (fair value, $3.1 million) at December 31, 1995. At December 31, 1995 defaulted investments constituted 0.3% of total invested assets at amortized cost. At September 30, 1995, defaulted investments totaled $5.0 million, which constituted 0.2% of total invested assets at amortized cost. SOURCES OF LIQUIDITY are readily available to the Company in the form of existing cash and short-term investments, Reverse Repo capacity on invested assets and, if required, proceeds from invested asset sales. At December 31, 1995, approximately $1.32 billion of the Company's Bond Portfolio had an aggregate unrealized gain of $37.9 million, while approximately $313.1 million of the Bond Portfolio had an aggregate unrealized loss of $23.2 million. In addition, the Company's investment portfolio also currently provides approximately $21.5 million of monthly cash flow from scheduled principal and interest payments. Management is aware that prevailing market interest rates may shift significantly and has strategies in place to manage either an increase or decrease in prevailing rates. In a rising interest rate environment, the Company's average cost of funds would increase over time as it prices its new and renewing annuities and GICs to maintain a generally competitive market rate. Management would seek to place new funds in investments that were matched in duration to, and higher yielding than, the liabilities assumed. The Company believes that liquidity to fund withdrawals would be available through incoming cash flow, the sale of short-term or floating-rate instruments or Reverse Repos on the Company's substantial MBS segment of the Bond Portfolio, thereby avoiding the sale of fixed-rate assets in an unfavorable bond market. In a declining rate environment, the Company's cost of funds would decrease over time, reflecting lower interest crediting rates on its fixed annuities and GICs. Should increased liquidity be required for withdrawals, the Company believes that a significant portion of its investments could be sold without adverse consequences in light of the general strengthening that would be expected in the bond market. REGULATION The Company is subject to regulation and supervision by the states in which it is authorized to transact business. State insurance laws establish supervisory agencies with broad administrative and supervisory powers related to granting and revoking licenses to transact business, regulating marketing and other trade practices, operating guaranty associations, licensing agents, approving policy forms, regulating certain premium rates, regulating insurance holding company systems, establishing reserve requirements, prescribing the form and content of required financial statements and reports, performing financial and other examinations, determining the reasonableness and adequacy of statutory capital and surplus, regulating the type and amount of investments permitted, limiting the amount of dividends that can be paid and the size of transactions that can be consummated without first obtaining regulatory approval and other related matters. During the last decade, the insurance regulatory framework has been placed under increased scrutiny by various states, the federal government and the NAIC. Various states have considered or enacted legislation that changes, and in many cases increases, the states' authority to regulate insurance 18 companies. Legislation has been introduced from time to time in Congress that could result in the federal government assuming some role in the regulation of insurance companies. In recent years, the NAIC has approved and recommended to the states for adoption and implementation several regulatory initiatives designed to reduce the risk of insurance company insolvencies. These initiatives include new investment reserve requirements, risk-based capital standards and restrictions on an insurance company's ability to pay dividends to its stockholders. The NAIC is also currently developing model laws to govern insurance company investments. Current proposals are still being debated and the Company is monitoring developments in this area and the effects any changes would have on the Company. SunAmerica Asset Management is registered with the Securities and Exchange Commission (the "Commission") as a registered investment adviser under the Investment Advisers Act of 1940. The mutual funds that it markets are subject to regulation under the Investment Company Act of 1940. SunAmerica Asset Management and the mutual funds are subject to regulation and examination by the Commission. In addition, variable annuities and the related separate accounts of the Company are subject to regulation by the Commission under the Securities Act of 1933 and the Investment Company Act of 1940. The Company's broker-dealer subsidiary is subject to regulation and supervision by the states in which it transacts business, as well as by the National Association of Securities Dealers, Inc. (the "NASD"). The NASD has broad administrative and supervisory powers relative to all aspects of business and may examine the subsidiary's business and accounts at any time. 19 ANCHOR NATIONAL LIFE INSURANCE COMPANY PART II - OTHER INFORMATION Item 1. Legal Proceedings ----------------- Not applicable. Item 2. Changes in Securities --------------------- Not applicable. Item 3. Defaults Upon Senior Securities ------------------------------- Not applicable. Item 4. Submissions of Matters to a Vote of Security Holders ---------------------------------------------------- Not applicable. Item 5. Other Information ----------------- The Company received approvals from the State of California Department of Insurance and the Arizona Department of Insurance to redomesticate to the state of Arizona effective January 1, 1996. Item 6. Exhibits and Reports on Form 8-K -------------------------------- EXHIBITS Exhibit No. Description - ------- ----------- 3(a) Amended and Restated Articles of Incorporation dated December 22, 1995. 3(b) Amended and Restated Bylaws, as adopted on January 1, 1996. 4 Amended and Restated Articles of Incorporation dated December 22, 1995. See Exhibit 3(a). 27 Financial Data Schedule. No Current Report on Form 8-K was filed during the three months ended December 31, 1995. 20 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANCHOR NATIONAL LIFE INSURANCE COMPANY Date: February 14, 1996 By:/s/ SCOTT L. ROBINSON - ------------------------ ------------------------ Scott L. Robinson Senior Vice President and Director Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated: Signature Title Date - --------- ----- ---- /s/ SCOTT L. ROBINSON Senior Vice President and February 14, 1996 - ------------------------ Director (Principal Financial ------------------ Scott L. Robinson Officer) /s/ N. SCOTT GILLIS Senior Vice President and February 14, 1996 - ------------------------ Controller (Principal ----------------- N. Scott Gillis Accounting Officer) 21 ANCHOR NATIONAL LIFE INSURANCE COMPANY LIST OF EXHIBITS FILED Exhibit No. Description - ------- ----------- 3(a) Amended and Restated Articles of Incorporation dated December 22, 1995. 3(b) Amended and Restated Bylaws, as adopted on January 1, 1996. 4 Amended and Restated Articles of Incorporation dated December 22, 1995. See Exhibit 3(a). 27 Financial Data Schedule. EX-3.A 2 [STAMP] AZ. CORP. COMMISSION Arizona Department of Insurance FILED By: /s/ BARBARA E. LEWIS Appr. /s/ CAROLYN LEMON Title: Compliance Section Manager Term Date: 12/22/95 DATE 12-26-95 0765111-0 AMENDED AND RESTATED ARTICLES OF INCORPORATION AND ARTICLES OF REDOMESTICATION OF ANCHOR NATIONAL LIFE INSURANCE COMPANY We, the undersigned, acting as incorporatiors for the purpose of redomesticating Anchor National Life Insurance Company, a California corporation, which intends to continue its existence, without interruption, as a corporation organized under the laws of the State of Arizona pursuant to Arizona Revised Statutes 20-231.A, do hereby adopt the following Amended and Restated Articles of Incorporation and Articles of Redomestication for said corporation. ARTICLE I The name of the corporation shall be Anchor National Life Insurance Company. ARTICLE II The corporation was incorporated in the State of California on April 12, 1965. ARTICLE III The existence of the corporation shall be perpetual ARTICLE IV Upon the approval of these Amended and Restated Articles of Incorporation and Articles of Redomestication by the necessary regulatory authorities, Anchor National Life Insurance Company shall be and continue to be possessed of all privileges, franchises and powers to the same extent as if it had been originally incorporated under the laws of the State of Arizona; and all privileges, franchises and powers belonging to said corporation, and all property, real, personal and mixed, and all debts due on whatever account, all Certificates of Authority, agent appointments, and all chooses in action, shall be and the same are hereby ratified, approved, confirmed and assured to Anchor National Life Insurance Company with like effect and to all intents and purposes as if it had been originally