10-Q

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
OR
/   /	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001 Commission File No. 33-47472 ANCHOR NATIONAL LIFE INSURANCE COMPANY

Incorporated in Arizona	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 REGISTRANT'S COMMON STOCK ON AUGUST 13, 2001 WAS AS FOLLOWS:
Common Stock (par value $1,000 per share)	3,511 shares outstanding

ANCHOR NATIONAL LIFE INSURANCE COMPANY

INDEX

		Page Number(s)
Part I - Financial Information
	Consolidated Balance Sheet (Unaudited) - June 30, 2001 and December 31, 2000	3-4
	Consolidated Statement of Income and Comprehensive Income (Unaudited) - Three Months and Six Months Ended June 30, 2001 and 2000	5-6
	Consolidated Statement of Cash Flows (Unaudited) - Six Months Ended June 30, 2001 and 2000	7-8
	Notes to Consolidated Financial Statements (Unaudited)	9-13
	Management's Discussion and Analysis of Financial Condition and Results of Operations	14-32
	Quantitative and Qualitative Disclosures About Market Risk	33
Part II - Other Information		34-36

ANCHOR NATIONAL LIFE INSURANCE COMPANY CONSOLIDATED BALANCE SHEET (Unaudited)
			June 30, 2001		December 31, 2000
			(In thousands)
ASSETS
Investments and cash:
	Cash and short-term investments		$	156,928	$	169,701
	Bonds, notes and redeemable
		preferred stocks available for sale,
		at fair value (amortized cost:
		June 2001, $3,997,091;
		December 2000, $4,130,570)		3,918,406		4,007,902
	Mortgage loans			693,976		684,174
	Policy loans			231,770		244,436
	Separate account seed money			58,115		104,678
	Common stocks available for sale,
		at fair value (cost: June 2001
		and December 2000, $1,001)		492		974
	Partnerships			177,116		8,216
	Real estate			20,091		24,139
	Other invested assets			11,737		18,514
	Total investments and cash			5,268,631		5,262,734
Variable annuity assets held in separate
	accounts			19,496,994		20,393,820
Accrued investment income				59,748		57,555
Deferred acquisition costs				1,376,063		1,286,456
Income taxes currently receivable from Parent				72,974		60,992
Due from affiliates				245,570		---
Other assets				112,352		127,921
TOTAL ASSETS			$	26,632,332	$	27,189,478

See accompanying notes to consolidated financial statements

3

ANCHOR NATIONAL LIFE INSURANCE COMPANY CONSOLIDATED BALANCE SHEET (Continued) (Unaudited)
			June 30, 2001			December 31, 2000
			(In thousands)
LIABILITIES AND SHAREHOLDER'S EQUITY
Reserves, payables and accrued liabilities:
	Reserves for fixed annuity contracts		$	2,813,893		$	2,778,229
	Reserves for universal life insurance
		contracts		1,777,437			1,832,667
	Reserves for guaranteed investment
		contracts		490,930			610,672
	Due to brokers for purchases of securities			55,950			3,662
	Modified coinsurance deposit liability			80,325			97,647
	Due to affiliates			---			5,744
	Other liabilities			184,236			197,271
	Total reserves, payables and accrued
		liabilities		5,402,771			5,525,892
Variable annuity liabilities related to
	separate accounts			19,496,994			20,393,820
Subordinated notes payable to affiliates				57,034			55,119
Deferred income taxes				121,499			85,978
Shareholder's equity:
	Common Stock			3,511			3,511
	Additional paid-in capital			925,753			493,010
	Retained earnings			663,245			697,730
	Accumulated other comprehensive loss			(38,475	)		(65,582	)
	Total shareholder's equity			1,554,034			1,128,669
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY			$	26,632,332		$	27,189,478

See accompanying notes to consolidated financial statements

4

ANCHOR NATIONAL LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the three months and six months ended June 30, 2001 and 2000 (Unaudited)
			Three Months						Six Months
			2001			2000			2001			2000
			(In thousands)
Investment income			$	101,202		$	96,939		$	188,983		$	202,715
Interest expense on:
	Fixed annuity contracts			(31,018	)		(33,298	)		(63,116	)		(71,018	)
	Universal life insurance
		contracts		(20,326	)		(19,842	)		(40,788	)		(43,598	)
	Guaranteed investment contracts			(6,385	)		(9,116	)		(16,104	)		(14,384	)
	Subordinated notes payable to
		affiliates		(1,118	)		(1,108	)		(2,235	)		(1,909	)
	Total interest expense			(58,847	)		(63,364	)		(122,243	)		(130,909	)
NET INVESTMENT INCOME				42,355			33,575			66,740			71,806
NET REALIZED INVESTMENT LOSSES				(14,719	)		(3,639	)		(39,583	)		(5,408	)
Fee income:
	Variable annuity fees			92,683			99,397			186,249			196,016
	Net retained commissions			12,599			14,914			25,036			28,072
	Asset management fees			16,998			17,750			34,196			34,818
	Universal life insurance fees, net			4,845			1,969			10,074			6,740
	Surrender charges			5,926			5,744			11,825			10,769
	Other fees			3,117			2,135			6,944			4,897
TOTAL FEE INCOME				136,168			141,909			274,324			281,312
GENERAL, ADMINISTRATIVE AND OTHER
	EXPENSES			(45,564	)		(40,969	)		(86,231	)		(80,720	)
AMORTIZATION OF DEFERRED
	ACQUISITION COSTS			(51,152	)		(36,397	)		(93,416	)		(74,329	)
ANNUAL COMMISSIONS				(14,632	)		(11,352	)		(28,565	)		(26,796	)
PRETAX INCOME BEFORE CUMULATIVE
	EFFECT OF CHANGE IN
	ACCOUNTING PRINCIPLE			52,456			83,127			93,269			165,865
Income tax expense				(13,299	)		(30,559	)		(23,317	)		(59,853	)
NET INCOME BEFORE CUMULATIVE EFFECT
	OF CHANGE IN ACCOUNTING PRINCIPLE			39,157			52,568			69,952			106,012
CUMULATIVE EFFECT OF CHANGE IN
	ACCOUNTING PRINCIPLE, NET OF TAX
	(NOTE 5)			(10,342	)		---			(10,342	)		---
NET INCOME				28,815			52,568			59,610			106,012

See accompanying notes to consolidated financial statements

5

ANCHOR NATIONAL LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Continued) For the three months and six months ended June 30, 2001 and 2000 (Unaudited)
			Three Months						Six Months
			2001			2000			2001		2000
			(In thousands)
OTHER COMPREHENSIVE INCOME (LOSS),
	NET OF TAX:
	Net unrealized gains (losses)
		on debt and equity securities
		available for sale identified
		in the current period (net of
		income tax benefit of $10,988
		and $7,493 for the second
		quarters of 2001 and 2000,
		respectively, and income tax
		expense of $2,185 and income
		tax benefit of $14,253 for the
		six months of 2001 and 2000,
		respectively)		(20,407	)		(13,916	)		4,057		(26,470	)
	Less reclassification adjustment
		for net realized losses
		included in net income (net
		of income tax benefit of
		$4,261 and $1,099 for
		the second quarters of 2001
		and 2000, respectively, and
		$11,396 and $1,617 for
		the six months of 2001 and
		2000, respectively)		7,913			2,041			21,164		3,003
	CUMULATIVE EFFECT OF CHANGE IN
		ACCOUNTING PRINCIPLE, NET OF TAX
		(NOTE 5)		---			---			1,389		---
	Net change related to cash flow
		hedges (net of income tax benefit
		of $89 and income tax expense
		of $267 for the second
		quarter and six months of
		2001, respectively)		(164	)		---			497		---
	OTHER COMPREHENSIVE INCOME (LOSS)			(12,658	)		(11,875	)		27,107		(23,467	)
COMPREHENSIVE INCOME			$	16,157		$	40,693		$	86,717	$	82,545

See accompanying notes to consolidated financial statements

6

ANCHOR NATIONAL LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended June 30, 2001 and 2000 (Unaudited)
				2001			2000
				(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	59,610		$	106,012
Adjustments to reconcile net income to net
	cash provided by operating activities:
		Cumulative effect of change in
			accounting principle		10,342			---
		Interest credited to:
			Fixed annuity contracts		63,116			71,018
			Universal life insurance contracts		40,788			43,598
			Guaranteed investment contracts		16,104			14,384
		Net realized investment losses			39,583			5,408
		Accretion (amortization) of net
			discounts (premiums) on investments		5,705			(5,964	)
		Universal life insurance fees			(10,074	)		(6,740	)
		Amortization of goodwill			695			727
		Provision for deferred income taxes			26,494			29,116
Change in:
	Accrued investment income				(2,193	)		3,404
	Deferred acquisition costs				(94,307	)		(96,191	)
	Other assets				17,775			(3,309	)
	Income taxes currently receivable/payable
		from Parent			(11,433	)		(30,609	)
	Due from/to affiliates				4,480			(33,727	)
	Other liabilities				(13,947	)		81,149
Other, net					18,055			9,245
NET CASH PROVIDED BY OPERATING ACTIVITIES					170,793			187,521
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of:
	Bonds, notes and redeemable preferred stocks				(509,078	)		(430,682	)
	Mortgage loans				(25,769	)		(46,831	)
	Other investments, excluding short-term
		investments			(5,043	)		(18,350	)
Sales of:
	Bonds, notes and redeemable preferred stocks				345,222			330,321
	Other investments, excluding short-term
		investments			3,433			793
Redemptions and maturities of:
	Bonds, notes and redeemable preferred stocks				312,947			240,882
	Mortgage loans				16,926			47,968
	Other investments, excluding short-term
		investments			53,683			74,304
Short-term investments transferred from First
	SunAmerica Life Insurance Company relating
	to assumption reinsurance transaction
	with MBL Life Assurance Corporation				---			16,741
NET CASH PROVIDED BY INVESTING ACTIVITIES					192,321			215,146

