-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RgA/fEyNSleEYM1yhc3l/wqQ1BcsjjYCLUGevo3Yxn+jFCh8ajcGSMAUiuvjU5Nz ebe5VRvs+/8NIxgnNjfUcg== 0001193125-04-076060.txt : 20040503 0001193125-04-076060.hdr.sgml : 20040503 20040503090424 ACCESSION NUMBER: 0001193125-04-076060 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20040503 EFFECTIVENESS DATE: 20040503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AGL SEPARATE ACCOUNT VL-R CENTRAL INDEX KEY: 0001051485 IRS NUMBER: 250598210 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-43264 FILM NUMBER: 04771508 BUSINESS ADDRESS: STREET 1: 2727-A ALLEN PARKWAY CITY: HOUSTON STATE: TX ZIP: 77019 BUSINESS PHONE: 713-522-1111 MAIL ADDRESS: STREET 1: 2727-A ALLEN PARKWAY CITY: HOUSTON STATE: TX ZIP: 77019 FORMER COMPANY: FORMER CONFORMED NAME: AGL SEPARATE ACCOUNT VL R DATE OF NAME CHANGE: 19990907 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN GENERAL LIFE INSURANCE CO SEPARATE ACCOUNT VL R DATE OF NAME CHANGE: 19971216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AGL SEPARATE ACCOUNT VL-R CENTRAL INDEX KEY: 0001051485 IRS NUMBER: 250598210 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08561 FILM NUMBER: 04771509 BUSINESS ADDRESS: STREET 1: 2727-A ALLEN PARKWAY CITY: HOUSTON STATE: TX ZIP: 77019 BUSINESS PHONE: 713-522-1111 MAIL ADDRESS: STREET 1: 2727-A ALLEN PARKWAY CITY: HOUSTON STATE: TX ZIP: 77019 FORMER COMPANY: FORMER CONFORMED NAME: AGL SEPARATE ACCOUNT VL R DATE OF NAME CHANGE: 19990907 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN GENERAL LIFE INSURANCE CO SEPARATE ACCOUNT VL R DATE OF NAME CHANGE: 19971216 485BPOS 1 d485bpos.txt PEA 8 (FORM N-6) AGL PLATINUM INVESTOR III VUL Registration Nos. 333-43264 811-08561 As filed With the Securities and Exchange Commission on May 3, 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] Pre-Effective Amendment No. [ ] Post-Effective Amendment No. [8] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X] Amendment No. [25] AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R (Exact Name of Registrant) AMERICAN GENERAL LIFE INSURANCE COMPANY (Name of Depositor) 2727-A Allen Parkway Houston, Texas 77019-2191 (Address of Depositor's Principal Executive Offices) (Zip Code) Depositor's Telephone Number, including Area Code (713) 831-8470 Lauren W. Jones, Esq. Deputy General Counsel American General Life Companies, LLC 2929 Allen Parkway Houston, Texas 77019-2191 (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering: Continuous It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) [X] on May 3, 2004 pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) pursuant to paragraph (a)(1) of Rule 485. If appropriate, check the following box: [ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment. PLATINUM INVESTOR(R) III FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES (the "Policies") issued by American General Life Insurance Company ("AGL") through its Separate Account VL-R This Prospectus is dated May 3, 2004 This prospectus describes Platinum Investor III flexible premium variable life insurance Policies issued by AGL. If there are any differences between this prospectus and your Policy, the provisions of your Policy will control. Platinum Investor III Policies provide life insurance coverage with flexibility in death benefits, premium payments and investment options. During the lifetime of the insured person you may designate or change the beneficiary to whom Platinum Investor III pays the death benefit upon the insured person's death. You choose one of three death benefit options. We guarantee a death benefit if the monthly guarantee premium is paid and your Policy has not lapsed. For information on how to contact AGL, please see page 4. The Index of Special Words and Phrases on page 59 will refer you to pages that contain more about many of the words and phrases that we use. All of the words and phrases listed in the Index will be underlined and written in bold the first time they appear in this prospectus. This prospectus generally describes only the variable portions of the Policy, except where the fixed account is specifically mentioned. Please read this prospectus carefully and keep it for future reference. The AGL declared fixed interest account ("Fixed Account") is the fixed investment option for these Policies. You can also use AGL's Separate Account VL-R ("Separate Account") to invest in the Platinum Investor III variable investment options. Currently, the Platinum Investor III variable investment options each purchase shares of a corresponding Fund of: .. AIM Variable Insurance Funds ("AIM V.I.") .. The Alger American Fund ("Alger American") .. American Century Variable Portfolios, Inc. ("American Century VP") .. Credit Suisse Trust ("Credit Suisse") .. Dreyfus Investment Portfolios ("Dreyfus IP") .. Dreyfus Variable Investment Fund ("Dreyfus VIF") .. Fidelity Variable Insurance Products ("Fidelity VIP") .. Franklin Templeton Variable Insurance Products Trust ("Franklin Templeton") .. Janus Aspen Series ("Janus Aspen") .. J.P. Morgan Series Trust II ("JPMorgan") .. MFS(R) Variable Insurance Trust/SM/ ("MFS") .. Neuberger Berman Advisers Management Trust ("Neuberger Berman AMT") .. Oppenheimer Variable Account Funds ("Oppenheimer") .. PIMCO Variable Insurance Trust ("PIMCO VIT") .. Putnam Variable Trust ("Putnam VT") .. SunAmerica Series Trust ("SunAmerica") .. The Universal Institutional Funds, Inc. ("UIF") .. VALIC Company I ("VALIC Co. I") .. Van Kampen Life Investment Trust ("Van Kampen LIT") .. Vanguard Variable Insurance Fund ("Vanguard") See "Variable Investment Options" on page 19 for a complete list of the variable investment options and the respective advisers and sub-advisers of the corresponding Funds. You should be sure you also read the prospectuses of the Funds underlying variable investment options you may be interested in. This prospectus must be accompanied by the current prospectuses for the Funds listed above. There is no guaranteed cash surrender value for amounts allocated to the variable investment options. If the net cash surrender value (the cash surrender value reduced by any loan balance) is insufficient to cover the charges due under the Policy, the Policy may terminate without value. Buying this Policy might not be a good way of replacing your existing insurance or adding more insurance if you already own a flexible premium variable life insurance Policy. You may wish to consult with your insurance representative or financial adviser. Neither the Securities and Exchange Commission ("SEC") nor any state securities commission has approved or disapproved these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The Policies are not insured by the FDIC, The Federal Reserve Board or any similar agency. They are not a deposit or other obligation of, nor are they guaranteed or endorsed by, any bank or depository institution. An investment in a variable life insurance policy is subject to investment risks, including possible loss of principal invested. The Policies are not available in all states. This prospectus does not offer the Policies in any jurisdiction where they cannot be lawfully sold. You should rely only on the information contained in this prospectus, sales materials we have approved or that we have referred you to. We have not authorized anyone to provide you with information that is different. TABLE OF CONTENTS POLICY BENEFITS/RISKS SUMMARY .................................................5 POLICY BENEFITS ...............................................................5 Death Benefit ............................................................5 Death Benefit Proceeds ..............................................5 Death Benefit Option 1, Option 2 and Option 3 .......................6 Full Surrenders, Partial Surrenders, Transfers, and Policy Loans .........6 Full Surrenders .....................................................6 Partial Surrenders ..................................................6 Transfers ...........................................................7 Policy Loans ........................................................7 Premiums .................................................................7 Flexibility of Premiums .............................................7 Free Look ...........................................................7 The Policy ...............................................................7 Ownership Rights ....................................................7 Separate Account ....................................................7 Fixed Account .......................................................8 Accumulation Value ..................................................8 Payment Options .....................................................8 Tax Benefits ........................................................8 Supplemental Benefits and Riders .........................................8 POLICY RISKS ..................................................................8 Investment Risk ..........................................................8 Risk of Lapse ............................................................9 Tax Risks ................................................................9 Partial Surrender and Full Surrender Risks ...............................9 Policy Loan Risks .......................................................10 PORTFOLIO RISKS ..............................................................10 TABLES OF CHARGES ............................................................11 GENERAL INFORMATION ..........................................................17 American General Life Insurance Company .................................17 Separate Account VL-R ...................................................17 Additional Information ..................................................17 Communication with AGL ..................................................18 Administrative Center ..............................................18 General ............................................................18 Telephone transactions .............................................19 Variable Investment Options .............................................19 Voting Privileges .......................................................22 Fixed Account ...........................................................22 Our general account ................................................22 How we declare interest ............................................22 Illustrations ...........................................................23 POLICY FEATURES ..............................................................23 Age .....................................................................23 Death Benefits ..........................................................23 Your specified amount of insurance .................................23 Your death benefit .................................................24 Required minimum death benefit .....................................24 Base coverage and supplemental coverage ............................26 Premium Payments ........................................................27 Premium payments ...................................................27 Limits on premium payments .........................................27 Checks .............................................................28 Planned periodic premiums ..........................................28 Monthly guarantee premiums .........................................28 2 Free look period ...................................................30 Changing Your Investment Option Allocations .............................30 Future premium payments ............................................30 Transfers of existing accumulation value ...........................30 Dollar cost averaging ..............................................31 Automatic rebalancing ..............................................31 Market timing ......................................................31 Changing the Specified Amount of Insurance ..............................32 Increase in coverage ...............................................32 Decrease in coverage ...............................................32 Changing Death Benefit Options ..........................................33 Change of death benefit option .....................................33 Tax consequences of changes in insurance coverage ..................34 Effect of changes in insurance coverage on guarantee period ........34 Effective Date of Policy and Related Transactions .......................34 Valuation dates, times, and periods ................................34 Date of receipt ....................................................34 Commencement of insurance coverage .................................35 Date of issue; Policy months and years .............................35 Monthly deduction days .............................................35 Commencement of investment performance .............................35 Effective date of other premium payments and requests that you make ..........................................................35 Reports to Policy Owners ................................................36 ADDITIONAL BENEFIT RIDERS ....................................................36 Riders ..................................................................36 Accidental Death Benefit Rider .....................................36 Children's Insurance Benefit Rider .................................36 Maturity Extension Rider ...........................................37 Spouse Term Rider ..................................................38 Terminal Illness Rider .............................................38 Waiver of Monthly Deduction Rider ..................................38 Tax Consequences of Additional Rider Benefits ...........................39 POLICY TRANSACTIONS ..........................................................39 Telephone Transactions ..................................................39 Withdrawing Policy Investments ..........................................39 Full surrender .....................................................39 Partial surrender ..................................................39 Exchange of Policy in certain states ...............................40 Policy loans .......................................................40 Preferred loan interest rate .......................................41 Maturity of your Policy ............................................41 Tax considerations .................................................41 POLICY PAYMENTS ..............................................................41 Payment Options .........................................................41 Change of payment option ...........................................42 Tax impact .........................................................42 The Beneficiary .........................................................42 Assignment of a Policy ..................................................43 Payment of Proceeds .....................................................43 General ............................................................43 Delay of Fixed Account proceeds ....................................43 Delay for check clearance ..........................................43 Delay of Separate Account VL-R proceeds ............................43 Delay to challenge coverage ........................................44 Delay required under applicable law ................................44 ADDITIONAL RIGHTS THAT WE HAVE ...............................................44 Underwriting and premium classes ...................................45 Policies purchased through "internal rollovers" ....................45 State law requirements .............................................45 3 Variations in expenses or risks ....................................45 CHARGES UNDER THE POLICY .....................................................46 Premium tax charge .................................................46 Tax charge back ....................................................46 Premium expense charge .............................................46 Daily charge (mortality and expense risk fee) ......................46 Flat monthly charge ................................................46 Monthly charge per $1,000 of base coverage .........................46 Monthly insurance charge ...........................................47 Monthly charges for additional benefit riders ......................48 Surrender charge ...................................................48 Partial surrender processing fee ...................................49 Transfer fee .......................................................49 Illustrations ......................................................49 Policy loans .......................................................49 Charge for taxes ...................................................49 Allocation of charges ..............................................49 More About Policy Charges ...............................................49 Purpose of our charges .............................................49 General ............................................................50 ACCUMULATION VALUE ...........................................................50 Your accumulation value ............................................50 Your investment options ............................................50 POLICY LAPSE AND REINSTATEMENT ...............................................51 FEDERAL TAX CONSIDERATIONS ...................................................51 Tax Effects .............................................................51 General ............................................................52 Testing for modified endowment contract status .....................52 Other effects of Policy changes ....................................53 Rider benefits .....................................................53 Taxation of pre-death distributions if your Policy is not a modified endowment contract .......................................53 Taxation of pre-death distributions if your Policy is a modified endowment contract .......................................54 Policy lapses and reinstatements ...................................55 Diversification ....................................................55 Estate and generation skipping taxes ...............................55 Life insurance in split dollar arrangements ........................56 Pension and profit-sharing plans ...................................56 Other employee benefit programs ....................................57 ERISA ..............................................................57 Our taxes ..........................................................57 When we withhold income taxes ......................................57 Tax changes ........................................................58 LEGAL PROCEEDINGS ............................................................58 FINANCIAL STATEMENTS .........................................................58 INDEX OF SPECIAL WORDS AND PHRASES ...........................................59 - -------------------------------------------------------------------------------- CONTACT INFORMATION: Here is how you can contact us about the Platinum Investor III Policies: ADMINISTRATIVE CENTER: (Express Delivery) (U.S. Mail) VUL Administration VUL Administration 2727-A Allen Parkway P. O. Box 4880 Houston, Texas 77019-2191 Houston, Texas 1-713-831-3443, 1-800-340-2765 77210-4880 (Hearing Impaired) 1-888-436-5258 Fax: 1-713-620-6653 (Except premium payments) HOME OFFICE: PREMIUM PAYMENTS: 2727-A Allen Parkway (Express Delivery) Houston, Texas 77019-2191 Payment Processing Center 1-713-831-3443 #1 Franklin Square 1-800-340-2765 Springfield, IL 62713-0001 (U.S. Mail) Payment Processing Center P.O. Box 0842 Carol Stream, IL 60132-0842 - -------------------------------------------------------------------------------- 4 POLICY BENEFITS/RISKS SUMMARY This summary describes the Policy's important benefits and risks. The sections in this prospectus following this summary discuss the Policy's benefits and other provisions in more detail. POLICY BENEFITS During the insured person's lifetime, you may, within limits, (1) change the amount of insurance, (2) borrow or withdraw amounts you have invested, (3) choose when and how much you invest, (4) choose whether your accumulation value or amount of premiums under your Policy, upon the insured person's death, will be added to the insurance proceeds we otherwise will pay to the beneficiary, and (5) add or delete certain other optional benefits that we make available by rider to your Policy. At the time of purchase, you can decide whether your Policy will be subject to certain tax rules that maximize the cash value or rules that maximize the insurance coverage. You may currently allocate your accumulation value among the 50 variable investment options available under the Policy, each of which invests in an underlying Fund (each available portfolio is referred to in this prospectus as a "Fund," and collectively, the "Funds"), and the Fixed Account, which credits a specified rate of interest. Any Policy owner whose accumulation value was at any time before May 1, 2003, invested in whole or part in the investment option funded by the Safeco RST Core Equity Portfolio or the Safeco RST Growth Opportunities Portfolio may continue to use that investment option for any purpose allowed under the Policy. Any Policy owner who had accumulation value invested in the Goldman Sachs Capital Growth Fund (formerly the Ayco Growth Fund) on April 30, 2003, may retain the investment but cannot use the Goldman Sachs Capital Growth Fund for any other purpose except to transfer to another investment option. Your accumulation value will vary based on the investment performance of the variable investment options you choose and interest credited in the Fixed Account. Death Benefit . Death Benefit Proceeds: We pay the death benefit proceeds (reduced by any outstanding Policy loans and increased by any unearned loan interest we may have already charged) to the beneficiary when the insured person dies. In your application to buy a Platinum Investor III Policy, you tell us how much life insurance coverage you want. We call this the "specified amount" of insurance. Platinum Investor III is available for specified amounts of $50,000 or more. The specified amount consists of what we refer to as "base coverage" plus any "supplemental coverage" you select. See "Base coverage and supplemental coverage" on page 26. You decide how much base coverage and how much supplemental coverage you want. Base coverage must be at least 10% of the specified amount. We also provide a guarantee of a death benefit equal to the 5 specified amount (less any indebtedness) and any benefit riders for a specified period. This guarantee is not applicable if your Policy has lapsed. . Death Benefit Option 1, Option 2 and Option 3: Owners whose Policies were issued before June 1, 2002 could choose only death benefit Option 1 or death benefit Option 2. You can choose Option 1 or Option 2 at the time of your application or at any later time before the death of the insured person. You can choose death benefit Option 3 only at the time of your application. You must choose one of the three options at the time we issue your Policy. . Death Benefit Option 1 is the specified amount on the date of the insured person's death. . Death Benefit Option 2 is the sum of (a) the specified amount on the date of the insured person's death and (b) the Policy's accumulation value as of the date of death. . Death Benefit Option 3 is the sum of (a) the death benefit we would pay under Option 1 and (b) the cumulative amount of premiums you paid for the Policy and any riders. The death benefit payable will be reduced by any amounts waived under the Waiver of Monthly Deduction Rider and any partial surrenders. Additional premiums you pay for the Policy and any riders following a partial surrender are not considered part of the "cumulative amount of premiums you paid" until the total value of the premiums paid is equivalent to or greater than the amount surrendered. Federal tax law may require us to increase payment under any of the above death benefit options. See "Required minimum death benefit" on page 24. Full Surrenders, Partial Surrenders, Transfers, and Policy Loans . Full Surrenders: At any time while the Policy is in force, you may surrender your Policy in full. If you do, we will pay you the accumulation value, less any Policy loans, plus any unearned loan interest, and less any surrender charge that then applies. We call this amount your "cash surrender value." You cannot reinstate a surrendered Policy. A full surrender may have adverse tax consequences. . Partial Surrenders: You may, at any time after the first Policy year, make a partial surrender of your Policy's cash surrender value. A partial surrender must be at least $500. We do not allow partial surrenders that would reduce the death benefit below $50,000. A partial surrender may have adverse tax consequences. 6 . Transfers: Within certain limits, you may make transfers among the variable investment options and the Fixed Account. You may make up to twelve transfers of accumulation value among the variable investment options in each Policy year without charge. We will assess a $25 charge for each transfer after the 12th transfer in a Policy year. There are special limits on transfers involving the Fixed Account. . Policy Loans: You may take a loan from your Policy at any time. The maximum loan amount you may take is equal to your Policy's cash surrender value less the loan interest that will be payable on your loan through your next Policy anniversary. The minimum loan you may take is $500 or, if less, an amount equal to your Policy's cash surrender value less the loan interest payable through your next Policy anniversary. We charge you interest at an effective annual rate of 4.75% on your loan. We credit interest on loaned amounts; we guarantee an effective annual interest rate of 4.00%. After the tenth Policy year, you may take a preferred loan from your Policy. You may increase your risk of lapse if you take a loan. Loans may have adverse tax consequences. Premiums . Flexibility of Premiums: After you pay the initial premium, you can pay subsequent premiums at any time (prior to the Policy's maturity) and in any amount (but not less than $50). You can select a premium payment plan to pay "Planned Periodic Premiums" monthly, quarterly, semiannually, or annually. You are not required to pay premiums according to the plan. You may also choose to have premiums automatically deducted monthly from your bank account or other source under our automatic payment plan. Under certain circumstances, we may reject a premium payment. . Free Look: When you receive your Policy, the free look period begins. You may return your Policy during this period and receive a refund. We will refund you the greater of (i) any premium payments received by us or (ii) your accumulation value plus any charges that have been deducted prior to allocation to your specified investment options. The free look period generally expires 10 days after you receive the Policy. The Policy . Ownership Rights: While the insured person is living, you, as the owner of the Policy, may exercise all of the rights and options described in the Policy. These rights include selecting and changing the beneficiary, changing the owner, and assigning the Policy. . Separate Account: You may direct the money in your Policy to any of the variable investment options of the Separate Account. Each variable investment option invests exclusively in one of the Funds listed in this prospectus. 7 . Fixed Account: You may place amounts in the Fixed Account where it earns at least 4% annual interest. We may declare higher rates of interest, but are not obligated to do so. . Accumulation Value: Your accumulation value is the sum of your amounts in the variable investment options and the Fixed Account. Accumulation value varies from day to day, depending on the investment performance of the variable investment options you choose, interest we credit to the Fixed Account, charges we deduct, and any other transactions (e.g., transfers, partial surrenders, and loans). . Payment Options: There are several ways of receiving proceeds under the death benefit, surrender, and maturity provisions of the Policy, other than in a lump sum. More detailed information concerning these payment options is available on request from our Administrative Office. . Tax Benefits: The Policy is designed to afford the tax treatment normally accorded life insurance contracts under federal tax law. Generally, under federal tax law, the death benefit under a qualifying life insurance policy is excludable from the gross income of the beneficiary. This means that under a qualifying life insurance policy, cash value builds up on a tax deferred basis and transfers of cash value among the available investment options under the policy may be made tax free. Under a qualifying life insurance policy that is not a modified endowment contract ("MEC"), the proceeds from Policy loans would not be taxed. If the Policy is not a MEC, distributions generally will be treated first as a return of basis or investment in the Policy and then as taxable income. Moreover, loans will generally not be treated as distributions. Finally, neither distributions nor loans from a Policy that is not a MEC are subject to the 10% penalty tax. Supplemental Benefits and Riders We offer several riders that provide supplemental benefits under the Policy, such as the Accidental Death Benefit Rider, which provides an additional death benefit payable if the insured person dies from bodily injury that results from an accident. For most of the riders that you choose, a charge, which is shown on page 3 of your Policy, will be deducted from your accumulation value on each monthly deduction date. Eligibility for and changes in these benefits are subject to our rules and procedures as in effect from time to time. Not all riders are available in all states. POLICY RISKS Investment Risk The Policy is not suitable as a short term investment. If you invest your accumulation value in one or more variable investment options, then you will be subject to the risk that the investment performance of the variable investment options 8 will be unfavorable. You will also be subject to the risk that the accumulation value will decrease because of the unfavorable performance and the resulting higher insurance charges. You could lose everything you invest. You will also be subject to the risk that the investment performance of the variable investment options you choose may be less favorable than that of other variable investment options, and in order to keep the Policy in force may be required to pay more premiums than originally planned. We do not guarantee a minimum accumulation value. If you allocate net premiums to the Fixed Account, then we credit your accumulation value (in the Fixed Account) with a declared rate of interest, but you assume the risk that the rate may decrease, although it will never be lower than a guaranteed minimum annual effective rate of 4%. Risk of Lapse If your cash surrender value is not enough to pay the charges deducted against your accumulation value each month, your Policy may enter a 61-day grace period. We will notify you that the Policy will lapse (terminate without value) at the end of the grace period unless you make a sufficient payment. Your Policy may also lapse if outstanding Policy loans plus any accrued interest payable exceeds the cash surrender value. If the monthly guarantee provision is applicable to your Policy and you pay the monthly guarantee premium, your Policy will not lapse and we will provide a death benefit depending on the death benefit Option you chose. Tax Risks We anticipate that the Policy should generally be deemed a life insurance contract under federal tax law. However, due to limited guidance under the Federal tax law, there is some uncertainty about the application of the federal tax law to the Policy, particularly if you pay the full amount of premiums permitted under the Policy. Please consult a tax adviser about these consequences. Depending on the total amount of premiums you pay, the Policy may be treated as a MEC under federal tax laws. If a Policy is treated as a MEC, then surrenders, partial surrenders, and loans under the Policy will be taxable as ordinary income to the extent there are earnings in the Policy. In addition, a 10% penalty tax may be imposed on surrenders, partial surrenders, and loans taken before you reach age 59 1/2. See "Federal Tax Considerations" on page 51. You should consult a qualified tax adviser for assistance in all Policy-related tax matters. Partial Surrender and Full Surrender Risks The surrender charge under the Policy applies for the first 10 Policy years (and for a maximum of the first 10 Policy years after any requested increase in the Policy's specified amount) in the event you surrender the Policy or decrease the specified amount. The surrender charge may be considerable. It is possible that you will receive no cash surrender value if you surrender your Policy in the first few Policy years. Any outstanding loan balance reduces the 9 amount available to you upon a partial or full surrender. Under Death Benefit Option 3, partial surrenders reduce the Policy's death benefit until the total value of the premiums you pay after the partial surrender is equivalent to or greater than the amount surrendered. You should purchase the Policy only if you have the financial ability to keep it in force for a substantial period of time. You should not purchase the Policy if you intend to surrender all or part of the accumulation value in the near future. We designed the Policy to meet long-term financial goals. A partial surrender or surrender may have adverse tax consequences. Policy Loan Risks A Policy loan, whether or not repaid, will affect accumulation value over time because we subtract the amount of the loan and any accrued interest from the variable investment options and/or Fixed Account as collateral, and this loan collateral does not participate in the investment performance of the variable investment options or receive any excess current interest rate credited to the Fixed Account. We reduce the amount we pay on the insured person's death by the amount of any Policy loan and any accrued interest. Your Policy may lapse (terminate without value) if outstanding Policy loans plus any accrued interest payable reduces the cash surrender value to zero. If you surrender the Policy or allow it to lapse while a Policy loan remains outstanding, the amount of the loan, to the extent it has not been previously taxed, is treated as a distribution from the Policy and may be subject to federal income taxation. PORTFOLIO RISKS A discussion of the risks of each Fund may be found in its prospectus. Please refer to the Funds' prospectuses for more information. You may request a copy of any or all of the Fund prospectuses by contacting us at the Administrative Center shown on page 4 of this prospectus. There is no assurance that any of the Funds will achieve its stated investment objective. 10 TABLES OF CHARGES The following tables describe the fees and expenses that are payable, when buying, owning and surrendering a Policy. No Policy owner will be charged more than the amount we show under the "Maximum Guaranteed Charge" columns. The first table describes the fees and expenses that are payable at the time that you (1) buy a Policy, (2) surrender a Policy during the first 10 Policy years and the first 10 Policy years following an increase in the Policy's base coverage, (3) change a Policy's specified amount, or (4) transfer accumulation value between investment options.
- ------------------------------------------------------------------------------------------------------------------------------ Transaction Fees - ------------------------------------------------------------------------------------------------------------------------------ Charge When Charge is Deducted Maximum Guaranteed Charge Current Charge - ------------------------------------------------------------------------------------------------------------------------------ Premium Tax Charge Upon receipt of each premium 3.5%/1/ of each premium 3.5%/1/ of each premium payment payment (tax charge back if payment (tax charge back if you purchase the Policy in you purchase the Policy in Oregon)/2/ Oregon)/2/ - ------------------------------------------------------------------------------------------------------------------------------ Premium Expense Charge Upon receipt of each premium 7.5% of the amount of each 5% of the amount of each payment premium payment remaining premium payment remaining after deduction of the after deduction of the premium tax charge premium tax charge - ------------------------------------------------------------------------------------------------------------------------------
- ---------- /1/ Premium tax rates vary by state. For example, the highest premium tax rate, 3.5%, is in the state of Nevada, while the lowest premium tax rate, 0.75%, is in the state of Wyoming. /2/ Instead of a premium tax charge, we assess a tax charge back of 2% of each premium payment for Policy owners residing in Oregon. See "Tax charge back" on page 46. 11
- ------------------------------------------------------------------------------------------------------------------------------ Transaction Fees - ------------------------------------------------------------------------------------------------------------------------------ Charge When Charge is Deducted Maximum Guaranteed Charge Current Charge - ------------------------------------------------------------------------------------------------------------------------------ Surrender Charge Maximum Charge-for the Upon a full surrender of your $49 per $1,000 of base $49 per $1,000 of base first Policy year-for a 60 Policy during the first 10 coverage coverage year old male, preferred Policy years and during the non-tobacco, with a first 10 Policy years Specified Amount of following an increase in the $360,000, of which $360,000 Policy's base coverage is base coverage/1/ Minimum Charge-for the Upon a full surrender of your $3 per $1,000 of base coverage $3 per $1,000 of base first Policy year - for a 6 Policy during the first 10 coverage year old female, juvenile, Policy years and during the with a Specified Amount of first 10 Policy years $360,000 of which $36,000 following an increase in the is base coverage/1/ Policy's base coverage Example Charge-for the Upon a full surrender of your $16 per $1,000 of base $16 per $1,000 of base first Policy year-for a 38 Policy during the first 10 coverage coverage year old male, preferred Policy years and during the non-tobacco, with a first 10 Policy years Specified Amount of following an increase in the $360,000 of which $252,000 Policy's base coverage is base coverage/1/ - ------------------------------------------------------------------------------------------------------------------------------ Partial Surrender Processing Upon a partial surrender of The lesser of $25 or 2% of $10 Fee your Policy the partial surrender - ------------------------------------------------------------------------------------------------------------------------------ Transfer Fee Upon a transfer of First 12 transfers in a First 12 transfers in a accumulation value Policy year are free; $25 for Policy year are free; $25 each subsequent transfer for each subsequent transfer - ------------------------------------------------------------------------------------------------------------------------------ Policy Loan Interest Charge Annually (on your Policy 4.75% of the loan balance 4.75% of the loan balance anniversary) - ------------------------------------------------------------------------------------------------------------------------------ Policy Owner Additional Upon each request for a Policy $25 $0 Illustration Charge illustration after the first in a Policy year - ------------------------------------------------------------------------------------------------------------------------------
- ---------- /1/ The Surrender Charge will vary based on the insured person's sex, age, risk class, Policy year and base coverage. The Surrender Charges shown in the table may not be typical of the charges you will pay. Page 27 of your Policy will indicate the maximum guaranteed Surrender Charges applicable to your Policy. More detailed information concerning your Surrender Charge is available free of charge on request from our Administrative Center. 12 The next table describes the fees and expenses that you will pay periodically during the time that you own the Policy, not including Fund fees and expenses.