incorporated under the laws of the State of Arizona. Said corporation shall be given recognition as a domestic corporation of the State of Arizona from and after April 12, 1965, and as a domestic insurer of the State of Arizona from under the laws of the State of California and authorization to transact insurance business under the laws of the State of Arizona, effective the latter of january 1, 1996 or the date of filing with the Arizona Corporation Commission. ARTICLE V The nature of the business to be transacted and the objects and purposes for which this corporation is organized include the transaction of any and all lawful business for which insurance corporations may be incorporated under the laws of the State of Arizona without limitation, and as said laws may be amended from time to time, and specifically said corporation shall be authorized to transact life insurance, disability insurance and annuities, as defined under Arizona Revised Statutes, Section 20-254, 20-253 and 20-254.01 respectively, together with such other kinds of insurance as the corporation may from time to time be authorized to transact, and to act as a reinsurer of business for which it is duly authorized. Consistent with the applicable federal and state requirements, the Company may issue funding agreements and guaranteed investment contracts as defined under Arizona Revised Statutes, Section 20-208. ARTICLE VI The authorized capital of the corporation shall be $4,000,000, and shall consist of 4,000 shares of voting common stock with a pr value of $1,000.00 per share. No holders of stock of the corporation shall have any preferential right to subscription to any shares or securities convertible into shares of stock of the corporation, nor any right of subscription to any thereof other than such, if any, as the Board of Directors in its discretion may determine, and at such price as the Board of Directors in its discretion may fix; and any shares or convertible securities which the Board of Directors may determine to offer for subscription to the holders of stock at the time existing. Nothing herein contained shall be construed as prohibiting the corporation from issuing any shares of authorized but unissued common stock for such consideration as the Board of Directors may determine, provided such issuance is approved by the shareholders of the corporation by a majority of the votes entitled to be cast at any annual or special meeting of shareholders called for that purpose. No such authorized but unissued stock may, however, be issued to the shareholders of the corporation by way of a stock dividend, split-up or in any other manner of distribution unless the same ratable stock dividend, stock split-up or other distribution be declared or made in voting common stock to the holder of such voting common stock at the time outstanding. Each holder of common stock shall be entitled to participate share for share in any cash dividends which may be declared from time to time on the common stock of the corporation by the Board of Directors and to receive pro rata the net assets of the corporation on liquidation. ARTICLE VII The affairs of the corporation shall be conducted by a Board of Directors consisting of not less than five (5) nor more than fifteen (15) directors as fixed by the bylaws, and such officers as said directors may at any time elect or appoint. No officer or director need be a shareholder of this corporation. Ten (10) directors shall constitute the initial Board of Directors. The names and addresses of the persons who are to serve as directors until the next annual meeting of shareholders or until their successors are elected and qualified, and of the persons who are to serve as officers until the next annual meeting of the directors or until their successors are elected and qualify, are: Board of Directors Eli Broad, Chairman 1 SunAmerica Center, Century City Los Angeles, California 90067-6022 James Richard Belardi, Director 1 SunAmerica Center, Century City Los Angeles, California 90067-6022 Lorin Merrill Fife, III, Director 1 SunAmerica Center, Century City Los Angeles, California 90067-6022 Jana Waring Greer, Director 1 SunAmerica Center, Century City Los Angeles, California 90067-6022 Susan Louis Harris, Director 1 SunAmerica Center, Century City Los Angeles, California 90067-6022 Gary Walden Krat, Director 1 SunAmerica Center, Century City Los Angeles, California 90067-6022 Director (Vacant) 1 SunAmerica Center, Century City Los Angeles, California 90067-6022 Peter McMillian, Director 1 SunAmerica Center, Century City Los Angeles, California 90067-6022 Scott Lawrence Robinson, Director 1 SunAmerica Center, Century City Los Angeles, California 90067-6022 Jay Steven Wintrob, Director 1 SunAmerica Center, Century City Los Angeles, California 90067-6022 Officers Victor Edward Akin, Vice President Eli Broad, President and Chief Executive Officer James Richard Belardi, Senior Vice President Lorin Merrill Fife, III, Senior Vice President, General Counsel and and Assistant Secretary Michael Lee Fowler, Vice President Nelson Scott Gillis, Senior Vice President and Controller Jana Waring Greer, Senior Vice President J. Franklin Grey, Vice President Susan Louise Harris, Senior Vice President and Secretary Keith Bernard Jones, Vice President Gary Walden Krat, Senior Vice President Michael Lee Lindquist, Vice President Edward Poli Nolan, Jr., Vice President Gregory Mark Outcalt, Vice President Edwin Raquel Reoliquio, Senior Vice President and Actuary Scott Harris Richland, Vice President and Treasurer Scott Lawrence Robinson, Senior Vice President James Warren Rowan, Vice President Jay Steven Wintrob, Executive Vice President The directors shall have the power to adopt, amend, alter and repeal the Bylaws, to manage the corporate affairs and make all rules and regulations expedient for the management of the affairs of the corporation, to remove any officer and to fill all vacancies occurring in the Board of Directors and offices for any cause, and to appoint from their own number an executive committee and other committees and vest said committees with all the powers permitted by the Bylaws. ARTICLE VIII Subject to the further provisions hereof, the corporation shall indemnify any and all of its existing and former directors and officers and their spouses against all expenses incurred by them and each of them, including but not confined to legal fees, judgements and penalties which may be incurred, rendered or levied in any legal or administrative action brought against any of them, for or on account of any action or omission alleged to have been committed while acting within the scope of employment as a director or officer of the coproration to the fullest extent allowable pursuant to A.R.S. 10-005, et al. as may be amended from time to time. Whenever any such person has grounds to believe that he may incur any such aforementioned expense, he shall promptly make a full report of the matter to the President and the Secretary of the Corporation. Thereafter, the Board of Directors of the corporation shall, within a reasonable time, determine if such person acted, or failed to act, in good faith and in a manner her reasonably believed to be in or not opposed to the best interest of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, them indemnification shall be mandatory and shall be automatically extended as specified herein, provided, however, that the corporation shall have the right to refuse indemnification, wholly or partially, in any instance in which the person to whom indemnification would otherwise have been applicable shall have unreasonably refused to permit the corporation, at its own expense and through counsel of its own choosing, to defend him in the action, or shall have unreasonable refused to cooperate in the defense of such action. ARTICLE IX All directors of the corporation shall be elected at the annual meeting of the shareholders, which shall be held on the third Thursday of March of each ear or such other date and time as may be determined by the Board of Directors, unless such day falls on a holiday, in which event the regular annual meeting shall be held on the next succeeding business day. ARTICLE X The principal place of business of the corporation shall be located in the City of Phoenix, Maricopa County, Arizona, but it may have other places of business and transact business, and its Board of Directors or shareholders may meet for the transaction of business, at such other place or places within or without the State of Arizona which its Board of Directors may designate. ARTICLE XI The fiscal year of the corporation shall be the calendar year. ARTICLE XII In no event shall the corporation incur indebtedness in excess of the amount authorized by law. ARTICLE XIII The shares of the corporation, when issued, shall be nonassessable, except to the extent required by the Constitution, specifically, but not in limitation thereof, as provided by Article XIV, Section 11 of the Constitution of the State of Arizona and the laws of the State of Arizona. ARTICLE XIV The private property of the