See accompanying notes to consolidated financial statements

7

ANCHOR NATIONAL LIFE INSURANCE COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (Continued) For the six months ended June 30, 2001 and 2000 (Unaudited)
		2001			2000
		(In thousands)
CASH FLOWS FROM FINANCING ACTIVITIES:
Premium receipts on:
	Fixed annuity contracts	$	900,743		$	852,080
	Universal life insurance contracts		26,155			29,515
	Guaranteed investment contracts		40,000			250,000
Net exchanges from the fixed accounts
	of variable annuity contracts		(781,401	)		(1,087,093	)
Withdrawal payments on:
	Fixed annuity contracts		(136,642	)		(228,382	)
	Universal life insurance contracts		(38,242	)		(62,731	)
	Guaranteed investment contracts		(175,874	)		(8,246	)
Claims and annuity payments on:
	Fixed annuity contracts		(26,093	)		(33,303	)
	Universal life insurance contracts		(74,028	)		(80,357	)
Net repayments from (repayments of)
	other short-term financings		912			(54,790	)
Net payment related to a modified
	coinsurance transaction		(17,322	)		(23,376	)
Net receipt from issuances of subordinated
	notes payable to affiliates		---			15,698
Dividends paid to Parent			(94,095	)		(69,000	)
NET CASH USED BY FINANCING ACTIVITIES			(375,887	)		(499,985	)
NET DECREASE IN CASH AND
	SHORT-TERM INVESTMENTS		(12,773	)		(97,318	)
CASH AND SHORT-TERM INVESTMENTS AT
	BEGINNING OF PERIOD		169,701			462,915
CASH AND SHORT-TERM INVESTMENTS AT
	END OF PERIOD	$	156,928		$	365,597
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid on indebtedness		$	320		$	1,211
Net income taxes paid to Parent		$	8,289		$	61,325

See accompanying notes to consolidated financial statements

8

ANCHOR NATIONAL LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1.	BASIS OF PRESENTATION
	Anchor National Life Insurance Company, including its wholly owned subsidiaries (the "Company"), is a direct wholly owned subsidiary of SunAmerica Life Insurance Company (the "Parent"), which is an indirect wholly owned subsidiary of American International Group, Inc. ("AIG"), an international insurance and financial services holding company.  The Company is an Arizona-domiciled life insurance company which conducts its business through three segments:  annuity operations, asset management operations and broker-dealer operations.  Annuity operations consist of the sale and administration of deposit-type insurance contracts, including fixed and variable annuities, universal life insurance contracts and guaranteed investment contracts ("GICs").  Asset management operations, which include the distribution and management of mutual funds, are conducted by SunAmerica Asset Management Corp. ("SunAmerica Asset Management"), the Company's registered investment advisor and wholly owned subsidiary and its related distributor, SunAmerica Capital Services, Inc. ("SACS").  Broker-dealer operations involve the sale of securities and financial services products, and are conducted by Royal Alliance Associates, Inc. ("Royal"), a wholly owned subsidiary of the Company.
	Effective January 1, 2001, the Parent contributed a wholly owned subsidiary, SA Affordable Housing LLC ("SAAH LLC"), to the Company.  SAAH LLC was subsequently contributed by the Company to SunAmerica Asset Management.  At the time of the contribution, SAAH LLC had partnership assets of $432,120,000, other assets of $623,000 and shareholder's equity of $432,743,000.  SAAH LLC's results of operations are included within the asset management operations.
	In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary, consisting of normal recurring items, to present fairly the Company's consolidated financial position as of June 30, 2001 and December 31, 2000, the results of its consolidated operations for the three months and six months ended June 30, 2001 and 2000 and its consolidated cash flows for the six months ended June 30, 2001 and 2000.  The results of operations for the three months and six months ended June 30, 2001 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 year ended December 31, 2000, contained in the Company's 2000 Annual Report on Form 10-K.  Certain prior year items have been reclassified to conform to the current period's presentation.

9

2.	SEGMENT INFORMATION
	The Company has three business segments:  annuity operations, asset management operations and broker-dealer operations.  The Company evaluates performance based on profit or loss from operations before income taxes.  Following is selected information pertaining to the Company's business segments.
			Annuity Operations			Asset Management Operations			Broker- Dealer Operations			Total
			(In thousands)
	THREE MONTHS ENDED
	JUNE 30, 2001:
	Investment income		$	94,138		$	6,920		$	144		$	101,202
	Interest expense			(57,729	)		(1,028	)		(90	)		(58,847	)
	Net investment income			36,409			5,892			54			42,355
	Net realized investment
		losses		(5,669	)		(9,050	)		---			(14,719	)
	Total fee income			101,429			22,510			12,229			136,168
	General, administrative
		and other expenses		(32,787	)		(5,243	)		(7,534	)		(45,564	)
	Amortization of deferred
		acquisition costs		(40,818	)		(10,334	)		---			(51,152	)
	Annual commissions			(14,632	)		---			---			(14,632	)
	Pretax income before
		cumulative effect of change
		in accounting principle	$	43,932		$	3,775		$	4,749		$	52,456
	Total assets		$	25,907,152		$	657,683		$	67,497		$	26,632,332
	THREE MONTHS ENDED
	JUNE 30, 2000:
	Investment income		$	95,331		$	1,295		$	313		$	96,939
	Interest expense			(62,256	)		(1,018	)		(90	)		(63,364	)
	Net investment income			33,075			277			223			33,575
	Net realized investment
		losses		(3,639	)		---			---			(3,639	)
	Total fee income			104,227			23,699			13,983			141,909
	General, administrative
		and other expenses		(27,506	)		(5,744	)		(7,719	)		(40,969	)
	Amortization of deferred
		acquisition costs		(28,807	)		(7,590	)		---			(36,397	)
	Annual commissions			(11,352	)		---			---			(11,352	)
	Pretax income		$	65,998		$	10,642		$	6,487		$	83,127
	Total assets		$	28,010,275		$	204,245		$	77,975		$	28,292,495

10

2.	SEGMENT INFORMATION (continued)
			Annuity Operations			Asset Management Operations			Broker- Dealer Operations			Total
			(In thousands)
	SIX MONTHS ENDED
	JUNE 30, 2001:
	Investment income		$	179,237		$	9,412		$	334		$	188,983
	Interest expense			(120,008	)		(2,055	)		(180	)		(122,243	)
	Net investment income			59,229			7,357			154			66,740
	Net realized investment losses			(30,533	)		(9,050	)		---			(39,583	)
	Total fee income			204,128			45,602			24,594			274,324
	General, administrative
		and other expenses		(60,533	)		(10,487	)		(15,211	)		(86,231	)
	Amortization of deferred
		acquisition costs		(73,768	)		(19,648	)		---			(93,416	)
	Annual commissions			(28,565	)		---			---			(28,565	)
	Pretax income before
		cumulative effect of change
		in accounting principle	$	69,958		$	13,774		$	9,537		$	93,269
	Total assets		$	25,907,152		$	657,683		$	67,497		$	26,632,332
	SIX MONTHS ENDED
	JUNE 30, 2000:
	Investment income		$	199,219		$	2,934		$	562		$	202,715
	Interest expense			(129,000	)		(1,729	)		(180	)		(130,909	)
	Net investment income			70,219			1,205			382			71,806
	Net realized investment
		losses		(5,408	)		---			---			(5,408	)
	Total fee income			207,906			46,937			26,469			281,312
	General, administrative
		and other expenses		(53,330	)		(12,158	)		(15,232	)		(80,720	)
	Amortization of deferred
		acquisition costs		(60,246	)		(14,083	)		---			(74,329	)
	Annual commissions			(26,796	)		---			---			(26,796	)
	Pretax income		$	132,345		$	21,901		$	11,619		$	165,865
	Total assets		$	28,010,275		$	204,245		$	77,975		$	28,292,495

11

3.	CONTINGENT LIABILITIES
	The Company has entered into six agreements in which it has provided liquidity support for certain short-term securities of municipalities and non-profit organizations by agreeing to purchase such securities in the event there is no other buyer in the short-term marketplace.  In return the Company receives a fee.  The maximum liability under these guarantees at June 30, 2001 is $925,000,000.  Related to each of these agreements are participation agreements with the Parent under which the Parent will share in $460,100,000 of these liabilities in exchange for a proportionate percentage of the fees received under these agreements.  Management does not anticipate any material losses with respect to these commitments. The Company has entered into an agreement whereby it is committed to purchase the remaining principle amount, $398.8 million as of June 30, 2001, of various mortgage-backed securities at par value in March 2006.  At the present time, management does not anticipate any material losses with respect to this agreement.
4.	DERIVATIVES
	As a component of its asset and liability management strategy, the Company utilizes interest rate swap agreements ("Swap Agreements") to match assets more closely to liabilities.  Swap Agreements are agreements to exchange with a counterparty interest rate payments of differing character (for example, variable-rate payments exchanged for fixed-rate payments) based on an underlying principal balance (notional principal) to hedge against interest rate changes.  The Company typically utilizes Swap Agreements to create a hedge that effectively converts floating-rate assets into fixed-rate instruments.  At June 30, 2001, the Company had one outstanding Swap Agreement subject to the provisions of SFAS 133 (see Note 5 below) with a notional principal of $97,000,000 which matures in June 2002.  This agreement effectively converts a $97,000,000 floating rate commercial mortgage to a fixed rate instrument.  The agreement has been designated as a cash flow hedge and accordingly, the market value of the Swap Agreement, $2,901,000, has been recorded as an asset in the Company's consolidated balance sheet as of June 30, 2001.  In compliance with SFAS 133, changes in the market value of this Swap Agreement, net of taxes, are recognized as a component of other comprehensive income.
5.	RECENTLY ISSUED ACCOUNTING STANDARD
	In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133").  This statement requires the Company to recognize all derivatives in the consolidated balance sheet measuring these derivatives at fair value.  The recognition of the change in fair value of a derivative depends on a number of factors, including the intended use of the derivative and, to the extent it is effective as part of a hedge transaction.  SFAS 133 was postponed by SFAS 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of  the  Effective  Date of FASB No. 133, and is now effective for the Company as of January 1, 2001.  The adoption of SFAS 133 as of January 1, 2001 resulted in an increase of $1,389,000 in other comprehensive income.

12

5.

RECENTLY ISSUED ACCOUNTING STANDARD (continued)

In November 1999, the Emerging Issues Task Force ("EITF") of the FASB issued EITF 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Interests in Securitized Financial Assets ("EITF 99-20").  This pronouncement changes the accounting requirements for interests in many asset backed securities, including collateralized debt obligations, commercial mortgage backed securities and residential mortgage backed securities.  EITF 99-20 requires that interest income on securities within its scope be recognized prospectively, with changes in expected future cash flows reflected in reported yields going forward.  In addition, if cash flows are expected to decrease, EITF 99-20 may require investors to recognize impairment losses.  EITF 99-20 is effective for the Company as of April 1, 2001.  The adoption of EITF 99-20 on April 1, 2001 resulted in a loss of $10,342,000, net of tax, which is being recognized and reported in the consolidated statement of income and comprehensive income as a cumulative effect of an accounting change.

13

ANCHOR NATIONAL LIFE INSURANCE COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Management's discussion and analysis of financial condition and results of operations of Anchor National Life Insurance Company (the "Company") for the three months and six months ended June 30, 2001 and June 30, 2000 follows.  Certain prior period amounts have been reclassified to conform to the current period's presentation.