- ------------------------------------------------------------------------------------------------------------------------------ Periodic Charges (other than Fund fees) - ------------------------------------------------------------------------------------------------------------------------------ Charge When Charge is Deducted Maximum Guaranteed Charge Current Charge - ------------------------------------------------------------------------------------------------------------------------------ Flat Monthly Charge Monthly, at the beginning $6 $6 of each Policy month - ------------------------------------------------------------------------------------------------------------------------------ Cost of Insurance Charge/1/ Minimum Charge for the first Monthly, at the beginning of $0.06 per $1,000 of net amount $0.03 per $1,000 of net amount Policy year - for a 6 year old each Policy month at risk/2/ attributable to at risk attributable to base female, juvenile, with a base coverage; and coverage; and Specified Amount of $1,000,000, of which $100,000 $0.06 per $1,000 of net amount $0.02 per $1,000 of net amount is base coverage and $900,000 at risk attributable to at risk attributable to is supplemental coverage supplemental coverage supplemental coverage Maximum Charge for the first Monthly, at the beginning of $10.36 per $1,000 of net $10.35 per $1,000 of net Policy year - for a 90 year each Policy month amount at risk attributable to amount at risk attributable to old male, special tobacco, base coverage; and base coverage; and with a Specified Amount of $50,000, of which $50,000 is $10.36 per $1,000 of net $6.23 per $1,000 of net amount base coverage and $10,000 is amount at risk attributable to at risk attributable to supplemental coverage supplemental coverage supplemental coverage Example Charge for the first Monthly, at the beginning of $0.22 per $1,000 of net amount $0.12 per $1,000 of net amount Policy year - for a 38 year each Policy month at risk attributable to base at risk attributable to old male, preferred coverage; and base coverage; and non-tobacco, with a Specified Amount of $360,000, of which $0.22 per $1,000 of net amount $0.06 per $1,000 of net amount $252,000 is base coverage and at risk attributable to at risk attributable to $108,000 is supplemental supplemental coverage supplemental coverage coverage - ------------------------------------------------------------------------------------------------------------------------------
- ---------- /1/ The Cost of Insurance Charge will vary based on the insured person's sex, age and premium class, Policy year, and base and supplemental coverage amounts. The Cost of Insurance Charges shown in the table may not be typical of the charges you will pay. Page 24 of your Policy will indicate the maximum guaranteed Cost of Insurance Charge applicable to your Policy. More detailed information concerning your Cost of Insurance Charge is available on request from our Administrative Center shown on page 4 of this prospectus. Also see "Illustrations" on page 23 of this prospectus. /2/ The net amount at risk is the difference between the current death benefit under your Policy and your accumulation value under the Policy. 13
- ------------------------------------------------------------------------------------------------------------------------------ Periodic Charges (other than Fund fees) - ------------------------------------------------------------------------------------------------------------------------------ Charge When Charge is Deducted Maximum Guaranteed Charge Current Charge - ------------------------------------------------------------------------------------------------------------------------------ Monthly Charge per $1,000 of base coverage/1/ Minimum Charge - for a 1 year Monthly, at the beginning $0.03 per $1000 of base $0.03 per $1000 of base old female, juvenile, with a of each Policy month. This coverage coverage Specified Amount of $360,000, Charge is imposed during the of which $36,000 is base first 7 Policy years and the coverage first 7 Policy years following an increase in base coverage/2/ Maximum Charge - for a 90 year Monthly, at the beginning $1.46 per $1000 of base $1.46 per $1000 of base old male, special tobacco, of each Policy month. This coverage coverage with a Specified Amount of Charge is imposed during the $360,000, of which $360,000 is first 7 Policy years and the base coverage first 7 Policy years following an increase in base coverage/2/ Example Charge - for a 38 year Monthly, at the beginning $0.14 per $1000 of base $0.14 per $1000 of base old male, preferred of each Policy month. This coverage coverage non-tobacco, with a Specified Charge is imposed during the Amount of $ 360,000, of which first 7 Policy years and the $252,000 is base coverage first 7 Policy years following an increase in base coverage/2/ - ------------------------------------------------------------------------------------------------------------------------------ Daily Charge (mortality and Daily effective annual rate of effective annual rate of expense risk fee) 0.70%/4/ 0.70%/4/ Policy years 1-10/3,4/ - ------------------------------------------------------------------------------------------------------------------------------
- ---------- /1/ The Monthly Charge per $1,000 of base coverage is applied only against each $1,000 of base coverage, and not against the Policy's supplemental coverage. The Monthly Charge per $1,000 of base coverage will vary based on the amount of base coverage and the insured person's sex, age and premium class. The Monthly Charge per $1,000 of base coverage shown in the table may not be typical of the charges you will pay. Page 3A of your Policy will indicate the initial Monthly Charge per $1,000 of base coverage applicable to your Policy. There is no additional charge for illustrations at the time you apply for a Policy which may show various amounts of base coverage and supplemental coverage. When you become a Policy owner, we reserve the right to charge a $25 fee for each illustration after the first in each Policy year. /2/ The charge assessed during the first 7 Policy years following an increase in base coverage is only upon the amount of the increase in base coverage. /3/ After the 10/th/ Policy year, the daily charge will be as follows: Policy years 11-20...........effective annual rate of 0.45% Policy years 21+..............effective annual rate of 0.10% These reductions in the amount of the daily charge are guaranteed. /4/ All percentages are calculated as a percent of accumulation value invested in the variable investment options. 14 The next table describes the fees and expenses that you will pay periodically, if you choose an optional benefit rider during the time that you own the Policy.
- ------------------------------------------------------------------------------------------------------------------------------ Periodic Charges (optional benefit riders only) - ------------------------------------------------------------------------------------------------------------------------------ Optional Benefit Rider Charges When Charge is Deducted Maximum Guaranteed Charge Current Charge - ------------------------------------------------------------------------------------------------------------------------------ Accidental Death Benefit Minimum Charge - for a 29 year Monthly, at the beginning of $0.07 per $1,000 of rider $0.07 per $1,000 of rider old each Policy month coverage coverage Maximum Charge - for a 65 year Monthly, at the beginning of $0.15 per $1,000 of rider $0.15 per $1,000 of rider old each Policy month coverage coverage Example Charge - for a 38 year Monthly, at the beginning of $0.09 per $1,000 of rider $0.09 per $1,000 of rider old each Policy month coverage coverage - ------------------------------------------------------------------------------------------------------------------------------ Children's Insurance Benefit Monthly, at the beginning of $0.48 per $1,000 of rider $0.48 per $1,000 of rider each Policy month coverage coverage - ------------------------------------------------------------------------------------------------------------------------------ Maturity Extension Monthly, at the beginning $10 $0 Accumulation Value Version of the Policy month which follows your original maturity date - ------------------------------------------------------------------------------------------------------------------------------ Maturity Extension Death Benefit Version Initial Charge Monthly beginning 9 years $30 per $1,000 of net amount $5 per $1,000 of net amount before your original at risk at risk attributable to the at risk attributable to the maturity date Policy (without any riders) Policy (without any riders) Administrative Charge Monthly, at the beginning of $10 $0 the Policy month which follows your original maturity date - ------------------------------------------------------------------------------------------------------------------------------ Spouse Term Minimum charge - for a 15 year Monthly at the beginning of $0.07 per $1,000 of rider $0.01 per $1,000 of rider old female, standard each Policy month coverage coverage non-tobacco Maximum charge - for a 75 year Monthly at the beginning of $5.54 per $1,000 of rider $4.61 per $1,000 of rider old male, standard tobacco each Policy month coverage coverage Example charge - for a 38 year Monthly at the beginning of $0.22 per $1,000 of rider $0.14 per $1,000 of rider old male, preferred each Policy month coverage coverage non-tobacco - ------------------------------------------------------------------------------------------------------------------------------ Terminal Illness Rider At time of claim $250 plus interest $150 plus interest - ------------------------------------------------------------------------------------------------------------------------------
15
- ------------------------------------------------------------------------------------------------------------------------------- Periodic Charges (optional benefit riders only) - ------------------------------------------------------------------------------------------------------------------------------- Optional Benefit Rider Charges When Charge is Deducted Maximum Guaranteed Charge Current Charge - ------------------------------------------------------------------------------------------------------------------------------- Waiver of Monthly Deduction Minimum Charge - for an 18 Monthly, at the beginning of $0.02 per $1,000 of net amount $0.02 per $1,000 of net amount year old each Policy month at risk attributable to the at risk attributable to the base Policy base Policy Maximum Charge - for a 59 Monthly, at the beginning of $0.40 per $1,000 of net amount $0.40 per $1,000 of net amount year old each Policy month at risk attributable to the at risk attributable to the base Policy base Policy Example Charge - for a 49 Monthly, at the beginning of $0.07 per $1,000 of net amount $0.07 per $1,000 of net amount year old each Policy month at risk attributable to the at risk attributable to the base Policy base Policy - -------------------------------------------------------------------------------------------------------------------------------
The next table describes the Fund fees and expenses that you will pay periodically during the time that you own the Policy. The table shows the maximum and minimum Total Annual Fund Operating Expenses before contractual waiver or reimbursement for any of the Funds for the fiscal year ended December 31, 2003. Current and future expenses for the Funds may be higher or lower than those shown. - --------------------------------------------------------------------- Annual Fund Fees and Expenses (expenses that are deducted from the Fund assets) - --------------------------------------------------------------------- Charge Maximum Minimum - --------------------------------------------------------------------- Total Annual Fund Operating Expenses for all of the Funds (expenses that are deducted from portfolio assets include management fees, distribution (12b-1) fees, and other expenses)/1/ 1.58% 0.29% - --------------------------------------------------------------------- Details concerning each Fund's specific fees and expenses are contained in the Funds' prospectuses accompanying this Policy prospectus. - ---------- /1/ Currently 8 of the Funds have contractual reimbursements or fee waivers. These reimbursements or waivers expire on April 30, 2005. The impact of contractual reimbursements or fee waivers is as follows: - --------------------------------------------------------------------- Charge Maximum Minimum - --------------------------------------------------------------------- Total Annual Fund Operating Expenses for all of the Funds After Contractual Reimbursement or Fee Waiver 1.27% 0.29% - --------------------------------------------------------------------- 16 GENERAL INFORMATION American General Life Insurance Company We are American General Life Insurance Company ("AGL"). AGL is a stock life insurance company organized under the laws of Texas. AGL's home office is 2727-A Allen Parkway, Houston, Texas 77019-2191. AGL is a successor in interest to a company originally organized under the laws of Delaware on January 10, 1917. AGL is an indirect, wholly-owned subsidiary of American International Group, Inc. ("AIG"). AIG, a Delaware corporation, is a holding company which through its subsidiaries is primarily engaged in a broad range of insurance and insurance-related activities and financial services in the United States and abroad. AIG American General is a marketing name for AGL and its affiliates. The commitments under the Policies are AGL's, and AIG has no legal obligation to back those commitments. AGL is a member of the Insurance Marketplace Standards Association ("IMSA"). IMSA is a voluntary membership organization created by the life insurance industry to promote ethical market conduct for individual life insurance and annuity products. AGL's membership in IMSA applies only to AGL and not its products. Separate Account VL-R We hold the Fund shares in which any of your accumulation value is invested in Separate Account VL-R (the "Separate Account"). The Separate Account is registered as a unit investment trust with the SEC under the Investment Company Act of 1940. We created the Separate Account on May 6, 1997 under Texas law. For record keeping and financial reporting purposes, the Separate Account is divided into 68 separate "divisions," 53 of which correspond to the 53 variable "investment options" under the Policy. The remaining 15 divisions, and some of these 53 divisions, represent investment options available under other variable life policies we offer. We hold the Fund shares in which we invest your accumulation value for an investment option in the division that corresponds to that investment option. Income, gains and losses credited to, or charged against, the Separate Account reflect the Separate Account's own investment experience and not the investment experience of the Separate Account's other assets. The assets in the Separate Account are our property. The assets in the Separate Account may not be used to pay any liabilities of AGL other than those arising from the Policies. AGL is obligated to pay all amounts under the Policies due the Policy owners. Additional Information We have filed a Statement of Additional Information (the "SAI") with the SEC which includes more information about your Policy. The back cover page to this prospectus describes how you can obtain a copy of the SAI. 17 Communication with AGL When we refer to "you," we mean the person who is authorized to take any action with respect to a Policy. Generally, this is the owner named in the Policy. Where a Policy has more than one owner, each owner generally must join in any requested action, except for transfers and changes in the allocation of future premiums or changes among the investment options. Administrative Center. The Administrative Center provides service to all Policy owners. For applicants, your AGL representative will tell you if you should use an address other than the Administrative Center address. All premium payments, requests, directions and other communications should be directed to the appropriate location. See AGL's addresses under "Contact Information" on page 4. General. You should mail or express premium payments and loan repayments directly to the appropriate address shown on your billing statement. If you do not receive a billing statement, send your premium directly to the address for premium payments shown under "Contact Information" on page 4. You must make the following requests in writing (unless you are permitted to make the requests by telephone. See "Telephone transactions" on page 19): . transfer of accumulation value; . loan; . full surrender; . partial surrender; . change of beneficiary or contingent beneficiary; . change of allocation percentages for premium payments; . change of allocation percentages for Policy deductions; . loan repayments or loan interest payments; . change of death benefit option or manner of death benefit payment; . change in specified amount; . addition or cancellation of, or other action with respect to any benefit riders; . election of a payment option for Policy proceeds; . tax withholding elections; and . telephone transaction privileges. You should mail or express these requests to the Administrative Center address shown under "Contact Information" on page 4. You should also communicate notice of the insured person's death, and related documentation, to our Administrative Center address. We have special forms which should be used for loans, assignments, partial and full surrenders, changes of owner or beneficiary, and all other contractual changes. You will be asked to return your Policy when you request a full surrender. You may obtain these forms from our Administrative Center or from your AGL representative. Each communication must include your name, Policy number and, if you are not the insured person, that person's name. We cannot process any requested action that does not include all required information. 18 Telephone transactions. If you have a completed telephone authorization form on file with us, you may make transfers, or change the allocation of future premium payments or deduction of charges, by telephone, subject to the terms of the form. We will honor telephone instructions from any person who provides the correct information, so there is a risk of possible loss to you if unauthorized persons use this service in your name. Our current procedure is that only the owner or your AGL representative may make a transfer request by phone. We are not liable for any acts or omissions based upon instructions that we reasonably believe to be genuine. Our procedures include verification of the Policy number, the identity of the caller, both the insured person's and owner's names, and a form of personal identification from the caller. We will mail you a prompt written confirmation of the transaction. If (a) many people seek to make telephone requests at or about the same time, or (b) our recording equipment malfunctions, it may be impossible for you to make a telephone request at the time you wish. You should submit a written request if you cannot make a telephone transfer. Also, if, due to malfunction or other circumstances, your telephone request is incomplete or not fully comprehensible, we will not process the transaction. The phone number for telephone requests is 1-800-340-2765. Variable Investment Options We divided the Separate Account into variable investment options, each of which invests in shares of a corresponding Fund. Except as noted below, you may invest premium payments in variable investment options investing in the Funds listed in the following table. The name of each Fund describes its type (for example, money market fund, growth fund, equity fund, etc.), except for the Funds with a footnote 1 next to their name. For these Funds, whose name does not describe their type, we provide that information immediately following the table. Fund sub-advisers are shown in parenthesis.
- ---------------------------------------------------------------------------------------------------------------- Variable Investment Options Investment Adviser (sub-adviser, if applicable) - ---------------------------------------------------------------------------------------------------------------- AIM V.I. International Growth Fund - Series I shares A I M Advisors, Inc. - ---------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund - Series I shares A I M Advisors, Inc. - ---------------------------------------------------------------------------------------------------------------- Alger American Leveraged AllCap Portfolio - Class O Shares/1/ Fred Alger Management, Inc. - ---------------------------------------------------------------------------------------------------------------- Alger American MidCap Growth Portfolio - Class O Shares Fred Alger Management, Inc. - ---------------------------------------------------------------------------------------------------------------- American Century VP Value Fund American Century Investment Management, Inc. - ---------------------------------------------------------------------------------------------------------------- Credit Suisse Small Cap Growth Portfolio Credit Suisse Asset Management, LLC - ---------------------------------------------------------------------------------------------------------------- Dreyfus IP MidCap Stock Portfolio - Initial shares The Dreyfus Corporation - ---------------------------------------------------------------------------------------------------------------- Dreyfus VIF Developing Leaders Portfolio - Initial shares/1/ The Dreyfus Corporation - ---------------------------------------------------------------------------------------------------------------- Dreyfus VIF Quality Bond Portfolio - Initial Shares The Dreyfus Corporation - ---------------------------------------------------------------------------------------------------------------- Fidelity VIP Asset Manager/SM/ Portfolio - Service Class 2/1/ Fidelity Management & Research Company (FMR Co., Inc.) (Fidelity Management & Research (U.K.) Inc.) (Fidelity Management & Research (Far East) Inc.) (Fidelity Investments Money Management, Inc.) (Fidelity Investments Japan Limited) - ---------------------------------------------------------------------------------------------------------------- Fidelity VIP Contrafund(R) Portfolio - Service Class 2/1/ Fidelity Management & Research Company (FMR Co., Inc.) (Fidelity Management & Research (U.K.) Inc.) (Fidelity Management & Research (Far East) Inc.) (Fidelity Investments Japan Limited) - ---------------------------------------------------------------------------------------------------------------- Fidelity VIP Equity-Income Portfolio - Service Class 2 Fidelity Management & Research Company (FMR Co., Inc.) - ----------------------------------------------------------------------------------------------------------------
19 (See footnotes on page 21)
- ---------------------------------------------------------------------------------------------------------------- Variable Investment Options Investment Adviser (sub-adviser, if applicable) - ---------------------------------------------------------------------------------------------------------------- Fidelity VIP Growth Portfolio - Service Class 2 Fidelity Management & Research Company (FMR Co., Inc.) - ---------------------------------------------------------------------------------------------------------------- Fidelity VIP Mid Cap Portfolio - Service Class 2 Fidelity Management & Research Company (FMR Co., Inc.) (Fidelity Management & Research (U.K.) Inc.) (Fidelity Management & Research (Far East) Inc.) (Fidelity Investments Japan Limited) - ---------------------------------------------------------------------------------------------------------------- Franklin Templeton Foreign Securities Fund - Class 2 Templeton Investment Counsel, LLC - ---------------------------------------------------------------------------------------------------------------- Franklin Templeton Mutual Shares Securities Fund - Class 2/1/ Franklin Mutual Advisers, LLC - ---------------------------------------------------------------------------------------------------------------- Franklin Templeton Small Cap Value Securities Fund -Class 2 Franklin Advisory Services, LLC - ---------------------------------------------------------------------------------------------------------------- Franklin Templeton U.S. Government Fund - Class 2 Franklin Advisors, Inc. - ---------------------------------------------------------------------------------------------------------------- Goldman Sachs Capital Growth Fund/2/ (Not available for Goldman Sachs Asset Management, L.P. Policies issued after December 31, 2002; see "Policy Benefits" on page 5 of this prospectus) - ---------------------------------------------------------------------------------------------------------------- Janus Aspen International Growth Portfolio - Service Shares Janus Capital - ---------------------------------------------------------------------------------------------------------------- Janus Aspen Mid Cap Growth Portfolio - Service Shares Janus Capital - ---------------------------------------------------------------------------------------------------------------- Janus Aspen Worldwide Growth Portfolio - Service Shares Janus Capital - ---------------------------------------------------------------------------------------------------------------- JPMorgan Mid Cap Value Portfolio J.P. Morgan Investment Management Inc. - ---------------------------------------------------------------------------------------------------------------- JPMorgan Small Company Portfolio J.P. Morgan Investment Management Inc. - ---------------------------------------------------------------------------------------------------------------- MFS(R) Capital Opportunities Series - Initial Class Massachusetts Financial Services Company - ---------------------------------------------------------------------------------------------------------------- MFS(R) Emerging Growth Series - Initial Class Massachusetts Financial Services Company - ---------------------------------------------------------------------------------------------------------------- MFS(R) New Discovery Series/1/ - Initial Class Massachusetts Financial Services Company - ---------------------------------------------------------------------------------------------------------------- MFS(R) Research Series - Initial Class Massachusetts Financial Services Company - ---------------------------------------------------------------------------------------------------------------- Neuberger Berman AMT Mid-Cap Growth Portfolio Neuberger Berman Management Inc. - ---------------------------------------------------------------------------------------------------------------- Oppenheimer Balanced Fund/VA/1/ OppenheimerFunds, Inc. - ---------------------------------------------------------------------------------------------------------------- Oppenheimer Global Securities Fund/VA OppenheimerFunds, Inc. - ---------------------------------------------------------------------------------------------------------------- PIMCO VIT Real Return Portfolio - Administrative Class Pacific Investment Management Company LLC - ---------------------------------------------------------------------------------------------------------------- PIMCO VIT Short-Term Portfolio - Administrative Class Pacific Investment Management Company LLC - ---------------------------------------------------------------------------------------------------------------- PIMCO VIT Total Return Portfolio - Administrative Class Pacific Investment Management Company LLC - ---------------------------------------------------------------------------------------------------------------- Putnam VT Diversified Income Fund - Class IB Putnam Investment Management, LLC - ---------------------------------------------------------------------------------------------------------------- Putnam VT Growth and Income Fund - Class IB Putnam Investment Management, LLC - ---------------------------------------------------------------------------------------------------------------- Putnam VT International Growth and Income Fund - Class IB Putnam Investment Management, LLC - ---------------------------------------------------------------------------------------------------------------- Safeco RST Core Equity Portfolio/2/ (Not available for Safeco Asset Management Company Policies issued after April 30, 2003; see "Policy Benefits" on page 5 of this prospectus) - ---------------------------------------------------------------------------- ----------------------------------- Safeco RST Growth Opportunities Portfolio/2/ (Not available Safeco Asset Management Company for Policies issued after April 30, 2003; see "Policy Benefits" on page 5 of this prospectus) - ---------------------------------------------------------------------------------------------------------------- SunAmerica Aggressive Growth Portfolio - Class 1 Shares AIG SunAmerica Asset Management Corp. - ---------------------------------------------------------------------------------------------------------------- SunAmerica Balanced Portfolio - Class 1 Shares AIG SunAmerica Asset Management Corp. - ---------------------------------------------------------------------------------------------------------------- UIF Equity Growth Portfolio - Class I Morgan Stanley Investment Management Inc. (d/b/a Van Kampen) - ---------------------------------------------------------------------------------------------------------------- UIF High Yield Portfolio - Class I Morgan Stanley Investment Management Inc. (d/b/a Van Kampen) - ---------------------------------------------------------------------------------------------------------------- VALIC Co. I International Equities Fund VALIC (AIG Global Investment Corp.) - ---------------------------------------------------------------------------------------------------------------- VALIC Co. I Mid Cap Index Fund VALIC (AIG Global Investment Corp.) - ---------------------------------------------------------------------------------------------------------------- VALIC Co. I Money Market I Fund VALIC (AIG SunAmerica Asset Management Corp.) - ---------------------------------------------------------------------------------------------------------------- VALIC Co. I Nasdaq-100(R) Index Fund VALIC (AIG Global Investment Corp.) - ---------------------------------------------------------------------------------------------------------------- VALIC Co. I Science & Technology Fund VALIC (T. Rowe Price Associates, Inc.) - ---------------------------------------------------------------------------------------------------------------- VALIC Co. I Small Cap Index Fund VALIC (AIG Global Investment Corp.) - ---------------------------------------------------------------------------------------------------------------- VALIC Co. I Stock Index Fund VALIC (AIG Global Investment Corp.) - ----------------------------------------------------------------------------------------------------------------
20 (See footnotes on page 21)
- ---------------------------------------------------------------------------------------------------------------- Variable Investment Options Investment Adviser (sub-adviser, if applicable) - ---------------------------------------------------------------------------------------------------------------- Van Kampen LIT Growth and Income Portfolio - Class I Van Kampen Asset Management - ---------------------------------------------------------------------------------------------------------------- Vanguard High Yield Bond Portfolio Wellington Management Company, LLP - ---------------------------------------------------------------------------------------------------------------- Vanguard REIT Index Portfolio The Vanguard Group - ----------------------------------------------------------------------------------------------------------------