shareholders, directors and officers of the corporation shall be forever exempt from debts and obligations of the corporation. ARTICLE XV The Bylaws of the corporation may be repealed, altered amended, or substitute Bylaws may be adopted, by the directors or the shareholders, in accordance with the provisions contained in said Bylaws. ARTICLE XVI J. Michael Low of 2999 North 44th Street, Suite 250, Phoenix, Arizona, 85018, having been a bona fide resident of Arizona for at least three (3) years, is hereby appointed the statutory agent of this corporation in the State of Arizona, upon whom notices and processes, including service of summons, may be served, and which, when so served shall have lawful personal service on the corporation. The board of Directors may revoke this appointment at any time, and shall fill the vacancy in such position whenever one exists. ARTICLE XVII The names and addresses of the incorporators of the corporation are: J. Michael Low Low & Childers, P.C. 2999 North 44th Street, Suite 250 Phoenix, Arizona 85018 S. David Childers Low & Childers, P.C. 2999 North 44th Street, Suite 250 Phoenix, Arizona 85018 Steven R. Henry Low & Childers, P.C. 2999 North 44th Street, Suite 250 Phoenix, Arizona 85018 Carrie M. McDonald Low & Childers, P.C. 2999 North 44th Street, Suite 250 Phoenix, Arizona 85018 Kathy A. Steadman Low & Childers, P.C. 2999 North 44th Street, Suite 250 Phoenix, Arizona 85018 All individual incorporators are eighteen (18) years of age or older. All powers, duties and responsibilities of the incorporators shall cease at the time of delivery of these Amended and Restated Articles of Incorporation and Articles of Redomestication to the Arizona Corporation Commission for filing. IN WITNESS WHEREOF, we hereunto affix our signatures as of the 14th day of December, 1995 /S/J. Michael Low /S/S. David Childers - --------------------- ---------------------- J. Michael Low S. David Childers /S/Steven R. Henry /S/Carrie M. McDonald - --------------------- ---------------------- Steven R. Henry Carrie M. McDonald /S/Kathy A. Steadman - --------------------- Kathy A. Steadman Subscribed, sworn to and acknowledged before me this 14th day of December, 1995. /S/Lori Barbus (Notary Public) My commission Expires: 8/15/97 APPOINTMENT OF STATUTORY AGENT I, J. Michael Low, being a resident of the State of Arizona for at least three (3) years preceding this appointment, do hereby accept appointment as Statutory Agent for Anchor National Life Insurance Company in accordance with the Arizona Revised Statutes until appointment of a successor Statutory Agent and removal. DATED, this 14th day of December, 1995. /S/J. Michael Low ------------------------ J. Michael Low, Esq. Low & Childers, P.C. STATE OF CALIFORNIA CHUCK QUACKENBUSH, Insurance Commissioner DEPARTMENT OF INSURANCE 45 FREMONT STREET SAN FRANCISCO, CA 94105 December 21, 1995 Mr. Lorin M. Fife, Esq. Senior Vice President and General Counsel Anchor National Life Insurance Company One SunAmerica Center Century City Los Angeles, CA 90067-6022 SUBJECT: Approval of Redomestication of Anchor National Life Insurance Company from California to Arizona Dear Mr. Fife: With this letter, the redomestication of your company from California to Arizona is hereby approved, pursuant to the authority granted by California Insurance Code Section 709.5. The company's Plan of Redomestication, dated October 5, 1995, is also hereby approved. The effective date of redomestication shall be January 1, 1996. Pursuant to documents filed with this Department, Susan L. Harris will appear on our records as the agent for service of process upon the company. Upon completion of the redomestication, please forward to us a true copy of the formal approval granted by the State of Arizona, along with any other necessary documents which may be needed to update our records at that point. This letter, or a true copy thereof, should be retained among the company's permanent corporate records, since it is the sole evidence of the approval of the effective date of Anchor National's Life redomiciling, until such time as you receive the Amended Certificate of Authority. If you have any questions, please feel free to contact the undersigned. Very truly yours, CHUCK QUACKENBUSH Insurance Commissioner By /S/FREDRIC MENDELSOHN Staff Counsel (415) 904-9446 FM:ams cc: David Saltsman - Anchor National Life Steve Ferguson, Sr. Analyst - Arizona Department of Insurance Susan Stapp, Legal Division Dan Vasco, Financial Analysis Division Kay Park, Financial Analysis Division Gloria Munar, CAB CAB Corporate Affairs Desk STATE OF ARIZONA DEPARTMENT OF INSURANCE State of Arizona FILED Dec. 26, 1995 Department of Insurance By [illegible] In the Matter of the ) Docket No. 95-272 Redomestication of ) ) ANCHOR NATIONAL LIFE ) INSURANCE COMPANY, ) ORDER APPROVING ) REDOMESTICATION Petitioner. ) - -------------------------- Anchor National Life Insurance Company ("Anchor National"), NAIC No. 60941, a California domestic insurer, has applied to the Director of Insurance for the State of Arizona ("Director") for approval to change its domicile from California to Arizona. After reviewing the filings, correspondence, and information provided to the Arizona Department of Insurance (("Department"), the Director makes the following findings of fact and conclusions of law and issues the following order: 1. Anchor National is a stock life and disability insurer organized in the State of California, and is duly admitted as a life and disability insurer in the State of Arizona. Anchor National is seeking redomestication to Arizona. 2. Anchor National has complied with all requirements of law relative to the organization of a domestic insurer and has designated its principal place of business at a place in this state. 3. The provisions of A.R.S. 20-231(A) have been complied with and Anchor National is entitled to a certificate of authority to transact insurance in this state and is subject to the authority and jurisdiction of this state. NOW, THEREFORE, I, CHRIS HERSTAM, the Director of Insurance, do hereby order that: 1. The Application for Redomestication of Anchor National from the State of California to the State of Arizona is approved to be effective January 1, 1996. DATED this 26th day of December, 1995. /S/ [illegible] ----------------------- for Chris Herstam Director of Insurance COPY of the foregoing mailed/delivered this 26th day of December, 1995, to: Charles R. Cohen, Deputy Director Gregory Y. Harris, Executive Assistant Director Gary Torticill, Assistant Director Deloris Williamson, Assistant Director Nancy Howse, Deputy Chief Analyst Steven P. Ferguson, Senior Analyst Scott Greenberg, Business Administrator Department of Insurance 2910 N. 44th Street, Suite 210 Phoenix, Arizona 85018 J. Michael Low Low & Childers, P.C. 2999 N. 44th St., Ste. 250 Phoenix, Arizona 85018 Lorin Fife Senior Vice President/General Counsel SunAmerica Life Insurance Company One SunAmerica Center Century City Los Angeles, CA 90067-6022 Charles Quackenbush State of California Department of Insurance 800 Capitol Mall, Suite 1500 Sacramento, CA 95814 Fredrick Mendelsohn Staff Counsel State of California Department of Insurance 45 Fremont Street San Francisco, CA 94105 /S/ Charis Crawford - -------------------- Chris Crawford ATTACHMENT TO CERTIFICATE OF DISCLOSURE OF ANCHOR NATIONAL LIFE INSURANCE COMPANY The undersigned is a member of or employee of Low & Childers, P.C., a law firm with its office located at 2999 North 44th Street, Suite 250, Phoenix, Arizona 85018. It is possible that the undersigned may have acted as incorporator of on or more corporations at the request of and on behalf of the clients of Low & Childers, P.C. With respect to such activity, the undersigned was acting solely in connection with the representation of clients by Low & Childers, P.C. and did not have any beneficial interest in any such corporation nor did the undersigned have any duties or responsibilities with respect to such corporation except in connection with the representation of clients of the law firm or Low & Childers, P.C. It is possible that one or more of such corporations may have been placed in bankruptcy or receivership or had its charter revoked during the time the corporation was being represented by Low & Childers, P.C. or subsequent thereto. In connection with each such corporation, the undersigned would not have been a principal thereof, but would have at most acted as a member or employee of Low & Childers, P.C. in connection with the legal representation thereof. It is not possible to determine from the records of the office of Low & Childers, P.C. or from the records of the Arizona Corporation Commission a list of all clients at the office of Low & Childers, P.C. which were involved in bankruptcy or receivership proceedings or charter revocations during the period of time such clients were represented by Low & Childers, P.C. and, with respect to such corporations, to determine whether the undersigned had ever served as an incorporator of any such corporations. The above information is applicable solely to the participation of the