     In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company cautions readers regarding certain forward-looking statements contained in this report and in any other statements made by, or on behalf of, the Company, whether or not in future filings with the Securities and Exchange Commission (the "SEC"). Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments.  Statements using verbs such as "expect," "anticipate," "believe" or words of similar import generally involve forward-looking statements.  Without limiting the foregoing, forward-looking statements include statements which represent the Company's beliefs concerning future levels of sales and redemptions of the Company's products, investment spreads and yields, or the earnings and profitability of the Company's activities.

     Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control and many of which are subject to change.  These uncertainties and contingencies could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company.  Whether or not actual results differ materially from forward-looking statements may depend on numerous foreseeable and unforeseeable developments.  Some may be national in scope, such as general economic conditions, changes in tax law and changes in interest rates.  Some may be related to the insurance industry generally, such as pricing competition, regulatory developments and industry consolidation.  Others may relate to the Company specifically, such as credit, volatility and other risks associates with the Company's investment portfolio.  Investors are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the SEC.  The Company disclaims any obligation to update forward-looking information.

RESULTS OF OPERATIONS

     The Company has three business segments, as presented in Note 2 of Notes to Consolidated Financial Statements: annuity operations, asset management operations and broker-dealer operations.  Annuity operations consist of the sale and administration of deposit-type insurance contracts, such as fixed and variable annuities, universal life insurance contracts and guaranteed investment contracts ("GICs").  Annuity operations focus primarily on the marketing of variable annuity products and the administration of a closed block of universal life business.  The variable annuity products offer investors a broad spectrum of fund alternatives, with a choice of investment GIC managers, as well as guaranteed fixed-rate account options.  The Company earns fee income on investments in the variable account options and net investment income on the fixed-rate account options.

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     The asset management operations are conducted by the Company's registered investment advisor subsidiary, SunAmerica Asset Management Corp. ("SunAmerica Asset Management"), and its related distributor, SunAmerica Capital Services, Inc. ("SACS").  Premiums from variable annuities sold by the Company are held in trusts that are owned by the Company, with the assets directly supporting policyholder obligations.  SunAmerica Asset Management is the investment advisor for all of the trusts as well as trusts owned by an affiliate, First SunAmerica Life Insurance Company.  These companies earn fee income by distributing and managing a diversified family of mutual funds, managing certain subaccounts within the Company's variable annuity products and providing professional management of individual, corporate and pension plan portfolios.

     The broker-dealer operations are conducted by the Company's broker-dealer subsidiary, Royal Alliance Associates, Inc. ("Royal"), which sells proprietary annuities and mutual funds, as well as a full range of non-proprietary investment products through approximately 2,900 independent registered representatives.  Royal earns income from commissions on sales of these products, net of the portion that is passed on to the registered representatives.  Royal is a registered broker-dealer under the Securities Exchange Act of 1934 and a member of the National Association of Securities Dealers.

     NET INCOME totaled $28.8 million in the second quarter of 2001, compared with $52.6 million in the second quarter of 2000.  For the six months, net income amounted to $59.6 million in 2001, compared with $106.0 million in 2000.

     CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE reflects the adoption of EITF 99-20 on April 1, 2001.  The Company recorded a loss of $10,342,000, net of tax, which is recognized in the consolidated statement of income and comprehensive income as a cumulative effect of accounting change (see Note 5 of Notes to Consolidated Financial Statements).

     PRETAX INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE totaled $52.5 million in the second quarter of 2001 and $83.1 million in the second quarter of 2000.  For the six months, pretax income before cumulative effect of change in accounting principle totaled $93.3 million in 2000, compared with $165.9 million in 2000.  The decrease in 2001 primarily resulted from increased net realized investment losses and increased amortization of deferred acquisition costs.

     INCOME TAX EXPENSE totaled $13.3 million in the second quarter of 2001, $30.6 million in the second quarter of 2000, $23.3 million in the six months of 2001 and $59.9 million in the six months of 2001, representing effective annualized tax rates of 25%, 37%, 25% and 36%, respectively.  The lower tax rate in 2001 is due primarily to tax credits generated by SA Affordable Housing LLC ("SAAH LLC"), a wholly-owned subsidiary of SunAmerica Asset Management (See Note 1).

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ANNUITY OPERATIONS

     PRETAX INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE totaled $43.9 million in the second quarter of 2001, compared with $66.0 million in the second quarter of 2000.  For the six months, pretax income before cumulative effect of change in accounting principle totaled $70.0 in 2001, compared with $132.3 million in 2000.  The decreases in 2001 from 2000 primarily resulted from increased net realized investment losses, increased amortization of deferred acquisition costs and decreased net investment 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, totaled $36.4 million in the second quarter of 2001 and $33.1 million in the second quarter of 2000.  These amounts equal 2.86% on average invested assets (computed on a daily basis) of $5.08 billion in the second quarter of 2001 and 2.44% on average invested assets of $5.42 billion in the second quarter of 2000.  For the six months, net investment income decreased to $59.2 million in 2001 from $70.2 million in 2000, representing 2.27% of average invested assets of $5.21 billion in 2001 and 2.57% of average invested assets of $5.47 billion in 2000.

     Net investment spreads include the effect of income earned or interest paid on the difference between average invested assets and average interest-bearing liabilities.  In the second quarter, average interest-bearing liabilities exceeded average invested assets by $7.7 million in 2001, whereas average invested assets exceeded average interest-bearing liabilities by $133.1 million in 2000.  For the six months, average invested assets exceeded average interest-bearing liabilities by $64.2 million in 2001, compared with $176.3 million in 2000.  The decrease in 2001 reflects dividends of $94.1 million paid to SunAmerica Life Insurance Company (the "Parent") in the second quarter of 2001.  The difference between the Company's yield on average invested assets and the rate paid on average interest-bearing liabilities (the "Spread Difference") was 2.88% in the second quarter of 2001 and 2.33% in the second quarter of 2000.  For the six months, the Spread Difference was 2.21% in 2001 and 2.41% in 2000.  The decrease in the Spread Difference in 2001 compared to 2000 is due primarily to the impact of gains and losses on seed money and decreased partnership income.

     Investment income (and the related yields on average invested assets) totaled $94.1 million (7.41%) in the second quarter of 2001, $95.3 million (7.04%) in the second quarter of 2000, $179.2 million (6.88%) in the six months of 2001 and $199.2 million (7.29%) in the six months of 2000.  The increase in the investment yield in the second quarter of 2001 over the second quarter of 2000 is principally due to the impact of gains and losses on seed money and decreased partnership income.  In the second quarter of 2001, seed money gains were $3.3 million as compared to seed money losses of $4.8 million.  Partnership income was $0.2 million and $1.1 million in the second quarters of 2001 and 2000, respectively.  Excluding the impact of seed money gains and losses and partnership income, investment returns would have been 7.23% in the second quarter of 2001 and 7.48% in the second quarter of 2000.

     The decrease in the investment yield in the six months of 2001 as compared to the six months of 2000 is due primarily to the impact of gains and losses on seed money and decreased partnership income.  In the six months of 2001, seed money losses were $5.6 million as compared to $3.6 million of seed money gains in 2000.  Partnership income was $0.5 million and $2.0 million in the six months of 2001 and 2000, respectively.  Excluding seed money gains and losses and partnership income, investment returns would have been 7.19% for the six months of 2001 and 7.26% for the six months of 2000.

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     Expenses incurred to manage the investment portfolio amounted to $1.4 million in the second quarter of 2001, $2.0 million in the second quarter of 2000, $3.2 million in the six months of 2001 and $3.5 million in the six months of 2000.  These expenses are included as a reduction of investment income in the consolidated statement of income.

     Total interest expense equaled $57.7 million in the second quarter of 2001 and $62.3 million in the second quarter of 2000.  For the six months, interest expense aggregated $120.0 million in 2001, compared with $129.0 million in 2000.  The average rate paid on all interest-bearing liabilities was 4.53% in the second quarter of 2001, compared with 4.71% in the second quarter of 2000.  For the six months, the average rate paid on all interest-bearing  liabilities  was  4.67% in 2001 and 4.88% in 2000.  Interest-bearing liabilities  averaged  $5.09 billion during the second quarter of 2001, $5.28 billion during the second quarter of 2000, $5.14 billion during the six months of 2001 and $5.29 billion during the six months of 2000.  The decreases in the overall rates paid in 2001 as compared to 2000 resulted primarily from reductions in crediting rates due to a decline in the interest rate environment during 2001.

     DECLINE IN AVERAGE INVESTED ASSETS largely resulted from the surrenders of certain closed blocks of fixed annuity policies.  Changes in average invested assets also reflect sales of the fixed account options of the Company's variable annuity products ("Fixed Annuity Premiums"), and renewal premiums on its universal life product ("UL Premiums"), partially offset by net exchanges from the fixed accounts into the separate accounts of variable annuity contracts.  Fixed Annuity Premiums and UL Premiums totaled $453.6 million in the second quarter of 2001, $486.6 million in the second quarter of 2000, $926.9 million in the six months of 2001 and $881.6 million in the six months of 2000, and are largely premiums for the fixed accounts of variable annuities.  On an annualized basis, these premiums represent 39%, 40%, 40% and 34%, respectively, of the related reserve balances at the beginning of the respective periods.

     GIC premiums totaled $100.0 million in the second quarter of 2000, $40.0 million in the six months of 2001 and $250.0 million in the six months of 2000.  No such premiums were written in the second quarter of 2001.  GIC surrenders and maturities totaled $12.8 million in the second quarter of 2001, $4.2 million in the second quarter of 2000, $175.9 million in the six months of 2001 and $8.2 million in the six months of 2000.  The GICs issued by the Company are generally variable rate contracts which guarantee the payment of principal and interest for a term of three to five years.  GICS that are purchased by banks for their long-term portfolios or by state and local governmental entities either prohibit withdrawals or permit scheduled book value withdrawals subject to the terms of the underlying indenture or agreement.  GICs purchased by asset management firms for their short-term portfolios either prohibit withdrawals or permit withdrawals with notice ranging from 90 to 270 days.  In pricing GICs, the Company analyzes cash flow information and prices accordingly so that it is compensated for possible withdrawals prior to maturity.

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     NET REALIZED INVESTMENT LOSSES totaled $5.7 million in the second quarter of 2001, compared with $3.6 million in the second quarter of 2000 and include impairment writedowns of $8.9 million and $5.8 million, respectively.  For the six months, net realized investment losses totaled $30.5 million in 2001, compared with $5.4 million in 2000 and include impairment writedowns of $34.7 million and $8.4 million, respectively.  Thus, net realized gains from sales and redemptions of investments totaled $3.2 million in the second quarter of 2001, $2.2 million in the second quarter of 2000, $4.2 million in the six months of 2001 and $3.0 million in the six months of 2000.