- ---------- /1/ The Fund type for Alger American Leveraged AllCap Portfolio-Class O Shares is equity growth. The Fund type for Dreyfus VIF Developing Leaders Portfolio - Initial shares is small cap. The Fund type for Fidelity VIP Asset Manager /SM/ Portfolio - Service Class 2 is high return. The Fund type for Fidelity VIP Contrafund(R) Portfolio - Service Class 2 is capital appreciation. The Fund type for Franklin Templeton Mutual Shares Securities Fund - Class 2 is capital appreciation. The Fund type for MFS New Discovery Series is small cap growth. The Fund type for Oppenheimer Balanced Fund/VA is total return. /2/ This investment option is not available to all Policy owners. See "Policy Benefits" on page 5. From time to time, certain Fund names are changed. When we are notified of a name change, we will make changes so that the new name is properly shown. However, until we complete the changes, we may provide you with various forms, reports and confirmations that reflect a Fund's prior name. You can learn more about the Funds, their investment policies, risks, expenses and all other aspects of their operations by reading their prospectuses, which accompany this prospectus. You should carefully read the Funds' prospectuses before you select any variable investment option. We do not guarantee that any Fund will achieve its objective. In addition, no single Fund or investment option, by itself, constitutes a balanced investment plan. We have entered into various services agreements with most of the advisers or administrators for the Funds. We receive payments for the administrative services we perform such as proxy mailing and tabulation, mailing of Fund related information and responding to Policy owners' inquiries about the Funds. Currently, these payments range from 0.15% to 0.35% of the market value of the assets invested in the underlying Fund as of a certain date, usually paid at the end of each calendar quarter. From time to time some of these arrangements may be renegotiated so that we receive a greater payment than previously paid depending on our determination that the expenses that we are incurring are greater than we anticipated. These payments do not result in any additional charges under the Policies that are not described under "Charges Under the Policy" on page 46. We have entered into a services agreement with PIMCO Variable Insurance Trust ("PIMCO VIT") under which we receive fees of up to 0.15% of the daily market value of the assets invested in the underlying Fund, paid directly by PIMCO VIT for services we perform. We also receive what is referred to as "12b-1 fees" from some of the Funds themselves. These fees are designed to help pay for our direct and indirect distribution costs for the Policies. These fees are generally equal to 0.25% of the daily market value of the assets invested in the underlying Fund. 21 Voting Privileges We are the legal owner of the Funds' shares held in the Separate Account. However, you may be asked to instruct us how to vote the Fund shares held in the various Funds that are attributable to your Policy at meetings of shareholders of the Funds. The number of votes for which you may give directions will be determined as of the record date for the meeting. The number of votes that you may direct related to a particular Fund is equal to (a) your accumulation value invested in that Fund divided by (b) the net asset value of one share of that Fund. Fractional votes will be recognized. We will vote all shares of each Fund that we hold of record, including any shares we own on our own behalf, in the same proportions as those shares for which we have received instructions from owners participating in that Fund through the Separate Account. If you are asked to give us voting instructions, we will send you the proxy material and a form for providing such instructions. Should we determine that we are no longer required to send the owner such materials, we will vote the shares as we determine in our sole discretion. In certain cases, we may disregard instructions relating to changes in a Fund's investment manager or its investment policies. We will advise you if we do and explain the reasons in our next report to Policy owners. AGL reserves the right to modify these procedures in any manner that the laws in effect from time to time allow. Fixed Account We invest any accumulation value you have allocated to the Fixed Account as part of our general assets. We credit interest on that accumulation value at a rate which we declare from time to time. We guarantee that the interest will be credited at an effective annual rate of at least 4%. Although this interest increases the amount of any accumulation value that you have in the Fixed Account, such accumulation value will also be reduced by any charges that are allocated to this option under the procedures described under "Allocation of charges" on page 49. The "daily charge" described on page 46 and the fees and expenses of the Funds discussed on page 16 do not apply to the Fixed Account. Our general account. Our general account assets are all of our assets that we do not hold in legally segregated separate accounts. Our general account supports our obligations to you under your Policy's Fixed Account. Because of applicable exemptions, no interest in this option has been registered under the Securities Act of 1933, as amended. Neither our general account or our Fixed Account is an investment company under the Investment Company Act of 1940. We have been advised that the staff of the SEC has not reviewed the disclosures that are included in this prospectus for your information about our general account or our Fixed Account. Those disclosures, however, may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. How we declare interest. Except for amounts held as collateral for loans, we can at any time change the rate of interest we are paying on any accumulation value allocated to our Fixed Account, but it will always be at an effective annual rate of at least 4%. 22 Under these procedures, it is likely that at any time different interest rates will apply to different portions of your accumulation value, depending on when each portion was allocated to our Fixed Account. Any charges, partial surrenders, or loans that we take from any accumulation value that you have in our Fixed Account will be taken from each portion in reverse chronological order based on the date that accumulation value was allocated to this option. Illustrations We may provide illustrations for death benefit, accumulation value, and cash surrender value based on hypothetical rates of return that are not guaranteed. Hypothetical illustrations also assume costs of insurance for a hypothetical person. These illustrations are illustrative only and should not be considered a representation of past or future performance. Your actual rates of return and actual charges may be higher or lower than these illustrations. The actual return on your accumulation value will depend on factors such as the amounts you allocate to particular investment options, the amounts deducted for the Policy's fees and charges, the variable investment options' fees and charges, and your Policy loan and partial surrender history. Before you purchase the Policy, we will provide you with what we refer to as a personalized illustration. A personalized illustration shows future benefits under the Policy based upon (1) the proposed insured person's age and premium class and (2) your selections of death benefit option, specified amount, planned periodic premiums, riders, and proposed investment options. After you purchase the Policy and upon your request, we will provide a similar personalized illustration that takes into account your Policy's actual values and features as of the date the illustration is prepared. We reserve the right to charge a maximum fee of $25 for personalized illustrations prepared after the Policy is issued if you request us to do so more than once each year. POLICY FEATURES Age Generally, our use of age in your Policy and this prospectus refers to a person who is between six months younger and six months older than the stated age. Death Benefits Your specified amount of insurance. In your application to buy a Platinum Investor III Policy, you tell us how much life insurance coverage you want. We call this the "specified amount" of insurance. The specified amount consists of what we refer to as "base coverage" plus any "supplemental coverage" you select. Base coverage must be at least 10% of the specified amount. We also guarantee a death benefit for a specified period equal to the specified amount (less any indebtedness) and any benefit riders. We refer to this guarantee in both your Policy and this prospectus as the "guarantee period benefit." We provide more information about the specified amount and the guarantee period benefit under "Monthly guarantee premiums," beginning on page 28. You should read these other discussions carefully because they contain 23 important information about how the choices you make can affect your benefits and the amount of premiums and charges you may have to pay. Investment performance affects the amount of your Policy's accumulation value. We deduct all charges from your accumulation value. The amount of the monthly charges may differ from month to month. However, as long as all applicable charges are paid timely each month, the specified amount of insurance payable under your Policy is unaffected by investment performance. (See "Monthly insurance charge" on page 47.) Your death benefit. You must choose one of three death benefit Options under your Policy at the time it is issued. Owners whose Policies were issued before June 1, 2002 could choose only death benefit Option 1 or death benefit Option 2. You can choose Option 1 or Option 2 at the time of your application or at any later time before the death of the insured person. You can choose death benefit Option 3 only at the time of your application. The death benefit we will pay is reduced by any outstanding Policy loans and increased by any unearned loan interest we may have already charged. Depending on the Option you choose, the death benefit we will pay is . Option 1--The specified amount on the date of the insured person's death. . Option 2--The sum of (a) the specified amount on the date of the insured person's death and (b) the Policy's accumulation value as of the date of death. . Option 3-- The sum of (a) the death benefit we would pay under Option 1 and (b) the cumulative amount of premiums you paid for the Policy and any riders. The death benefit payable will be reduced by any amounts waived under the Waiver of Monthly Deduction Rider and any partial surrenders. Additional premiums you pay for the Policy and any riders following a partial surrender are not considered part of the "cumulative amount of premiums you paid" until the total value of the premiums paid is equivalent to or greater than the amount surrendered. See "Partial surrender" on page 39 for more information about the effect of partial surrenders on the amount of the death benefit. Under either Option 2 or Option 3, your death benefit will tend to be higher than under Option 1. However, the monthly insurance charge we deduct will also be higher to compensate us for our additional risk. Because of this, your accumulation value for the same amount of premium will tend to be higher under Option 1 than under either Option 2 or Option 3. Any premiums we receive after the insured person's death will be returned and not included in your accumulation value. Required minimum death benefit. We may be required under federal tax law to pay a larger death benefit than what would be paid under your chosen death benefit Option. We refer to this larger benefit as the "required minimum death benefit" as explained below. 24 Federal tax law requires a minimum death benefit (the required minimum death benefit) in relation to the accumulation value in order for a Policy to qualify as life insurance. We will automatically increase the death benefit of a Policy if necessary to ensure that the Policy will continue to qualify as life insurance. One of two tests under current federal tax law can be used: the "guideline premium test" or the "cash value accumulation test." You must elect one of these tests when you apply for a Policy. After we issue your Policy, the choice may not be changed. If you choose the guideline premium test, total premium payments paid in a Policy year may not exceed the guideline premium payment limitations for life insurance set forth under federal tax law. If you choose the cash value accumulation test, there are no limits on the amount of premium you can pay in a Policy year, so long as the death benefit is large enough compared to the accumulation value to meet the test requirements. The other major difference between the two tax tests involves the Policy's required minimum death benefit. The required minimum death benefit is calculated as shown in the tables that follow. If you selected death benefit Option 1, Option 2 or Option 3 at any time when the required minimum death benefit is more than the death benefit payable under the Option you selected, the death benefit payable would be the required minimum death benefit. Under federal tax law rules, if you selected either death benefit Option 1 or Option 3 and elected the cash value accumulation test, rather than the guideline premium test, the payment of additional premiums may cause your accumulation value to increase to a level where the required minimum death benefit becomes applicable. Therefore, choosing the cash value accumulation test may make it more likely that the required minimum death benefit will apply if you select death benefit Option 1 or Option 3. If you anticipate that your Policy may have a substantial accumulation value in relation to its death benefit, you should be aware that the cash value accumulation test may cause your Policy's death benefit to be higher than if you had chosen the guideline premium test. To the extent that the cash value accumulation test does result in a higher death benefit, the cost of insurance charges deducted from your Policy will also tend to be higher. (This compensates us for the additional risk that we might have to pay the higher required minimum death benefit.) If you have selected the cash value accumulation test, we calculate the required minimum death benefit by multiplying your Policy's accumulation value by a required minimum death benefit percentage that will be set forth on page 25 of your Policy. The required minimum death benefit percentage varies based on the age and sex of the insured person. Below is an example of applicable required minimum death benefit percentages for the cash value accumulation test. The example is for a male. 25 - -------------------------------------------------------------------------------- APPLICABLE PERCENTAGES UNDER ---------------------------- CASH VALUE ACCUMULATION TEST ---------------------------- (for a male) Insured Person's Age 40 45 50 55 60 65 70 75 99 % 344% 293% 252% 218% 191% 169% 152% 140% 104% - -------------------------------------------------------------------------------- If you have selected the guideline premium test, we calculate the required minimum death benefit by multiplying your Policy's accumulation value by an applicable required minimum death benefit percentage. The applicable required minimum death benefit percentage is 250% when the insured person's age is 40 or less, and decreases each year thereafter to 100% when the insured person's age is 95 or older. The applicable required minimum death benefit percentages under the guideline premium test for certain ages between 40 to 95 are set forth in the following table. - -------------------------------------------------------------------------------- APPLICABLE PERCENTAGES UNDER ---------------------------- GUIDELINE PREMIUM TEST ---------------------- Insured Person's Age 40 45 50 55 60 65 70 75 95+ % 250% 215% 185% 150% 130% 120% 115% 105% 100% - -------------------------------------------------------------------------------- Your Policy calls the multipliers used for each test the "Cash Value Corridor Rate." Base coverage and supplemental coverage. The amount of insurance coverage you select at the time you apply to purchase a Policy is called the specified amount. The specified amount is the total of two types of coverage: your "base coverage" and "supplemental coverage," if any, that you select. The total of the two coverages cannot be less than the minimum of $50,000 and at least 10% of the total must be base coverage when you purchase the Policy. Generally, if we assess less than the maximum guaranteed charges under your Policy and if you choose supplemental coverage instead of base coverage, then in the early Policy years you will reduce your total charges and increase your accumulation value and cash surrender value. The more supplemental coverage you elect, the greater will be the amount of the reduction in charges and increase in accumulation value. You should have an understanding of the significant differences between base coverage and supplemental coverage before you complete your application. Here are the features about supplemental coverage that differ from base coverage: . In general, the larger percentage of supplemental coverage you choose when your Policy is issued, the shorter the time the guarantee period benefit will be in force; . Supplemental coverage has no surrender charges; 26 . The monthly insurance charge for supplemental coverage is always equal to or less than the monthly insurance charge for an equivalent amount of base coverage; and . We do not collect the monthly charge for each $1,000 of specified amount that is attributable to supplemental coverage. You can change the percentage of base coverage when you increase the specified amount, but at least 10% of the total specified amount after the increase must remain as base coverage. There is no charge when you change the percentages of base and supplemental coverages. The percentage that your base and supplemental coverages represent of your specified amount will not change whenever you decrease the specified amount. A partial surrender will reduce the specified amount. In this case, we will deduct any surrender charge that applies to the decrease in base coverage, but not to the decrease in supplemental coverage since supplemental coverage has no surrender charge. You can use the mix of base and supplemental coverage to emphasize your own objectives. For instance, our guarantee of a minimum death benefit (through the guarantee period benefit) may be essential to your planning. If this is the case, you may wish to maximize the percentage amount of base coverage you purchase. Policy owner objectives differ. Therefore, before deciding how much, if any, supplemental coverage you should have, you should discuss with your AGL representative what you believe to be your own objectives. Your representative can provide you with further information and Policy illustrations showing how your selection of base and supplemental coverage can affect your Policy values under different assumptions. Premium Payments Premium payments. We call the payments you make "premiums" or "premium payments." The amount we require as your initial premium varies depending on the specifics of your Policy and the insured person. We can refuse to accept a subsequent premium payment that is less than $50. If mandated under applicable law, we may be required to reject a premium payment. Otherwise, with a few exceptions mentioned below, you can make premium payments at any time and in any amount. Premium payments we receive after your free look period, as discussed on page 30, will be allocated upon receipt to the available investment options you have chosen. Limits on premium payments. Federal tax law may limit the amount of premium payments you can make (relative to the amount of your Policy's insurance coverage) and may impose penalties on amounts you take out of your Policy if you do not observe certain additional requirements. These tax law requirements and a discussion of modified endowment contracts are summarized further under "Federal Tax Considerations" beginning on page 51. We will monitor your premium payments, however, to be sure that you do not exceed permitted amounts or inadvertently incur any tax penalties. The tax law limits can vary as a result of changes you make to your Policy. For example, a reduction in the specified amount of your Policy can reduce the amount of premiums you can pay. 27 Also, in certain limited circumstances, additional premiums may cause the death benefit to increase by more than they increase your accumulation value. In such case, we may refuse to accept an additional premium if the insured person does not provide us with adequate evidence that our requirements for issuing insurance are still met. This increase in death benefit is on the same terms (including additional charges) as any other specified amount increase you request (as described under "Increase in coverage" on page 32.) Checks. You may pay premiums by check drawn on a U.S. bank in U.S. dollars and made payable to "American General Life Insurance Company," or "AGL." Premiums after the initial premium should be sent directly to the appropriate address shown on your billing statement. If you do not receive a billing statement, send your premium directly to the address for premium payments shown on page 4 of this prospectus. We also accept premium payments by bank draft, wire or by exchange from another insurance company. Premium payments from salary deduction plans may be made only if we agree. You may obtain further information about how to make premium payments by any of these methods from your AGL representative or from our Administrative Center. Planned periodic premiums. Page 3 of your Policy will specify a "Planned Periodic Premium." This is the amount that you (within limits) choose to pay. Our current practice is to bill quarterly, semi-annually or annually. However, payment of these or any other specific amounts of premiums is not mandatory. After payment of your initial premium, you need only invest enough to ensure that your Policy's cash surrender value stays above zero or that the guarantee period benefit (described under "Monthly guarantee premiums" on page 28) remains in effect ("Cash surrender value" is explained under "Full surrenders" on page 6.) The less you invest, the more likely it is that your Policy's cash surrender value could fall to zero as a result of the deductions we periodically make from your accumulation value. Monthly guarantee premiums. Page 3 of your Policy will specify a "Monthly Guarantee Premium." If you pay these guarantee premiums, we will provide at least an Option 1 death benefit, even if your policy's cash surrender value has declined to zero. We call this our "guarantee period" benefit and here are its terms and conditions: . On the first day of each Policy month that you are covered by the guarantee period benefit, we determine if the cash surrender value (we use your accumulation value less loans during your first five Policy years) is sufficient to pay the monthly deduction. (Policy months are measured from the "Date of Issue" that will also be shown on page 3 of your Policy.) . If the cash surrender value is insufficient, we determine if the cumulative amount of premiums paid under the Policy, less any partial surrenders and Policy loans, is at least equal to the sum of the monthly guarantee premiums starting with the date of issue, including the current Policy month. . If the monthly guarantee premium requirement is met, the Policy will not lapse. See "Policy Lapse and Reinstatement" on page 51. 28 . We continue to measure your cash surrender value and the sum of monthly guarantee premiums for the length of time you are covered by the guarantee period benefit. The cost of providing the guarantee period benefit is, in part, dependent on the level of the monthly guarantee premium and the duration of the guarantee period. Higher monthly guarantee premiums and shorter guarantee periods both result in lowering our cost to pay for the benefit. The more supplemental coverage you choose, the lower are your overall Policy charges. Because overall Policy charges are lower, you will receive a higher monthly guarantee premium and a shorter guarantee period. The length of time you are covered by the guarantee period benefit varies on account of two things (except in New Jersey, as described in the last paragraph of this section): . the insured person's age at the Policy's date of issue; and . the amounts of base coverage and supplemental coverage you have chosen. The maximum duration for the guarantee period - 10 years - happens in the event you have chosen 100% base coverage and the insured person is no older than age 50 at the Policy's date of issue. We reduce the maximum time for the guarantee period by one year for each year the insured person is older than age 50 at the date of issue. The reductions stop after the insured person is age 55 or older at the date of issue. This means, for instance, that you will have a guarantee period of 5 years if you choose 100% base coverage and the insured person is age 55 at the Policy's date of issue. The least amount of time for the guarantee period to be in effect - 3 years - - happens in the event you have chosen the maximum permitted 90% of supplemental coverage and the insured person is older than age 50 at the date of issue. Whenever you increase or decrease your specified amount, change death benefit Options or add or delete a benefit rider, we calculate a new monthly guarantee premium. The amount you must pay to keep the guarantee period benefit in force will increase or decrease. We can calculate your new monthly guarantee premium as a result of a Policy change before you make the change. Please contact either your agent or the Administrative Center for this purpose. . For increases in the specified amount, the new monthly guarantee premium is calculated based on the insured's underwriting characteristics at the time of the increase and the amount of the increase. . For decreases in the specified amount, the monthly guarantee premium is adjusted on a pro-rata basis. For instance, if the specified amount is reduced by one-half, the monthly guarantee premium is reduced by one-half. . For the addition of a benefit rider, the monthly guarantee premium is increased by the amount of the monthly deduction for the rider. 29 . For the deletion of a benefit rider, the monthly guarantee premium will be decreased by the amount of the monthly deduction for the rider. We provide the guarantee period benefit for 5 years for all Policies issued in the State of New Jersey. The period of coverage for New Jersey Policies is unaffected by the insured person's age at the Policy's date of issue or your choice of base coverage and supplemental coverage. Free look period. If for any reason you are not satisfied with your Policy, you may return it to us and we will refund you the greater of (i) any premium payments received by us or (ii) your accumulation value plus any charges that have been deducted. To exercise your right to return your Policy, you must mail it directly to the Administrative Center address shown on page 4 or return it to the AGL representative through whom you purchased the Policy within 10 days after you receive it. In a few states, this period may be longer. Because you have this right, we will invest your initial net premium payment in the money market investment option from the date your investment performance begins until the first business day that is at least 15 days later. Then we will automatically allocate your investment among the available investment options in the ratios you have chosen. Any additional premium we receive during the 15-day period will also be invested in the money market investment option and allocated to the investment options at the same time as your initial net premium. Changing Your Investment Option Allocations Future premium payments. You may at any time change the investment options in which future premiums you pay will be invested. Your allocation must, however, be in whole percentages that total 100%. Transfers of existing accumulation value. You may also transfer your existing accumulation value from one investment option under the Policy to another. The first 12 transfers in a year are free of charge. We consider your instruction to transfer from or to more than one investment option at the same time to be one transfer. We will charge you $25 for each additional transfer. You may make transfers from or to the variable investment options at any time. You may make transfers from the Fixed Account only during the 60-day period following each Policy anniversary. The total amount that you can transfer each year from the Fixed Account is limited to the greater of: . 25% of the unloaned accumulation value you have in the Fixed Account as of the Policy anniversary; or . the total amount you transferred or surrendered from the Fixed Account during the previous Policy year. Unless you are transferring the entire amount you have in an investment option, including the Fixed Account, each transfer must be at least $500. See "Additional Rights That We Have" on page 44. 30 Dollar cost averaging. Dollar cost averaging is an investment strategy designed to reduce the risks that result from market fluctuations. The strategy spreads the allocation of your accumulation value among your chosen variable investment options over a period of time. This allows you to reduce the risk of investing most of your funds at a time when prices are high. The success of this strategy depends on market trends and is not guaranteed. You should carefully consider your financial ability to continue the program over a long enough period of time to allocate accumulation value to the variable investment options when their value is low as well as when it is high. Under dollar cost averaging, we automatically make transfers of your accumulation value from the money market investment option to one or more of the other variable investment options that you choose. You tell us what day of the month you want these transfers to be made (other than the 29th, 30th or 31st of a month) and whether the transfers on that day should occur monthly, quarterly, semi-annually or annually. We make the transfers at the end of the valuation period containing the day of the month you select. (The term "valuation period" is described on page 34.) You must have at least $5,000 of accumulation value to start dollar cost averaging and each transfer under the program must be at least $100. Dollar cost averaging ceases upon your request, or if your accumulation value in the money market investment option becomes exhausted. You may maintain only one dollar cost averaging instruction with us at a time. You cannot use dollar cost averaging at the same time you are using automatic rebalancing. Dollar cost averaging transfers do not count against the 12 free transfers that you are permitted to make each year. We do not charge you for using this service. Automatic rebalancing. This feature automatically rebalances the proportion of your accumulation value in each variable investment option under your Policy to correspond to your then current premium allocation designation. Automatic rebalancing does not guarantee gains, nor does it assure that you will not have losses. You tell us whether you want us to do the rebalancing quarterly, semi-annually or annually. Automatic rebalancing will occur as of the end of the valuation period that contains the date of the month your Policy was issued. For example, if your Policy is dated January 17, and you have requested automatic rebalancing on a quarterly basis, automatic rebalancing will start on April 17, and will occur quarterly thereafter. You must have a total accumulation value of at least $5,000 to begin automatic rebalancing. Rebalancing ends upon your request. You cannot use automatic rebalancing at the same time you are using dollar cost averaging. Automatic rebalancing transfers do not count against the 12 free transfers that you are permitted to make each year. We do not charge you for using this service. Market timing. The Policies are not designed for professional market timing organizations or other entities using programmed and frequent transfers involving large amounts. We monitor the Policies to determine if . An exchange out of an investment option occurs within two calendar weeks of an earlier exchange into that same investment option; or . Exchanges into or out of the same investment option occur more than twice in any one calendar quarter. 31 If either of the above transactions occurs, we will suspend such Policy owner's telephone, same day or overnight delivery transfer privileges (including website, e-mail and facsimile communications) with prior notice to prevent market timing efforts that could be harmful to other Policy owners or beneficiaries. Such notice of suspension will take the form of either a letter mailed to your last known address, or a phone call from our Administrative Center to inform you that effective immediately, your telephone, same day or overnight delivery transfer privileges have been suspended. The Policy suspension will last for no more than six months. Transfers under dollar cost averaging, automatic rebalancing or any other automatic transfer arrangements to which we have agreed are not affected by these procedures. The procedures above will be followed in all circumstances and we will treat all Policy owners the same. Changing the Specified Amount of Insurance Increase in coverage. At any time while the insured person is living, you may request an increase in the specified amount of coverage under your Policy. You must, however, provide us with satisfactory evidence that the insured person continues to meet our requirements for issuing insurance coverage. We treat an increase in specified amount in many respects as if it were the issuance of a new Policy. For example, the monthly insurance charge for the increase will be based on the age, gender and premium class of the insured person at the time of the increase. Also, a new amount of surrender charge . applies to any amount of the increase that you request as base (rather than supplemental) coverage; . applies as if we were instead issuing the same amount of base coverage as a new Platinum Investor III Policy; and . applies for the 10 Policy years following the increase. Whenever you decide to increase your specified amount, you will be subject to a new monthly charge per $1,000 of base coverage. The additional charge will be applied to the increase in your base coverage portion of the increase in the specified amount for the first 7 Policy years following the increase. You are not required to increase your specified amount in any specific percentage or ratio that your base and supplemental coverage bear to your specified amount before the increase, with one exception. Base coverage must be at least 10% of the total specified amount after the increase. Decrease in coverage. After the first Policy year, you may request a reduction in the specified amount of coverage, but not below certain minimums. After any decrease, the specified amount cannot be less than the greater of: 32 . $50,000; and . any minimum amount which, in view of the amount of premiums you have paid, is necessary for the Policy to continue to meet the federal tax law definition of life insurance. We will apply a reduction in specified amount proportionately against the specified amount provided under the original application and any specified amount increases. The decrease in specified amount will decrease both your base and supplemental coverage in the same ratio they bear to your specified amount before the decrease. We will deduct from your accumulation value any surrender charge that is due on account of the decrease. If there is not sufficient accumulation value to pay the surrender charge at the time you request a reduction, the decrease will not be allowed. A reduction in specified amount will not reduce the monthly charge per $1,000 of base coverage or the amount of time for which we assess this charge. For instance, if you increase your base coverage and follow it by a decrease in base coverage within 7 years of the increase, we will assess the monthly charge per $1,000 of base coverage against the increase in base coverage for the full 7 years even though you have reduced the amount of base coverage. Changing Death Benefit Options Change of death benefit option. You may at any time before the death of the insured person request us to change your choice of death benefit option from: Option 1 to Option 2; Option 2 to Option 1; or Option 3 to Option 1. No other changes are permitted. A change from Option 3 to Option 1 may be subject to regulatory approval in your state. . If you change from Option 1 to Option 2, we automatically reduce your Policy's specified amount of insurance by the amount of your Policy's accumulation value (but not below zero) at the time of the change. The change will go into effect on the monthly deduction day following the date we receive your request for change. We will take the reduction proportionately from each component of the Policy's specified amount. We will not charge a surrender charge for this reduction in specified amount. The surrender charge schedule will not be reduced on account of the reduction in specified amount. The monthly charge per $1,000 of base coverage and the cost of insurance rates will not change. At the time of the change of death benefit Option, Your Policy's monthly insurance charge and surrender value will not change. . If you change from Option 2 to Option 1, then as of the date of the change we automatically increase your Policy's specified amount by the amount of your Policy's accumulation value. We will apply the entire increase in your specified amount to the last coverage added (either base or supplemental) to your Policy, 33 and which has not been removed. For the purpose of this calculation, if base and supplemental coverages were issued on the same date, we will consider the supplemental coverage to have been issued later. The monthly charge per $1000 of base coverage and the cost of insurance rates will not change. At the time of the change of death benefit Option, your Policy's monthly insurance charge and surrender value will not change. . If you change from Option 3 to Option 1, your Policy's specified amount will not change. The monthly charge per $1000 of base coverage and the cost of insurance rates will not change. Your Policy's monthly insurance charge will decrease and the surrender value will increase. Tax consequences of changes in insurance coverage. Please read "Tax Effects" starting on page 51 of this prospectus to learn about possible tax consequences of changing your insurance coverage under your Policy. Effect of changes in insurance coverage on guarantee period. A change in coverage does not result in termination of the guarantee period, so that if you pay certain prescribed amounts of premiums, we will pay a death benefit even if your Policy's cash surrender value declines to zero. The details of this guarantee are discussed under "Monthly guarantee premiums," beginning on page 28. Effective Date of Policy and Related Transactions Valuation dates, times, and periods. We compute values under a Policy on each day that the New York Stock Exchange ("NYSE") is open for business. We call each such day a "valuation date" or a "business day." We compute policy values as of the time the NYSE closes on each valuation date, which usually is 3:00 p.m. Central time. We call this our "close of business." We call the time from the close of business on one valuation date to the close of business of the next valuation date a "valuation period." We are closed only on those holidays the NYSE is closed. Each Fund produces a price per Fund share following each close of the NYSE and provides that price to us. We then determine the Fund value at which you may invest in the particular investment option, which reflects the change in value of each Fund reduced by the daily charge and any other charges that are applicable to your Policy. Date of receipt. Generally we consider that we have received a premium payment or another communication from you on the day we actually receive it in full and proper order at any of the addresses shown on page 4 of this prospectus. If we receive it after the close of business on any valuation date, however, we consider that we have received it on the day following that valuation date. Any premium payments we receive after our close of business are held in our general account until the next business day. If we receive your premiums through payroll allotment, such as salary deduction or salary reduction programs, we consider that we receive your premium on the day we actually receive it, 34 rather than the day the deduction from your payroll occurs. This is important for you to know because your premium receives no interest or earnings for the time between the deduction from your payroll and our receipt of the payment. We currently do not accept military allotment programs. Commencement of insurance coverage. After you apply for a Policy, it can sometimes take up to several weeks for us to gather and evaluate all the information we need to decide whether to issue a Policy to you and, if so, what the insured person's premium class should be. We will not pay a death benefit under a Policy unless (a) it has been delivered to and accepted by the owner and at least the initial premium has been paid, and (b) at the time of such delivery and payment, there have been no adverse developments in the insured person's health or risk of death. However, if you pay at least the minimum first premium payment with your application for a Policy, we will provide temporary coverage of up to $300,000 provided the insured person meets certain medical and risk requirements. The terms and conditions of this coverage are described in our "Limited Temporary Life Insurance Agreement," available to you when you apply for this Policy. Date of issue; Policy months and years. We prepare the Policy only after we approve an application for a Policy and assign the appropriate premium class. The day we begin to deduct charges will appear on page 3 of your Policy and is called the "Date of Issue." Policy months and years are measured from the date of issue. To preserve a younger age at issue for the insured person, we may assign a date of issue to a Policy that is up to 6 months earlier than otherwise would apply. Monthly deduction days. Each charge that we deduct monthly is assessed against your accumulation value at the close of business on the date of issue and at the end of each subsequent valuation period that includes the first day of a Policy month. We call these "monthly deduction days." Commencement of investment performance. We begin to credit an investment return to the accumulation value resulting from your initial