undersigned, if any, with respect to corporations as to which the undersigned's sole participation was in connection with the representation of a client of Low & Childers, P.C. The above statement does not apply to the participation by the undersigned, if any, if any corporation in which the undersigned owned a proprietary, beneficial, or membership interest greater than 20% or in which the undersigned served as director, officer, trustee or incorporator otherwise than in connection with representations of clients of Low & Childers, P.C. Date of Signing: 12/14/95 /S/ S. David Childers anchor cert.dis 10431-104 ATTACHMENT TO CERTIFICATE OF DISCLOSURE OF ANCHOR NATIONAL LIFE INSURANCE COMPANY The undersigned is a member of or employee of Low & Childers, P.C., a law firm with its office located at 2999 North 44th Street, Suite 250, Phoenix, Arizona 85018. It is possible that the undersigned may have acted as incorporator of on or more corporations at the request of and on behalf of the clients of Low & Childers, P.C. With respect to such activity, the undersigned was acting solely in connection with the representation of clients by Low & Childers, P.C. and did not have any beneficial interest in any such corporation nor did the undersigned have any duties or responsibilities with respect to such corporation except in connection with the representation of clients of the law firm or Low & Childers, P.C. It is possible that one or more of such corporations may have been placed in bankruptcy or receivership or had its charter revoked during the time the corporation was being represented by Low & Childers, P.C. or subsequent thereto. In connection with each such corporation, the undersigned would not have been a principal thereof, but would have at most acted as a member or employee of Low & Childers, P.C. in connection with the legal representation thereof. It is not possible to determine from the records of the office of Low & Childers, P.C. or from the records of the Arizona Corporation Commission a list of all clients at the office of Low & Childers, P.C. which were involved in bankruptcy or receivership proceedings or charter revocations during the period of time such clients were represented by Low & Childers, P.C. and, with respect to such corporations, to determine whether the undersigned had ever served as an incorporator of any such corporations. The above information is applicable solely to the participation of the undersigned, if any, with respect to corporations as to which the undersigned's sole participation was in connection with the representation of a client of Low & Childers, P.C. The above statement does not apply to the participation by the undersigned, if any, if any corporation in which the undersigned owned a proprietary, beneficial, or membership interest greater than 20% or in which the undersigned served as director, officer, trustee or incorporator otherwise than in connection with representations of clients of Low & Childers, P.C. Date of Signing: 12/14/95 /S/ Carrie M. McDonald anchor cert.dis 10431-104 ATTACHMENT TO CERTIFICATE OF DISCLOSURE OF ANCHOR NATIONAL LIFE INSURANCE COMPANY The undersigned is a member of or employee of Low & Childers, P.C., a law firm with its office located at 2999 North 44th Street, Suite 250, Phoenix, Arizona 85018. It is possible that the undersigned may have acted as incorporator of on or more corporations at the request of and on behalf of the clients of Low & Childers, P.C. With respect to such activity, the undersigned was acting solely in connection with the representation of clients by Low & Childers, P.C. and did not have any beneficial interest in any such corporation nor did the undersigned have any duties or responsibilities with respect to such corporation except in connection with the representation of clients of the law firm or Low & Childers, P.C. It is possible that one or more of such corporations may have been placed in bankruptcy or receivership or had its charter revoked during the time the corporation was being represented by Low & Childers, P.C. or subsequent thereto. In connection with each such corporation, the undersigned would not have been a principal thereof, but would have at most acted as a member or employee of Low & Childers, P.C. in connection with the legal representation thereof. It is not possible to determine from the records of the office of Low & Childers, P.C. or from the records of the Arizona Corporation Commission a list of all clients at the office of Low & Childers, P.C. which were involved in bankruptcy or receivership proceedings or charter revocations during the period of time such clients were represented by Low & Childers, P.C. and, with respect to such corporations, to determine whether the undersigned had ever served as an incorporator of any such corporations. The above information is applicable solely to the participation of the undersigned, if any, with respect to corporations as to which the undersigned's sole participation was in connection with the representation of a client of Low & Childers, P.C. The above statement does not apply to the participation by the undersigned, if any, if any corporation in which the undersigned owned a proprietary, beneficial, or membership interest greater than 20% or in which the undersigned served as director, officer, trustee or incorporator otherwise than in connection with representations of clients of Low & Childers, P.C. Date of Signing: 12/14/95 /S/ J. Michael Low anchor cert.dis 10431-104 ATTACHMENT TO CERTIFICATE OF DISCLOSURE OF ANCHOR NATIONAL LIFE INSURANCE COMPANY The undersigned is a member of or employee of Low & Childers, P.C., a law firm with its office located at 2999 North 44th Street, Suite 250, Phoenix, Arizona 85018. It is possible that the undersigned may have acted as incorporator of on or more corporations at the request of and on behalf of the clients of Low & Childers, P.C. With respect to such activity, the undersigned was acting solely in connection with the representation of clients by Low & Childers, P.C. and did not have any beneficial interest in any such corporation nor did the undersigned have any duties or responsibilities with respect to such corporation except in connection with the representation of clients of the law firm or Low & Childers, P.C. It is possible that one or more of such corporations may have been placed in bankruptcy or receivership or had its charter revoked during the time the corporation was being represented by Low & Childers, P.C. or subsequent thereto. In connection with each such corporation, the undersigned would not have been a principal thereof, but would have at most acted as a member or employee of Low & Childers, P.C. in connection with the legal representation thereof. It is not possible to determine from the records of the office of Low & Childers, P.C. or from the records of the Arizona Corporation Commission a list of all clients at the office of Low & Childers, P.C. which were involved in bankruptcy or receivership proceedings or charter revocations during the period of time such clients were represented by Low & Childers, P.C. and, with respect to such corporations, to determine whether the undersigned had ever served as an incorporator of any such corporations. The above information is applicable solely to the participation of the undersigned, if any, with respect to corporations as to which the undersigned's sole participation was in connection with the representation of a client of Low & Childers, P.C. The above statement does not apply to the participation by the undersigned, if any, if any corporation in which the undersigned owned a proprietary, beneficial, or membership interest greater than 20% or in which the undersigned served as director, officer, trustee or incorporator otherwise than in connection with representations of clients of Low & Childers, P.C. Date of Signing: 12/14/95 /S/ Kathy A. Steadman anchor cert.dis 10431-104 ATTACHMENT TO CERTIFICATE OF DISCLOSURE OF ANCHOR NATIONAL LIFE INSURANCE COMPANY The undersigned is a member of or employee of Low & Childers, P.C., a law firm with its office located at 2999 North 44th Street, Suite 250, Phoenix, Arizona 85018. It is possible that the undersigned may have acted as incorporator of on or more corporations at the request of and on behalf of the clients of Low & Childers, P.C. With respect to such activity, the undersigned was acting solely in connection with the representation of clients by Low & Childers, P.C. and did not have any beneficial interest in any such corporation nor did the undersigned have any duties or responsibilities with respect to such corporation except in connection with the representation of clients of the law firm or Low & Childers, P.C. It is possible that one or more of such corporations may have been placed in bankruptcy or receivership or had its charter revoked during the time the corporation was being represented by Low & Childers, P.C. or subsequent thereto. In connection with each such corporation, the undersigned would not have been a principal thereof, but would have at most acted as a member