     The Company sold or redeemed invested assets, principally bonds and notes, aggregating $350.3 million in the second quarter of 2001, $212.5 million in the second quarter of 2000, $730.0 million in the six months of 2001 and $621.5 million in the six months of 2000.  Sales of investments result from the active management of the Company's investment portfolio.  Because redemptions of investments are generally involuntary and sales of investments are made in both rising and falling interest rate environments, net gains and losses from sales and redemptions of investments fluctuate from period to period, and represent, on an annualized basis, 0.25%, 0.16%, 0.16% and 0.11% of average invested assets in the second quarter of 2001, the second quarter of 2000, the six months of 2001 and the six months of 2000, respectively.  Active portfolio management involves the ongoing evaluation of asset sectors, individual securities within the investment portfolio and the reallocation of investments from sectors that are perceived to be relatively overvalued to sectors that are perceived to be relatively undervalued.  The intent of the Company's active portfolio management is to maximize total returns on the investment portfolio, taking into account credit, option, liquidity and interest-rate risk.

     Impairment writedowns include $8.9 million, $5.8 million, $34.7 million and $8.4 million of provisions applied to high yield bonds in the second quarter of 2001, the second quarter of 2000, the six months of 2001 and the six months of 2000, respectively.  On an annualized basis, impairment writedowns represent 0.70%, 0.43%, 1.33% and 0.31% of average invested assets in the second quarter of 2001, the second quarter of 2000, the six months of 2001 and the six months of 2000, respectively.  For the twenty quarters ended June 30, 2001, impairment writedowns as an annualized percentage of average invested assets have ranged up to 2.62% and have averaged 0.50%.  Such writedowns are made when the Company has determined that the applicable assets have suffered other than temporary declines in net realizable value.   Actual realization will be dependent upon future events.  The Company recorded $15.9 million ($10.3 million, net of tax) of additional impairments pursuant to the implementation of EITF 99-20 (See Note 5 of Notes to Consolidated Financial Statements).  This adjustment was recorded as a cumulative effect of change in accounting principle in the accompanying consolidated statement of income and comprehensive income.

     VARIABLE ANNUITY FEES are based on the market value of assets in separate accounts supporting variable annuity contracts.  Such fees totaled $89.8 million in the second quarter 2001 and $95.8 million in the second quarter of 2000.  For the six months, variable annuity fees totaled $180.4 million in 2001, compared with $188.8 million in 2000.  The decreased fees reflect a decline in average variable annuity assets, principally due to a decline in market values and to surrenders, partially offset by receipt of variable annuity premiums and net exchanges into the separate accounts from the fixed accounts of variable annuity contracts.  On an annualized basis, variable annuity fees represent 1.8% of average variable annuity assets in all periods presented.  Variable annuity assets averaged $19.44 billion, $21.00 billion, $19.63 billion and $20.71 billion during the second quarter of 2001 and 2000 and the six months of 2001 and 2000, respectively.  Variable annuity premiums, which exclude premiums allocated to the fixed accounts of variable annuity products, totaled $427.2 million and $498.0 in the second quarters of 2001 and 2000, respectively.  For the six months, variable annuity premiums totaled $839.1 million in 2001, compared with $972.3 million in 2000.  On an annualized basis, these amounts represent 9%, 9%, 8% and 10% of variable annuity reserves at the beginning of the respective periods.  Transfers from the fixed accounts of the Company's variable annuity products to the separate accounts (see "Decline in Average Invested Assets") are not classified as variable annuity premiums.  Accordingly, changes in variable are not necessarily indicative of the ultimate allocation by customers among fixed and variable account options of the Company's variable annuity products.

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     Sales of variable annuity products (which include premiums allocated to the fixed accounts) ("Variable Annuity Product Sales") amounted to $868.1 million, $970.0 million, $1.74 billion and $1.83 billion in the second quarters of 2001 and 2000 and six months of 2001 and 2000, respectively. Variable Annuity Product Sales primarily reflect sales of the Company's flagship variable annuity line, Polaris.  Polaris is a multimanager variable annuity that offers investors a choice of 31 variable funds and a number of guaranteed fixed-rate funds.  Variable Annuity Product Sales have decreased as a result of unfavorable stock market conditions.

     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.  Also, from time to time, Federal initiatives are proposed that could affect the taxation of variable annuities and annuities generally (See "Regulation").

     UNIVERSAL LIFE INSURANCE FEES amounted to $4.8 million and $2.0 million in the second quarter of 2001 and 2000, respectively.  For the six months, universal life insurance fees totaled $10.1 million in 2001 and $6.7 million in 2000.  Universal life insurance fees consist of mortality changes, up-front fees earned on premiums received and administrative fees, net of the excess mortality expense on these contracts.  The Company does not actively market universal life insurance contracts.  Such fees annualized represent 1.08%, 0.41%, 1.12% and 0.70% of average reserves for universal life insurance contracts in the respective periods.  Universal life insurance fees have increased in 2001, principally as a result of improved mortality experience, which fluctuates and cannot necessarily be expected to continue in future periods.

     SURRENDER CHARGES on fixed and variable annuity contracts and  universal life contracts totaled $5.9 million in the second quarter of 2001 and $5.7 million in the second quarter of 2000.  For the six months, such surrender charges totaled $11.8 million in 2001 and $10.8 million in 2000.  Surrender charges generally are assessed on withdrawals at declining rates during the first seven years of a contract.  Withdrawal payments, which exclude claims and lump-sum annuity benefits, totaled $491.6 million in the second quarter of 2001, compared with $532.3 million in the second quarter of 2000.  For the six months, such withdrawal payments totaled $1.02 billion in 2001 and $1.19 billion in 2000.  Annualized, these payments when expressed as a percentage of average fixed and variable annuity and universal life reserves represent 8.3%, 8.4%, 8.5% and 9.4% for the second quarters of 2001 and 2000 and six months of 2001 and 2000, respectively.  Withdrawal rates were higher in 2000 due to higher surrenders on certain closed blocks of fixed annuity business.  Withdrawals include variable annuity payments from the separate accounts totaling $402.2 million (8.3% of average variable annuity reserves), $408.9 million (7.8% of average variable annuity reserves), $841.5 million (8.6% of average variable annuity reserves) and $903.9 million (8.8% of average variable annuity reserves) in the second quarters of 2001 and 2000 and the six months of 2001 and 2000, respectively.  Management does not anticipate a significant increase in the level of withdrawal payments relative to fixed and variable annuity and universal life reserves.

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     GENERAL, ADMINISTRATIVE AND OTHER EXPENSES totaled $32.8 million in the second quarter of 2001 and $27.5 million in the second quarter of 2000.  For the six months, general, administrative and other expenses totaled $60.5 million in 2001 and $53.3 million in 2000.  General, administrative and other expenses have increased principally due to guaranteed death benefits paid pursuant to the Company's separate account contracts.  These guarantee payments, net of reinsurance, totaled $3.6 million in the second quarter of 2001 and $67,000 in the second quarter of 2000.  For the six months, such payments totaled $6.5 million in 2001 and $186,000 million in 2000.  The increase in these guaranteed minimum death benefit payments is principally due to unfavorable stock market conditions which resulted in decreases in the market values of the assets within the separate accounts.  General, administrative and other expenses remain closely controlled through a company-wide cost containment program and continue to represent less than 1% of average total assets.

     AMORTIZATION OF DEFERRED ACQUISITION COSTS totaled $40.8 million in the second quarter of 2001, compared with $28.8 million in the second quarter of 2000.  For the six months, such amortization totaled $73.8 million in 2001 compared with $60.2 million in 2000.  The increase in amortization was primarily due to additional fixed and variable annuity sales and the subsequent amortization of related deferred commissions and other direct  selling costs.

     ANNUAL COMMISSIONS totaled $14.6 million in the second quarter of 2001, compared with $11.4 million in the second quarter of 2000.  For the six months, annual commissions amounted to $28.6 million in 2001 and $26.8 million in 2000.  Annual commissions represent renewal commissions paid quarterly in arrears to maintain the persistency of certain of the Company's variable annuity contracts.  Substantially all of the Company's currently available variable annuity products allow for an annual commission payment option in return for a lower immediate commission.  The Company estimates that approximately 54% of the average balances of its variable annuity products is currently subject to such annual commissions.  Based on current sales, this percentage is expected to increase in future periods.

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ASSET MANAGEMENT OPERATIONS

     PRETAX INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE totaled $3.8 million in the second quarter of 2001 and $10.6 million in the second quarter of 2000.  For the six months, pretax income before cumulative effect of change in accounting principle totaled $13.8 million in 2001 and $21.9 million in 2000.  The decrease in 2001 from 2000 primarily resulted from increased net realized investment losses and increased amortization of deferred acquisition costs, partially offset by an increase in net investment income.

     NET REALIZED INVESTMENT LOSSES totaled $9.1 million in the second quarter of 2001 and six months of 2001 and include impairment writedowns of $7.5 million in the second quarter of 2001 and six months of 2001.   There were no realized investment losses in 2000.  Thus, net realized losses from sales and redemptions of investments totaled $1.6 million in the second quarter and six months of 2001.  Impairment writedowns include $7.5 million of provisions applied to partnerships of SAAH LLC in the second quarter and six months of 2001.  Such writedowns are made when the Company has determined that the applicable assets have suffered other than temporary declines in net realizable value.   Actual realization will be dependent upon future events.

     VARIABLE ANNUITY FEES totaled $2.9 million in the second quarter of 2001, compared to $3.6 million in the second quarter of 2000.  For the six months, variable annuity fees totaled $5.9 million in 2001 and $7.3 million in 2000.  The decreased fees reflect a decline in average variable annuity assets, principally due to a decline in market values.

     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  by  SunAmerica  Asset  Management.  Such fees totaled $17.0 million on average assets managed of $6.64 billion in the second quarter of 2001 and $17.8 million on average assets managed of $6.33 billion in the second quarter of 2000.  For the six months, asset management fees totaled $34.2 million on average assets managed of $6.65 billion in 2001, compared with $34.8 million on average assets managed of $6.18 billion in 2000.  Asset management fees are not necessarily proportionate to average assets managed, principally due to changes in product mix.  Mutual fund sales, excluding sales of money market accounts, totaled $529.7 million in the second quarter of 2001, compared to $727.2 million in the second quarter of 2000.  For the six months, mutual fund sales amounted to $1.03 billion in 2001, compared with $1.56 billion in 2000.  Redemptions of mutual funds, excluding redemptions of money market accounts, amounted to $271.1 million in the second quarter of 2001, $185.7 million in the second quarter of 2000, $528.4 million in the six months of 2001 and $405.8 million in the six months of 2000, which, annualized, represent 19.3%, 13.5%, 18.8% and 15.3%, respectively, of average related mutual fund assets.  The decrease in sales and the increase in redemptions in 2001 principally reflect lower demand for growth funds, which have been out of favor with investors due to unfavorable stock market conditions.