premium payment on the later of (a) the date of issue, or (b) the date all requirements needed to place the Policy in force have been satisfied, including underwriting approval and receipt of the necessary premium. In the case of a back-dated Policy, we do not credit an investment return to the accumulation value resulting from your initial premium payment until the date stated in (b) above. Effective date of other premium payments and requests that you make. Premium payments (after the first) and transactions made in response to your requests and elections are generally effected at the end of the valuation period in which we receive the payment, request or election and based on prices and values computed as of that same time. Exceptions to this general rule are as follows: . Increases or decreases you request in the specified amount of insurance, reinstatements of a Policy that has lapsed, and changes in death benefit Option take effect on the Policy's monthly deduction day if your request is approved on that day or on the next monthly deduction day following our approval if we approve your request on any other day of the month; 35 . In most states, we may return premium payments, make a partial surrender or reduce the death benefit if we determine that such premiums would cause your Policy to become a modified endowment contract or to cease to qualify as life insurance under federal income tax law or exceed the maximum net amount at risk; . If you exercise your right to return your Policy described under "Free look period" on page 30 of this prospectus, your coverage will end when you deliver it to your AGL representative, or if you mail it to us, the date it is postmarked; and . If you pay a premium at the same time that you make a Policy request which requires our approval, your payment will be applied when received rather than following the effective date of the requested change, but only if your Policy is in force and the amount paid will not cause you to exceed premium limitations under the Internal Revenue Code of 1986, as amended (the "Code"). If we do not approve your Policy request, your premium payment will still be accepted in full or in part (we will return to you the portion of your premium payment that would be in violation of the maximum premium limitations under the Code). We will not apply this procedure to premiums you pay in connection with reinstatement requests. Reports to Policy Owners Shortly after the end of each Policy year, we will mail you a report that includes information about your Policy's current death benefit, accumulation value, cash surrender value and Policy loans. We will send you notices to confirm premium payments, transfers and certain other Policy transactions. We will mail to you at your last known address of record, these and any other reports and communications required by law. You should give us prompt written notice of any address change. ADDITIONAL BENEFIT RIDERS Riders You can request that your Policy include the additional rider benefits described below. For most of the riders that you choose, a charge, which will be shown on page 3 of your Policy, will be deducted from your accumulation value on each monthly deduction date. Eligibility for and changes in these benefits are subject to our rules and procedures as in effect from time to time. Not all riders are available in all states. More details are included in the form of each rider, which we suggest that you review if you choose any of these benefits. . Accidental Death Benefit Rider. This rider pays an additional death benefit if the insured person dies from certain accidental causes. You can purchase this rider only at the time we issue your Policy. . Children's Insurance Benefit Rider. This rider provides term life insurance coverage on the eligible children of the person insured under the Policy. This 36 rider is convertible into any other insurance (except for term coverage) available for conversions, under our published rules at the time of conversion. You may purchase this rider only at the time we issue your Policy. . Maturity Extension Rider. This rider gives you the option to extend the Policy's maturity date beyond what it otherwise would be, at any time before the original maturity date. Once you select this rider, if you have not already elected to extend the maturity date, we will notify you of this right 60 days before maturity. If you do not then elect to extend the maturity date before the original maturity date, the rider will terminate and the maturity date will not be extended. You have two versions of this rider from which to choose, the Accumulation Value version and the Death Benefit version. Either or both versions may not be available in your state. The Accumulation Value version provides for a death benefit after your original maturity date that is equal to the accumulation value on the date of death. The death benefit will be reduced by any outstanding Policy loan amount. There is no charge for this version until you reach your original maturity date. After your original maturity date, we will charge a monthly fee of no more than $10. The Death Benefit version provides for a death benefit after your original maturity date equal to the death benefit in effect on the day prior to your original maturity date. If the death benefit is based fully, or in part, on the accumulation value, we will adjust the death benefit to reflect future changes in your accumulation value. The death benefit will never be less than the accumulation value. The death benefit will be reduced by any outstanding Policy loan amount. We will charge you the following amounts under the death benefit version . A monthly fee of no more than $30 for each $1000 of the net amount at risk. This fee begins 9 years before your original maturity date and terminates on your original maturity date; and . A monthly fee of no more than $10. This fee begins on your original maturity date if you exercise your right under the rider to extend your original maturity date. Nine years and 60 days before your original maturity date, we will notify you that you will incur these charges if you keep the rider. You will then have until your original maturity date to terminate the rider and with it, your right to extend your original maturity date. If you terminate the rider at any time within this nine year and 60 day period, there will be no further charges and you will receive no benefit. 37 Both versions of the rider may be added at any time to an existing Policy up until the same nine year and 60 day period before your original maturity date. In Illinois you may select either version of the rider only after we issue your Policy. There are features common to both riders in addition to the $10 maximum monthly fee. Only the insurance coverage associated with the Policy will be extended beyond your original maturity date. We do not allow additional premium payments, new loans, or changes in specified amount after your original maturity date. The only charge we continue to automatically deduct after the original maturity date is the daily charge described on page 46. Once you have exercised your right to extend your original maturity date, you cannot revoke it. You can, however, surrender your Policy at any time. Extension of the maturity date beyond the insured person's age 100 may result in current taxation of increases in your Policy's accumulation value as a result of interest or investment experience after that time. You should consult a qualified tax adviser before making such an extension. . Spouse Term Rider. This rider provides term life insurance on the life of the spouse of the Policy's insured person. This rider terminates no later than the Policy anniversary nearest the spouse's 75th birthday. You can convert this rider into any other insurance (except for term coverage) available for conversions, under our published rules at the time of conversion. You can purchase this rider only at the time we issue your Policy. . Terminal Illness Rider. This rider provides the Policy owner with the right to request a benefit if the Policy's insured person is diagnosed as having a terminal illness (as defined in the rider) and less than 12 months to live. This rider is not available in all states. The maximum amount you may receive under this rider before the insured person's death is 50% of the death benefit that would be due under the Policy (excluding any rider benefits), not to exceed $250,000. The amount of benefits paid under the rider, plus an administrative fee (not to exceed $250), plus interest on these amounts to the next Policy anniversary becomes a "lien" against the Policy. A lien is a claim by AGL against all future Policy benefits. We will continue to charge interest in advance on the total amount of the lien and will add any unpaid interest to the total amount of the lien each year. The cash surrender value of the Policy also will be reduced by the amount of the lien. Any time the total lien, plus any other Policy loans, exceeds the Policy's then current death benefit, the Policy will terminate without further value. You can purchase this rider at any time prior to the maturity date. . Waiver of Monthly Deduction Rider. This rider provides for a waiver of all monthly charges assessed for both your Policy and riders that we otherwise would deduct from your accumulation value, so long as the insured person is totally disabled (as defined in the rider). While we are paying benefits under this rider we will not permit you to request any increase in the specified amount of your Policy's coverage. When we "pay benefits" under this rider, we pay all monthly 38 charges (except for loan interest) for your Policy when they become due, and then deduct the same charges from your Policy. Therefore, your Policy's accumulation value does not change on account of monthly charges. We perform these two transactions at the same time. However, loan interest will not be paid for you under this rider, and the Policy could, under certain circumstances, lapse for nonpayment of loan interest. You can purchase this rider on the life of an insured person who is younger than age 56. You can purchase this rider only at the time we issue your Policy. Tax Consequences of Additional Rider Benefits. Adding or deleting riders, or increasing or decreasing coverage under existing riders can have tax consequences. See "Tax Effects" starting on page 51. You should consult a qualified tax adviser. POLICY TRANSACTIONS The transactions we describe below may have different effects on the accumulation value, death benefit, specified amount or cost of insurance. You should consider the net effects before requesting a Policy transaction. See "Policy Features" on page 23. Certain transactions also entail charges. For information regarding other charges, see "Charges Under the Policy" on page 46. Telephone Transactions See page 19 for information regarding telephone transactions. Withdrawing Policy Investments Full surrender. You may at any time surrender your Policy in full. If you do, we will pay you the accumulation value, less any Policy loans, plus any unearned loan interest, and less any surrender charge that then applies. We call this amount your "cash surrender value." Because of the surrender charge, it is unlikely that a Platinum Investor III Policy will have any cash surrender value during at least the first year unless you pay significantly more than the monthly guarantee premiums. Partial surrender. You may, at any time after the first Policy year, make a partial surrender of your Policy's cash surrender value. A partial surrender must be at least $500. We will automatically reduce your Policy's accumulation value by the amount of your withdrawal and any related charges. We do not allow partial surrenders that would reduce the death benefit below $50,000. If the Option 1 or Option 3 death benefit is then in effect, we also will reduce your Policy's specified amount by the amount of such withdrawal and charges, but not below $0. We will take any such reduction in specified amount in accordance with the description found under "Changing the Specified Amount of Insurance" on page 32. We also deduct any remaining 39 surrender charge that is associated with any portion of your Policy's base coverage that is canceled. You may choose the investment option or options from which money that you withdraw will be taken. Otherwise, we will allocate the partial surrender in the same proportions as then apply for deducting monthly charges under your Policy or, if that is not possible, in proportion to the amount of accumulation value you then have in each investment option. There is a maximum partial surrender processing fee equal to the lesser of 2% of the amount withdrawn or $25 for each partial surrender you make. This charge currently is $10. Exchange of Policy in certain states. Certain states require that a policy owner be given the right to exchange the Policy for a fixed benefit life insurance policy, within either 18 or 24 months from the date of issue. This right is subject to various conditions imposed by the states and us. In such states, this right has been more fully described in your Policy or related endorsements to comply with the applicable state requirements. Policy loans. You may at any time borrow from us an amount up to your Policy's cash surrender value less our estimate of three months' charges and less the interest that will be payable on your loan through your next Policy anniversary. The minimum amount you can borrow is $500 or, if less, your Policy's cash surrender value less the loan interest payable through your next Policy anniversary. These rules are not applicable in all states. We remove from your investment options an amount equal to your loan and hold that part of your accumulation value in the Fixed Account as collateral for the loan. We will credit your Policy with interest on this collateral amount at a guaranteed effective annual rate of 4.0% (rather than any amount you could otherwise earn in one of our investment options), and we will charge you interest on your loan at an effective annual rate of 4.75%. Loan interest is payable annually, on the Policy anniversary, in advance, at a rate of 4.54%. Any amount not paid by its due date will automatically be added to the loan balance as an additional loan. Interest you pay on Policy loans will not, in most cases, be deductible on your tax returns. You may choose which of your investment options the loan will be taken from. If you do not so specify, we will allocate the loan in the same way that charges under your Policy are being allocated. If this is not possible, we will make the loan pro-rata from each investment option that you then are using. You may repay all or part (but not less than $100 unless it is the final payment) of your loan at any time before the death of the insured person while the Policy is in force. You must designate any loan repayment as such. Otherwise, we will treat it as a premium payment instead. Any loan repayments go first to repay all loans that were taken from the Fixed Account. We will invest any additional loan repayments you make in the investment options you request. In the absence of such a request we will invest the repayment in the same proportion as you then have selected for premium payments that we receive from you. Any unpaid loan (increased by any unearned loan interest we may have already charged) will be deducted from the proceeds we pay following the insured person's death. 40 Preferred loan interest rate. We will charge a lower interest rate on loans available after the first 10 Policy years. We call these "preferred loans." The maximum amount eligible for preferred loans for any year is: . 10% of your Policy's accumulation value (which includes any loan collateral we are holding for your Policy loans) at the Policy anniversary; or . if less, your Policy's maximum remaining loan value at that Policy anniversary. We will always credit your preferred loan collateral amount at a guaranteed effective annual rate of 4.0%. We intend to set the rate of interest you are paying to the same 4.0% rate we credit to your preferred loan collateral amount, resulting in a zero net cost (0.00%) of borrowing for that amount. We have full discretion to vary the rate we charge you, provided that the rate: . will always be greater than or equal to the guaranteed preferred loan collateral rate of 4.0%, and . will never exceed an effective annual rate of 4.25%. Because we first began offering the Policies in the year 2000, we have not yet declared a preferred loan interest rate we charge. Maturity of your Policy. If the insured person is living on the "Maturity Date" shown on page 3 of your Policy, we will pay you the cash surrender value of the Policy, and the Policy will end. The maturity date can be no later than the Policy anniversary nearest the insured person's 100th birthday, unless you have elected the Maturity Extension Rider. See "Additional Benefit Riders-Riders-Maturity Extension Rider," on page 37. Tax considerations. Please refer to "Federal Tax Considerations" on page 51 for information about the possible tax consequences to you when you receive any loan, surrender or other funds from your Policy. A Policy loan may cause the Policy to lapse which will result in adverse tax consequences. POLICY PAYMENTS Payment Options The beneficiary will receive the full death benefit proceeds from the Policy as a single sum, unless the beneficiary elects another method of payment within 60 days of the insured person's death. Likewise, the Policy owner will receive the full proceeds that become payable upon full surrender or the maturity date, unless the Policy owner elects another method of payment within 60 days of full surrender or the maturity date. The payee can elect that all or part of such proceeds be applied to one or more of the following payment options. If the payee dies before all guaranteed payments are paid, the payee's heirs or estate will be paid the remaining payments. 41 The payee can elect that all or part of such proceeds be applied to one or more of the following payment options: . Option 1--Equal monthly payments for a specified period of time. . Option 2--Equal monthly payments of a selected amount of at least $60 per year for each $1,000 of proceeds until all amounts are paid out. . Option 3--Equal monthly payments for the payee's life, but with payments guaranteed for a specified number of years. These payments are based on annuity rates that are set forth in the Policy or, at the payee's request, the annuity rates that we then are using. . Option 4--Proceeds left to accumulate at an interest rate of 3% compounded annually for any period up to 30 years. At the payee's request we will make payments to the payee monthly, quarterly, semiannually, or annually. The payee can also request a partial withdrawal of any amount of $500 or more. There is no charge for partial withdrawals. Additional payment options may also be available with our consent. We have the right to reject any payment option if the payee is a corporation or other entity. You can read more about each of these options in the Policy and in the separate form of payment contract that we issue when any such option takes effect. Interest rates that we credit under each option will be at least 3%. Change of payment option. The payee may give us written instructions to change any payment option the payee has elected at any time while the Policy is in force and before the start date of the payment option. Tax impact. If a payment option is chosen, you or your beneficiary may have adverse tax consequences. You should consult with a qualified tax adviser before deciding whether to elect one or more payment options. The Beneficiary You name your beneficiary when you apply for a Policy. The beneficiary is entitled to the insurance benefits of the Policy. You may change the beneficiary during the lifetime of the insured person unless your previous designation of beneficiary provides otherwise. In this case the previous beneficiary must give us permission to change the beneficiary and then we will accept your instructions. We also require the consent of any irrevocably named beneficiary. A new beneficiary designation is effective as of the date you sign it, but will not affect any payments we may make before we receive it. If no beneficiary is living when the insured person dies, we will pay the insurance proceeds to the owner or the owner's estate. 42 Assignment of a Policy You may assign (transfer) your rights in a Policy to someone else as collateral for a loan or for some other reason. We will not be bound by an assignment unless it is received in writing. You must provide us with two copies of the assignment. We are not responsible for any payment we make or any action we take before we receive a complete notice of the assignment in good order. We are also not responsible for the validity of the assignment. An absolute assignment is a change of ownership. Because there may be unfavorable tax consequences, including recognition of taxable income and the loss of income tax-free treatment for any death benefit payable to the beneficiary, you should consult a qualified tax adviser before making an assignment. Payment of Proceeds General. We will pay any death benefit, maturity benefit, cash surrender value or loan proceeds within seven days after we receive the last required form or request (and any other documents that may be required for payment of a death benefit). If we do not have information about the desired manner of payment within 60 days after the date we receive notification of the insured person's death, we will pay the proceeds as a single sum, normally within seven days thereafter. Delay of Fixed Account proceeds. We have the right, however, to defer payment or transfers of amounts out of the Fixed Account for up to six months. If we delay more than 30 days in paying you such amounts, we will pay interest of at least 3% a year from the date we receive all items we require to make the payment. Delay for check clearance. We reserve the right to defer payment of that portion of your accumulation value that is attributable to a payment made by check for a reasonable period of time (not to exceed 15 days) to allow the check to clear the banking system. Delay of Separate Account VL-R proceeds. We reserve the right to defer computation of values and payment of any death benefit, loan or other distribution that comes from that portion of your accumulation value that is allocated to Separate Account VL-R, if: . the NYSE is closed (other than weekend and holiday closings); . trading on the NYSE is restricted; . an emergency exists (as determined by the SEC or other appropriate regulatory authority) such that disposal of securities or determination of the accumulation value is not reasonably practicable; or . the SEC by order so permits for the protection of Policy owners. Transfers and allocations of accumulation value among the investment options may also be postponed under these circumstances. If we need to defer calculation of Separate Account 43 VL-R values for any of the foregoing reasons, all delayed transactions will be processed at the next values that we do compute. Delay to challenge coverage. We may challenge the validity of your insurance Policy based on any material misstatements in your application or any application for a change in coverage. However, . We cannot challenge the Policy after it has been in effect, during the insured person's lifetime, for two years from the date the Policy was issued or restored after termination. (Some states may require that we measure this time in another way. Some states may also require that we calculate the amount we are required to pay in another way.) . We cannot challenge any Policy change that requires evidence of insurability (such as an increase in specified amount) after the change has been in effect for two years during the insured person's lifetime. . We cannot challenge an additional benefit rider that provides benefits if the insured person becomes totally disabled, after two years from the later of the Policy's date of issue or the date the additional benefit rider becomes effective. Delay required under applicable law. We may be required under applicable law to block a request for transfer or payment, including a Policy loan request, under a Policy until we receive instructions from the appropriate regulator. ADDITIONAL RIGHTS THAT WE HAVE We have the right at any time to: . transfer the entire balance in an investment option in accordance with any transfer request you make that would reduce your accumulation value for that option to below $500; . transfer the entire balance in proportion to any other investment options you then are using, if the accumulation value in an investment option is below $500 for any other reason; . end the automatic rebalancing feature if your accumulation value falls below $5,000; . replace the underlying Fund that any investment option uses with another Fund, subject to SEC and other required regulatory approvals; 44 . add, delete or limit investment options, combine two or more investment options, or withdraw assets relating to the Policies from one investment option and put them into another, subject to SEC and other required regulatory approvals; . operate Separate Account VL-R under the direction of a committee or discharge such a committee at any time; . operate Separate Account VL-R, or one or more investment options, in any other form the law allows, including a form that allows us to make direct investments. Separate Account VL-R may be charged an advisory fee if its investments are made directly rather than through another investment company. In that case, we may make any legal investments we wish; or . make other changes in the Policy that in our judgment are necessary or appropriate to ensure that the Policy continues to qualify for tax treatment as life insurance, or that do not reduce any cash surrender value, death benefit, accumulation value, or other accrued rights or benefits. We also have the right to make some variations in the terms and conditions of a Policy. Any variations will be made only in accordance with uniform rules that we establish. Here are the potential variations: Underwriting and premium classes. We currently have nine premium classes we use to decide how much the monthly insurance charges under any particular Policy will be: preferred plus non-tobacco, preferred non-tobacco, standard non-tobacco, preferred tobacco, standard tobacco, special non-tobacco, special tobacco, juvenile and special juvenile. Various factors such as the insured person's age, health history, occupation and history of tobacco use, are used in considering the appropriate premium class for the insured. Each premium class is described in your Policy. Policies issued in New Jersey do not have the juvenile and special juvenile classes. Policies purchased through "internal rollovers". We maintain published rules that describe the procedures necessary to replace another life insurance policy we issued with a Policy. Not all types of other insurance we issue are eligible to be replaced with a Policy. Our published rules may be changed from time to time, but are evenly applied to all our customers. State law requirements. AGL is subject to the insurance laws and regulations in every jurisdiction in which the Policies are sold. As a result, various time periods and other terms and conditions described in this prospectus may vary depending on where you reside. These variations will be reflected in your Policy and related endorsements. Variations in expenses or risks. AGL may vary the charges and other terms within the limits of the Policy where special circumstances result in sales, administrative or other expenses, mortality risks or other risks that are different from those normally associated with the Policy. You will be notified as required by law if there are any material changes in the underlying investments of an investment option that you are using. We intend to comply with all applicable 45 laws in making any changes and, if necessary, we will seek Policy owner approval and SEC and other regulatory approvals. CHARGES UNDER THE POLICY Premium tax charge. Unless your Policy was issued in Oregon, we deduct from each premium a charge for the tax that is then applicable to us in your state or other jurisdiction. These taxes, if any, currently range in the United States from 0.75% to 3.5%. Please let us know if you move to another jurisdiction, so we can adjust this charge if required. You are not permitted to deduct the amount of these taxes on your income tax return. We use this charge to offset our obligation to pay premium tax on the Policies. Tax charge back. If you are a resident of Oregon at the time you purchase a Policy, there is no premium tax charge. Instead, we will deduct from each premium a tax charge back that is permissible under Oregon law. If you later move from Oregon to a state that has a premium tax, we will not charge you a premium tax. We deduct the tax charge back from each premium you pay, regardless of the state in which you reside at the time you pay the premium. The current tax charge back is 2% of each premium. We may change the tax charge back amount but any change will only apply to new Policies we issue. We use the charge partly to offset our obligation to pay premium taxes on the same Policy if you move to another state. We also use the charge to pay for the cost of additional administrative services we provide under these Policies. Premium expense charge. After we deduct premium tax (or a tax charge back if we issued your Policy in Oregon) from each premium payment, we currently deduct 5.0% from the remaining amount. We may increase this charge for all years, but it will never exceed 7.5%. AGL receives this charge to cover sales expenses, including commissions. Daily charge (mortality and expense risk fee). We will deduct a daily charge at an effective annual rate of 0.70% of your accumulation value that is then being invested in any of the variable investment options. After a Policy has been in effect for 10 years, however, we will reduce this rate to an annual effective rate of 0.45%, and after 20 years, to an annual effective rate of 0.10%. We guarantee these rate reductions. Since the Policies were first offered only in the year 2000, the reduction has not yet taken effect under any outstanding Policies. AGL receives this charge to pay for our mortality and expense risks. Flat monthly charge. We will deduct $6 from your accumulation value each month. We may lower this charge but it is guaranteed to never exceed $6. The flat monthly charge is the Monthly Administration Fee shown on page 3A of your Policy. AGL receives this charge to pay for the cost of administrative services we provide under the Policies. Monthly charge per $1,000 of base coverage. We deduct a charge monthly from your accumulation value for the first 7 Policy years. This monthly charge also applies to the amount of any increase in base coverage during the 7 Policy years following the increase. This charge varies according to the amount and the age, gender and premium class of the insured person. The dollar amount of this charge changes with each change in your Policy's base coverage. (We describe your base coverage and specified amount under "Your specified amount of insurance" on page 23 and "Base coverage and supplemental coverage" on page 26.) This charge can range 46 from a maximum of $1.46 for each $1000 of the base coverage portion of the specified amount to a minimum of $0.03 for each $1000 of base coverage. The representative (referred to as "Example" in the Tables of Charges on page 14) charge is $0.14 for each $1000 of base coverage. The initial amount of this charge is shown on page 3A of your Policy and is called "Monthly Expense Charge for First Seven Years." Page 4 of your Policy contains a table of the guaranteed rates for this charge. AGL receives this charge to pay for underwriting costs and other costs of issuing the Policies, and also to help pay for the administrative services we provide under the Policies. Monthly insurance charge. Every month we will deduct from your accumulation value a charge based on the cost of insurance rates applicable to your Policy on the date of the deduction and our "net amount at risk" on that date. Our net amount at risk is the difference between (a) the death benefit that would be payable before reduction by policy loans if the insured person died on that date and (b) the then total accumulation value under the Policy. For otherwise identical Policies: . greater amounts at risk result in a higher monthly insurance charge; and . higher cost of insurance rates also result in a higher monthly insurance charge. Keep in mind that investment performance of the investment options in which you have accumulation value will affect the total amount of your accumulation value. Therefore your monthly insurance charge can be greater or less, depending on investment performance. Our cost of insurance rates are guaranteed not to exceed those that will be specified in your Policy. Our current rates are lower than the guaranteed maximum rates for insured persons in most age, gender and premium classes, although we have the right at any time to raise these rates to not more than the guaranteed maximum. In general the longer you own your Policy, the higher the cost of insurance rate will be as the insured person grows older. Also our cost of insurance rates will generally be lower if the insured person is a female than if a male. Similarly, our current cost of insurance rates are generally lower for non-tobacco users than tobacco users, and for persons considered to be in excellent health . On the other hand, insured persons who present particular health, occupational or non-work related risks may require higher cost of insurance rates and other additional charges based on the specified amount of insurance coverage under their Policies. Finally, our current cost of insurance rates for the same insured person differ depending on the specified amount in force on the day the charge is deducted. We have different rates we apply for specified amounts. The highest rates begin with the minimum specified amount. The rates decline on a graduated schedule as the specified amount increases. Your agent can discuss the schedule with you. Our cost of insurance rates are generally higher under a Policy that has been in force for some period of time than they would be under an otherwise identical Policy purchased more recently on the same insured person. AGL receives this charge to fund the death benefits we pay under the Policies. 47 Monthly charges for additional benefit riders. We will deduct charges monthly from your accumulation value, if you select additional benefit riders. The charges for any rider you select will vary by Policy within a range based on either the personal characteristics of the insured person or the specific coverage you choose under the rider. The riders we currently offer are accidental death benefit rider, children's insurance benefit rider, two versions of maturity extension rider, spouse term rider, terminal illness rider and waiver of monthly deduction rider. The riders are described beginning on page 36, under "Additional Benefit Riders." The specific charges for any riders you choose are shown on page 3 of your Policy. AGL receives these charges to pay for the benefits under the riders and to help offset the risks we assume. Surrender charge. The Policies have a surrender charge that applies for a maximum of the first 10 Policy years (and for a maximum of the first 10 Policy years after any increase in the Policy's base coverage). We will apply the surrender charge only to the base coverage portion of the specified amount. The amount of the surrender charge depends on the age and other insurance characteristics of the insured person. Your Policy's surrender charge will be found in the table beginning on page 27 of the Policy. As shown in the Tables of Charges on page 12, the maximum surrender charge is $49 per $1,000 of the base coverage portion of the specified amount (or any increase in the base coverage portion of the specified amount). The minimum surrender charge is $3 per $1,000 of the base coverage (or any increase in the base coverage). The representative (referred to as "Example" in the Tables of Charges) surrender charge is $16 per $1,000 of base coverage (or any increase in the base coverage). The surrender charge decreases on an annual basis beginning in the fourth year of its 10 year period referred to above until, in the eleventh year, it is zero. These decreases are also based on the age and other insurance characteristics of the insured person. We are permitted to not charge some or all of the surrender charges under certain limited circumstances, according to the terms of a Policy endorsement. We will deduct the entire amount of any then applicable surrender charge from the accumulation value at the time of a full surrender. Upon a requested decrease in a Policy's base coverage portion of the specified amount, we will deduct any remaining amount of the surrender charge that was associated with the base coverage that is canceled. This includes any decrease that results from any requested partial surrender. See "Partial surrender" beginning on page 39 and "Change of death benefit option" beginning on page 33. For those Policies that lapse in the first 10 Policy years, AGL receives surrender charges to help recover sales expenses, which are higher for base coverage than for supplemental coverage. Higher amounts of base coverage result in higher premiums and higher charges, including higher surrender charges. The older and the greater health risk the insured person is when the Policy is issued, the more premium we need to pay for all Policy charges. As a result, we use the insured person's age, sex and premium class to help determine the appropriate rate of surrender charge per $1,000 of base coverage to help us offset these higher sales charges. 