or employee of Low & Childers, P.C. in connection with the legal representation thereof. It is not possible to determine from the records of the office of Low & Childers, P.C. or from the records of the Arizona Corporation Commission a list of all clients at the office of Low & Childers, P.C. which were involved in bankruptcy or receivership proceedings or charter revocations during the period of time such clients were represented by Low & Childers, P.C. and, with respect to such corporations, to determine whether the undersigned had ever served as an incorporator of any such corporations. The above information is applicable solely to the participation of the undersigned, if any, with respect to corporations as to which the undersigned's sole participation was in connection with the representation of a client of Low & Childers, P.C. The above statement does not apply to the participation by the undersigned, if any, if any corporation in which the undersigned owned a proprietary, beneficial, or membership interest greater than 20% or in which the undersigned served as director, officer, trustee or incorporator otherwise than in connection with representations of clients of Low & Childers, P.C. Date of Signing: 12/14/95 /S/ Steven R. Henry anchor cert.dis 10431-104 ARIZONA CORPORATION COMMISSION CORPORATIONS DIVISION Phoenix Address: Tucson Address: 1300 West Washington 400 West Congress Phoenix, Arizona 85007-2929 Tucson, Arizona 85707-1347 CERTIFICATE OF DISCLOSURE A.R.S. Sections 10-128 & 10-1084 CHECK APPROPRIATE BOX(ES) A or B Anchor National Life ANSWER "C" Insurance Company EXACT CORPORATE NAME THE UNDERSIGNED CERTIFY THAT: A. No persons serving either by elections or appointment as officers, [X] directors, incorporators and persons controlling, or holding more than 10% of the issued and outstanding common shares or 10% of any other proprietary, beneficial or membership interest in the corporation: 1. Have been convicted of a felony involving a transaction in securities, consumer fraud or antitrust in any state or federal jurisdiction within the seven-year period immediately preceding the execution of this Certificate. 2. Have been convicted of a felony, the essential elements of which consisted of fraud, misrepresentation, theft by false pretenses, or restraining the trade or monopoly in any state or federal jurisdiction within the seven-year period immediately preceding the execution of this Certificate 3. Have been or are subject to an injunction, judgment, decree or permanent order of any state or federal court entered within the seven-year period immediately preceding the execution of this Certificate where such injunction, judgment, decree or permanent order: (a) Involved the violation of fraud or registration provisions of the securities laws of that jurisdiction; or (b) Involved the violation of the consumer fraud laws of that jurisdiction; or (c) Involved the violation of the antitrust or restraint of trade laws of that jurisdiction. B. For any person or persons who have been or are subject to one or more [ ] of the statements in Items A.1 through A.3 above, the following information MUST be attached: 1. Full name and prior name(s) used. 2. Full birth name 3. Present home address. 4. Prior addresses (for immediate preceding 7-year period). 5. Date and location of birth 6. Social Security number. 7. The nature and description of each conviction or judicial action, date, and location, the court and public agency involved and file or cause number of case. STATEMENT OF BANKRUPTCY, RECEIVERSHIP OR REVOCATION A.R.S. Sections 10-128.01 and 10-1083 C. Has any person serving (a) either by election or appointment as an officer, director, trustee or incorporator of the corporation or, (b) major stockholder possessing or controlling any proprietary, beneficial or membership interest in the corporation, served in any such capacity or held such interest in any corporation which has been placed in bankruptcy or receivership or had its charter revoked? Yes No (X) IF YOUR ANSWER TO THE ABOVE QUESTION IS "YES", YOU MUST ATTACH THE FOLLOWING INFORMATION FOR EACH CORPORATION: 1. Name and address of the corporation. 2. Full name, including alias and address of each person involved. 3. State(s) in which the corporation (a) Was incorporated. (b) Has transacted business. 4. Dates of corporate operation. 5. A description of the bankruptcy, receivership or charter revocation, including the date, court or agency involved and the file or cause numer of the case. Under penalties of law, the undersigned incorporators/Officers declare that we have examined this Certificate, including any attachments, and to the best of our knowledge and belief it is true, correct and complete. BY /S/ S. David Childers Date 12/14/95 TITLE Incorporator BY DATE TITLE FISCAL DATE:12/31 ALL INCORPORATORS MUST SIGN THE INITIAL CERTIFICATE OF DISCLOSURE. (If more than four Incorporators, please attach remaining signatures on a separate sheet of paper.) When initial officers have been elected, an AMENDED Certificate must be filed within sixty (60) days of original filings and must be signed by two (2) executive officers and directors. C/F 001-Domestic ARIZONA CORPORATION COMMISSION CORPORATIONS DIVISION Phoenix Address: Tucson Address: 1300 West Washington 400 West Congress Phoenix, Arizona 85007-2929 Tucson, Arizona 85707-1347 CERTIFICATE OF DISCLOSURE A.R.S. Sections 10-128 & 10-1084 CHECK APPROPRIATE BOX(ES) A or B Anchor National Life ANSWER "C" Insurance Company EXACT CORPORATE NAME THE UNDERSIGNED CERTIFY THAT: A. No persons serving either by elections or appointment as officers, [X] directors, incorporators and persons controlling, or holding more than 10% of the issued and outstanding common shares or 10% of any other proprietary, beneficial or membership interest in the corporation: 1. Have been convicted of a felony involving a transaction in securities, consumer fraud or antitrust in any state or federal jurisdiction within the seven-year period immediately preceding the execution of this Certificate. 2. Have been convicted of a felony, the essential elements of which consisted of fraud, misrepresentation, theft by false pretenses, or restraining the trade or monopoly in any state or federal jurisdiction within the seven-year period immediately preceding the execution of this Certificate 3. Have been or are subject to an injunction, judgment, decree or permanent order of any state or federal court entered within the seven-year period immediately preceding the execution of this Certificate where such injunction, judgment, decree or permanent order: (a) Involved the violation of fraud or registration provisions of the securities laws of that jurisdiction; or (b) Involved the violation of the consumer fraud laws of that jurisdiction; or (c) Involved the violation of the antitrust or restraint of trade laws of that jurisdiction. B. For any person or persons who have been or are subject to one or more [ ] of the statements in Items A.1 through A.3 above, the following information MUST be attached: 1. Full name and prior name(s) used. 2. Full birth name 3. Present home address. 4. Prior addresses (for immediate preceding 7-year period). 5. Date and location of birth 6. Social Security number. 7. The nature and description of each conviction or judicial action, date, and location, the court and public agency involved and file or cause number of case. STATEMENT OF BANKRUPTCY, RECEIVERSHIP OR REVOCATION A.R.S. Sections 10-128.01 and 10-1083 C. Has any person serving (a) either by election or appointment as an officer, director, trustee or incorporator of the corporation or, (b) major stockholder possessing or controlling any proprietary, beneficial or membership interest in the corporation, served in any such capacity or held such interest in any corporation which has been placed in bankruptcy or receivership or had its charter revoked? Yes No (X) IF YOUR ANSWER TO THE ABOVE QUESTION IS "YES", YOU MUST ATTACH THE FOLLOWING INFORMATION FOR EACH CORPORATION: 1. Name and address of the corporation. 2. Full name, including alias and address of each person involved. 3. State(s) in which the corporation (a) Was incorporated. (b) Has transacted business. 4. Dates of corporate operation. 