     GENERAL, ADMINISTRATIVE AND OTHER EXPENSES totaled $5.2 million in the second quarter of 2001 and $5.7 million in the second quarter of 2000.  For the six months, general, administrative and other expenses totaled $10.5 million in 2001 and $12.2 million in 2000.  The decrease in expenses in 2001 principally reflects  the lower sales of mutual funds and related marketing costs.

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     AMORTIZATION OF DEFERRED ACQUISITION COSTS totaled $10.3 million in the second quarter of 2001, compared with $7.6 million in the second quarter of 2000.  For the six months, such amortization totaled $19.6 million in 2001 and $14.1 million in 2000.  The increase in amortization was primarily due to additional mutual fund sales and the subsequent amortization of related deferred commissions and other direct selling costs.

BROKER DEALER OPERATIONS

     PRETAX INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE totaled $4.7 million in 2001 and $6.5 million in 2000.  For the six months, pretax income before cumulative effect of change in accounting principle totaled $9.5 million in 2001 and $11.6 million in 2000.  The decrease in 2001 from 2000 primarily resulted from a decline in net retained commissions.

     NET RETAINED COMMISSIONS totaled $11.9 million in 2001 and $14.0 million in 2000.  For the six months, net retained commissions totaled $23.8 million in 2001 and $26.2 million in 2000.  Net retained commissions are derived from commissions on the sales of proprietary and nonproprietary investment products, after deducting approximately 90% of such commissions that is passed on to registered representatives and have decreased as a result of lower sales.  Fluctuations in net retained commissions may not necessarily be limited to fluctuations in sales primarily due to changes in sales mix.  Broker-dealer sales (mainly sales of general securities, mutual funds and annuities) totaled $2.65 billion in the second quarter of 2001 and $3.73 billion in the second quarter of 2000, $5.83 billion in the six months of 2001 and $6.61 billion in the six months of 2000.  The decrease in broker-dealer sales in 2001 reflects lower demand for mutual funds due to unfavorable stock market conditions.

     GENERAL, ADMINISTRATIVE AND OTHER EXPENSES totaled $7.5 million in 2001, compared with $7.7 million in 2000.  For the six months, general, administrative and other expenses totaled $15.2 million in 2001 and 2000.

FINANCIAL CONDITION AND LIQUIDITY

     SHAREHOLDER'S EQUITY increased to $1.55 billion at June 30, 2001 from $1.13 billion at December 31, 2000, due principally to a $432.7 million capital contribution from the Parent of its wholly-owned subsidiary, SAAH LLC, to the Company.  In addition, the Company recorded net income of $59.6 million and other comprehensive income of $27.1 million, offset by ordinary and extraordinary dividends totaling $94.1 million paid to the Parent on April 2, 2001.

     INVESTED ASSETS at June 30, 2001 totaled $5.27 billion, compared with $5.26 billion at December 31, 2000.  The Company manages most of its invested assets internally.  The Company's general investment philosophy is to hold fixed-rate assets for long-term investment.  Thus, it does not have a trading portfolio.  However, the Company has determined that all of its portfolio of bonds, notes and redeemable preferred stocks (the "Bond Portfolio") is available to be sold in response to changes in market interest rates, changes in relative value of asset sectors and individual securities, changes in  prepayment risk, changes in the credit quality outlook for certain securities, the Company's need for liquidity and other similar factors.

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     THE BOND PORTFOLIO, which constituted 74% of the Company's total investment portfolio at June 30, 2001, had an amortized cost that was $78.7 million greater than its aggregate fair value at June 30, 2001 and $122.7 million  greater  than  its  aggregate fair value at December 31, 2000.  The decrease in net unrealized losses on the Bond Portfolio during 2001 reflects impairment writedowns recorded in 2001 as well as the decline in prevailing interest rates and the corresponding effect on the fair value of the Bond  Portfolio at June 30, 2001.

     At June 30, 2001, the Bond Portfolio (excluding $1.4 million of redeemable preferred stocks) included $3.89 billion of bonds rated by Standard & Poor's ("S&P"), Moody's Investors Service ("Moody's"), Fitch ("Fitch") or the Securities Valuation Office of the National Association of Insurance Commissioners ("NAIC"), and $26.4 million of bonds rated by the Company pursuant to statutory ratings guidelines established by the NAIC.  At June 30, 2001, approximately $3.69 billion of the Bond Portfolio was investment grade, including $1.68 billion of U.S. government/agency securities and mortgage-backed securities ("MBS").

     At June 30, 2001, the Bond Portfolio included $223.1 million of bonds that were not investment grade.  These non-investment-grade bonds accounted for approximately 0.8% of the Company's total assets and approximately 4.2% of its 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 had no material concentrations of non-investment-grade securities at June 30, 2001.

     The table on the next page summarizes the Company's rated bonds by rating classification as of June 30, 2001.

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RATED BONDS BY RATING CLASSIFICATION (Dollars in thousands)
Issues Rated by S&P/Moody's/Fitch			Issues not rated by S&P/Moody's/ Fitch, by NAIC Category			Total
S&P/Moody's/ Fitch category (1)	Amortized cost	Estimated fair value	NAIC category (2)	Amortized cost	Estimated fair value	Amortized cost	Estimated fair value	Percent of invested assets
AAA+ to A-
(Aaa to A3)
[AAA to A-]
{AAA to A-}	$2,923,062	$2,911,186	1	$83,502	$85,512	$3,006,564	$2,996,698	56.88	%
BBB+ to BBB-
(Baa1 to Baa3)
[BBB+ to BBB-]
{BBB+ to BBB-}	596,604	586,577	2	112,628	110,627	709,232	697,204	13.23	%
BB+ to BB-
(Ba1 to Ba3)
[BB+ to BB-]
{BB+ to BB-}	65,098	54,776	3	1,682	1,474	66,780	56,250	1.07	%
B+ to B-
(B1 to B3)
[B+ to B-]
{B+ to B-}	171,174	136,526	4	4,320	4,168	175,494	140,694	2.67	%
CCC+ to C
(Caa to C)
[CCC]
{CCC+ to C-}	29,188	18,801	5	6,000	5,875	35,188	24,676	0.47	%
CI to D
[DD]
{D}	2,458	1,509	6	---	---	2,458	1,509	0.03	%
TOTAL RATED ISSUES	$3,787,584	$3,709,375		$208,132	$207,656	$3,995,716	$3,917,031
Footnotes appear on the following page.

24

	Footnotes to the table of Rated Bonds by Rating Classification
(1)	S&P and Fitch rate debt securities in rating categories ranging 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 rating categories ranging from Aaa (the highest) to C (extremely poor prospects of ever attaining any 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 highest of the S&P, Moody's and Fitch ratings if rated by multiple 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/Fitch rating groups listed above, with categories 1 and 2 considered investment grade.  The NAIC categories include $26.4 million of assets that were rated by the Company pursuant to applicable NAIC rating guidelines.

25

     Senior secured loans ("Secured Loans") are included in the Bond Portfolio and aggregated $155.7 million at June 30, 2001.  Secured Loans are senior to subordinated debt and equity and are secured by assets of the issuer.  At June 30, 2001, Secured Loans consisted of $52.3 million of publicly traded securities and $103.4 million of privately traded securities.  These Secured Loans are composed of loans to 37 borrowers spanning 15 industries, with 28% of these assets concentrated in utilities and 17% concentrated in energy.  No other industry constituted more than 10% of these assets.

     While the trading market for the Company's privately traded Secured Loans is more limited than for publicly traded issues, management believes that participation in these transactions has enabled the Company to improve its investment yield.  As a result of restrictive financial covenants, these Secured Loans involve greater risk of technical default than do publicly traded investment-grade securities.  However, management believes that the risk of loss upon default for these Secured Loans is mitigated by such financial covenants and the collateral values underlying the Secured Loans. The Company's Secured Loans are rated by S&P, Moody's, Fitch, the NAIC or by the Company, pursuant to comparable statutory ratings guidelines established by the NAIC.

     MORTGAGE LOANS aggregated $694.0 million at June 30, 2001 and consisted of 130 commercial first mortgage loans with an average loan balance of approximately $5.3 million, collateralized by properties located in 30 states.  Approximately 30% of this portfolio was office, 19% was manufactured housing, 18% was multifamily residential, 9% was hotels, 9% was industrial, 5% was retail, and 10% was other types.  At June 30, 2001, approximately 32% and 9% of this portfolio were secured by properties located in California and New York, respectively, and no more than 8% of this portfolio was secured by properties located in any other single state. At June 30, 2001, there were 13 mortgage loans with outstanding balances of $10 million or more, which collectively aggregated approximately 39% of this portfolio.  At June 30, 2001, approximately 28% of the mortgage loan portfolio consisted of loans with balloon payments due before July 1, 2004.  During 2001 and 2000, loans delinquent by more than 90 days, foreclosed loans and restructured loans have not been significant in relation to the total mortgage loan portfolio.

     Substantially all 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 more immediate effects of general economic conditions on these commercial property types.  However, due to the Company's strict underwriting standards, the Company believes that it has prudently managed the risk attributable to its mortgage loan portfolio while maintaining attractive yields.

     POLICY LOANS totaled $231.8 million at June 30, 2001, compared to $244.4 million at December 31, 2000,  and are primarily  loans taken against universal life policies.

     SEPARATE ACCOUNT SEED MONEY totaled $58.1 million at June 30, 2001, compared to $104.7 million at December 31, 2000, and consists of seed money for mutual funds used as investment vehicles for the Company's variable annuity separate accounts and SunAmerica Asset Management's mutual funds.   The decrease reflects a decline in the market value of the Company's variable annuity assets.

26

     PARTNERSHIPS totaled $177.1 million at June 30, 2001, constituting investments in 536 partnerships with an average size of approximately $0.3 million, most of which are partnership assets of SAAH LLC which was contributed to the Company effective January 1, 2001 (see Note 1).   This portfolio includes $168.9 million of partnerships that make tax-advantaged investments in affordable housing properties, currently involving approximately 530 multifamily projects in 48 states, and $8.2 million of partnerships managed by independent money managers that invest in a broad selection of equity and fixed-income securities, currently including 419 separate issuers.  The risks generally associated with partnerships include those related to their underlying investments (i.e., equity securities, debt securities and real estate), plus a level of illiquidity, which is mitigated, to some extent, for the affordable housing partnerships by the marketability of the tax credits they generate, and in the case of many of the other partnerships, by the existence of contractual termination provisions.