48 Partial surrender processing fee. We will charge a maximum fee equal to the lesser of 2% of the amount withdrawn or $25 for each partial surrender you make. This charge is currently $10. AGL receives this charge to help pay for the expense of making a partial surrender. Transfer fee. We will charge a $25 transfer fee for each transfer between investment options that exceeds 12 each Policy Year. This charge will be deducted from the investment options in the same ratio as the requested transfer. AGL receives this charge to help pay for the expense of making the requested transfer. Illustrations. If you request illustrations more than once in any Policy year, we may charge a maximum fee of $25 for the illustration. AGL receives this charge to help pay for the expenses of providing additional illustrations. Policy loans. We will charge you interest on any loan at an effective annual rate of 4.75%. The loan interest charged on a preferred loan (available after the first 10 Policy years) will never exceed an effective annual rate of 4.25%. AGL receives these charges to help pay for the expenses of administering and providing for Policy loans. See "Policy loans" beginning on page 40. Charge for taxes. We can adjust charges in the future on account of taxes we incur or reserves we set aside for taxes in connection with the Policies. This would reduce the investment experience of your accumulation value. For a further discussion regarding these charges we will deduct from your investment in a Policy, see "More About Policy Charges" on page 49. Allocation of charges. You may choose the investment options from which we deduct all monthly charges and any applicable surrender charges. If you do not have enough accumulation value in those investment options, we will deduct these charges in the same ratio the charges bear to the unloaned accumulation value you then have in each investment option. More About Policy Charges Purpose of our charges. The charges under the Policy are designed to cover, in total, our direct and indirect costs of selling, administering and providing benefits under the Policy. They are also designed, in total, to compensate us for the risks we assume and services that we provide under the Policy. These include: . mortality risks (such as the risk that insured persons will, on average, die before we expect, thereby increasing the amount of claims we must pay); . sales risks (such as the risk that the number of Policies we sell and the premiums we receive net of withdrawals, are less than we expect, thereby depriving us of expected economies of scale); 49 . regulatory risks (such as the risk that tax or other regulations may be changed in ways adverse to issuers of variable life insurance policies); and . expense risks (such as the risk that the costs of administrative services that the Policy requires us to provide will exceed what we currently project). The current monthly insurance charge has been designed primarily to provide funds out of which we can make payments of death benefits under the Policy as the insured person dies. General. If the charges that we collect from the Policies exceed our total costs in connection with the Policies, we will earn a profit. Otherwise we will incur a loss. The charges remain constant over the life of each Policy we issue; we reserve the right to increase the charges to the maximum amounts on Policies issued in the future. Although the paragraphs above describe the primary purposes for which charges under the Policies have been designed, these purposes are subject to considerable change over the life of a Policy. We can retain or use the revenues from any charge for any purpose. ACCUMULATION VALUE Your accumulation value. From each premium payment you make, we deduct the charges that we describe on page 46 under "Premium tax charge" (or "Tax charge back" if you are a resident of Oregon when you purchase your Policy) and "Other deductions from each premium payment." We invest the rest in one or more of the investment options listed in the chart on page 19 of this prospectus. We call the amount that is at any time invested under your Policy (including any loan collateral we are holding for your Policy loans) your "accumulation value." Your investment options. We invest the accumulation value that you have allocated to any variable investment option in shares of a corresponding Fund. Over time, your accumulation value in any such investment option will increase or decrease by the same amount as if you had invested in the related Fund's shares directly (and reinvested all dividends and distributions from the Fund in additional Fund shares); except that your accumulation value will also be reduced by certain charges that we deduct. We describe these charges beginning on page 46 under "Charges Under the Policy." You can review other important information about the Funds that you can choose in the separate prospectuses for those Funds. You can request additional free copies of these prospectuses from your AGL representative, from our Home Office or from the Administrative Center. Both locations and the telephone numbers are shown under "Contact Information" on page 4. We invest any accumulation value you have allocated to the Fixed Account as part of our general assets. We credit interest on that accumulation value at a rate which we declare from time to time. We guarantee that the interest will be credited at an effective annual rate of at least 4%. Although this interest increases the amount of any accumulation value that you have in the Fixed Account, such accumulation value will also be reduced by any charges that are allocated to 50 this option under the procedures described under "Allocation of charges" on page 49. The "daily charge" described on page 46 and the fees and expenses of the Funds discussed on page 16 do not apply to the Fixed Account. Policies are "non-participating." You will not be entitled to any dividends from AGL. POLICY LAPSE AND REINSTATEMENT If your Policy's cash surrender value (the Policy's accumulation value less Policy loans and loan interest during the first 5 Policy years) falls to an amount insufficient to cover the monthly charges, we will notify you in a letter and give you a grace period of 61 days to pay an amount of premium that we determine will cover estimated monthly charges for three months to avoid lapse of the Policy. You are not required to repay any outstanding Policy loan in order to reinstate your Policy. If the insured person dies during the grace period we will pay the death benefit reduced by the charges that are owed at the time of death. The grace period begins with the first day of the Policy month for which all charges could not be paid. If we do not receive your payment by the end of the grace period, your Policy and all riders will end without value and all coverage under your Policy will cease. Although you can apply to have your Policy "reinstated," you must do this within 5 years (or, if earlier, before the Policy's maturity date), and you must present evidence that the insured person still meets our requirements for issuing coverage. You will find additional information in the Policy about the values and terms of the Policy after it is reinstated. FEDERAL TAX CONSIDERATIONS Generally, the death benefit paid under a Policy is not subject to income tax, and earnings on your accumulation value are not subject to income tax as long as we do not pay them out to you. If we do pay any amount of your Policy's accumulation value upon surrender, partial surrender, or maturity of your Policy, all or part of that distribution may be treated as a return of the premiums you paid, which is not subject to income tax. Amounts you receive as Policy loans are not taxable to you, unless you have paid such a large amount of premiums that your Policy becomes what the tax law calls a "modified endowment contract." In that case, the loan will be taxed as if it were a partial surrender. Furthermore, loans, partial surrenders and other distributions from a modified endowment contract may require you to pay additional taxes and penalties that otherwise would not apply. If your Policy lapses, you may have to pay income tax on a portion of any outstanding loan. Tax Effects This discussion is based on current federal income tax law and interpretations. It assumes that the policy owner is a natural person who is a U.S. citizen and resident. The consequences for corporate taxpayers, non-U.S. residents or non-U.S. citizens, may be different. The following discussion of federal income tax treatment is general in nature and is not intended as tax advice. You should consult with a competent tax adviser to determine the specific federal tax treatment of your Policy based on your individual factual situation. 51 General. The Policy will be treated as "life insurance" for federal income tax purposes (a) if it meets the definition of life insurance under Section 7702 of the Code and (b) for as long as the investments made by the underlying Funds satisfy certain investment diversification requirements under Section 817(h) of the Code. We believe that the Policy will meet these requirements and that: . the death benefit received by the beneficiary under your Policy will generally not be subject to federal income tax; and . increases in your Policy's accumulation value as a result of interest or investment experience will not be subject to federal income tax unless and until there is a distribution from your Policy, such as a surrender or a partial surrender. The federal income tax consequences of a distribution from your Policy can be affected by whether your Policy is determined to be a "modified endowment contract,"as explained in the following discussion. In all cases, however, the character of all income that is described as taxable to the payee will be ordinary income (as opposed to capital gain). Testing for modified endowment contract status. The Code provides for a "seven-pay test." This test determines if your Policy will be a "modified endowment contract." If, at any time during the first seven Policy years: . you have paid a cumulative amount of premiums; . the cumulative amount exceeds the premiums you would have paid by the same time under a similar fixed-benefit life insurance policy; and . the fixed benefit policy was designed (based on certain assumptions mandated under the Code) to provide for paid-up future benefits ("paid-up" means no future premium payments are required) after the payment of seven level annual premiums; then your Policy will be a modified endowment contract. Whenever there is a "material change" under a policy, the policy will generally be (a) treated as a new contract for purposes of determining whether the policy is a modified endowment contract and (b) subjected to a new seven-pay period and a new seven-pay limit. The new seven-pay limit would be determined taking into account, under a prescribed formula, the accumulation value of the policy at the time of such change. A materially changed policy would be considered a modified endowment contract if it failed to satisfy the new seven-pay limit at any time during the new seven-pay period. A "material change" for these purposes could occur as a result of a change in death benefit option. A material change will occur as a result of an increase in your Policy's specified amount of coverage, and certain other changes. If your Policy's benefits are reduced during the first seven Policy years (or within seven years after a material change), the calculated seven-pay premium limit will be redetermined 52 based on the reduced level of benefits and applied retroactively for purposes of the seven-pay test. (Such a reduction in benefits could include, for example, a decrease in the specified amount that you request or that results from a partial surrender). If the premiums previously paid are greater than the recalculated seven-payment premium level limit, the Policy will become a modified endowment contract. The Company will monitor your Policy and attempt to notify you on a timely basis to prevent additional premium payments from causing your Policy to become a modified endowment contract. A life insurance policy that is received in a tax free 1035 exchange for a modified endowment contract will also be considered a modified endowment contract. Other effects of Policy changes. Changes made to your Policy (for example, a decrease in specified amount that you request or that results from a partial surrender that you request) may also have other effects on your Policy. Such effects may include impacting the maximum amount of premiums that can be paid under your Policy, as well as the maximum amount of accumulation value that may be maintained under your Policy. Rider benefits. The premium payments and any death benefits to be paid under any term insurance rider you may purchase under your Policy will not disqualify your Policy as life insurance for tax purposes. However, a term rider may be determined to constitute a "qualified additional benefit" as that term is defined in Section 7702 of the Code. The death benefit to be paid under a rider that is a "qualified additional benefit" will not be treated as a future benefit of the Policy for tax purposes. The premium payments for the same rider, however, will be treated as future benefits for purposes of compliance with Section 7702. You should consult a qualified tax adviser regarding any term rider you may purchase. Taxation of pre-death distributions if your Policy is not a modified endowment contract. As long as your Policy remains in force during the insured person's lifetime and not as a modified endowment contract, a Policy loan will be treated as indebtedness, and no part of the loan proceeds will be subject to current federal income tax. Interest on the Policy loan generally will not be tax deductible. After the first 15 Policy years, the proceeds from a partial surrender will not be subject to federal income tax except to the extent such proceeds exceed your "basis" in your Policy. (Your basis generally will equal the premiums you have paid, less the amount of any previous distributions from your Policy that were not taxable.) During the first 15 Policy years, however, the proceeds from a partial surrender could be subject to federal income tax, under a complex formula, to the extent that your accumulation value exceeds your basis in your Policy. On the maturity date or upon full surrender, any excess in the amount of proceeds we pay (including amounts we use to discharge any Policy loan) over your basis in the Policy, will be subject to federal income tax. In addition, if a Policy ends after a grace period while there is a Policy loan, the cancellation of such loan and any accrued loan interest will be treated as a distribution and could be subject to federal income tax under the above rules. Finally, if you 53 make an assignment of rights or benefits under your Policy you may be deemed to have received a distribution from your Policy, all or part of which may be taxable. Taxation of pre-death distributions if your Policy is a modified endowment contract. If your Policy is a modified endowment contract, any distribution from your Policy while the insured person is still living will be taxed on an "income-first" basis. Distributions: . include loans (including any increase in the loan amount to pay interest on an existing loan, or an assignment or pledge to secure a loan) and partial surrenders; . will be considered taxable income to you to the extent your accumulation value exceeds your basis in the Policy; and . have their taxability determined by aggregating all modified endowment contracts issued by the same insurer (or its affiliates) to the same owner (excluding certain qualified plans) during any calendar year. For modified endowment contracts, your basis: . is similar to the basis described above for other policies; and . will be increased by the amount of any prior loan under your Policy that was considered taxable income to you. A 10% penalty tax also will apply to the taxable portion of most distributions from a policy that is a modified endowment contract. The penalty tax will not, however, apply: . to taxpayers 59 1/2 years of age or older; . in the case of a disability (as defined in the Code); or . to distributions received as part of a series of substantially equal periodic annuity payments for the life (or life expectancy) of the taxpayer or the joint lives (or joint life expectancies) of the taxpayer and his or her beneficiary. If your Policy ends after a grace period while there is a Policy loan, the cancellation of the loan will be treated as a distribution to the extent not previously treated as such and could be subject to tax, including the 10% penalty tax, as described above. In addition, on the maturity date or upon a full surrender, any excess of the proceeds we pay (including any amounts we use to discharge any Policy loan) over your basis in the Policy, will be subject to federal income tax and, unless one of the above exceptions applies, the 10% penalty tax. Distributions that occur during a Policy year in which your Policy becomes a modified endowment contract, and during any subsequent Policy years, will be taxed as described in the two preceding paragraphs. In addition, distributions from a policy within two years before it becomes a modified endowment contract also will be subject to tax in this manner. This means 54 that a distribution made from a policy that is not a modified endowment contract could later become taxable as a distribution from a modified endowment contract. Policy lapses and reinstatements. A Policy which has lapsed may have the tax consequences described above, even though you may be able to reinstate that Policy. For tax purposes, some reinstatements may be treated as the purchase of a new insurance contract. Diversification. Under Section 817(h) of the Code, the Treasury Department has issued regulations that implement investment diversification requirements. Our failure to comply with these regulations would disqualify your Policy as a life insurance policy under Section 7702 of the Code. If this were to occur, you would be subject to federal income tax on the income under the Policy for the period of the disqualification and for subsequent periods. Also, if the insured person died during such period of disqualification or subsequent periods, a portion of the death benefit proceeds would be taxable to the beneficiary. Separate Account VL-R, through the Funds, intends to comply with these requirements. Although we do not have direct control over the investments or activities of the Funds, we will enter into agreements with them requiring the Funds to comply with the diversification requirements of the Section 817(h) Treasury Regulations. The Treasury Department has stated that it anticipates the issuance of guidelines prescribing the circumstances in which the ability of a policy owner to direct his or her investment to particular Funds within Separate Account VL-R may cause the policy owner, rather than the insurance company, to be treated as the owner of the assets in the account. Due to the lack of specific guidance on investor control, there is some uncertainty about when a policy owner is considered the owner of the assets for tax purposes. If you were considered the owner of the assets of Separate Account VL-R, income and gains from the account would be included in your gross income for federal income tax purposes. Under current law, however, we believe that AGL, and not the owner of a Policy, would be considered the owner of the assets of Separate Account VL-R. Estate and generation skipping taxes. If the insured person is the Policy's owner, the death benefit under the Policy will generally be includable in the owner's estate for purposes of federal estate tax. If the owner is not the insured person, under certain conditions, only an amount approximately equal to the cash surrender value of the Policy would be includable. In addition, an unlimited marital deduction may be available for federal estate tax purposes. The federal estate tax is integrated with the federal gift tax under a unified rate schedule. The enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16) (the "2001 Act") brought significant change to the transfer tax system, the most notable being the repeal of the estate and generation-skipping transfer (GST) taxes in 2010. Prior to repeal, a number of modifications are made to the maximum estate tax rate and the estate and gift tax applicable exclusion amounts. The 2001 Act increases the estate tax applicable exclusion amount to $1.5 million for decedents dying in 2004. In order to comply with the Congressional Budget Act of 1974, the 2001 Act provides that all provisions of, and amendments made by, the 2001 Act will not apply to estates of decedents dying, gifts made, or generation-skipping transfers, after December 31, 2010. Unless Congress acts affirmatively in the interim, the Code will thereafter be applied and administered as if these provisions had not been enacted. 55 As a general rule, if a "transfer" is made to a person two or more generations younger than the Policy's owner, a generation skipping tax may be payable at rates similar to the maximum estate tax rate in effect at the time. The generation skipping tax provisions generally apply to "transfers" that would be subject to the gift and estate tax rules. Individuals are generally allowed an aggregate generation skipping tax exemption of $1.5 million in 2004. Because these rules are complex, you should consult with a qualified tax adviser for specific information, especially where benefits are passing to younger generations. The particular situation of each Policy owner, insured person or beneficiary will determine how ownership or receipt of Policy proceeds will be treated for purposes of federal estate and generation skipping taxes, as well as state and local estate, inheritance and other taxes. Life insurance in split dollar arrangements. The IRS and Treasury issued final regulations on split dollar life insurance arrangements September 11, 2003. The final regulations substantially adopted prior proposed regulations. The regulations provide two mutually exclusive regimes for taxing split dollar life insurance arrangements: the "economic benefit" regime and the "loan" regime. The economic benefit regime, under which the non-owner of the policy is treated as receiving certain economic benefits from its owner, applies to endorsement arrangements and most non-equity split dollar life insurance arrangements. The loan regime applies to collateral assignment arrangements and other arrangements in which the non-owner could be treated as loaning amounts to the owner. These final regulations apply to any split dollar life insurance arrangement entered into after September 17, 2003. Additionally, these regulations apply to any split dollar life insurance arrangements entered into before September 17, 2003, if the arrangement is materially modified after September 17, 2003. In addition, it should be noted that split dollar arrangements characterized as loans for tax purposes may be affected by the Corporate Responsibility Act of 2002 also referred to as the Sarbanes-Oxley Act of 2002 (the "Act"). The Act prohibits loans from companies publicly traded in the United States to their executives and officers. The status of split dollar arrangement under the Act is uncertain, in part because the SEC may view the tax treatment of such arrangements as instructive. Purchasers of life insurance policies are strongly advised to consult with a qualified tax adviser to determine the tax treatment resulting from a split dollar arrangement. Pension and profit-sharing plans. If a life insurance policy is purchased by a trust or other entity that forms part of a pension or profit-sharing plan qualified under Section 401(a) of the Code for the benefit of participants covered under the plan, the federal income tax treatment of such policies will be somewhat different from that described above. The reasonable net premium cost for such amount of insurance that is purchased as part of a pension or profit-sharing plan is required to be included annually in the plan participant's gross income. This cost (generally referred to as the "P.S. 58" cost) is reported to the participant annually. If the plan participant dies while covered by the plan and the policy proceeds are paid to the participant's beneficiary, then the excess of the death benefit over the policy's 56 accumulation value will not be subject to federal income tax. However, the policy's accumulation value will generally be taxable to the extent it exceeds the participant's cost basis in the policy. The participant's cost basis will generally include the costs of insurance previously reported as income to the participant. Special rules may apply if the participant had borrowed from the policy or was an owner-employee under the plan. The rules for determining P.S. 58 costs are currently provided under Notice 2002-8, I.R.B. 2002-4. There are limits on the amounts of life insurance that may be purchased on behalf of a participant in a pension or profit-sharing plan. Complex rules, in addition to those discussed above, apply whenever life insurance is purchased by a tax qualified plan. You should consult a qualified tax adviser. Other employee benefit programs. Complex rules may also apply when a policy is held by an employer or a trust, or acquired by an employee, in connection with the provision of other employee benefits. These policy owners must consider whether the policy was applied for by or issued to a person having an insurable interest under applicable state law and with the insured person's consent. The lack of an insurable interest or consent may, among other things, affect the qualification of the policy as life insurance for federal income tax purposes and the right of the beneficiary to receive a death benefit. ERISA. Employers and employer-created trusts may be subject to reporting, disclosure and fiduciary obligations under the Employee Retirement Income Security Act of 1974, as amended. You should consult a qualified legal adviser. Our taxes. We report the operations of Separate Account VL-R in our federal income tax return, but we currently pay no income tax on Separate Account VL-R's investment income and capital gains, because these items are, for tax purposes, reflected in our variable universal life insurance policy reserves. We currently make no charge to any Separate Account VL-R division for taxes. We reserve the right to make a charge in the future for taxes incurred; for example, a charge to Separate Account VL-R for income taxes we incur that are allocable to the Policy. We may have to pay state, local or other taxes in addition to applicable taxes based on premiums. At present, these taxes are not substantial. If they increase, we may make charges for such taxes when they are attributable to Separate Account VL-R or allocable to the Policy. Certain Funds in which your accumulation value is invested may elect to pass through to AGL taxes withheld by foreign taxing jurisdictions on foreign source income. Such an election will result in additional taxable income and income tax to AGL. The amount of additional income tax, however, may be more than offset by credits for the foreign taxes withheld which are also passed through. These credits may provide a benefit to AGL. When we withhold income taxes. Generally, unless you provide us with an election to the contrary before we make the distribution, we are required to withhold income tax from any proceeds we distribute as part of a taxable transaction under your Policy. In some cases, where generation skipping taxes may apply, we may also be required to withhold for such taxes unless we are provided satisfactory written notification that no such taxes are due. 57 In the case of non-resident aliens who own a Policy, the withholding rules may be different. With respect to distributions from modified endowment contracts, non-resident aliens are generally subject to federal income tax withholding at a statutory rate of 30% of the distributed amount. In some cases, the non-resident alien may be subject to lower or even no withholding if the United States has entered into a tax treaty with his or her country of residence. Tax changes. The U.S. Congress frequently considers legislation that, if enacted, could change the tax treatment of life insurance policies. Congress passed tax legislation on May 26, 2001 which modified existing estate tax law. In addition, the Treasury Department may amend existing regulations, issue regulations on the qualification of life insurance and modified endowment contracts, or adopt new interpretations of existing law. State and local tax law or, if you are not a U.S. citizen and resident, foreign tax law, may also affect the tax consequences to you, the insured person or your beneficiary, and are subject to change. Any changes in federal, state, local or foreign tax law or interpretation could have a retroactive effect. We suggest you consult a qualified tax adviser. LEGAL PROCEEDINGS AGL is a party to various lawsuits and proceedings arising in the ordinary course of business. Many of these lawsuits and proceedings arise in jurisdictions that permit damage awards disproportionate to the actual damages incurred. Based upon information presently available, AGL believes that the total amounts that will ultimately be paid, if any, arising from these lawsuits and proceedings will not have a material adverse effect on AGL's results of operations and financial position. The principal underwriter and distributor of the Policies, American General Equity Services Corporation ("AGESC"), offered general securities prior to October 1, 2002. As a consequence, AGESC is engaged in certain legal matters related to its previous line of business. AGESC believes that none of these legal matters are of any materiality. More information about AGESC can be found in the SAI. FINANCIAL STATEMENTS The Financial Statements of AGL and the Separate Account can be found in the SAI. Please see the back cover of this prospectus for information on how to obtain a copy of the SAI. 58 INDEX OF SPECIAL WORDS AND PHRASES Page to See in this Defined Term Prospectus - ------------ ----------- accumulation value................................................. 8 Administrative Center.............................................. 4 automatic rebalancing.............................................. 31 base coverage...................................................... 23 basis.............................................................. 53 beneficiary........................................................ 42 cash surrender value............................................... 6 cash value accumulation test....................................... 25 close of business.................................................. 34 Code............................................................... 36 cost of insurance rates............................................ 47 daily charge....................................................... 46 date of issue...................................................... 35 death benefit...................................................... 5 dollar cost averaging.............................................. 31 Fixed Account...................................................... 1 full surrender..................................................... 6 Fund, Funds........................................................ 1 grace period....................................................... 9 guarantee period, guarantee period benefit......................... 28 guideline premium test............................................. 25 insured person..................................................... 1 investment options................................................. 19 lapse.............................................................. 9 loan (see "Policy loans" in this Index)............................ 7 loan interest...................................................... 49 maturity, maturity date............................................ 41 modified endowment contract........................................ 52 monthly deduction days............................................. 35 monthly guarantee premium.......................................... 28 monthly insurance charge........................................... 47 net amount at risk................................................. 13 Option 1, Option 2 and Option 3.................................... 6 partial surrender.................................................. 39 59 INDEX OF SPECIAL WORDS AND PHRASES Page to See in this Defined Term Prospectus - ------------ ----------- payment options.................................................... 8 planned periodic premiums.......................................... 28 Policy loans....................................................... 40 Policy month, year................................................. 35 preferred loans.................................................... 41 premium class...................................................... 45 premium payments................................................... 27 reinstate, reinstatement........................................... 51 required minimum death benefit..................................... 24 required minimum death benefit percentage.......................... 25 Separate Account VL-R.............................................. 1 seven-pay test..................................................... 52 specified amount................................................... 5 supplemental coverage.............................................. 23 surrender.......................................................... 6 telephone transactions............................................. 19 transfers.......................................................... 7 valuation date..................................................... 34 valuation period................................................... 34 variable investment options........................................ 