5. A description of the bankruptcy, receivership or charter revocation, including the date, court or agency involved and the file or cause numer of the case. Under penalties of law, the undersigned incorporators/Officers declare that we have examined this Certificate, including any attachments, and to the best of our knowledge and belief it is true, correct and complete. BY /S/ Carrie M. McDonald BY /S/ Steven R. Henry Date 12/14/95 Date 12/14/95 TITLE Incorporator TITLE Incorporator BY /S/ Kathy A. Steadman BY /S/ J. Michael Low Date 12/14/95 Date 12/14/95 TITLE Incorporator TITLE Incorporator FISCAL DATE:12/31 ALL INCORPORATORS MUST SIGN THE INITIAL CERTIFICATE OF DISCLOSURE. (If more than four Incorporators, please attach remaining signatures on a separate sheet of paper.) When initial officers have been elected, an AMENDED Certificate must be filed within sixty (60) days of original filings and must be signed by two (2) executive officers and directors. C/F 001-Domestic EX-3.B 3 AMENDED AND RESTATED BYLAWS of ANCHOR NATIONAL LIFE INSURANCE COMPANY ARTICLE I. Shareholders. Section 1. Annual Meetings. The annual meeting of the shareholders of the Corporation shall be held on the fourth Thursday in April of each year or such other dates and times as may be determined. Not less than ten (10) nor more than fifty (50) days' written or printed notice stating the place, day and hour of each annual meeting shall be given in the manner provided in Section 1 of Article IX hereof. The business to be transacted at the annual meeting shall include the election of directors, consideration and action upon the reports of officers and directors and any other business within the power of the Corporation. All annual meetings shall be general meetings. Section 2. Special Meetings Called by President or Board of Directors. At any time in the interval between annual meetings, special meetings of shareholders may be called by the President, the Secretary or by two (2) or more directors, upon ten (10) days' written or printed notice, stating the place, day and hour of such meeting and the business proposed to be transacted thereat. Such notice shall be given in the manner provided in Section 1 of Article IX. No business shall be transacted at any special meeting except that named in the notice. Section 3. Special Meeting Called by Shareholders. Upon the request in writing delivered to the President or Secretary of the Corporation by the holders of ten percent (10%) or more of all shares outstanding and entitled to vote, it shall be the duty of the President or Secretary of the Corporation to call forthwith a special meeting of the shareholders. Such request shall state the purpose or purposes of such meeting and the matters proposed to be acted on thereat. The Secretary of the Corporation shall inform such shareholders of the reasonably estimated cost of preparing and mailing the notice of the meeting. If upon payment of such costs to the corporation, the person to whom such request in writing shall have been delivered shall fail to issue a call for such meeting within ten (10) days after the receipt of such request and payment of costs, then the shareholders owning ten percent (10%) or more of the voting shares may do so upon giving fifteen (15) days' notice of the time, place and object of the meeting in the manner provided in Section 1 of Article IX. Section 4. Removal of Directors. At any special meeting of the shareholders called in the manner provided for by this Article, the shareholders, by a vote of a majority of all shares of stock outstanding and entitled to vote, may remove any director or the entire Board of Directors from office and may elect a successor or successors to fill any resulting vacancies for the remainder of his or their terms. Section 5. Voting; Proxies; Record Date. At all meetings of shareholders any shareholder entitled to vote may vote by proxy. Such proxy shall be in writing and signed by the shareholder or by his duly authorized attorney in fact. It shall be dated, but need not be sealed, witnessed or acknowledged. The Board of Directors may fix the record date for the determination of shareholders entitled to vote in the manner provided in Section 4 of Article IX hereof. Section 6. Quorum. The presence in person or by proxy of the persons entitled to vote a majority of the voting shares of any meeting shall constitute a quorum for the transaction of business. If at any annual or special meeting of shareholders a quorum shall fail to attend in person or by proxy, a majority in interest attending in person or by proxy may adjourn the meeting from time to time, not exceeding thirty (30) days in all, and thereupon any business may be transacted which might have been transacted at the meeting originally called had the same been held at the time so called. Section 7. Filing Proxies. At all meetings of shareholders, the proxies shall be filed with and be verified by the Secretary of the Corporation or, if the meeting shall so decide, by the Secretary of the meeting. Section 8. Place of Meetings. All meetings of shareholders shall be held at such place, either within or without the State of Arizona, on such date and at such time as may be determined from time to time by the Board of Directors (or the Chairman in the absence of a designation by the Board of Directors). Section 9. Order of Business. The order of business at all meetings of shareholders shall be as determined by the Chairman of the meeting. Section 10. Action Without Meeting. Directors may be elected without a shareholders' meeting by a consent in writing, setting forth the action so taken, signed by all persons entitled to vote for the election of directors; provided, however, that the foregoing shall not limit the power of directors to fill vacancies in the Board of Directors, and that a director may be elected to fill a vacancy not filled by the directors by written consent in the manner provided by the General Corporation Law. Any other action, which under any provision of the General Corporation Law, may be taken at a meeting of the shareholders, may be taken without a meeting, and without notice except as hereinafter set forth, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. All written consents shall be filed with the Secretary of the Corporation. Any shareholder giving a written consent, or the shareholder's proxyholders, or a transferee of the shares of a personal representative of the shareholder or their respective proxyholders, may revoke the consent by a writing receiving by the Corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the Corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the Corporation. ARTICLE II. Directors. Section 1. Powers. The Board of Directors shall have the control and management of the affairs, business and properties of the Corporation. They shall have and exercise in the name of the Corporation and on behalf of the Corporation all the rights and privileges legally exercisable by the Corporation, except as otherwise provided by law, by the Charter or by these Bylaws. A director need not be a shareholder or a resident of Arizona. Section 2. Number; Term of Office; Removal. The number of directors of the Corporation shall be not less than five (5) nor more than fifteen (15). The number to be elected at each annual meeting shall be fixed by resolution of the directors and stated in the notice of the meeting, subject, however, to approval by the shareholders voting at the meeting. The directors shall hold office for the term of one year, or until their successors are elected and qualify. A director may be removed from office as provided in Section 4 of Article I hereof. Section 3. Vacancies. If the office of a director becomes vacant, or if the number of directors is increased, such vacancy may be filled by the Board by a vote of a majority of directors then in office though not less than a quorum. The shareholders may, however, at any time during the term of such director, elect some other person to fill said vacancy and thereupon the election by the Board shall be superseded and such election by the shareholders shall be deemed a filling of the vacancy and not a removal and may be made at any special meeting called for that purpose. Section 4. Organization Meetings; Regular Meetings. The Board of Directors shall meet for the election of officers and any other business as soon as practicable after the adjournment of the annual meeting of the shareholders. No notice of the organization meeting shall be required if it is held at the same place and immediately following the annual meeting of the shareholders. Other regular meetings of the Board of Directors may be held at such intervals as the Board may from time to time prescribe. Any action required or permitted to be taken at a meeting of the Board of Directors or of a committee of the Board may be taken without a meeting, if a unanimous written consent which sets forth the action is signed by each member of the Board or committee and filed with the minutes of proceedings of the Board or committee. Unless otherwise restricted by the Articles of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or such committee, as the case may be, by means of telephone conference or similar communications equipment by means of which are persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. Section 5. Special Meetings. Special meetings of the Board may be called by the President or by a majority of the directors. At least twenty-four (24) hours' notice shall be given of all special meetings; with the consent of the majority of the directors, a shorter notice may be given. Section 6. Quorum. A majority of the Board of Directors shall constitute a quorum for the transaction of business, but such number may be decreased and/or increased at any time or from time to time by vote of a majority of the entire Board to any number not less than two (2) directors or not less than one-third of the directors, whichever