     OTHER INVESTED ASSETS aggregated $11.7 million at June 30, 2001, compared with $18.5 million at December 31, 2000, and consist of collateralized bond obligations and other mutual fund investments.

     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-rate investments 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-rate investments are priced over the yield curve, default rates and general economic conditions.  Its portfolio strategy is constructed with a view to achieve adequate risk-adjusted returns consistent with its investment objectives of effective asset-liability matching, liquidity and safety.  The Company's fixed-rate products incorporate surrender charges or other restrictions in order to encourage persistency. Approximately 82% of the Company's fixed annuity, universal life and GIC reserves had surrender penalties or other restrictions at June 30, 2001.

     As part of its asset-liability matching discipline, the Company conducts detailed computer simulations that model its fixed-rate assets and liabilities under commonly used stress-test interest rate scenarios.  With the results of these computer simulations, the Company can measure the potential gain or loss in fair value of its interest-rate sensitive instruments and seek to protect its economic value and achieve a predictable spread between what it earns on its invested assets and what it pays on its liabilities by designing its fixed-rate products and conducting its investment operations to closely match the duration of the fixed-rate assets to that of its fixed-rate liabilities.  The Company's fixed-rate assets include: cash and short-term investments; bonds, notes and redeemable preferred stocks; mortgage loans; policy loans; and investments in limited partnerships that invest primarily in fixed-rate securities.  At June 30, 2001, these assets had an aggregate fair value of $5.04 billion with a duration of 3.4.  The Company's fixed-rate liabilities include fixed annuity, GIC and universal life reserves and subordinated notes.  At June 30, 2001, these liabilities had an aggregate fair value (determined by discounting future contractual cash flows by related market rates of interest) of $4.70 billion with a duration of 3.1.  The Company's potential exposure due to a 10% increase in prevailing interest rates from their June 30, 2001 levels is a loss of approximately $13.7 million, representing the increase in the fair value of its fixed-rate liabilities that is not offset by an increase in the fair value of its fixed-rate assets.  Because the Company actively manages its assets and liabilities and has strategies in place to minimize its exposure to loss as interest rate changes occur, it expects that actual losses would be less than the estimated potential loss.

27

    Duration is a common option-adjusted measure for the price sensitivity of a fixed-maturity portfolio to changes in interest rates.  It measures the approximate percentage change in the market value of a portfolio if interest rates change by 100 basis points, recognizing the changes in cash flows resulting from embedded options such as policy surrenders, investment prepayments and bond calls.  It also incorporates the assumption that the Company will continue to utilize its existing strategies of pricing its fixed annuity, universal life and GIC products, allocating its available cash flow amongst its various investment portfolio sectors and maintaining sufficient levels of liquidity.  Because the calculation of duration involves estimation and incorporates assumptions, potential changes in portfolio value indicated by the portfolio's duration will likely be different from the actual changes experienced under given interest rate scenarios, and the differences may be material.

     As a component of its asset and liability management strategy, the Company utilizes interest rate swap agreements ("Swap Agreements") to match assets more closely to liabilities.  Swap Agreements are agreements to exchange with a counterparty interest rate payments of differing character (for example, variable-rate payments exchanged for fixed-rate payments) based on an underlying principal balance (notional principal) to hedge against interest rate changes.  The Company typically utilizes Swap Agreements to create a hedge that effectively converts floating-rate assets and liabilities into fixed-rate instruments.  At June 30, 2001, the Company had two outstanding Swap Agreements with a total notional principal of $126.8 million.  These agreements mature in June 2002 and December 2024.

     The Company also seeks to provide liquidity from time to time by using reverse repurchase agreements ("Reverse Repos") and by investing in MBSs. It also seeks to enhance its spread income by using Reverse Repos.  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.  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 repayments 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 the Company's Reverse Repos and Swap Agreements is counterparty risk.  The Company believes, however, that the counterparties to its Reverse Repos and Swap Agreements are financially responsible and that the counterparty risk associated with those transactions is minimal.  It is the Company's policy that these agreements are entered into with counterparties who have a debt rating of A/A2 or better from both S&P and Moody's.  The Company continually monitors its credit exposure with respect to these agreements.  In addition to counterparty risk, Swap Agreements also have interest rate risk.  However, the Company's Swap Agreements typically hedge variable-rate assets or liabilities, and interest rate fluctuations that adversely affect the net cash received or paid under the terms of a Swap Agreement would be offset by increased interest income earned on the variable-rate assets or reduced interest expense paid on the variable-rate liabilities.  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.  As part of its decision to purchase an MBS, the Company assesses the risk of prepayment by analyzing the security's projected performance over an array of interest-rate scenarios.  Once an MBS is purchased, the Company monitors its actual prepayment experience monthly to reassess the relative attractiveness of the security with the intent to maximize total return.

28

     INVESTED ASSETS EVALUATION is routinely conducted by the Company. Management identifies monthly those investments that require additional monitoring and carefully reviews the carrying values 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 any collateral, compliance with contractual covenants, the borrower's recent financial performance, new 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. For investments in partnerships, management reviews the financial statements and other information provided by the general partners.

     The carrying values of investments that are determined to have declines in value that are other than temporary are reduced to net realizable value and, in the case of bonds, no further accruals of interest are made.  The provisions for impairment 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 that are in default as to the payment of principal or interest, totaled $7.3 million of bonds at June 30, 2001, and constituted approximately 0.1% of total invested assets.  At December 31, 2000, defaulted investments totaled $3.6 million of bonds and constituted less than 0.1% of total invested assets.

     SOURCES OF LIQUIDITY are readily available to the Company in the form of the Company's existing portfolio of cash and short-term investments, Reverse Repo capacity on invested assets and, if required, proceeds from invested asset sales.   At June 30, 2001, approximately $1.80 billion of the Company's Bond Portfolio had an aggregate unrealized gain of $32.6 million, while approximately $2.12 billion of the Bond Portfolio had an aggregate unrealized loss of $111.3 million.  In addition, the Company's investment portfolio currently provides approximately $50.3 million of monthly cash flow from scheduled principal and interest payments.  Historically, cash flows from operations and from the sale of the Company's annuity and GIC products have been more than sufficient in amount to satisfy the Company's liquidity needs.

29

     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, in common with other insurers, is subject to regulation and supervision by the states and other jurisdictions in which it does business.  Within the United States, the method of such regulation varies but generally has its source in statutes that delegate regulatory and supervisory powers to an insurance official.  The regulation and supervision relate primarily to approval of policy forms and rates, the standards of solvency that must be met and maintained, including risk based capital measurements, the licensing of insurers and their agents, the nature of and limitations on investments, restrictions on the size of risks which may be insured under a single policy, deposits on securities for the benefit of policyholders, methods of accounting, periodic examinations of the affairs of insurance companies, the form and content of reports of financial condition required to be filed, and reserves for unearned premiums, losses and other purposes.  In general, such regulation is for the protection of policyholders rather than security holders.

     Risk based capital ("RBC") standards are designed to measure the adequacy of an insurer's statutory capital and surplus in relation to the risks inherent in its business.  The standards are intended to help identify inadequately capitalized companies and require specific regulatory actions in the event an insurer's RBC is deficient.  The RBC formula develops a risk adjusted target level of adjusted statutory capital and surplus by applying certain factors to various asset, premium and reserve items.  Higher factors are applied to more risky items and lower factors are applied to less risky items.  Thus, the target level of statutory surplus varies not only as a result of the insurer's size, but also on the risk profile of the insurer's operations.

30

     The RBC Model Law provides four incremental levels of regulatory attention for insurers whose surplus is below  the calculated RBC target.  These levels of attention range in severity from requiring the insurer to submit a plan for corrective action to actually placing the insurer under regulatory control.  The statutory capital and surplus of the Company exceeded its RBC requirements by a considerable margin as of June 30, 2001.

     In 1998, the NAIC adopted the codification of statutory accounting principles ("Codification") which replaced the NAIC's previous primary guidance on statutory accounting, which became effective January 1, 2001.  Codification changed prescribed statutory accounting practices and has resulted in changes to the accounting practices that the Company uses to prepare its statutory basis financial statements.  Codification has been adopted by all fifty states as the prescribed basis of accounting, including Arizona.  The adoption of Codification resulted in an increase to the Company's statutory surplus of approximately $99.4 million.

     Privacy provisions of the Gramm-Leach-Bliley Act are fully effective in 2001 and establish new consumer protections regarding the security, confidentiality, and uses of nonpublic personal information of individuals.  The law also requires financial institutions to disclose their privacy policies to their customers.  Additional privacy legislation pending in the United States Congress and several states is designed to provide further privacy protections to consumers of financial products and services.  These statutes and regulations may result in additional regulatory compliance costs, may limit the Company's ability to market its products, and may otherwise constrain the nature or scope of the Company's insurance and financial services operations.

     The Gramm-Leach-Bliley Act also allows combinations between insurance companies, banks and other entities.  It is not yet known what effect this legislation will have on insurance companies.  In addition, from time to time, Federal initiatives are proposed that could affect the Company's businesses.  Such initiatives include employee benefit plan regulations and tax law changes affecting the taxation of insurance companies and the tax treatment of insurance and other investment products.  Proposals made in recent years to limit the tax deferral of annuities or otherwise modify the tax rules related to the treatment of annuities have not been enacted.  While certain of such proposals, if implemented, could have an adverse effect on the Company's sales of affected products, and, consequently, on its results of operations, the Company believes these proposals have a small likelihood of being enacted, because they would discourage retirement savings  and  there  is  strong  public  and  industry  opposition  to them.

     SunAmerica Asset Management is registered with the Securities and Exchange Commission ("SEC") as an investment adviser under the Investment Advisers Act of 1940.  The mutual funds that it markets are subject to regulations under the Investment Company Act of 1940.  SunAmerica Asset Management and the mutual funds are also subject to regulation and examination by the SEC.  In addition, variable annuities and the related separate accounts of the Company are subject to regulation by the SEC under the Securities Act of 1933 and the Investment Company Act of 1940.

31

     The Company's broker-dealer subsidiaries are subject to regulation and supervision by the states in which they transact business, as well as by the SEC and the National Association of Securities Dealers ("NASD").  The SEC and the NASD have broad administrative and supervisory powers relative to all aspects of business and may examine each subsidiary's business and accounts at any time.  The SEC also has broad jurisdiction to oversee various activities of the Company and its other subsidiaries.