19 60 THIS DOCUMENT IS NOT PART OF ANY PROSPECTUS. [LOGO] AIG American General Privacy Notice - -------------------------------------------------------------------------------- AIG American General knows that your privacy is important. You have received this notice as required by law and because you are now or may be a customer of one of our companies. This notice will advise you of the types of Nonpublic Personal Information we collect, how we use it, and what we do to protect your privacy. "Nonpublic Personal Information" refers to personally identifiable information that is not available to the public. "Employees, Representatives, Agents, and Selected Third Parties" refers to individuals or entities who act on our behalf. . Our Employees, Representatives, Agents, and Selected Third Parties may collect Nonpublic Personal Information about you, including information: - Given to us on applications or other forms; - About transactions with us, our affiliates, or third parties; - From others, such as credit reporting agencies, employers, and federal and state agencies. . The types of Nonpublic Personal Information we collect depends on the products we offer to you and may include your: name; address; Social Security Number; account balances; income; assets; insurance premiums; coverage and beneficiaries; credit reports; marital status; and payment history. We may also collect Nonpublic Personal Health Information, such as medical reports, to underwrite insurance policies, process claims, or for other related functions. . We restrict access to Nonpublic Personal Information to those Employees, Representatives, Agents, or Selected Third Parties who provide products or services to you and who have been trained to handle Nonpublic Personal Information as described in this Notice. . We have policies and procedures that direct our Employees, Representatives, Agents and Selected Third Parties acting for us, on how to protect and use Nonpublic Personal Information. . We have physical, electronic, and procedural safeguards in place that were designed to protect Nonpublic Personal Information. . We do not share Nonpublic Personal Information about you except as allowed by law. . We may disclose all types of Nonpublic Personal Information that we collect, including information regarding your transactions or experiences with us, when needed, to: (i) Affiliated AIG American General companies, including the American International Group Inc. family of companies, and Employees, Representatives, Agents, and Selected Third Parties as permitted by law; or (ii) other organizations with which we have joint marketing agreements as permitted by law. . The types of companies and persons to whom we may disclose Nonpublic Personal Information as permitted by law include: banks; attorneys; trustees; third-party administrators; insurance agents; insurance companies; insurance support organizations; credit reporting agencies; registered broker-dealers; auditors; regulators; and reinsurers. . We do not share your Nonpublic Personal Health Information unless authorized by you or allowed by law. . Our privacy policy applies, to the extent required by law, to our agents and representatives when they are acting on behalf of AIG American General. . You will be notified if our privacy policy changes. . Our privacy policy applies to current and former customers. THIS PRIVACY NOTICE IS GIVEN TO YOU FOR YOUR INFORMATION ONLY. YOU DO NOT NEED TO CALL OR TAKE ANY ACTION. CALIFORNIA, NEW MEXICO AND VERMONT RESIDENTS ONLY: Following the law of your state, we will not disclose nonpublic personal financial information about you to nonaffiliated third parties (other than as permitted by law) unless you authorize us to make that disclosure. Your authorization must be in writing. If you wish to authorize us to disclose your nonpublic personal financial information to nonaffiliated third parties, you may write to us at: American General Service Center, P.O. Box 4373, Houston, Texas 77210-4373. - -------------------------------------------------------------------------------- This Privacy Notice is provided on behalf of the following companies: AGC Life Insurance Company, AIG Life Insurance Company of Puerto Rico, AIG Life Insurance Company, AIG Life of Bermuda, Ltd., American General Assurance Company, American General Equity Services Corporation, American General Indemnity Company, American General Life and Accident Insurance Company, American General Life Insurance Company, American General Property Insurance Company of Florida, American General Property Insurance Company, American General Securities Incorporated, American International Life Assurance Company of New York, Delaware American Life Insurance Company, Pacific Union Assurance Company, The United States Life Insurance Company in the City of New York, USLIFE Credit Life Insurance Company of Arizona AGLC0375-MLR REV0304 (C) 2004 American International Group, Inc. All rights reserved. [LOGO OF AIG AMERICAN GENERAL] For additional information about the Platinum Investor(R) III Policies and the Separate Account, you may request a copy of the Statement of Additional Information (the "SAI"), dated May 3, 2004. We have filed the SAI with the SEC and have incorporated it by reference into this prospectus. You may obtain a free copy of the SAI if you write us at our Administrative Center, which is located at 2727-A Allen Parkway, Houston, Texas 77019 or call us at 1-800-340-2765. You may also obtain the SAI from an insurance representative through which the Policies may be purchased. Additional information about the Platinum Investor III Policies, including, personalized illustrations of death benefits, cash surrender values, and cash values is available, without charge, upon request to the same address or phone number printed above. Information about the Separate Account, including the SAI, can also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Inquiries on the operations of the Public Reference Room may be made by calling the SEC at 1-202-942-8090. Reports and other information about the Separate Account are available on the SEC's Internet site at http://www.sec.gov and copies of this information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549-0102. Policies issued by: American General Life Insurance Company A member company of American International Group, Inc. 2727-A Allen Parkway, Houston, TX 77019 Platinum Investor III Flexible Premium Variable Life Insurance Policy Form Number 00600 Not available in the state of New York Distributed by American General Equity Services Corporation Member NASD A member company of American International Group, Inc. The underwriting risks, financial obligations and support functions associated with the products issued by American General Life Insurance Company ("AGL") are solely its responsibility. AGL is responsible for its own financial condition and contractual obligations. AGL does not solicit business in the state of New York. The Policies are not available in all states. (C) 2004 American International Group, Inc. ICA File No. 811-08561 All rights reserved. AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R PLATINUM INVESTOR(R) III FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICIES ISSUED BY AMERICAN GENERAL LIFE INSURANCE COMPANY VUL ADMINISTRATION DEPARTMENT P.O. BOX 4880, HOUSTON, TEXAS 77210-4880 TELEPHONE: 1-888-325-9315; 1-713-831-3443; HEARING IMPAIRED: 1-888-436-5258 STATEMENT OF ADDITIONAL INFORMATION DATED MAY 3, 2004 This Statement of Additional Information ("SAI") is not a prospectus. It should be read in conjunction with the prospectus for American General Life Insurance Company Separate Account VL-R (the "Separate Account" or "Separate Account VL-R") dated May 3, 2004, describing the Platinum Investor III flexible premium variable life insurance policies (the "Policy" or "Policies"). The Policy prospectus sets forth information that a prospective investor should know before investing. For a copy of the Policy prospectus, and any prospectus supplements, contact American General Life Insurance Company ("AGL") at the address or telephone numbers given above. Terms used in this SAI have the same meanings as are defined in the Policy prospectus. TABLE OF CONTENTS GENERAL INFORMATION ........................................................ 3 AGL ...................................................................... 3 Separate Account VL-R .................................................... 3 SERVICES ................................................................... 3 DISTRIBUTION OF THE POLICIES ............................................... 4 PERFORMANCE INFORMATION .................................................... 5 ADDITIONAL INFORMATION ABOUT THE POLICIES .................................. 6 Gender neutral policies ................................................ 6 Cost of insurance rates ................................................ 6 Certain arrangements ................................................... 6 More About the Fixed Account ............................................. 6 Our general account .................................................... 6 How we declare interest ................................................ 6 Adjustments to Death Benefit ............................................. 7 Suicide ................................................................ 7 Wrong age or gender .................................................... 7 Death during grace period .............................................. 7 ACTUARIAL EXPERT ........................................................... 7 MATERIAL CONFLICTS ......................................................... 7 FINANCIAL STATEMENTS ....................................................... 8 Separate Account Financial Statements .................................... 8 AGL Financial Statements ................................................. 8 Index to Financial Statements ............................................ 9 2 GENERAL INFORMATION AGL We are American General Life Insurance Company ("AGL"). AGL is a stock life insurance company organized under the laws of Texas. AGL is a successor in interest to a company originally organized under the laws of Delaware on January 10, 1917. AGL is an indirect, wholly-owned subsidiary of American International Group, Inc. ("AIG"). AIG, a Delaware corporation, is a holding company which through its subsidiaries is primarily engaged in a broad range of insurance and insurance-related activities and financial services in the United States and abroad. AIG American General is a marketing name of AGL and its affiliates. The commitments under the Policies are AGL's, and AIG has no legal obligation to back those commitments. AGL is a member of the Insurance Marketplace Standards Association ("IMSA"). IMSA is a voluntary membership organization created by the life insurance industry to promote ethical market conduct for individual life insurance and annuity products. AGL's membership in IMSA applies only to AGL and not its products. Separate Account VL-R We hold the Mutual Fund shares in which any of your accumulation value is invested in Separate Account VL-R. Separate Account VL-R is registered as a unit investment trust with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940. We created the Separate Account on May 6, 1997 under Texas law. For record keeping and financial reporting purposes, Separate Account VL-R is divided into 64 separate "divisions," 53 of which are available under the Policies offered by the Policy prospectus as variable "investment options." All of these 53 divisions and the remaining 11 divisions are offered under other AGL policies. We hold the Mutual Fund shares in which we invest your accumulation value for an investment option in the division that corresponds to that investment option. The assets in Separate Account VL-R are our property. The assets in the Separate Account may not be used to pay any liabilities of AGL other than those arising from the Policies. AGL is obligated to pay all amounts under the Policies due the Policy owners. We act as custodian for the Separate Account's assets. SERVICES AGL and American General Life Companies, LLC ("AGLC"), are parties to a services agreement. AGL and AGLC are each indirect wholly-owned subsidiaries of AIG and therefore affiliates of one another. AGLC is a Delaware limited liability company established on August 30, 2002. Prior to that date, AGLC was a Delaware business trust. Its address is 2727-A Allen Parkway, Houston, Texas 77019-2191. Under the services agreement, AGLC provides shared services to AGL and certain other life insurance companies under the AIG holding company system at cost. Those 3 services include data processing systems, customer services, product development, actuarial, internal auditing, accounting and legal services. During 2003, 2002 and 2001, AGL paid AGLC for these services $299,019,857, $99,267,147, and $86,168,095, respectively. Services provided in 2003 increased substantially over previous years. DISTRIBUTION OF THE POLICIES American General Equity Services Corporation ("AGESC"), #1 Franklin Square, Springfield, Illinois 62713, a Delaware corporation and a direct wholly-owned subsidiary of AGL, is the principal underwriter and distributor of the Policies for the Separate Account under a Distribution Agreement between AGESC and AGL. AGESC also acts as principal underwriter for AGL's other separate accounts and for the separate accounts of certain AGL affiliates. AGESC is a registered broker-dealer under the Securities Exchange Act of 1934, as amended and a member of the National Association of Securities Dealers, Inc. ("NASD"). AGESC, as the principal underwriter and distributor, is not paid any fees on the Policies. The Policies are offered on a continuous basis. We and AGESC have sales agreements with various broker-dealers and banks under which the Policies will be sold by registered representatives of the broker-dealers or employees of the banks. These registered representatives and employees are also required to be authorized under applicable state regulations as life insurance agents to sell variable life insurance. The broker-dealers are ordinarily required to be registered with the SEC and must be members of the NASD. We pay compensation directly to broker-dealers and banks for promotion and sales of the Policies. The compensation may vary with the sales agreement, but is generally not expected to exceed: . 90% of the premiums received in the first Policy year up to a "target" amount; . 3% of the premiums up to the target amount received in each of Policy years two through 10; . 3% of the premiums in excess of the target amount received in each of Policy years one through 10; . 0.25% of the Policy's accumulation value (reduced by any outstanding loans) in the investment options in each of Policy years two through 20; . 0.15% of the Policy's accumulation value (reduced by any outstanding loans) in the investment options in each Policy year after Policy year 20; and . a comparable amount of compensation to broker-dealers or banks with respect to any increase in the specified amount of coverage that you request. 4 At our discretion, we may pay additional first Policy year commissions to any broker-dealer or bank for sales conducted by a particular registered representative of that broker-dealer or bank. We may pay up to a total of 115% of the premiums we receive in the first Policy year. The target amount is an amount of level annual premium that would be necessary to support the benefits under your Policy, based on certain assumptions that we believe are reasonable. The maximum value of any alternative amounts we may pay for sales of the Policies is expected to be equivalent over time to the amounts described above. For example, we may pay a broker-dealer compensation in a lump sum which will not exceed the aggregate compensation described above. We pay the compensation directly to any selling broker-dealer firm or bank. We pay the compensation from our own resources which does not result in any additional charge to you that is not described in your Policy. Each broker-dealer firm or bank, in turn, may compensate its registered representative or employee who acts as agent in selling you a Policy. We sponsor a non-qualified deferred compensation plan ("Plan") for our insurance agents. Some of our agents are registered representatives of our subsidiary broker-dealer American General Securities Incorporated and sell the Policies. These agents may, subject to regulatory approval, receive benefits under the Plan when they sell the Policies. The benefits are deferred and the Plan terms may result in the agent never receiving the benefits. The Plan provides for a varying amount of benefits annually. We have the right to change the Plan in ways that affect the amount of benefits earned each year. PERFORMANCE INFORMATION From time to time, we may quote performance information for the divisions of Separate Account VL-R in advertisements, sales literature, or reports to owners or prospective investors. We may quote performance information in any manner permitted under applicable law. We may, for example, present such information as a change in a hypothetical owner's cash value or death benefit. We also may present the yield or total return of the division based on a hypothetical investment in a Policy. The performance information shown may cover various periods of time, including periods beginning with the commencement of the operations of the division or the Mutual Funds in which it invests. The performance information shown may reflect the deduction of one or more charges, such as the premium charge, and we generally expect to exclude costs of insurance charges because of the individual nature of these charges. We also may present the yield or total return of the investment option in which a division invests. We may compare a division's performance to that of other variable life separate accounts or investment products, as well as to generally accepted indices or analyses, such as those provided by research firms and rating services. In addition, we may use performance ratings that may be reported periodically in financial publications, such as Money Magazine, Forbes, Business Week, Fortune, Financial Planning and The Wall Street Journal. We also may advertise ratings of AGL's financial 5 strength or claims-paying ability as determined by firms that analyze and rate insurance companies and by nationally recognized statistical rating organizations. ADDITIONAL INFORMATION ABOUT THE POLICIES Gender neutral policies. Congress and the legislatures of various states have from time to time considered legislation that would require insurance rates to be the same for males and females of the same age, premium class and tobacco user status. In addition, employers and employee organizations should consider, in consultation with counsel, the impact of Title VII of the Civil Rights Act of 1964 on the purchase of life insurance policies in connection with an employment-related insurance or benefit plan. In a 1983 decision, the United States Supreme Court held that, under Title VII, optional annuity benefits under a deferred compensation plan could not vary on the basis of gender. In general, we do not offer the Policies for sale in situations which, under current law, require gender-neutral premiums or benefits. Cost of insurance rates. Because of specified amount increases, different cost of insurance rates may apply to different increments of specified amount under your Policy. If so, we attribute your accumulation value proportionately to each increment of specified amount to compute our net amount at risk. Certain arrangements. Most of the advisers or administrators of the Mutual Funds make certain payments to us, on a quarterly basis, for certain administrative, Policy, and Policy owner support expenses. These amounts will be reasonable for the services performed and are not designed to result in a profit. These amounts are paid by the advisers or the administrators, and will not be paid by the Mutual Funds, the options or Policy owners. More About the Fixed Account Our general account. Our general account assets are all of our assets that we do not hold in legally segregated separate accounts. Our general account supports our obligations to you under your Policy's declared Fixed Account. Because of applicable exemptions, no interest in this option has been registered under the Securities Act of 1933, as amended. Neither our general account nor our Fixed Account is an investment company under the Investment Company Act of 1940. We have been advised that the staff of the SEC has not reviewed the disclosures that are included in this prospectus for your information about our general account or our Fixed Account. Those disclosures, however, may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. How we declare interest. Except for amounts held as collateral for loans, we can at any time change the rate of interest we are paying on any accumulation value allocated to our Fixed Account, but it will always be at an effective annual rate of at least 4%. Under these procedures, it is likely that at any time different interest rates will apply to different portions of your accumulation value, depending on when each portion was allocated to our fixed Account. Any charges, partial surrenders, or loans that we take from any accumulation value 6 that you have in our fixed Account will be taken from each portion in reverse chronological order based on the date that accumulation value was allocated to this option. Adjustments to Death Benefit Suicide. If the insured person commits suicide during the first two Policy years, we will limit the proceeds payable to the total of all premiums that have been paid to the time of death minus any outstanding Policy loans (plus credit for any unearned interest) and any partial surrenders. A new two year period begins if you increase the specified amount. You can increase the specified amount only if the insured person is living at the time of the increase. In this case, if the insured person commits suicide during the first two years following the increase, we will refund the monthly insurance deductions attributable to the increase. The death benefit will then be based on the specified amount in effect before the increase. Wrong age or gender. If the age or gender of the insured person was misstated on your application for a Policy (or for any increase in benefits), we will adjust any death benefit to be what the monthly insurance charge deducted for the current month would have purchased based on the correct information. Death during grace period. We will deduct from the insurance proceeds any monthly charges that remain unpaid because the insured person died during a grace period. ACTUARIAL EXPERT Actuarial matters have been examined by Wayne A. Barnard who is Senior Vice President of AGL. His opinion on actuarial matters is filed as an exhibit to the registration statement we have filed with the SEC in connection with the Policies. MATERIAL CONFLICTS We are required to track events to identify any material conflicts from using investment portfolios for both variable life and variable annuity separate accounts. The boards of the Funds, AGL, and other insurance companies participating in the Funds have this same duty. There may be a material conflict if: . state insurance law or federal income tax law changes; . investment management of an investment portfolio changes; or . voting instructions given by owners of variable life insurance Policies and variable annuity contracts differ. The investment portfolios may sell shares to certain qualified pension and retirement plans qualifying under Code Section 401. These include cash or deferred arrangements under Code 7 Section 401(k). Therefore, there is a possibility that a material conflict may arise between the interests of owners in general, or certain classes of owners, and these retirement plans or participants in these retirement plans. If there is a material conflict, we have the duty to determine appropriate action, including removing the portfolios involved from our variable investment options. We may take other action to protect Policy owners. This could mean delays or interruptions of the variable operations. When state insurance regulatory authorities require us, we may ignore instructions relating to changes in an investment portfolio's adviser or its investment policies. If we do ignore voting instructions, we give you a summary of our actions in the next semi-annual report to owners. Under the Investment Company Act of 1940, we must get your approval for certain actions involving our Separate Account. In this case, you have one vote for every $100 of value you have in the variable investment options. We cast votes credited to amounts in the variable investment options not credited to Policies in the same proportion as votes cast by owners. FINANCIAL STATEMENTS In 2002, due to AIG's acquisition of AGL and its affiliated companies, AGL changed its independent auditor from Ernst & Young LLP ("E&Y") located at 1401 McKinney Street, Suite 1200, 5 Houston Center, Houston, Texas 77010 to PricewaterhouseCoopers LLP ("PWC") located at 1201 Louisiana Street, Suite 2900, Houston, Texas 77002-5678. AIG has been using PWC as its corporate-wide auditing firm. Separate Account Financial Statements The statement of net assets as of December 31, 2003 and the related statement of operations for the year then ended and statements of changes in net assets for the two years ended December 31, 2003 of the Separate Account, appearing herein, have been audited by PWC, independent auditors, on the authority of such firm as experts in accounting and auditing, as set forth in their report appearing elsewhere herein. AGL Financial Statements The consolidated balance sheets of AGL as of December 31, 2003 and 2002 and the related statements of income, shareholder's equity, comprehensive income and cash flows for the two years ended December 31, 2003, appearing herein, have been audited by PWC, independent auditors, on the authority of such firm as experts in accounting and auditing, as set forth in their report appearing elsewhere herein. This SAI does not contain any financial statements of AGL for 2001. Due to the merger of The Old Line Life Insurance Company of America into AGL effective March 31, 2003 (see Note 1 to the AGL Consolidated Financial Statements), it was determined that the preparation of restated 2001 financial statements of AGL giving effect to the merger, as required by GAAP, was 8 impracticable. Accordingly, the SEC staff has granted us a waiver from the requirement to present the 2001 amounts in this filing. Index to Financial Statements
I. Separate Account VL-R 2003 Financial Statements Page ----------------------------------------------- ---- Report of PricewaterhouseCoopers LLP, Independent Auditors ................................... VL-R 1 Statement of Net Assets as of December 31, 2003 and Statement of Operations for the year ended December 31, 2003 .................................................... VL-R 2 Statement of Changes in Net Assets for the years ended December 31, 2003 and 2002 ............ VL-R 21 Notes to Financial Statements ................................................................ VL-R 40 II. AGL 2003 Consolidated Financial Statements Page ------------------------------------------ ---- You should consider the financial statements of AGL that we include in this SAI primarily as bearing on the ability of AGL to meet its obligations under the Policies. Report of PricewaterhouseCoopers LLP, Independent Auditors ................................... F - 1 Consolidated Balance Sheets as of December 31, 2003 and 2002 ................................. F - 2 Consolidated Statements of Income for the years ended December 31, 2003 and 2002 ............. F - 4 Consolidated Statements of Shareholder's Equity for the years ended December 31, 2003 and 2002 .......................................................... F - 5 Consolidated Statements of Comprehensive Income for the years ended December 31, 2003 and 2002 .......................................................... F - 6 Consolidated Statements of Cash Flows for the years ended December 31, 2003 and 2002 ......... F - 7 Notes to Consolidated Financial Statements ................................................... F - 9
9 [LOGO OF AIG AMERICAN GENERAL] Variable Universal Life Insurance Separate Account VL-R 2003 Annual Report December 31, 2003 American General Life Insurance Company A member company of American International Group, Inc. [Letterhead of PricewaterhouseCoopers] - -------------------------------------------------------------------------------- PricewaterhouseCoopers LLP Suite 2900 1201 Lousiana Houston, TX 77002-5678 Telephone (713)356-4000 Report of Independent Auditors To the Board of Directors of American General Life Insurance Company and Policy Owners of American General Life Insurance Company Separate Account VL-R In our opinion, the accompanying statement of net assets, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of the Divisions listed in Note A of American General Life Insurance Company Separate Account VL-R (the "Separate Account") at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Separate Account's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the investment companies, provide a reasonable basis for our opinion. The financial highlights as of and for the year ended December 31, 2001 were audited by other independent auditors whose report dated March 7, 2002, expressed an unqualified opinion thereon. /s/ PRICEWATERHOUSECOOPERS LLP - ------------------------------ April 6, 2004 VL-R 1 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Alger American AIM V.I. AIM V.I. AIM V.I. Leveraged Capital International Premier AllCap Appreciation Growth Fund - Equity Portfolio - Fund - Series Series I Fund - Series Class O I shares shares I shares Shares Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 0 $ 4,395,123 $ 11,964,389 $ 234,433 Due from (to) American General Life Insurance Company 0 81 300 10 -------------- -------------- -------------- -------------- NET ASSETS $ 0 $ 4,395,204 $ 11,964,689 $ 234,443 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 0 $ 20,828 $ 32,920 $ 0 Mortality and expense risk and administrative charges 0 (25,667) (75,960) (41) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) 0 (4,839) (43,040) (41) -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 0 (593,810) (1,581,995) 74 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 0 1,535,463 3,957,612 3,670 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 0 941,653 2,375,617 3,744 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 0 $ 936,814 $ 2,332,577 $ 3,703 ============== ============== ============== ==============
See accompanying notes. VL-R 2 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Alger American Credit Suisse MidCap Growth American Small Cap Portfolio - Century VP Growth Class O Shares Value Fund Ayco Growth Portfolio Division Division Fund Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 302,627 $ 9,629,559 $ 0 $ 1,269,377 Due from (to) American General Life Insurance Company 9 214 0 37 -------------- -------------- -------------- -------------- NET ASSETS $ 302,636 $ 9,629,773 $ 0 $ 1,269,414 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 0 $ 64,067 $ 30,008 $ 0 Mortality and expense risk and administrative charges (468) (50,759) (36,439) (5,108) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (468) 13,308 (6,431) (5,108) -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 3,238 (113,748) (1,915,469) 566 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 23,049 2,076,101 3,756,480 298,373 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 26,287 1,962,353 1,841,011 298,939 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 25,819 $ 1,975,661 $ 1,834,580 $ 293,831 ============== ============== ============== ==============
See accompanying notes. VL-R 3 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Dreyfus VIF Fidelity VIP Dreyfus IP Developing Dreyfus VIF Asset Manager MidCap Stock Leaders Quality Bond Portfolio - Portfolio - Portfolio - Portfolio - Service Initial shares Initial shares Initial shares Class 2 Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 2,859,569 $ 10,150,805 $ 7,737,897 $ 3,723,833 Due from (to) American General Life Insurance Company 70 231 107 58 -------------- -------------- -------------- -------------- NET ASSETS $ 2,859,639 $ 10,151,036 $ 7,738,004 $ 3,723,891 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 6,859 $ 2,865 $ 456,171 $ 84,976 Mortality and expense risk and administrative charges (14,957) (61,349) (56,340) (21,367) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (8,098) (58,484) 399,831 63,609 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 15,841 (182,784) 28,230 (8,047) Capital gain distributions from mutual funds 0 0 17,341 0 Net unrealized appreciation (depreciation) of investments 603,728 2,772,382 (124,635) 419,961 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 619,569 2,589,598 (79,064) 411,914 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 611,471 $ 2,531,114 $ 320,767 $ 475,523 ============== ============== ============== ==============
See accompanying notes. VL-R 4 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Fidelity VIP Fidelity VIP Fidelity VIP Fidelity VIP Contrafund Equity-Income Growth Mid Cap Portfolio - Portfolio - Portfolio - Portfolio - Service Service Service Service Class 2 Class 2 Class 2 Class 2 Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 9,293,612 $ 11,352,744 $ 8,798,643 $ 325,435 Due from (to) American General Life Insurance Company 276 226 196 10 -------------- -------------- -------------- -------------- NET ASSETS $ 9,293,888 $ 11,352,970 $ 8,798,839 $ 325,445 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 22,289 $ 143,974 $ 8,638 $ 0 Mortality and expense risk and administrative charges (55,011) (64,310) (52,618) (438) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (32,722) 79,664 (43,980) (438) -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 226,646 (172,182) (334,820) 119 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 2,022,921 2,900,788 2,738,235 27,990 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 2,249,567 2,728,606 2,403,415 28,109 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,216,845 $ 2,808,270 $ 2,359,435 $ 27,671 ============== ============== ============== ==============
See accompanying notes. VL-R 5 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Franklin Templeton - Franklin Franklin Franklin Franklin Templeton - Small Templeton - Templeton - Franklin Cap Value Franklin U.S. Mutual Shares Small Cap Securities Government Securities Fund - Class 2 Fund - Class 2 Fund - Class 2 Fund - Class 2 Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 135,304 $ 243,988 $ 11,754,825 $ 5,991,559 Due from (to) American General Life Insurance Company 5 11 261 152 -------------- -------------- -------------- -------------- NET ASSETS $ 135,309 $ 243,999 $ 11,755,086 $ 5,991,711 ============== ============= ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 0 $ 5 $ 476,091 $ 51,779 Mortality and expense risk and administrative charges (870) (338) (66,302) (35,210) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (870) (333) 409,789 16,569 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (416) 714 (20,622) 18,441 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 35,509 29,112 (230,914) 1,104,782 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 35,093 29,826 (251,536) 1,123,223 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 34,223 $ 29,493 $ 158,253 $ 1,139,792 ============== ============== ============== ==============
See accompanying notes. VL-R 6 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Franklin Janus Aspen Templeton - Franklin Series Templeton Templeton - International Developing Templeton Growth Markets Foreign Goldman Sachs Portfolio - Securities Securities Capital Service Fund - Class 2 Fund - Class 2 Growth Fund Shares Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 0 $ 6,509,112 $ 8,501,063 $ 2,140,069 Due from (to) American General Life Insurance Company 0 193 119 28 -------------- -------------- -------------- -------------- NET ASSETS $ 0 $ 6,509,305 $ 8,501,182 $ 2,140,097 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 0 $ 85,094 $ 0 $ 16,560 Mortality and expense risk and administrative charges 0 (35,589) (1,352) (11,916) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) 0 49,505 (1,352) 4,644 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 0 26,313 269 (50,569) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 0 1,404,968 186,155 577,849 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 0 1,431,281 186,424 527,280 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 0 $ 1,480,786 $ 185,072 $ 531,924 ============== ============== ============== ==============
See accompanying notes. VL-R 7 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Janus Aspen Janus Aspen Series Series Mid Worldwide Cap Growth Growth Portfolio - Portfolio - JPMorgan JPMorgan Service Service Mid Cap Value Small Company Shares Shares Portfolio Portfolio Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 2,087,464 $ 3,410,017 $ 122,094 $ 808,258 Due from (to) American General Life Insurance Company 49 58 3 29 -------------- -------------- -------------- -------------- NET ASSETS $ 2,087,513 $ 3,410,075 $ 122,097 $ 808,287 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 0 $ 23,686 $ 0 $ 0 Mortality and expense risk and administrative charges (10,749) (19,046) (201) (3,626) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (10,749) 4,640 (201) (3,626) -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (27,446) (108,229) 0 1,128 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 504,583 717,239 10,159 175,505 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 477,137 609,010 10,159 176,633 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 466,388 $ 613,650 $ 9,958 $ 173,007 ============== ============== ============== ==============
See accompanying notes. VL-R 8 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
MFS VIT Capital MFS VIT MFS VIT MFS VIT New Opportunities Emerging Investors Discovery Series Growth Series Trust Series Series Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 3,294,729 $ 10,890,807 $ 0 $ 3,082,073 Due from (to) American General Life Insurance Company 90 146 0 73 -------------- -------------- -------------- -------------- NET ASSETS $ 3,294,819 $ 10,890,953 $ 0 $ 3,082,146 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 6,095 $ 0 $ 0 $ 0 Mortality and expense risk and administrative charges (18,607) (63,944) 0 (16,667) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (12,512) (63,944) 0 (16,667) -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (76,292) (1,772,200) 0 (77,770) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 748,094 4,119,769 0 763,494 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 671,802 2,347,569 0 685,724 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 659,290 $ 2,283,625 $ 0 $ 669,057 ============== ============== ============== ==============
See accompanying notes. VL-R 9 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Neuberger Berman AMT Neuberger MFS VIT MFS VIT Mid-Cap Berman AMT Research Total Return Growth Partners Series Series Portfolio Portfolio Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 1,284,913 $ 752,768 $ 1,861,300 $ 116,590 Due from (to) American General Life Insurance Company 34 15 43 4 -------------- -------------- -------------- -------------- NET ASSETS $ 1,284,947 $ 752,783 $ 1,861,343 $ 116,594 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 6,310 $ 11,373 $ 0 $ 0 Mortality and expense risk and administrative charges (6,949) (5,098) (12,820) (788) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (639) 6,275 (12,820) (788) -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (31,868) (5,273) (59,197) (226) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 260,832 96,968 622,686 30,029 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 228,964 91,695 563,489 29,803 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 228,325 $ 97,970 $ 550,669 $ 29,015 ============== ============== ============== ==============