is greater. Section 7. Place of Meetings. The Board of Directors shall hold its meetings at such place, either within or without the State of Arizona, and at such time as may be determined from time to time by the Board of Directors (or the Chairman in the absence of a determination by the Board of Directors). Section 8. Rules and Regulations. The Board of Directors may adopt such rules and regulations for the conduct of its meetings and the management of the affairs of the Corporation as the Board may deem proper and not inconsistent with the laws of the State of Arizona or these Bylaws or the Charter. Section 9. Compensation. The directors, as such, may receive a stated salary for their services and/or a fixed sum and expenses of attendance may be allowed for attendance at each regular or special meeting of the Board of Directors. Such stated salary and/or attendance fee shall be determined by resolution of the Board unless the shareholders have adopted a resolution relating thereto, provided that nothing herein contained shall be construed to preclude a director from serving in any other capacity and receiving compensation therefor. Section 10. Chairman of the Board. The Board of Directors shall provide for a Chairman of the Board from among its members. So long as there shall be a person so active, he shall preside at all meetings of the Board and at all joint meetings of officers and directors. In the absence of the Chairman, the Vice Chairman, if any, or in his absence, the President, shall preside at all meetings of the Board and all joint meetings of officers and directors. Section 11. Investment Committee. There shall be an Investment Committee consisting of the President of the Corporation ex officio and such members of the Board of Directors and/or officers and employees as the Board may by resolution prescribe. No investments or loans (other than policy loans or annuity contract loans) shall be made unless the same be authorized or approved by the Board of Directors or the Investment Committee. The Investment Committee shall maintain minutes of its meetings and shall submit regular reports to the Board of Directors. Section 12. Executive Committee. The Board of Directors may appoint from among its members an Executive Committee composed of three (3) or more directors, and may delegate to such Committee, in the interval between the meetings of the Board of Directors, any and all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, except the power to declare dividends, issue stock, select directors to fill vacancies in the membership of the Executive Committee or recommend to shareholders any action requiring shareholders' approval. The members of such Committee shall constitute a quorum for the transaction of business at any meeting and the act of a majority of the members present at any meeting at which the quorum requirement is satisfied shall be the act of the Board of Directors. In the absence of any member of the Executive Committee necessary to constitute a quorum, the members thereof present at any meeting, whether or not they constitute a quorum, may, with telephonic approval of one of the absent members of the Executive Committee, appoint a member of the Board of Directors to act in place of such absent member. Section 13. Other Committees. The Board of Directors may appoint from its own members and, where permitted by law, from the Corporation's officers and/or employees, such standing, temporary, special or ad hoc committees as the Board may determine, investing such committees with such powers, duties and functions as the Board may prescribe. All such committees shall include the President, ex officio. Section 14. Advisory Board. The Board of Directors may elect an Advisory Board to serve until the next annual meeting of the Board of Directors or until their successors are elected and qualify. Such Board shall consist of a number as determined from time to time by the Board of Directors, and they shall be advised of the meetings of the Board of Directors and authorized to attend the meetings and counsel with them, but shall have no vote. The Board of Directors (and between meeting of the Board of Directors, the Executive Committee) shall have the authority to increase or decrease the number of members to the Advisory Board and to elect one or more members to the Advisory Board to serve until the next meeting of the Board of Directors and until their successors are elected and qualify, and may provide for the compensation and other rules and regulations with respect to such Board. Section 15. Procedures; Meetings. The Committees shall keep minutes of their proceedings and shall report the same to the Board of Directors at the meeting next succeeding, and any action by the Committees shall be subject to revision and alteration by the Board of Directors, provided that no rights of third persons shall be affected by any such revision or alteration. ARTICLE III. Officers. Section 1. In General. The officers of the Corporation shall consist of a President, one or more Vice Presidents, a Secretary, a Treasurer, and one or more Assistant Secretaries and Assistant Treasurers, and such other officers bearing such titles as may be fixed pursuant to these Bylaws. The President, Vice Presidents, Secretary, and Treasurer shall be chosen by the Board of Directors and, except those persons holding contracts for fixed terms, shall hold office only during the pleasure of the Board or until their successors are chosen and qualify. The President may from time to time appoint Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other officers bearing such titles and exercising such authority as he may from time to time deem appropriate, and except those persons holding contracts for fixed terms, those officers appointed by the President shall hold office only during his pleasure or until their successors are appointed and qualify. Any two (2) officers, except those of President, Executive Vice President and Secretary, may be held by the same persons, but no officer shall execute, acknowledge or verify any instrument in more than one capacity when such instrument is required to be executed, acknowledged, or verified by any two (2) or more officers. The Board of Directors or the President may from time to time appoint other agents and employees, with such powers and duties as they may deem proper. Section 2. President. The President shall be Chief Executive Officer of the Corporation and shall have the general management of the Corporation's business in all departments. In the absence of the Chairman of the Board, the President shall preside at all meetings of the Board of Directors and shall call to order all meetings of shareholders. The President shall perform such other duties as the Board of Directors may direct. Section 3. Vice Presidents. In the absence or disability of the President, the Vice Presidents, if any, in order of their rank as designated by the Board of Directors or, if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the Bylaws. Section 4. Treasurer. Unless there shall be a financial Vice President designated by the Board of Directors as the chief financial officer of the Corporation, having general supervision over its finances, the Treasurer shall be the chief financial officer with such authority. He shall also have authority to attest to the seal of the Corporation and shall perform such other duties as may be assigned to him by the Board of Directors. Section 5. Secretary of the Corporation. The Secretary of the Corporation shall keep the minutes of the meetings of the shareholders and of the Board of Directors, and shall attend to the giving and serving of all notices of the Corporation required by law or these Bylaws. The Secretary shall maintain at all times in the principal office of the Corporation at least one copy of the Bylaws with all amendments to date, and shall make the same, together with the minutes of the meetings of the shareholders, the annual statement of the affairs of the Corporation and any voting trust agreement on file at the office of the Corporation, available for inspection by any officer, director, or shareholder during reasonable business hours. The Secretary shall have authority to attest to the seal of the Corporation and shall perform such other duties as may be assigned to the Secretary by the Board of Directors. Section 6. Other Secretaries, Assistant Treasurers and Assistant Secretaries. Secretaries other than the Secretary of the Corporation, the Assistant Treasurers and the Assistant Secretaries shall have authority to attest to the seal of the Corporation and shall perform such other duties as may from time to time be assigned to them by the Board of Directors or the President. Section 7. Substitutes. The Board of Directors may from time to time in the absence of any one of said officers or, at any other time, designate any other person or persons on behalf of the Corporation, to sign any contracts, deeds, notes, or other instruments in the place or stead of any of said officers, and designate any person to fill any one of said