32

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The quantitative and qualitative disclosures about market risk are contained in the Asset-Liability Matching section of Management's Discussion and Analysis of Financial Condition and Results of Operations on pages 27 to 28 herein.

33

ANCHOR NATIONAL LIFE INSURANCE COMPANY OTHER INFORMATION
Item 1.     Legal Proceedings
	Not applicable.
Item 2.     Changes in Securities and Use of Proceeds
	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
	Not applicable.
Item 6.     Exhibits and Reports on Form 8-K

EXHIBITS
Exhibit    No.	Description
10(a)	Second amendment to Subordinated Loan Agreement for Equity Capital, dated as of April 30, 2001, between the Company's subsidiary, SunAmerica Capital Services, Inc. ("SACS"), and SunAmerica Inc. ("SAI"), extending the maturity date to June 30, 2003 and adjusting the interest rate from 9.5% to 7.5% per annum for the unpaid principal under the Amendment to Subordinated Loan Agreement for Equity Capital, dated as of May 22, 2000, with a maturity date of June 30, 2002.
10(b)	Second amendment to Subordinated Loan Agreement for Equity Capital, dated as of June 5, 2001, between SACS and SAI, extending the maturity date to July 30, 2003 and adjusting the interest rate from 9.5% to 7.5% per annum for the unpaid principal under the Amendment to Subordinated Loan Agreement for Equity Capital, dated as of May 22, 2000, with a maturity date of July 30, 2002.

REPORTS ON FORM 8-K

There were no current reports on Form 8-K filed during the three months ended June 30, 2001.

34

SIGNATURES

        Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ANCHOR NATIONAL LIFE INSURANCE COMPANY Registrant
Dated:   August 13, 2001	/s/ N. SCOTT GILLIS N. Scott Gillis Senior Vice President      (Principal Financial Officer)
Dated:   August 13, 2001	/s/ MAURICE S. HEBERT Maurice S. Hebert Vice President and Controller      (Principal Accounting Officer)

35

ANCHOR NATIONAL LIFE INSURANCE COMPANY LIST OF EXHIBITS FILED
Exhibit    No.	Description
10(a)	Second amendment to Subordinated Loan Agreement for Equity Capital, dated as of April 30, 2001, between the Company's subsidiary, SunAmerica Capital Services, Inc. ("SACS"), and SunAmerica Inc. ("SAI"), extending the maturity date to June 30, 2003 and adjusting the interest rate from 9.5% to 7.5% per annum for the unpaid principal under the Amendment to Subordinated Loan Agreement for Equity Capital, dated as of May 22, 2000, with a maturity date of June 30, 2002.
10(b)	Second amendment to Subordinated Loan Agreement for Equity Capital, dated as of June 5, 2001, between SACS and SAI, extending the maturity date to July 30, 2003 and adjusting the interest rate from 9.5% to 7.5% per annum for the unpaid principal under the Amendment to Subordinated Loan Agreement for Equity Capital, dated as of May 22, 2000, with a maturity date of July 30, 2002.

36

EX-10.A

EXHIBIT 10(a)

NASD
REGULATION
An NASD Company

June 12, 2001

Ms. Debbie Potash - Turner
SunAmerica Capital Services, Inc.
733 Third Avenue, 3rd Floor
New York, New York 10017-3204

Re:	Subordinated Loan Agreement
	Extension of Maturity Date
Type:	Equity
Control #:	10-E-SLA-10749
Lender:	SunAmerica Inc.
Current Maturity Date:	June 30, 2002

Dear Ms. Potash - Turner:

The amendment extending the maturity date of the above referenced agreement from June 30, 2002 to June 30, 2003 is accepted by the National Association of Securities Dealers, Inc.

It is important to note that the limitations required by paragraph V, which covers Permissive Prepayments, will run from the effective date of the original agreement, not from the date of this amendment.

If you have any questions regarding this Agreement or our acceptance thereof, please contact this office.

Very truly yours,

/s/ Gerald Dougherty

Gerald Dougherty
Assistant Director

GD: jr

Cc: Patricia MacGeorge

NASD Regulation, Inc.  District 10, One Liberty Plaza,  New York, NY 10006  212 858 4000

NASD
SUBORDINATED AGREEMENT
AMENDMENT EXTENDING MATURITY DATE

SL-A

AGREEMENT BETWEEN:

Lender: SunAmerica Inc.

1 SunAmerica Center, 1999 Avenue of the Stars, 38th Floor
(Street Address)

Los Angeles                  California                90067-6002
(City)                         (State)                      (Zip)

AND

Broker-Dealer: SunAmerica Capital Services, Inc.

733 Third Avenue, 3rd Floor
(Street Address)

New York                 New York                    10017
   (City)                        (State)                       (Zip)

NASD ID Number: 13158
DATE FILED: May 21, 2001

-1-

SUBORDINATED LOAN AGREEMENT
AMENDMENT EXTENDING THE MATURITY DATE

          This Amendment No. 2 of that certain NASD Subordinated Loan Agreement for Equity Capital SL-5 by and between SunAmerica Inc. (the "Lender") and SunAmerica Capital Services, Inc. (the "Broker-Dealer") effective as of May 28, 1998 ("Subordinated Loan Agreement") and amendment thereto dated as of May 22, 2000 ("Amendment No. 1") is dated as of April 30, 2001 ("Amendment No. 2").

          In consideration of the sum of $3,500,000 (the unpaid principal amount) and subject to the terms and conditions set forth in the Subordinated Loan Agreement approved by the National Association of Securities Dealers, Inc. ("NASD"), as amended by Amendment No. 1, scheduled to mature on June 30, 2002 bearing  Loan Number 10-E-SLA-10749, the Broker-Dealer and the Lender agree to extend the maturity date until July 30, 2003. This Amendment No. 2 shall not become effective unless and until the NASD has found Amendment No. 2 acceptable.

          The interest rate set forth in the Subordinated Loan Agreement, as amended by Amendment No. 1, is changed from 9.5% to 7.5% per annum effective as of July 1, 2002.

(The signature page follows.)

-2-

          IN WITNESS WHEREOF the parties have set their hands and seal this 30th day of April, 2001.

BROKER-DEALER:                                                                                           SUNAMERICA CAPITAL SERVICES, INC.

[Seal]                                                                   

                                                                                                              

                                                                                                                              By: /s/ Debbie Potash Turner
                                                                                                                                     Name: Debbie Potash Turner
                                                                                                                                     Title: Chief Financial Officer

LENDER:                                                                                                              SUNAMERICA INC.

[Seal]                                                                                                                       

                           
                                                                                                                               By: /s/ James R. Belardi
                                                                                                                                      Name: James R. Belardi
                                                                                                                                      Title: Executive Vice President

                                                                                               FOR NASD USE ONLY 

                                                                                            
                                                                                              ACCEPTED BY:      /s/ Gerald Dougherty
                                                                                                                                              (Name)

                                                                                                                                Assistant Director
                                                                                                                                              (Title)

                                                                                               EFFECTIVE DATE:  JUN 30 2002

                                                                                               LOAN NUMBER:  10-E-SLA-10749

-3-

SUBORDINATED LOAN AGREEMENT
LENDER'S ATTESTATION

              It is recommended that you discuss the merits of this investment with an attorney, accountant or some other person who has knowledge and experience in financial and business matters prior to executing this Agreement.

1.	I have received and reviewed a copy of Appendix D of 17 CFR 240.15c3-l, and am familiar with its provisions.
2.	I am aware that the funds or securities subject to this Agreement are not covered by the Securities Investor Protection Act of 1970.
3.	I understand that I will be furnished financial statements pursuant to SEC Rule 17a-5(c).
4.	On the date this Agreement was entered into, the broker-dealer carried funds or securities for my account. (State Yes or No): No.
5.	Lender's business relationship to the broker-dealer is: Lender is an intermediate holding company of Broker-Dealer and continuously monitors fiscal status and reports of Broker-Dealer.
6.	If the partner or stockholder is not actively engaged in the business of the broker-dealer, acknowledge receipt of the following:

a.	Certified audit and accountant's certificate dated ___________.
b.	Disclosure of financial and/or operational problems since the last  certified audit which required reporting pursuant to SEC Rule 17a-11.  (If no such reporting was required, state "none") _______________________.
c.	Balance sheet and statement of ownership equity dated _____________.
d.	Most recent computation of net capital and aggregate indebtedness or aggregate debit items dated ______________ reflecting a net capital of  $___________ and ratio of ___________.
e.	Debt/equity as of _____________ of ____________.

-1-

f.  Other disclosures:  ______________________ .  

Dated: April 30, 2001                                                                                          SUNAMERICA INC.  (Lender)

           [Seal]
                                                                                                                              By: /s/ James R. Belardi                                                                          
                                                                                                                                      Name: James R. Belardi
                                                                                                                                     Title: Executive Vice President

-2-

OFFICER'S CERTIFICATE

           I, James R. Belardi, Executive Vice President of SunAmerica Inc., a Delaware corporation (this "Corporation"), do hereby certify that the $3,500,000 subordinated loan made by this Corporation to SunAmerica Capital Services, Inc., amended to mature on June 30, 2003, does not cause the aggregate principal amount of all outstanding loans made by this Corporation to its broker-dealer subsidiaries to exceed $75 million.

Dated: April 30, 2001                                                                                           /s/ James R. Belardi
                                                                                                                               James R. Belardi, Executive Vice President 
                        [Seal]                                                                                            

SUNAMERICA INC.

CERTIFICATE OF ASSISTANT SECRETARY 

     I, the undersigned, the duly elected, qualified and acting Assistant Secretary of SunAmerica Inc., a Delaware corporation (the "Corporation"), do hereby certify that the following resolutions were adopted by unanimous written consent by the Executive Committee of the Board of Directors of the Corporation on the 7th day of May 2001, and that said resolutions are in full force and effect as of the date hereof: 

Blanket Authorization of Subordinated Loan Agreements for Equity Capital

          WHEREAS, this Corporation, from time to time, reviews the net capital infusion needs of its wholly-owned broker-dealer subsidiaries, registered with the Securities and Exchange Commission and members of the National Association of Securities Dealers, Inc., which include, but not limited to, SunAmerica Capital Services, Inc., Advantage Capital Corporation, SunAmerica Securities, Inc., Royal Alliance Associates, Inc., Sentra Securities Corporation, Spelman & Co., Inc. and FSC Securities Corporation, and in conjunction with such review intends to provide subordinated loans to such subsidiaries pursuant to Subordinated Loan Agreements for Equity Capital; 

          WHEREAS, it is in the best interests of this Corporation to provide blanket authorization for such subordinated loan transactions, which authorization shall supercede any prior authorization; 

          NOW, THEREFORE, BE IT RESOLVED that the Chairman, any Vice Chairman, any Executive Vice President, or the Treasurer (the "Designated Officers"), acting alone, be, and each hereby is authorized to effect subordinated loans to the wholly-owned broker-dealer subsidiaries of the Corporation, in an aggregate principal amount not to exceed Seventy-five Million Dollars ($75,000,000), and such authority shall supercede any prior authorization; and to make, execute and deliver such loan agreements and other documents evidencing such loans, including any Subordinated Loan Agreement for Equity Capital, as deemed necessary or appropriate; 

          RESOLVED FURTHER that each of the Designated Officers are hereby authorized to make such changes in the terms and conditions of such Subordinated Loan Agreements as may be necessary to conform to the requirements of Title 17 CFR §240.15c 3-1d and the rules of the National Association of Securities Dealers; and 

          RESOLVED FURTHER that the Executive Committee hereby ratifies any and all action that may have been taken by the officers of this Corporation in connection with the foregoing resolutions and authorizes the officers of this Corporation to take any and all such further actions as may be deemed appropriate to reflect these resolutions and to carry out their tenor, effect and intent. 