See accompanying notes. VL-R 10 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
One Group One Group Investment One Group Investment Trust Investment Oppenheimer Trust Equity Large Cap Trust Mid Cap Global Index Growth Growth Securities Portfolio Portfolio Portfolio Fund/VA Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 0 0 $ 0 $ 177,631 Due from (to) American General Life Insurance Company 0 0 0 6 -------------- -------------- -------------- -------------- NET ASSETS $ 0 $ 0 $ 0 $ 177,637 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 0 $ 0 $ 0 $ 0 Mortality and expense risk and administrative charges 0 0 0 (134) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) 0 0 0 (134) -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 0 0 0 659 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 0 0 0 19,921 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 0 0 0 20,580 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 0 $ 0 $ 0 $ 20,446 ============== ============== ============== ==============
See accompanying notes. VL-R 11 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Oppenheimer PIMCO VIT PIMCO VIT Oppenheimer Multiple Real Return Short-Term High Income Strategies Portfolio - Portfolio - Fund/VA Fund/VA Administrative Administrative Division Division Class Division Class Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 71,478 $ 116,380 $ 8,516,017 $ 4,496,759 Due from (to) American General Life Insurance Company 0 3 377 28 -------------- -------------- -------------- -------------- NET ASSETS $ 71,478 $ 116,383 $ 8,516,394 $ 4,496,787 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 8,307 $ 0 $ 303,547 $ 65,812 Mortality and expense risk and administrative charges (565) (91) (49,152) (28,360) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) 7,742 (91) 254,395 37,452 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (8,505) 8 304,617 4,733 Capital gain distributions from mutual funds 0 0 52,887 5,940 Net unrealized appreciation (depreciation) of investments 17,487 6,321 (53,420) 1,466 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 8,982 6,329 304,084 12,139 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 16,724 $ 6,238 $ 558,479 $ 49,591 ============== ============== ============== ==============
See accompanying notes. VL-R 12 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Putnam VT PIMCO VIT Putnam VT Putnam VT International Total Return Diversified Growth and Growth and Portfolio - Income Fund - Income Fund - Income Fund - Administrative Class IB Class IB Class IB Class Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 10,740,353 $ 5,869,329 $ 14,520,974 $ 5,063,138 Due from (to) American General Life Insurance Company 270 (34) 242 25 -------------- -------------- -------------- -------------- NET ASSETS $ 10,740,623 $ 5,869,295 $ 14,521,216 $ 5,063,163 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 319,709 $ 360,898 $ 199,110 $ 78,463 Mortality and expense risk and administrative charges (68,492) (23,395) (72,349) (32,690) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) 251,217 337,503 126,761 45,773 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 75,409 (10,841) (366,503) 28,250 Capital gain distributions from mutual funds 44,719 0 0 0 Net unrealized appreciation (depreciation) of investments 17,793 444,180 3,033,842 1,725,291 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 137,921 433,339 2,667,339 1,753,541 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 389,138 $ 770,842 $ 2,794,100 $ 1,799,314 ============== ============== ============== ==============
See accompanying notes. VL-R 13 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Putnam VT Small Cap Putnam VT Putnam VT SAFECO RST Value Fund - Vista Fund - Voyager Core Equity Class IB Class IB Fund - Class Portfolio Division Division IB Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 407,000 $ 73,077 $ 266,767 $ 3,156,601 Due from (to) American General Life Insurance Company 15 9 8 (33) -------------- -------------- -------------- -------------- NET ASSETS $ 407,015 $ 73,086 $ 266,775 $ 3,156,568 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 1,095 $ 0 $ 894 $ 27,561 Mortality and expense risk and administrative charges (2,564) (335) (1,674) (20,970) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (1,469) (335) (780) 6,591 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 1,539 (23) (19,611) (246,197) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 132,063 17,731 63,728 878,719 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 133,602 17,708 44,117 632,522 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 132,133 $ 17,373 $ 43,337 $ 639,113 ============== ============== ============== ==============
See accompanying notes. VL-R 14 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
SAFECO RST Scudder Scudder VIT Growth International Scudder Small EAFE Equity Opportunities Research Cap Value Index Fund - Portfolio Portfolio Portfolio Class A Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 5,028,994 $ 0 $ 0 $ 0 Due from (to) American General Life Insurance Company 20 0 0 0 -------------- -------------- -------------- -------------- NET ASSETS $ 5,029,014 $ 0 $ 0 $ 0 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 0 $ 0 $ 0 $ 0 Mortality and expense risk and administrative charges (29,697) 0 0 0 -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (29,697) 0 0 0 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (419,891) 0 0 0 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 1,933,768 0 0 0 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 1,513,877 0 0 0 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,484,180 $ 0 $ 0 $ 0 ============== ============== ============== ==============
See accompanying notes. VL-R 15 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
SunAmerica - SunAmerica - Scudder VIT Aggressive SunAmerica UIF Equity Equity 500 Growth Balanced Growth Index Fund - Portfolio - Portfolio - Portfolio - Class A Class 1 Class 1 Class I Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 15,466 $ 243,944 $ 361,206 $ 3,766,040 Due from (to) American General Life Insurance Company (18) 12 60 31 -------------- -------------- -------------- -------------- NET ASSETS $ 15,448 $ 243,956 $ 361,266 $ 3,766,071 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 156 $ 0 $ 6,187 $ 0 Mortality and expense risk and administrative charges (68) (955) (1,314) (25,672) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) 88 (955) 4,873 (25,672) -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (117) 889 18 (808,862) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 3,269 30,987 27,522 1,605,587 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 3,152 31,876 27,540 796,725 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,240 $ 30,921 $ 32,413 $ 771,053 ============== ============== ============== ==============
See accompanying notes. VL-R 16 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
UIF High VALIC VALIC Yield Company I - VALIC Company I - Portfolio - International Company I - Money Market Class I Equities Fund Mid Cap Index I Fund Division Division Fund Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 1,812,256 $ 1,854,246 $ 13,397,850 $ 36,676,878 Due from (to) American General Life Insurance Company (84) 195 320 800 -------------- -------------- -------------- -------------- NET ASSETS $ 1,812,172 $ 1,854,441 $ 13,398,170 $ 36,677,678 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 0 $ 22,317 $ 72,765 $ 240,646 Mortality and expense risk and administrative charges (11,182) (10,538) (75,373) (279,646) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (11,182) 11,779 (2,608) (39,000) -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (71,559) (188,763) (420,348) 0 Capital gain distributions from mutual funds 0 0 101,586 0 Net unrealized appreciation (depreciation) of investments 430,126 576,934 3,596,532 0 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 358,567 388,171 3,277,770 0 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 347,385 $ 399,950 $ 3,275,162 ($ 39,000) ============== ============== ============== ==============
See accompanying notes. VL-R 17 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
VALIC VALIC VALIC Company I - Company I - Company I - VALIC Nasdaq-100 Science & Small Cap Company I - Index Technology Index Stock Index Fund Division Fund Division Fund Division Fund Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 2,943,249 $ 927,054 $ 3,649,280 $ 43,966,387 Due from (to) American General Life Insurance Company 104 (7) 102 1,048 -------------- -------------- -------------- -------------- NET ASSETS $ 2,943,353 $ 927,047 $ 3,649,382 $ 43,967,435 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 0 $ 0 $ 13,500 $ 510,613 Mortality and expense risk and administrative charges (14,653) (4,284) (16,688) (248,791) -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (14,653) (4,284) (3,188) 261,822 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (153,402) (20,757) (52,742) (2,794,127) Capital gain distributions from mutual funds 0 0 0 120,686 Net unrealized appreciation (depreciation) of investments 960,016 285,268 1,005,025 11,335,046 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 806,614 264,511 952,283 8,661,605 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 791,961 $ 260,227 $ 949,095 $ 8,923,427 ============== ============== ============== ==============
See accompanying notes. VL-R 18 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Van Kampen Van Kampen Van Kampen LIT Emerging Van Kampen LIT Growth LIT Stategic Growth LIT Government and Income Stock Portfolio - Portfolio - Portfolio - Portfolio - Class I Class I Class I Class I Division Division Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 59,393 $ 163,214 $ 3,820,252 $ 0 Due from (to) American General Life Insurance Company 0 10 116 0 -------------- -------------- -------------- -------------- NET ASSETS $ 59,393 $ 163,224 $ 3,820,368 $ 0 ============== ============== ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 0 $ 6,162 $ 26,136 $ 0 Mortality and expense risk and administrative charges (417) (1,020) (20,267) 0 -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) (417) 5,142 5,869 0 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (21,092) 577 (74,987) 0 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 34,653 (4,265) 800,092 0 -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 13,561 (3,688) 725,105 0 -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 13,144 $ 1,454 $ 730,974 $ 0 ============== ============== ============== ==============
See accompanying notes. VL-R 19 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R Vanguard VIF High Yield Vanguard VIF Bond REIT Index Portfolio Portfolio Division Division STATEMENT OF NET ASSETS December 31, 2003 ASSETS: Investment securities - at market $ 4,294,466 $ 6,097,988 Due from (to) American General Life Insurance Company 65 158 -------------- -------------- NET ASSETS $ 4,294,531 $ 6,098,146 ============== ============== STATEMENT OF OPERATIONS For the Year Ended December 31, 2003 NET INVESTMENT INCOME (LOSS): Dividends from mutual funds $ 175,451 $ 151,378 Mortality and expense risk and administrative charges (21,121) (30,733) -------------- -------------- NET INVESTMENT INCOME (LOSS) 154,330 120,645 -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 32,404 29,227 Capital gain distributions from mutual funds 0 112,869 Net unrealized appreciation (depreciation) of investments 288,914 1,118,953 -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 321,318 1,261,049 -------------- -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 475,648 $ 1,381,694 ============== ============== See accompanying notes. VL-R 20 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Alger AIM V.I. American Capital AIM V.I. AIM V.I. Leveraged Appreciation International Premier AllCap Fund - Growth Fund - Equity Fund - Portfolio - Series I Series I Series I Class O shares shares shares Shares Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 0 ($ 4,839) ($ 43,040) ($ 41) Net realized gain (loss) on investments 0 (593,810) (1,581,995) 74 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 0 1,535,463 3,957,612 3,670 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 0 936,814 2,332,577 3,703 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 0 993,314 2,893,233 7,670 Net transfers from (to) other Divisions or fixed rate option 0 (115,158) (269,225) 228,598 Internal rollovers 0 0 0 0 Cost of insurance and other charges 0 (551,493) (1,877,618) (4,623) Administrative charges 0 (35,209) (111,346) (353) Policy loans 0 (26,827) (95,683) (552) Terminations and withdrawals 0 (276,223) (742,081) 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 0 (11,596) (202,720) 230,740 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 0 925,218 2,129,857 234,443 NET ASSETS: Beginning of year 0 3,469,986 9,834,832 0 -------------- -------------- -------------- -------------- End of year $ 0 $ 4,395,204 $ 11,964,689 $ 234,443 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) ($ 18) ($ 4,701) ($ 45,337) $ 0 Net realized gain (loss) on investments (2,823) (719,072) (1,867,250) 0 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 2,179 57,613 (2,564,149) 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (662) (666,160) (4,476,736) 0 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 0 1,294,282 4,146,666 0 Net transfers from (to) other Divisions or fixed rate option 59 (39,712) (247,458) 0 Internal rollovers 0 0 0 0 Cost of insurance and other charges (126) (615,430) (2,075,303) 0 Administrative charges 0 (41,964) (148,848) 0 Policy Loans 0 (64,923) (43,622) 0 Terminations and withdrawals (4,141) (306,569) (776,285) 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions (4,208) 225,684 855,150 0 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (4,870) (440,476) (3,621,586) 0 NET ASSETS: Beginning of year 4,870 3,910,462 13,456,418 0 -------------- -------------- -------------- -------------- End of year $ 0 $ 3,469,986 $ 9,834,832 $ 0 ============== ============== ============== ==============
See accompanying notes. VL-R 21 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Alger American Credit MidCap Growth Suisse Portfolio - American Small Cap Class O Century VP Growth Shares Value Fund Ayco Growth Portfolio Division Division Fund Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 468) $ 13,308 ($ 6,431) ($ 5,108) Net realized gain (loss) on investments 3,238 (113,748) (1,915,469) 566 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 23,049 2,076,101 3,756,480 298,373 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 25,819 1,975,661 1,834,580 293,831 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 16,326 1,933,044 43,307 226,793 Net transfers from (to) other Divisions or fixed rate option 270,505 2,411,560 (8,523,709) 440,490 Internal rollovers 0 0 0 0 Cost of insurance and other charges (9,040) (1,066,847) (566,235) (112,769) Administrative charges (816) (91,943) (2,459) (10,793) Policy loans 185 (105,937) 272 1,284 Terminations and withdrawals (343) (610,640) (8,938) (26,394) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 276,817 2,469,237 (9,057,762) 518,611 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 302,636 4,444,898 (7,223,182) 812,442 NET ASSETS: Beginning of year 0 5,184,875 7,223,182 456,972 -------------- -------------- -------------- -------------- End of year $ 302,636 $ 9,629,773 $ 0 $ 1,269,414 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) $ 0 $ 150,742 ($ 12,864) ($ 3,542) Net realized gain (loss) on investments 0 (73,600) (214,090) (36,230) Capital gain distributions from mutual funds 0 9,080 0 0 Net unrealized appreciation (depreciation) of investments 0 (729,490) (2,624,547) (159,536) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 0 (643,268) (2,851,501) (199,308) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 0 1,298,906 1,432,876 154,113 Net transfers from (to) other Divisions or fixed rate option 0 3,310,913 2,415,380 129,005 Internal rollovers 0 0 0 0 Cost of insurance and other charges 0 (582,368) (578,108) (76,635) Administrative charges 0 (59,299) (89,109) (7,362) Policy Loans 0 (398,602) (725) 1,437 Terminations and withdrawals 0 (100,020) (7,212) (524) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 0 3,469,530 3,173,102 200,034 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 0 2,826,262 321,601 726 NET ASSETS: Beginning of year 0 2,358,613 6,901,581 456,246 -------------- -------------- -------------- -------------- End of year $ 0 $ 5,184,875 $ 7,223,182 $ 456,972 ============== ============== ============== ==============
See accompanying notes. VL-R 22 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Dreyfus VIF Dreyfus IP Developing Dreyfus VIF Fidelity VIP MidCap Stock Leaders Quality Bond Asset Manager Portfolio - Portfolio - Portfolio - Portfolio - Initial Initial Initial Service shares shares shares Class 2 Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 8,098) ($ 58,484) $ 399,831 $ 63,609 Net realized gain (loss) on investments 15,841 (182,784) 28,230 (8,047) Capital gain distributions from mutual funds 0 0 17,341 0 Net unrealized appreciation (depreciation) of investments 603,728 2,772,382 (124,635) 419,961 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 611,471 2,531,114 320,767 475,523 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 673,023 2,503,579 1,567,678 565,088 Net transfers from (to) other Divisions or fixed rate option 295,454 287,248 99,791 974,862 Internal rollovers 0 0 0 0 Cost of insurance and other charges (363,758) (1,243,407) (1,009,427) (387,659) Administrative charges (32,326) (106,929) (70,077) (26,659) Policy loans (1,791) (86,656) (225,675) 389,292 Terminations and withdrawals (24,024) (1,409,821) (596,804) (582,833) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 546,578 (55,986) (234,514) 932,091 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,158,049 2,475,128 86,253 1,407,614 NET ASSETS: Beginning of year 1,701,590 7,675,908 7,651,751 2,316,277 -------------- -------------- -------------- -------------- End of year $ 2,859,639 $ 10,151,036 $ 7,738,004 $ 3,723,891 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) ($ 2,990) ($ 51,760) $ 350,583 $ 7,894 Net realized gain (loss) on investments (2,154) (1,983,843) 178,135 (16,496) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments (188,669) 336,267 (12,194) (83,076) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (193,813) (1,699,336) 516,524 (91,678) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 435,104 2,382,413 1,799,886 366,530 Net transfers from (to) other Divisions or fixed rate option 832,978 1,730,475 (357,026) 1,903,125 Internal rollovers 0 0 0 0 Cost of insurance and other charges (255,483) (1,205,289) (934,180) (196,045) Administrative charges (21,290) (92,580) (69,421) (17,356) Policy Loans (17,833) (200,691) 115,150 32,090 Terminations and withdrawals (4,039) (1,451,484) (2,473,037) (45,115) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 969,437 1,162,844 (1,918,628) 2,043,229 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 775,624 (536,492) (1,402,104) 1,951,551 NET ASSETS: Beginning of year 925,966 8,212,400 9,053,855 364,726 -------------- -------------- -------------- -------------- End of year $ 1,701,590 $ 7,675,908 $ 7,651,751 $ 2,316,277 ============== ============== ============== ==============
See accompanying notes. VL-R 23 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Fidelity VIP Fidelity VIP Fidelity VIP Fidelity VIP Contrafund Equity-Income Growth Mid Cap Portfolio - Portfolio - Portfolio - Portfolio - Service Service Service Service Class 2 Class 2 Class 2 Class 2 Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 32,722) $ 79,664 ($ 43,980) ($ 438) Net realized gain (loss) on investments 226,646 (172,182) (334,820) 119 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 2,022,921 2,900,788 2,738,235 27,990 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 2,216,845 2,808,270 2,359,435 27,671 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 2,107,417 2,363,111 2,194,072 23,093 Net transfers from (to) other Divisions or fixed rate option 2,236,877 2,127,316 1,244,332 281,977 Internal rollovers 0 0 0 0 Cost of insurance and other charges (1,041,103) (1,086,303) (1,020,329) (6,292) Administrative charges (101,730) (114,113) (107,447) (1,004) Policy loans (92,869) 6,155 (9,205) 0 Terminations and withdrawals (2,461,920) (2,436,613) (2,518,247) 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 646,672 859,553 (216,824) 297,774 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 2,863,517 3,667,823 2,142,611 325,445 NET ASSETS: Beginning of year 6,430,371 7,685,147 6,656,228 0 -------------- -------------- -------------- -------------- End of year $ 9,293,888 $ 11,352,970 $ 8,798,839 $ 325,445 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) ($ 3,433) $ 57,787 ($ 29,704) $ 0 Net realized gain (loss) on investments (72,725) (271,361) (133,229) 0 Capital gain distributions from mutual funds 0 126,755 0 0 Net unrealized appreciation (depreciation) of investments (606,601) (1,450,751) (2,054,440) 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (682,759) (1,537,570) (2,217,373) 0 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 3,510,995 4,047,379 1,447,237 0 Net transfers from (to) other Divisions or fixed rate option 868,929 512,539 5,014,912 0 Internal rollovers 0 0 0 0 Cost of insurance and other charges (559,508) (809,034) (797,698) 0 Administrative charges (209,566) (239,140) (71,732) 0 Policy Loans (361,800) 83,174 11,127 0 Terminations and withdrawals (34,456) (252,348) (132,239) 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 3,214,594 3,342,570 5,471,607 0 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 2,531,835 1,805,000 3,254,234 0 NET ASSETS: Beginning of year 3,898,536 5,880,147 3,401,994 0 -------------- -------------- -------------- -------------- End of year $ 6,430,371 $ 7,685,147 $ 6,656,228 $ 0 ============== ============== ============== ==============
See accompanying notes. VL-R 24 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Franklin Templeton - Franklin Franklin Franklin Franklin Templeton - Small Templeton - Templeton - Franklin Cap Value Franklin U.S. Mutual Shares Small Securities Government Securities Cap Fund - Fund - Fund - Fund - Class 2 Class 2 Class 2 Class 2 Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 870) ($ 333) $ 409,789 $ 16,569 Net realized gain (loss) on investments (416) 714 (20,622) 18,441 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 35,509 29,112 (230,914) 1,104,782 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 34,223 29,493 158,253 1,139,792 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 5,767 19,349 490,325 248,378 Net transfers from (to) other Divisions or fixed rate option 6,443 201,273 3,185,489 665,193 Internal rollovers 0 0 0 0 Cost of insurance and other charges (3,612) (4,995) (848,459) (410,405) Administrative charges 0 (876) (24,478) (11,828) Policy loans (44) (245) (2,967) (644) Terminations and withdrawals (124) 0 (83,914) (105,409) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 8,430 214,506 2,715,996 385,285 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 42,653 243,999 2,874,249 1,525,077 NET ASSETS: Beginning of year 92,656 0 8,880,837 4,466,634 -------------- -------------- -------------- -------------- End of year $ 135,309 $ 243,999 $ 11,755,086 $ 5,991,711 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) ($ 401) $ 0 $ 874,503 ($ 6,533) Net realized gain (loss) on investments (7,085) 0 (24,566) (1,429) Capital gain distributions from mutual funds 0 0 0 2,874 Net unrealized appreciation (depreciation) of investments (26,248) 0 152,493 70,209 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (33,734) 0 1,002,430 65,121 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 5,110 0 36,239 26,176 Net transfers from (to) other Divisions or fixed rate option 83,801 0 8,781,219 4,472,003 Internal rollovers 0 0 0 0 Cost of insurance and other charges (5,812) 0 (936,574) (95,318) Administrative charges 0 0 (1,767) (1,349) Policy Loans 220 0 (710) 1 Terminations and withdrawals (8,353) 0 0 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 74,966 0 7,878,407 4,401,513 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 41,232 0 8,880,837 4,466,634 NET ASSETS: Beginning of year 51,424 0 0 0 -------------- -------------- -------------- -------------- End of year $ 92,656 $ 0 $ 8,880,837 $ 4,466,634 ============== ============== ============== ==============
See accompanying notes. VL-R 25 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Franklin Templeton - Franklin Janus Aspen Templeton Templeton - Series Developing Templeton International Markets Foreign Goldman Growth Securities Securities Sachs Portfolio - Fund - Fund - Capital Service Class 2 Class 2 Growth Fund Shares Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 0 $ 49,505 ($ 1,352) $ 4,644 Net realized gain (loss) on investments 0 26,313 269 (50,569) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 0 1,404,968 186,155 577,849 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 0 1,480,786 185,072 531,924 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 0 231,810 0 552,095 Net transfers from (to) other Divisions or fixed rate option 0 856,708 8,330,325 104,648 Internal rollovers 0 0 0 0 Cost of insurance and other charges 0 (397,656) (13,551) (210,933) Administrative charges 0 (9,953) (15) (26,519) Policy loans 0 (4,301) 0 (30,308) Terminations and withdrawals 0 (5,539) (649) (45,629) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 0 671,069 8,316,110 343,354 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 0 2,151,855 8,501,182 875,278 NET ASSETS: Beginning of year 0 4,357,450 0 1,264,819 -------------- -------------- -------------- -------------- End of year $ 0 $ 6,509,305 $ 8,501,182 $ 2,140,097 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) $ 34 ($ 6,631) $ 0 $ 445 Net realized gain (loss) on investments (435) (8,250) 0 (165,484) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 394 101,832 0 (244,489) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (7) 86,951 0 (409,528) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 0 25,122 0 519,553 Net transfers from (to) other Divisions or fixed rate option (373) 4,330,002 0 334,006 Internal rollovers 0 0 0 0 Cost of insurance and other charges (1,038) (92,212) 0 (202,456) Administrative charges 0 (1,006) 0 (25,378) Policy Loans 0 163 0 13,026 Terminations and withdrawals (670) 192 0 (20,624) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions (2,081) 4,262,261 0 618,127 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (2,088) 4,349,212 0 208,599 NET ASSETS: Beginning of year 2,088 8,238 0 1,056,220 -------------- -------------- -------------- -------------- End of year $ 0 $ 4,357,450 $ 0 $ 1,264,819 ============== ============== ============== ==============
See accompanying notes. VL-R 26 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Janus Aspen Janus Aspen Series Series Mid Worldwide Cap Growth Growth JPMorgan Portfolio - Portfolio - JPMorgan Mid Small Service Service Cap Value Company Shares Shares Portfolio Portfolio Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 10,749) $ 4,640 ($ 201) ($ 3,626) Net realized gain (loss) on investments (27,446) (108,229) 0 1,128 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 504,583 717,239 10,159 175,505 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 466,388 613,650 9,958 173,007 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 685,443 1,034,656 6,420 184,262 Net transfers from (to) other Divisions or fixed rate option 259,924 444,690 111,047 242,922 Internal rollovers 0 0 0 0 Cost of insurance and other charges (324,758) (454,566) (4,705) (91,397) Administrative charges (33,718) (50,983) (316) (9,053) Policy loans (2,492) (6,625) (307) (2,767) Terminations and withdrawals (34,006) (273,289) 0 (9,405) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 550,393 693,883 112,139 314,562 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,016,781 1,307,533 122,097 487,569 NET ASSETS: Beginning of year 1,070,732 2,102,542 0 320,718 -------------- -------------- -------------- -------------- End of year $ 2,087,513 $ 3,410,075 $ 122,097 $ 808,287 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) ($ 7,003) $ 655 $ 0 ($ 1,426) Net realized gain (loss) on investments (243,313) (139,803) 0 (5,373) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments (94,351) (404,814) 0 (62,087) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (344,667) (543,962) 0 (68,886) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 618,755 801,080 0 122,450 Net transfers from (to) other Divisions or fixed rate option 310,178 1,126,551 0 123,545 Internal rollovers 0 0 0 0 Cost of insurance and other charges (270,011) (322,446) 0 (52,666) Administrative charges (30,068) (39,434) 0 (5,843) Policy Loans (15,127) (1,551) 0 (1,445) Terminations and withdrawals (9,714) (18,526) 0 (235) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 604,013 1,545,674 0 185,806 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 259,346 1,001,712 0 116,920 NET ASSETS: Beginning of year 811,386 1,100,830 0 203,798 -------------- -------------- -------------- -------------- End of year $ 1,070,732 $ 2,102,542 $ 0 $ 320,718 ============== ============== ============== ==============
See accompanying notes. VL-R 27 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
MFS VIT MFS VIT MFS VIT Capital Emerging Investors MFS VIT New Opportunities Growth Trust Discovery Series Series Series Series Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 12,512) ($ 63,944) $ 0 ($ 16,667) Net realized gain (loss) on investments (76,292) (1,772,200) 0 (77,770) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 748,094 4,119,769 0 763,494 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 659,290 2,283,625 0 669,057 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 978,715 2,882,107 0 648,572 Net transfers from (to) other Divisions or fixed rate option 242,910 636,191 0 525,864 Internal rollovers 0 0 0 0 Cost of insurance and other charges (530,646) (1,658,472) 0 (319,494) Administrative charges (48,492) (105,154) 0 (30,969) Policy loans (1,264) (60,579) 0 (1,949) Terminations and withdrawals (133,731) (390,492) 0 (80,358) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 507,492 1,303,601 0 741,666 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,166,782 3,587,226 0 1,410,723 NET ASSETS: Beginning of year 2,128,037 7,303,727 0 1,671,423 -------------- -------------- -------------- -------------- End of year $ 3,294,819 $ 10,890,953 $ 0 $ 3,082,146 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) ($ 12,739) ($ 62,426) $ 22 ($ 11,117) Net realized gain (loss) on investments (83,439) (3,807,816) (2,146) (48,679) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments (632,215) 90,927 1,407 (538,980) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (728,393) (3,779,315) (717) (598,776) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 966,780 4,068,001 0 414,807 Net transfers from (to) other Divisions or fixed rate option 815,845 (674,638) (105) 909,002 Internal rollovers 0 0 0 0 Cost of insurance and other charges (441,498) (1,794,881) (2,592) (202,532) Administrative charges (48,404) (138,930) 0 (19,982) Policy Loans 25,383 (321) 0 (4,360) Terminations and withdrawals (52,601) (612,056) (1,708) (25,656) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 1,265,505 847,175 (4,405) 1,071,279 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 537,112 (2,932,140) (5,122) 472,503 NET ASSETS: Beginning of year 1,590,925 10,235,867 5,122 1,198,920 -------------- -------------- -------------- -------------- End of year $ 2,128,037 $ 7,303,727 $ 0 $ 1,671,423 ============== ============== ============== ==============
See accompanying notes. VL-R 28 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Neuberger Berman AMT Neuberger MFS VIT MFS VIT Total Mid-Cap Berman AMT Research Return Growth Partners Series Series Portfolio Portfolio Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 639) $ 6,275 ($ 12,820) ($ 788) Net realized gain (loss) on investments (31,868) (5,273) (59,197) (226) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 260,832 96,968 622,686 30,029 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 228,325 97,970 550,669 29,015 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 425,030 5,366 534,232 5,114 Net transfers from (to) other Divisions or fixed rate option 84,559 90,955 222,849 1,183 Internal rollovers 0 0 0 0 Cost of insurance and other charges (221,546) (51,740) (266,006) (2,976) Administrative charges (21,146) 0 (26,362) 0 Policy loans (8,345) 0 (11,148) 0 Terminations and withdrawals (19,454) (54,153) (929,746) 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 239,098 (9,572) (476,181) 3,321 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 467,423 88,398 74,488 32,336 NET ASSETS: Beginning of year 817,524 664,385 1,786,855 84,258 -------------- -------------- -------------- -------------- End of year $ 1,284,947 $ 752,783 $ 1,861,343 $ 116,594 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) ($ 3,495) $ 7,041 ($ 9,228) ($ 135) Net realized gain (loss) on investments (115,976) (4,902) (73,540) 1,604 Capital gain distributions from mutual funds 0 3,043 0 0 Net unrealized appreciation (depreciation) of investments (107,759) (33,979) (451,849) (25,455) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (227,230) (28,797) (534,617) (23,986) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 386,082 54,848 440,368 2,947 Net transfers from (to) other Divisions or fixed rate option 164,804 616,981 1,439,959 58,744 Internal rollovers 0 0 0 0 Cost of insurance and other charges (179,739) (24,318) (184,494) (2,259) Administrative charges (19,294) 0 (22,453) 0 Policy Loans 35,347 0 27,434 0 Terminations and withdrawals (89,598) (3,686) (31,706) 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 297,602 643,825 1,669,108 59,432 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 70,372 615,028 1,134,491 35,446 NET ASSETS: Beginning of year 747,152 49,357 652,364 48,812 -------------- -------------- -------------- -------------- End of year $ 817,524 $ 664,385 $ 1,786,855 $ 84,258 ============== ============== ============== ==============
See accompanying notes. VL-R 29 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
One Group One Group One Group Oppenheimer Investment Investment Investment Global Trust Equity Trust Large Trust Mid Cap Securities Index Cap Growth Growth Fund/VA Portfolio Portfolio Portfolio Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 0 $ 0 $ 0 ($ 134) Net realized gain (loss) on investments 0 0 0 659 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 0 0 0 19,921 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 0 0 0 20,446 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 0 0 0 14,355 Net transfers from (to) other Divisions or fixed rate option 0 0 0 147,158 Internal rollovers 0 0 0 0 Cost of insurance and other charges 0 0 0 (3,274) Administrative charges 0 0 0 (741) Policy loans 0 0 0 (307) Terminations and withdrawals 0 0 0 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 0 0 0 157,191 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 0 0 0 177,637 NET ASSETS: Beginning of year 0 0 0 0 -------------- -------------- -------------- -------------- End of year $ 0 0 $ 0 $ 177,637 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) ($ 36) ($ 55) $ 29 $ 0 Net realized gain (loss) on investments (3,929) (2,105) (1,618) 0 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 2,192 1,394 1,026 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (1,773) (766) (563) 0 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 0 0 0 0 Net transfers from (to) other Divisions or fixed rate option 361 292 (120) 0 Internal rollovers 0 0 0 0 Cost of insurance and other charges (334) (94) (93) 0 Administrative charges 0 0 0 0 Policy Loans 0 0 0 0 Terminations and withdrawals (9,967) (1,998) (1,924) 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions (9,940) (1,800) (2,137) 0 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (11,713) (2,566) (2,700) 0 NET ASSETS: Beginning of year 11,713 2,566 2,700 0 -------------- -------------- -------------- -------------- End of year $ 0 $ 0 $ 0 $ 0 ============== ============== ============== ==============