offices, temporarily or for any particular purpose; and any instruments so signed in accordance with a resolution of the Board shall be the valid act of this Corporation as fully as if executed by any regular officer. ARTICLE IV. Resignation. Any director or officer may resign his office at any time. Such resignation shall be made in writing and shall take effect from the time of its receipt by the Corporation, unless some time be fixed in the resignation, and then from that date. The acceptance of a resignation shall not be required to make it effective. ARTICLE V. Indemnification of Directors and Officers. The Corporation shall indemnify any and all of its existing and former directors and officers and their spouses against all expenses incurred by them and each of them, including but not confined to legal fees, judgments and penalties which may be incurred, rendered or levied in any legal or administrative action brought against any of then, for or on account of any action or omission alleged to have been committed while acting within the scope of employment as director of officer of the Corporation to the fullest extent allowable pursuant to the Arizona General Corporation Law as may be amended from time to time. Whenever any such person has grounds to believe that he may incur any such aforementioned expense, he shall promptly make a full report of the matter to the President and the Secretary of the Corporation. Thereafter, the Board of Directors of the Corporation shall, within a reasonable time, determine if such person acted, or failed to act, in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. If the Board of Directors determines that such person acted, or failed to act, in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, then indemnification shall be mandatory and shall be automatically extended as specified herein, provided, however, that the Corporation shall have the right to refuse indemnification, wholly or partially, in any instance in which the person to whom indemnification would otherwise have been applicable shall have unreasonably refused to permit the Corporation, at its own expense and through counsel of its own choosing, to defend him in the action, or shall have unreasonably refused to cooperate in the defense of such action. ARTICLE VI. Fiscal Year. The fiscal year of the Corporation shall be the calendar year. ARTICLE VII. Seal. The seal of the Corporation shall be a circular disc inscribed with the name of the Corporation, Anchor National Life Insurance Company, and the word Incorporated. ARTICLE VIII. Miscellaneous Provisions - Stock. Section 1. Issue. All certificates of shares of the Corporation shall be signed by the manual or facsimile signatures of the President or any Vice President, and countersigned by the Treasurer or Secretary of the Corporation and sealed with the seal or facsimile seal of the Corporation. Any stock certificates bearing the facsimile signatures of the officers above named shall be manually signed by an authorized representative of the Corporation's duly constituted transfer agent. If an officer whose signature appears on a certificate ceases to be an officer before the certificate is issued, it may, nevertheless, be issued with the same effect as if such officer were still in office. Section 2. Transfers. No transfers of shares shall be recognized or binding upon the Corporation until recorded on the transfer books of the Corporation upon surrender and cancellation of certificates for a like number of shares. All transfers shall be effected only by the holder of record of such shares or by his legal representative, or by his attorney thereunto authorized by power of attorney duly executed. The person in whose name shares shall stand on the books of the Corporation may be deemed by the Corporation the owner thereof for all purposes. The Corporations transfer agent shall maintain a stock transfer book, shall record therein all stock transfers and shall forward copies of all transfer sheets at regular prompt intervals to the Corporation's registrar, if there be one, or, if not, then to the Corporation's principal office for transcription on the stock registry books. Section 3. Form of Certificates; Procedure. The Board of Directors shall have power and authority to determine the form of stock certificates (except insofar as prescribed by law), and to make all such rules and regulations as the Board may deem expedient concerning the issue; transfer and registration of said certificates, and to appoint one or more transfer agents and/or registrars to countersign and register the same. The transfer agent and registrar may be the same party. Section 4. Record Dates for Dividends and Shareholders' Meetings. The Board of Directors may fix the time, not exceeding twenty (20) days preceding the date of any meeting of shareholders, any dividend payment date or any date for the allotment of rights, during which the books of the Corporation shall be closed against transfers of stock, or the Board of Directors may fix a date not exceeding forty (40) days preceding the date of any meeting of shareholders, any dividend payment date or any date for the allotment of rights, as a record date for the determination of the shareholders entitled to notice of and to vote at such meeting, or entitled to receive such dividends or rights, as the case may be, and only shareholders of record on such date shall be entitled to notice of and to vote at such meeting or to receive such dividends or rights, as the case may be. In the case of a meeting of shareholders, the record date shall be fixed not less than ten (10) days prior to the date of the meeting. Section 5. Lost Certificates. In case any certificate of shares is lost, mutilated or destroyed, the Board of Directors may issue a new certificate in place thereof, upon indemnity to the Corporation against loss and upon such other terms and conditions as the Board of Directors may deem advisable. ARTICLE IX. Notice. Section 1. Notice to Shareholders. Whenever by law or these Bylaws notice is required to be given to any shareholder, such notice may be given to each shareholder, whether or not such shareholder is entitled to vote, by leaving the same with him or at his residence or usual place of business, or by mailing it, postage prepaid, and addressed to him at his address as it appears on the books of the Corporation. Such leaving or mailing of notice shall be deemed the time of giving such notice. Section 2. Notice to Directors and Officers. Whenever by law of these Bylaws notice is required to be given to any director or officer, such notice may be given in any one of the following ways: by personal notice to such director or officer; by telephone communication with such director or officer personally; by wire, addressed to such director or officer at his then address or at his address as it appears on the books of the Corporation; or by depositing the same in writing in the post office or in a letter box in a postage paid, sealed wrapper addressed to such director or officer at his then address or at his address as it appears on the books of the Corporation; and the time when such notice shall be mailed or consigned to a telegraph company for delivery shall be deemed to be the time of the giving of such notice. ARTICLE X. Voting of Securities in Other Corporations. Any stock or other voting securities in other corporations, which may from time to time be held by the Corporation, may be represented and voted at any meeting of shareholders of such other corporation by the President, any Vice President, or the Treasurer, or by proxy or proxies appointed by the President, any Vice President, or the Treasurer, or otherwise pursuant to authorization thereunto given by a resolution of the Board of Directors. ARTICLE XI. Amendments. These Bylaws may be added to, altered, amended or repealed by a majority vote of the entire Board of Directors at any regular meeting of the Board or at any special meeting called for that purpose. Any action of the Board of Directors in adding to, altering, amending or repealing these Bylaws shall be reported to the shareholders at the next annual meeting and may be changed or rescinded by majority vote of all of the stock then outstanding and entitled to vote, without, however, affecting the validity of any action taken in the meanwhile in reliance on these Bylaws so added to, altered, amended or repealed as aforesaid by the Board of Directors. In no event shall the Board of Directors have any power to amend this Article. EX-27 4
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND INCOME STATEMENT OF ANCHOR NATIONAL LIFE INSURANCE COMPANY'S FORM 10-Q FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS SEP-30-1996 DEC-31-1995 1,648,656,000 0 0 3,312,000 92,909,000 40,899,000 1,964,418,000 127,286,000 0 379,922,000 7,844,340,000 1,751,131,000 0 0 0 34,000,000 3,511,000 0 0 482,932,000 7,844,340,000 0 37,825,000 (12,800,000) 37,088,000 23,208,000 12,846,000 (213,000) 9,275,000 3,449,000 5,826,000 0 0 0 5,826,000 0 0 0 0 0 0 0 0 0
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