          IN WITNESS WHEREOF, the undersigned has executed this Certificate and affixed the seal of the Corporation this 7th day of May, 2001. 

                                                                                       /s/ Lawrence M. Goldman
                                                                                                              Lawrence M. Goldman
                                                                                                              Assistant Secretary

(Corporate Seal)

EX-10.B 4 extenb.htm

EXHIBIT 10(b)

NASD
REGULATION
An NASD Company

June 12, 2001

Ms. Debbie Potash - Turner
SunAmerica Capital Services, Inc.
733 Third Avenue, 3rd Floor
New York, New York 10017-3204

Re:	Subordinated Loan Agreement
	Extension of Maturity Date
Type:	Equity
Control #:	10-E-SLA-10761
Lender:	SunAmerica Inc.
Current Maturity Date:	July 30, 2002

Dear Ms. Potash - Turner:

The amendment extending the maturity date of the above referenced agreement from July 30, 2002 to July 30, 2003 is accepted by the National Association of Securities Dealers, Inc.

It is important to note that the limitations required by paragraph I, which covers Permissive Prepayments, will run from the effective date of the original agreement, not from the date of this amendment.

If you have any questions regarding this Agreement or our acceptance thereof, please contact this office.

Very truly yours,

/s/ Gerald Dougherty

Gerald Dougherty
Assistant Director

GD: jr

Cc: Patricia MacGeorge

NASD Regulation, Inc.,  District 10 One Liberty Plaza,  New York, NY 10006  (212) 858 - 4000

NASD
SUBORDINATED AGREEMENT
AMENDMENT EXTENDING MATURITY DATE

SL-A

AGREEMENT BETWEEN:

Lender: SunAmerica Inc.

1 SunAmerica Center, 1999 Avenue of the Stars, 38th Floor
(Street Address)

Los Angeles                  California                90067-6002
(City)                         (State)                      (Zip)

AND

Broker-Dealer: SunAmerica Capital Services, Inc.

733 Third Avenue, 3rd Floor
(Street Address)

New York                 New York                    10017
   (City)                        (State)                      (Zip)

NASD ID Number: 13158
DATE FILED: June 28, 2001

JUL 0 2 2001        

-1-

SUBORDINATED LOAN AGREEMENT
AMENDMENT EXTENDING THE MATURITY DATE

          This Amendment No. 2 of that certain NASD Subordinated Loan Agreement for Equity Capital SL-5 by and between SunAmerica Inc. (the "Lender") and SunAmerica Capital Services, Inc. (the "Broker-Dealer") effective as of June 30, 1998 ("Subordinated Loan Agreement") and amendment thereto dated as of May 22, 2000 ("Amendment No. 1") is dated as of June 5, 2001 ("Amendment No. 2").

          In consideration of the sum of $3,500,000 (the unpaid principal amount) and subject to the terms and conditions set forth in the Subordinated Loan Agreement approved by the National Association of Securities Dealers, Inc. ("NASD"), as amended by Amendment No. 1, scheduled to mature on July 30, 2002 bearing  Loan Number 10-E-SLA-10761, the Broker-Dealer and the Lender agree to extend the maturity date until July 30, 2003. This Amendment No. 2 shall not become effective unless and until the NASD has found Amendment No. 2 acceptable.

          The interest rate set forth in the Subordinated Loan Agreement, as amended by Amendment No. 1, is changed from 9.5% to 7.0% per annum effective as of July 31, 2002.

(The signature page follows.)

-2-

          IN WITNESS WHEREOF the parties have set their hands and seal this 5th day of June, 2001.

BROKER-DEALER:                                                                                           SUNAMERICA CAPITAL SERVICES, INC.

[Seal]                                                                   

                                                                                                              

                                                                                                                              By: /s/ Debbie Potash Turner
                                                                                                                                     Name: Debbie Potash Turner
                                                                                                                                     Title: Chief Financial Officer

LENDER:                                                                                                              SUNAMERICA INC.

[Seal]                                                                                                                       

                           
                                                                                                                               By: /s/ James R. Belardi
                                                                                                                                      Name: James R. Belardi
                                                                                                                                      Title: Executive Vice President

                                                                                               FOR NASD USE ONLY 

                                                                                            
                                                                                              ACCEPTED BY:      /s/ Gerald Dougherty
                                                                                                                                              (Name)

                                                                                                                                Assistant Director
                                                                                                                                              (Title)

                                                                                               EFFECTIVE DATE:  JUL 30 2002

                                                                                               LOAN NUMBER:  10-E-SLA-10761

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SUBORDINATED LOAN AGREEMENT
LENDER'S ATTESTATION

              It is recommended that you discuss the merits of this investment with an attorney, accountant or some other person who has knowledge and experience in financial and business matters prior to executing this Agreement.

1.	I have received and reviewed a copy of Appendix D of 17 CFR 240.15c3-l, and am familiar with its provisions.
2.	I am aware that the funds or securities subject to this Agreement are not covered by the Securities Investor Protection Act of 1970.
3.	I understand that I will be furnished financial statements pursuant to SEC Rule 17a-5(c).
4.	On the date this Agreement was entered into, the broker-dealer carried funds or securities for my account. (State Yes or No): No.
5.	Lender's business relationship to the broker-dealer is: Lender is an intermediate holding company of Broker-Dealer and continuously monitors fiscal status and reports of Broker-Dealer.
6.	If the partner or stockholder is not actively engaged in the business of the broker-dealer, acknowledge receipt of the following:

a.	Certified audit and accountant's certificate dated ___________.
b.	Disclosure of financial and/or operational problems since the last  certified audit which required reporting pursuant to SEC Rule 17a-11.  (If no such reporting was required, state "none") _______________________.
c.	Balance sheet and statement of ownership equity dated _____________.
d.	Most recent computation of net capital and aggregate indebtedness or aggregate debit items dated ______________ reflecting a net capital of  $___________ and ratio of ___________.
e.	Debt/equity as of _____________ of ____________.

-1-

f.  Other disclosures:  ______________________ .  

Dated: June 5, 2001                                                                                            SUNAMERICA INC.  (Lender)

           [Seal]
                                                                                                                              By: /s/ James R. Belardi                                                                          
                                                                                                                                      Name: James R. Belardi
                                                                                                                                     Title: Executive Vice President

-2-

OFFICER'S CERTIFICATE

           I, James R. Belardi, Executive Vice President of SunAmerica Inc., a Delaware corporation (this "Corporation"), do hereby certify that the $3,500,000 subordinated loan made by this Corporation to SunAmerica Capital Services, Inc., amended to mature on July 30, 2003, does not cause the aggregate principal amount of all outstanding loans made by this Corporation to its broker-dealer subsidiaries to exceed $75 million.

Dated: June 5, 2001                                                                                             /s/ James R. Belardi
                                                                                                                               James R. Belardi, Executive Vice President 
                        [Seal]                                                                                            

SUNAMERICA INC.

CERTIFICATE OF ASSISTANT SECRETARY 

     I, the undersigned, the duly elected, qualified and acting Assistant Secretary of SunAmerica Inc., a Delaware corporation (the "Corporation"), do hereby certify that the following resolutions were adopted by unanimous written consent by the Executive Committee of the Board of Directors of the Corporation on the 16th day of March 2000, and that said resolutions are in full force and effect as of the date hereof: 

Blanket Authorization of Subordinated Loan Agreements for Equity Capital

          WHEREAS, this Corporation, from time to time, reviews the net capital infusion needs of its wholly-owned broker-dealer subsidiaries, registered with the Securities and Exchange Commission and members of the National Association of Securities Dealers, Inc., which include, but not limited to, SunAmerica Capital Services, Inc., Advantage Capital Corporation, SunAmerica Securities, Inc., Royal Alliance Associates, Inc., Sentra Securities Corporation, Spelman & Co., Inc. and FSC Securities Corporation, and in conjunction with such review intends to provide subordinated loans to such subsidiaries pursuant to Subordinated Loan Agreements for Equity Capital; 

          WHEREAS, it is in the best interests of this Corporation to provide blanket authorization for such subordinated loan transactions, which authorization shall supercede any prior authorization; 

          NOW, THEREFORE, BE IT RESOLVED that the Chairman, any Vice Chairman, any Executive Vice President, or the Treasurer (the "Designated Officers"), acting alone, be, and each hereby is authorized to effect subordinated loans to the wholly-owned broker-dealer subsidiaries of the Corporation, in an aggregate principal amount not to exceed Seventy-five Million Dollars ($75,000,000), and such authority shall supercede any prior authorization; and to make, execute and deliver such loan agreements and other documents evidencing such loans, including any Subordinated Loan Agreement for Equity Capital, as deemed necessary or appropriate; 

          RESOLVED FURTHER that each of the Designated Officers are hereby authorized to make such changes in the terms and conditions of such Subordinated Loan Agreements as may be necessary to conform to the requirements of Title 17 CFR §240.15c 3-1d and the rules of the National Association of Securities Dealers; and 

          RESOLVED FURTHER that the Executive Committee hereby ratifies any and all action that may have been taken by the officers of this Corporation in connection with the foregoing resolutions and authorizes the officers of this Corporation to take any and all such further actions as may be deemed appropriate to reflect these resolutions and to carry out their tenor, effect and intent. 

          IN WITNESS WHEREOF, the undersigned has executed this Certificate and affixed the seal of the Corporation this 15th day of June, 2001. 

                                                                                       /s/ Lawrence M. Goldman
                                                                                                              Lawrence M. Goldman
                                                                                                              Assistant Secretary

(Corporate Seal)

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