See accompanying notes. VL-R 30 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Oppenheimer PIMCO VIT PIMCO VIT Oppenheimer Multiple Real Return Short-Term High Income Strategies Portfolio- Portfolio- Fund/VA Fund/VA Administrative Administrative Division Division Class Division Class Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 7,742 ($ 91) $ 254,395 $ 37,452 Net realized gain (loss) on investments (8,505) 8 304,617 4,733 Capital gain distributions from mutual funds 0 0 52,887 5,940 Net unrealized appreciation (depreciation) of investments 17,487 6,321 (53,420) 1,466 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 16,724 6,238 558,479 49,591 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 1,531 3,591 2,271,260 671,086 Net transfers from (to) other Divisions or fixed rate option 3,074 108,982 1,416,476 1,947,753 Internal rollovers 0 0 0 0 Cost of insurance and other charges (2,533) (1,950) (983,514) (426,413) Administrative charges 0 (171) (106,171) (32,641) Policy loans 0 (307) (276,152) 11,267 Terminations and withdrawals (57,763) 0 (486,420) (167,101) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions (55,691) 110,145 1,835,479 2,003,951 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (38,967) 116,383 2,393,958 2,053,542 NET ASSETS: Beginning of year 110,445 0 6,122,436 2,443,245 -------------- -------------- -------------- -------------- End of year $ 71,478 $ 116,383 $ 8,516,394 $ 4,496,787 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) $ 8,782 $ 0 $ 176,817 $ 40,371 Net realized gain (loss) on investments (394) 0 83,063 (1,650) Capital gain distributions from mutual funds 0 0 3,336 1,277 Net unrealized appreciation (depreciation) of investments (11,331) 0 458,848 5,746 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (2,943) 0 722,064 45,744 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 20,502 0 1,631,388 292,655 Net transfers from (to) other Divisions or fixed rate option 19,013 0 3,411,999 1,324,458 Internal rollovers 0 0 0 0 Cost of insurance and other charges (1,982) 0 (538,885) (188,810) Administrative charges 0 0 (81,144) (14,400) Policy Loans 0 0 (388,058) 97,931 Terminations and withdrawals (2,267) 0 (512,928) (168,673) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 35,266 0 3,522,372 1,343,161 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 32,323 0 4,244,436 1,388,905 NET ASSETS: Beginning of year 78,122 0 1,878,000 1,054,340 -------------- -------------- -------------- -------------- End of year $ 110,445 $ 0 $ 6,122,436 $ 2,443,245 ============== ============== ============== ==============
See accompanying notes. VL-R 31 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Putnam VT PIMCO VIT Putnam VT Putnam VT International Total Return Diversified Growth and Growth and Portfolio - Income Fund - Income Fund - Income Fund - Administrative Class IB Class IB Class IB Class Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 251,217 $ 337,503 $ 126,761 $ 45,773 Net realized gain (loss) on investments 75,409 (10,841) (366,503) 28,250 Capital gain distributions from mutual funds 44,719 0 0 0 Net unrealized appreciation (depreciation) of investments 17,793 444,180 3,033,842 1,725,291 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 389,138 770,842 2,794,100 1,799,314 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 2,104,538 1,658,759 3,872,320 987,946 Net transfers from (to) other Divisions or fixed rate option 1,352,598 393,258 763,265 175,916 Internal rollovers 0 0 0 0 Cost of insurance and other charges (1,103,217) (266,249) (1,433,233) (463,675) Administrative charges (100,344) (131,765) (227,454) (42,520) Policy loans (71,282) (57,380) (62,002) (10,928) Terminations and withdrawals (272,047) (84,372) (781,349) (1,825,361) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 1,910,246 1,512,251 2,131,547 (1,178,622) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 2,299,384 2,283,093 4,925,647 620,692 NET ASSETS: Beginning of year 8,441,239 3,586,202 9,595,569 4,442,471 -------------- -------------- -------------- -------------- End of year $ 10,740,623 $ 5,869,295 $ 14,521,216 $ 5,063,163 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) $ 291,737 $ 214,439 $ 120,947 ($ 4,060) Net realized gain (loss) on investments 5,381 (93,347) (351,798) (151,257) Capital gain distributions from mutual funds 19,770 0 0 0 Net unrealized appreciation (depreciation) of investments 205,234 25,736 (1,766,501) (514,967) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 522,122 146,828 (1,997,352) (670,284) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 859,203 1,269,358 3,317,093 1,292,212 Net transfers from (to) other Divisions or fixed rate option 4,381,349 (19,487) 1,289,615 884,586 Internal rollovers 0 0 0 0 Cost of insurance and other charges (568,626) (234,445) (1,250,154) (421,543) Administrative charges (43,612) (92,336) (182,733) (63,007) Policy Loans 149,547 (18,958) 83,273 20,534 Terminations and withdrawals (311,766) (57,161) (227,974) (45,000) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 4,466,095 846,971 3,029,120 1,667,782 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 4,988,217 993,799 1,031,768 997,498 NET ASSETS: Beginning of year 3,453,022 2,592,403 8,563,801 3,444,973 -------------- -------------- -------------- -------------- End of year $ 8,441,239 $ 3,586,202 $ 9,595,569 $ 4,442,471 ============== ============== ============== ==============
See accompanying notes. VL-R 32 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Putnam VT Small Cap Putnam VT Putnam VT Safeco RST Value Fund - Vista Fund - Voyager Fund - Core Equity Class IB Class IB Class IB Portfolio Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 1,469) ($ 335) ($ 780) $ 6,591 Net realized gain (loss) on investments 1,539 (23) (19,611) (246,197) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 132,063 17,731 63,728 878,719 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 132,133 17,373 43,337 639,113 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 7,836 2,517 3,522 758,391 Net transfers from (to) other Divisions or fixed rate option 21,555 2,556 78,006 (190,682) Internal rollovers 0 0 0 0 Cost of insurance and other charges (12,245) (1,845) (13,251) (367,928) Administrative charges 0 0 0 (26,290) Policy loans (3,983) 0 (54) (52,990) Terminations and withdrawals (183) 0 (55,887) (416,636) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 12,980 3,228 12,336 (296,135) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 145,113 20,601 55,673 342,978 NET ASSETS: Beginning of year 261,902 52,485 211,102 2,813,590 -------------- -------------- -------------- -------------- End of year $ 407,015 $ 73,086 $ 266,775 $ 3,156,568 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) $ 676 ($ 415) ($ 492) $ 7,689 Net realized gain (loss) on investments 0 (4,668) (9,038) (1,074,474) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments (53,402) (13,789) (51,606) (79,718) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (52,726) (18,872) (61,136) (1,146,503) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 18,572 4,440 35,710 1,076,197 Net transfers from (to) other Divisions or fixed rate option 196,179 17,738 94,586 (263,190) Internal rollovers 0 0 0 0 Cost of insurance and other charges (7,470) (1,416) (11,329) (431,130) Administrative charges 0 0 0 (34,658) Policy Loans 220 0 (232) (8,622) Terminations and withdrawals (476) (1,838) (6,609) (1,495,273) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 207,025 18,924 112,126 (1,156,676) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 154,299 52 50,990 (2,303,179) NET ASSETS: Beginning of year 107,603 52,433 160,112 5,116,769 -------------- -------------- -------------- -------------- End of year $ 261,902 $ 52,485 $ 211,102 $ 2,813,590 ============== ============== ============== ==============
See accompanying notes. VL-R 33 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Safeco RST Scudder Scudder VIT Growth International Scudder Small EAFE Equity Opportunities Research Cap Value Index Fund - Portfolio Portfolio Portfolio Class A Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 29,697) $ 0 $ 0 $ 0 Net realized gain (loss) on investments (419,891) 0 0 0 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 1,933,768 0 0 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 1,484,180 0 0 0 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 1,109,783 0 0 0 Net transfers from (to) other Divisions or fixed rate option (216,155) (3) 0 (2) Internal rollovers 0 0 0 0 Cost of insurance and other charges (616,883) 0 0 0 Administrative charges (44,183) 0 0 0 Policy loans (89,094) 0 0 0 Terminations and withdrawals (332,512) 0 0 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions (189,044) (3) 0 (2) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,295,136 (3) 0 (2) NET ASSETS: Beginning of year 3,733,878 3 0 2 -------------- -------------- -------------- -------------- End of year $ 5,029,014 $ 0 $ 0 $ 0 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) ($ 31,934) $ 21 $ 115 ($ 49) Net realized gain (loss) on investments (316,182) (618) (112) (19,822) Capital gain distributions from mutual funds 17,939 0 0 0 Net unrealized appreciation (depreciation) of investments (1,900,968) 249 (165) 16,942 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (2,231,145) (348) (162) (2,929) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 1,477,200 0 0 267 Net transfers from (to) other Divisions or fixed rate option 547,535 11 (600) 1 Internal rollovers 0 0 0 0 Cost of insurance and other charges (652,107) (94) (94) (236) Administrative charges (54,938) 0 0 0 Policy Loans (126,831) 0 0 0 Terminations and withdrawals (335,298) (2,096) (1,928) (44,821) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 855,561 (2,179) (2,622) (44,789) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (1,375,584) (2,527) (2,784) (47,718) NET ASSETS: Beginning of year 5,109,462 2,530 2,784 47,720 -------------- -------------- -------------- -------------- End of year $ 3,733,878 $ 3 $ 0 $ 2 ============== ============== ============== ==============
See accompanying notes. VL-R 34 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
SunAmerica - SunAmerica - Scudder VIT Aggressive SunAmerica UIF Equity Equity 500 Growth Balanced Growth Index Portfolio - Portfolio Portfolio - Fund - Class A Class 1 Class 1 Class 1 Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 88 ($ 955) $ 4,873 ($ 25,672) Net realized gain (loss) on investments (117) 889 18 (808,862) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 3,269 30,987 27,522 1,605,587 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 3,240 30,921 32,413 771,053 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 2,601 52,688 127,729 815,440 Net transfers from (to) other Divisions or fixed rate option 1 170,242 173,438 (425,787) Internal rollovers 0 0 0 0 Cost of insurance and other charges (2,097) (25,036) (58,435) (508,401) Administrative charges 0 (2,547) (5,762) (24,928) Policy loans 0 (398) (394) (24,477) Terminations and withdrawals 0 0 (444) (292,607) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 505 194,949 236,132 (460,760) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 3,745 225,870 268,545 310,293 NET ASSETS: Beginning of year 11,703 18,086 92,721 3,455,778 -------------- -------------- -------------- -------------- End of year $ 15,448 $ 243,956 $ 361,266 $ 3,766,071 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) $ 19 $ 44 $ 663 ($ 23,392) Net realized gain (loss) on investments (39,381) 0 0 (761,812) Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 28,488 (558) (2,383) (612,195) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (10,874) (514) (1,720) (1,397,399) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 3,935 5,102 16,108 1,138,033 Net transfers from (to) other Divisions or fixed rate option (2) 16,385 86,051 (645,576) Internal rollovers 0 0 0 0 Cost of insurance and other charges (3,093) (2,392) (6,826) (604,024) Administrative charges 0 (254) (781) (34,941) Policy Loans 0 (241) (111) (201,396) Terminations and withdrawals (154,566) 0 0 (171,222) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions (153,726) 18,600 94,441 (519,126) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (164,600) 18,086 92,721 (1,916,525) NET ASSETS: Beginning of year 176,303 0 0 5,372,303 -------------- -------------- -------------- -------------- End of year $ 11,703 $ 18,086 $ 92,721 $ 3,455,778 ============== ============== ============== ==============
See accompanying notes. VL-R 35 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
VALIC UIF High Yield Company I - VALIC VALIC Portfolio - International Company I - Company I - Class I Equities Fund Mid Cap Index Money Market I Division Division Fund Division Fund Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 11,182) $ 11,779 ($ 2,608) ($ 39,000) Net realized gain (loss) on investments (71,559) (188,763) (420,348) 0 Capital gain distributions from mutual funds 0 0 101,586 0 Net unrealized appreciation (depreciation) of investments 430,126 576,934 3,596,532 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 347,385 399,950 3,275,162 (39,000) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 270,783 216,967 2,263,927 36,945,344 Net transfers from (to) other Divisions or fixed rate option 89,086 204,654 860,042 (36,108,365) Internal rollovers 0 0 0 5,128,027 Cost of insurance and other charges (152,488) (145,751) (1,213,346) (6,913,801) Administrative charges (9,818) (9,306) (95,916) (1,579,738) Policy loans (25,743) (4,276) (22,683) 239,468 Terminations and withdrawals (82,763) (138,241) (411,368) (2,937,192) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 89,057 124,047 1,380,656 (5,226,257) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 436,442 523,997 4,655,818 (5,265,257) NET ASSETS: Beginning of year 1,375,730 1,330,444 8,742,352 41,942,935 -------------- -------------- -------------- -------------- End of year $ 1,812,172 $ 1,854,441 $ 13,398,170 $ 36,677,678 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) $ 123,640 ($ 6,514) ($ 5,654) $ 241,212 Net realized gain (loss) on investments (426,084) (385,799) (1,065,554) 0 Capital gain distributions from mutual funds 0 0 309,128 0 Net unrealized appreciation (depreciation) of investments 153,114 55,344 (846,426) (8) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (149,330) (336,969) (1,608,506) 241,204 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 285,569 318,598 2,288,050 78,127,466 Net transfers from (to) other Divisions or fixed rate option (530,318) (35,540) 1,769,136 (77,689,898) Internal rollovers 0 0 0 4,680,779 Cost of insurance and other charges (162,819) (161,078) (1,094,904) (7,888,139) Administrative charges (8,612) (12,450) (87,623) (3,456,650) Policy Loans 5,875 (5,134) (71,728) (1,480,127) Terminations and withdrawals (32,190) (11,615) (1,223,545) (3,671,295) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions (442,495) 92,781 1,579,386 (11,377,864) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (591,825) (244,188) (29,120) (11,136,660) NET ASSETS: Beginning of year 1,967,555 1,574,632 8,771,472 53,079,595 -------------- -------------- -------------- -------------- End of year $ 1,375,730 $ 1,330,444 $ 8,742,352 $ 41,942,935 ============== ============== ============== ==============
See accompanying notes. VL-R 36 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
VALIC VALIC VALIC Company I - Company I - Company I - VALIC Nasdaq-100 Science & Small Cap Company I - Index Fund Technology Index Stock Index Division Fund Division Fund Division Fund Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 14,653) ($ 4,284) ($ 3,188) $ 261,822 Net realized gain (loss) on investments (153,402) (20,757) (52,742) (2,794,127) Capital gain distributions from mutual funds 0 0 0 120,686 Net unrealized appreciation (depreciation) of investments 960,016 285,268 1,005,025 11,335,046 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 791,961 260,227 949,095 8,923,427 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 636,919 256,569 485,690 9,618,556 Net transfers from (to) other Divisions or fixed rate option 634,553 129,000 848,960 2,978,412 Internal rollovers 0 0 0 0 Cost of insurance and other charges (281,546) (109,973) (233,702) (3,775,692) Administrative charges (30,416) (12,409) (23,992) (447,770) Policy loans 107 (73) (7,951) (22,463) Terminations and withdrawals (98,553) (17,464) (57,319) (1,925,003) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 861,064 245,650 1,011,686 6,426,040 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,653,025 505,877 1,960,781 15,349,467 NET ASSETS: Beginning of year 1,290,328 421,170 1,688,601 28,617,968 -------------- -------------- -------------- -------------- End of year $ 2,943,353 $ 927,047 $ 3,649,382 $ 43,967,435 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) ($ 9,939) ($ 3,137) $ 4,889 $ 138,158 Net realized gain (loss) on investments (421,034) (100,424) (56,190) (1,993,346) Capital gain distributions from mutual funds 0 0 0 705,226 Net unrealized appreciation (depreciation) of investments (310,412) (125,305) (346,842) (6,020,777) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (741,385) (228,866) (398,143) (7,170,739) -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 456,899 252,511 427,217 7,972,943 Net transfers from (to) other Divisions or fixed rate option 547,642 104,185 827,664 9,563,937 Internal rollovers 0 0 0 0 Cost of insurance and other charges (250,639) (94,950) (177,453) (3,353,403) Administrative charges (20,482) (12,259) (20,701) (324,482) Policy Loans (12,360) 12,243 (1,506) (89,359) Terminations and withdrawals (318,578) (13,080) (4,145) (867,240) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 402,482 248,650 1,051,076 12,902,396 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (338,903) 19,784 652,933 5,731,657 NET ASSETS: Beginning of year 1,629,231 401,386 1,035,668 22,886,311 -------------- -------------- -------------- -------------- End of year $ 1,290,328 $ 421,170 $ 1,688,601 $ 28,617,968 ============== ============== ============== ==============
See accompanying notes. VL-R 37 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R
Van Kampen LIT Van Kampen LIT Emerging Van Kampen LIT Growth Van Kampen LIT Growth Government and Income Stategic Stock Portfolio - Portfolio - Portfolio - Portfolio - Class I Class I Class I Class I Division Division Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) ($ 417) $ 5,142 $ 5,869 $ 0 Net realized gain (loss) on investments (21,092) 577 (74,987) 0 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments 34,653 (4,265) 800,092 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations 13,144 1,454 730,974 0 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 6,192 2,634 891,596 0 Net transfers from (to) other Divisions or fixed rate option 8,525 60,630 811,551 0 Internal rollovers 0 0 0 0 Cost of insurance and other charges (2,590) (19,519) (424,419) 0 Administrative charges 0 0 (40,176) 0 Policy loans 0 0 (45,305) 0 Terminations and withdrawals (37,276) (18,177) (209,486) 0 -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions (25,149) 25,568 983,761 0 -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (12,005) 27,022 1,714,735 0 NET ASSETS: Beginning of year 71,398 136,202 2,105,633 0 -------------- -------------- -------------- -------------- End of year $ 59,393 $ 163,224 $ 3,820,368 $ 0 ============== ============== ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) ($ 292) $ 1,343 ($ 6,646) $ 41,618 Net realized gain (loss) on investments (10,775) 119 (85,747) 129,873 Capital gain distributions from mutual funds 0 0 0 0 Net unrealized appreciation (depreciation) of investments (19,220) 3,081 (258,773) (94,970) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from operations (30,287) 4,543 (351,166) 76,521 -------------- -------------- -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 21,819 88,371 350,154 197,166 Net transfers from (to) other Divisions or fixed rate option 6,193 11,510 2,388,124 (1,874,682) Internal rollovers 0 0 0 0 Cost of insurance and other charges (7,951) (6,168) (217,982) (84,135) Administrative charges 0 0 (14,361) (7,418) Policy Loans 0 0 (2,605) (1,663) Terminations and withdrawals (4,715) 0 (46,531) (34,783) -------------- -------------- -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 15,346 93,713 2,456,799 (1,805,515) -------------- -------------- -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS (14,941) 98,256 2,105,633 (1,728,994) NET ASSETS: Beginning of year 86,339 37,946 0 1,728,994 -------------- -------------- -------------- -------------- End of year $ 71,398 $ 136,202 $ 2,105,633 $ 0 ============== ============== ============== ==============
See accompanying notes. VL-R 38 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R Vanguard VIF Vanguard VIF High Yield REIT Index Bond Portfolio Portfolio Division Division STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2003 OPERATIONS: Net investment income (loss) $ 154,330 $ 120,645 Net realized gain (loss) on investments 32,404 29,227 Capital gain distributions from mutual funds 0 112,869 Net unrealized appreciation (depreciation) of investments 288,914 1,118,953 -------------- -------------- Increase (decrease) in net assets resulting from operations 475,648 1,381,694 -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 725,583 1,247,148 Net transfers from (to) other Divisions or fixed rate option 1,395,290 1,224,911 Internal rollovers 0 0 Cost of insurance and other charges (476,367) (560,979) Administrative charges (34,883) (60,804) Policy loans (12,655) (209,742) Terminations and withdrawals (16,354) (177,062) -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 1,580,614 1,463,472 -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 2,056,262 2,845,166 NET ASSETS: Beginning of year 2,238,269 3,252,980 -------------- -------------- End of year $ 4,294,531 $ 6,098,146 ============== ============== STATEMENT OF CHANGES IN NET ASSETS For the Year Ended December 31, 2002 OPERATIONS: Net investment income (loss) $ 86,200 $ 42,399 Net realized gain (loss) on investments (62,557) (734) Capital gain distributions from mutual funds 0 16,944 Net unrealized appreciation (depreciation) of investments 38,852 (107,359) -------------- -------------- Increase (decrease) in net assets resulting from operations 62,495 (48,750) -------------- -------------- PRINCIPAL TRANSACTIONS: Net premiums 410,754 906,246 Net transfers from (to) other Divisions or fixed rate option 1,049,802 2,414,771 Internal rollovers 0 0 Cost of insurance and other charges (223,235) (281,129) Administrative charges (21,872) (44,648) Policy Loans 1,456 367 Terminations and withdrawals (36,030) (369,910) -------------- -------------- Increase (decrease) in net assets resulting from principal transactions 1,180,875 2,625,697 -------------- -------------- TOTAL INCREASE (DECREASE) IN NET ASSETS 1,243,370 2,576,947 NET ASSETS: Beginning of year 994,899 676,033 -------------- -------------- End of year $ 2,238,269 $ 3,252,980 ============== ============== See accompanying notes. VL-R 39 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS Note A - Organization Separate Account VL-R (the "Separate Account") was established by resolution of the Board of Directors of American General Life Insurance Company (the "Company") on May 6, 1997 to fund variable universal life insurance policies issued by the Company. The following products are included in the Separate Account: AG Legacy Plus, Corporate America, Legacy Plus, Platinum Investor I, Platinum Investor II, Platinum Investor III, Platinum Investor PLUS, Platinum Investor Survivor and Platinum Investor Survivor II. Of the products listed, Corporate America, Legacy Plus, Platinum Investor I and Platinum Investor Survivor are no longer offered for sale. The Company is an indirect, wholly-owned subsidiary of American International Group, Inc. The Separate Account is registered with the Securities and Exchange Commission as a unit investment trust pursuant to the provisions of the Investment Company Act of 1940, as amended. The Separate Account is divided into "Divisions", which invest in independently managed mutual fund portfolios ("Funds"). As of December 31, 2003, the Funds available to policy owners through the various Divisions were as follows: AIM Variable Insurance Funds: AIM V.I. International Growth Fund - Series I shares AIM V.I. Premier Equity Fund - Series I shares The Alger American Fund: Alger American Leveraged AllCap Portfolio - Class O Shares/(1)/ Alger American MidCap Growth Portfolio - Class O Shares /(1)/ American Century Variable Portfolios, Inc. ("American Century"): VP Value Fund Class I Credit Suisse Trust ("Credit Suisse"): Small Cap Growth Portfolio Dreyfus Investment Portfolios ("Dreyfus IP"): MidCap Stock Portfolio - Initial shares Dreyfus Variable Investment Fund ("Dreyfus VIF"): Developing Leaders Portfolio - Initial shares /(2)/ Quality Bond Portfolio - Initial shares Fidelity(R) Variable Insurance Products ("Fidelity"): VIP Asset Manager/SM/ Portfolio - Service Class 2 VIP Contrafund(R) Portfolio - Service Class 2 VIP Equity-Income Portfolio - Service Class 2 VIP Growth Portfolio - Service Class 2 VIP Mid Cap Portfolio - Service Class 2 /(1)/ Franklin Templeton Variable Insurance Products Trust ("Franklin Templeton"): Franklin Small Cap Fund - Class 2 Franklin Small Cap Value Securities Fund - Class 2 /(1)/ Franklin U.S. Government Fund - Class 2 Mutual Shares Securities Fund - Class 2 Templeton Foreign Securities Fund - Class 2 Goldman Sachs Variable Insurance Trust: Goldman Sachs Capital Growth Fund /(3)/ Janus Aspen Series: International Growth Portfolio - Service Shares Mid Cap Growth Portfolio - Service Shares /(4)/ Worldwide Growth Portfolio - Service Shares J.P. Morgan Series Trust II: JPMorgan Mid Cap Value Portfolio /(1)/ JPMorgan Small Company Portfolio MFS(R) Variable Insurance Trust/SM/ ("VIT"): MFS(R) Capital Opportunities Series MFS(R) Emerging Growth Series MFS(R) New Discovery Series MFS(R) Research Series MFS(R) Total Return Series Neuberger Berman Advisers Management Trust ("Neuberger Berman AMT"): Mid-Cap Growth Portfolio Partners Portfolio Oppenheimer Variable Account Funds: Oppenheimer Global Securities Fund/VA /(1)/ Oppenheimer High Income Fund/VA Oppenheimer Multiple Strategies Fund/VA /(1)/ PIMCO Variable Insurance Trust ("VIT"): PIMCO Real Return Portfolio - Administrative Class PIMCO Short-Term Portfolio - Administrative Class PIMCO Total Return Portfolio - Administrative Class Putnam Variable Trust: Putnam VT Diversified Income Fund - Class IB Putnam VT Growth and Income Fund - Class IB Putnam VT International Growth and Income Fund - Class IB Putnam VT Small Cap Value Fund - Class IB Putnam VT Vista Fund - Class IB Putnam VT Voyager Fund - Class IB VL-R 40 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note A - Organization - Continued Safeco Resource Series Trust ("Safeco RST"): Core Equity Portfolio /(5)(6)/ Growth Opportunities Portfolio /(5)/ Scudder Investments VIT Funds /(7)/: Scudder VIT EAFE(R) Equity Index Fund - Class A Shares Scudder VIT Equity 500 Index Fund - Class A Shares SunAmerica Series Trust ("SunAmerica"): Aggressive Growth Portfolio - Class 1 SunAmerica Balanced Portfolio - Class 1 The Universal Institutional Funds, Inc. ("UIF"): Equity Growth Portfolio - Class I High Yield Portfolio - Class I VALIC Company I: International Equities Fund Mid Cap Index Fund VALIC Company I (continued): Money Market I Fund Nasdaq-100(R) Index Fund Science & Technology Fund Small Cap Index Fund Stock Index Fund Van Kampen Life Investment Trust ("Van Kampen LIT"): Emerging Growth Portfolio - Class I Shares Government Portfolio - Class I Shares Growth and Income Portfolio - Class I Shares Vanguard(R) Variable Insurance Fund ("Vanguard VIF"): High Yield Bond Portfolio REIT Index Portfolio /(1)/ Effective May 1, 2003, these Funds became available for investment. /(2)/ Effective January 2, 2003, Dreyfus VIF Small Cap Portfolio changed its name to Dreyfus VIF Developing Leaders Portfolio. /(3)/ Effective December 19, 2003, Ayco Growth Fund (which was not available for new investments as of May 1, 2003) was reorganized into Goldman Sachs Capital Growth Fund. Goldman Sachs Capital Growth Fund is not available for new investments. /(4)/ Effective May 1, 2003, Janus Aggressive Growth Portfolio changed its name to Janus Mid Cap Growth Portfolio. /(5)/ Effective May 1, 2003, SAFECO RST Equity Portfolio and SAFECO RST Growth Opportunities Portfolio were closed to investment from new policies and to existing policy owners not previously invested prior to May 1, 2003. /(6)/ Effective October 1, 2003 Safeco RST Equity Portfolio changed its name to Safeco RST Core Equity Portfolio. /(7)/ Effective May 16, 2003, Deutsche Asset Management VIT Funds changed its name to Scudder Investments VIT Funds. AIG SunAmerica Asset Management Corp., an affiliate of the Company, serves as the investment advisor to SunAmerica Series Trust. The Variable Annuity Life Insurance Company, an affiliate of the Company, serves as the investment advisor to VALIC Company I. In addition to the Divisions above, a policy owner may allocate policy funds to a fixed account, which is part of the Company's general account. Policy owners should refer to the prospectus for a complete description of the available Funds and the fixed account. The assets of the Separate Account are segregated from the Company's other assets. The operations of the Separate Account are part of the Company. Net premiums from the policies are allocated to the Divisions and invested in the Funds in accordance with policy owner instructions. The premiums are recorded as principal transactions in the Statement of Changes in Net Assets. Note B - Summary of Significant Accounting Policies and Basis of Presentation The accompanying financial statements of the Divisions of the Separate Account have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). A summary of the significant accounting principles followed by the Divisions and the methods of applying those principles is presented below. VL-R 41 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note B - Summary of Significant Accounting Policies and Basis of Presentation - Continued Changes in presentation - Certain items have been reclassified to conform to the current period's presentation. Use of estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the period. Actual results could differ from those estimates. Security valuation - The investments in shares of the Funds listed above are stated at the net asset value of the respective portfolio as determined by the fund, which value their securities at fair value. Security transactions and related investment income - Security transactions are accounted for on the trade date. Dividend income and distributions of capital gains are recorded on the ex-dividend date and reinvested upon receipt. Realized gains and losses from security transactions are determined on the basis of identified cost. Policy loans - When a policy loan is made, the loan amount is transferred to the Company from the policy owner's selected investment Division(s), and held as collateral. Interest on this collateral amount is credited to the policy. Loan repayments are invested in the policy owner's selected investment Division(s), after they are first used to repay all loans taken from the declared fixed interest account option. Federal income taxes - The Company is taxed as a life insurance company under the Internal Revenue Code and includes the operations of the Separate Account in determining its federal income tax liability. As a result, the Separate Account is not taxed as a "Regulated Investment Company" under subchapter M of the Internal Revenue Code. Under existing federal income tax law, the investment income and capital gains from sales of investments realized by the Separate Account are not taxable. Therefore, no federal income tax provision has been made. Note C - Policy Charges Deductions from premium payments - Certain jurisdictions require that a deduction be made from each premium payment for premium taxes. The amount of such deduction currently ranges from 0.75% to 3.50%. For Corporate America contracts, the Company deducts from each premium payment a charge to cover costs associated with the issuance of the policy, administrative services the Company performs and a premium tax that is applicable to the Company in the state or other jurisdiction of the policy owner. The amount the Company deducts in policy year 1 through 7 is 9% up to the "target premium" and 5% on any premium amounts in excess of the target premium. The amount the Company deducts in year 8 and thereafter is 5% of all premium payments. The target premium is an amount of premium that is approximately equal to the seven-pay premium, which is the maximum amount of premium that may be paid without the policy becoming a modified endowment contract. For other policies offered through the Separate Account (except for Corporate America, AG Legacy Plus, and Legacy Plus), prior to allocation to the Separate Account, the following sales load is deducted from each after-tax premium payment. - ----------------------------------------------------------- Contracts Sales Load - ----------------------------------------------------------- Platinum Investor I and II 2.50% - ----------------------------------------------------------- Platinum Investor III 5.00% - ----------------------------------------------------------- Platinum Investor PLUS 5.00% - ----------------------------------------------------------- Platinum Investor Survivor 6.50% - ----------------------------------------------------------- Platinum Investor Survivor II 5.00% - ----------------------------------------------------------- VL-R 42 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note C - Policy Charges - Continued Separate Account charges - Currently, charges are assessed through the daily unit value calculation at the following annual rates from the daily net asset value of the Divisions are paid to the Company. These charges are made in return for the Company's assumption of mortality and expense risks associated with the policies issued. A summary of these charges by contract follows:
- ----------------------------------------------------------------------------------------------------- Mortality & Second Year Expense First After Reduction After Policy (M & E) Reduction in Policy in M & E Policy First Contracts Annual Rate M & E Rate Year Rate Year Offered - ----------------------------------------------------------------------------------------------------- AG Legacy Plus .75% .25% 10 .25% 20 2000 - ----------------------------------------------------------------------------------------------------- Corporate America .35% .10% 10 .10% 20 2000 - ----------------------------------------------------------------------------------------------------- Legacy Plus .75% .25% 10 .25% 20 1998 - ----------------------------------------------------------------------------------------------------- Platinum Investor I and II .75% .25% 10 .25% 10 1998 - ----------------------------------------------------------------------------------------------------- Platinum Investor III .70% .25% 10 .35% 20 2000 - ----------------------------------------------------------------------------------------------------- Platinum Investor PLUS .70% .45% 10 .10% 20 2002 - ----------------------------------------------------------------------------------------------------- Platinum Investor Survivor .40% .20% 10 .10% 30 2000 - ----------------------------------------------------------------------------------------------------- Platinum Investor Survivor II .75% .25% 15 .35% 30 2001 - -----------------------------------------------------------------------------------------------------
Other charges paid to the Company by redemption of units outstanding include: deductions for the cost of insurance, monthly maintenance charges, additional benefit riders and surrender charges. Since determination of both the insurance rate and the Company's net amount at risk depends upon several factors, the cost of insurance deduction may vary from month to month. Policy accumulation value, specified amount of insurance and certain characteristics of the insured person are among the variables included in the calculation for the monthly cost of insurance deduction. Also, monthly charges are deducted, if the policy owner selects additional benefits riders for certain policies. The charges for any rider selected will vary by policy within a range based on either the personal characteristics of the insured person or the specific coverage chosen under the rider. A summary of surrender charges by contract follows:
- ------------------------------------------------------------------------------------------------------------------- Surrender Surrender Charge Contracts Charge Period Transaction Fee on Surrender - ------------------------------------------------------------------------------------------------------------------- AG Legacy Plus No N/A Lesser of 2% of amount withdrawn or $25, currently $10 - ------------------------------------------------------------------------------------------------------------------- Corporate America No N/A $25 transaction fee may be charged - ------------------------------------------------------------------------------------------------------------------- Legacy Plus No N/A $25 transaction fee may be charged - ------------------------------------------------------------------------------------------------------------------- Platinum Investor I and II Yes First 10 years Lesser of 2% of amount withdrawn or $25, currently $10 - ------------------------------------------------------------------------------------------------------------------- Platinum Investor III Yes First 10 years Lesser of 2% of amount withdrawn or $25, currently $10 - ------------------------------------------------------------------------------------------------------------------- Platinum Investor PLUS Yes First 10 years Lesser of 2% of amount withdrawn or $25, currently $10 - ------------------------------------------------------------------------------------------------------------------- Platinum Investor Survivor Yes First 9 years Lesser of 2% of amount withdrawn or $25, currently $10 - ------------------------------------------------------------------------------------------------------------------- Platinum Investor Survivor II Yes First 14 years Lesser of 2% of amount withdrawn or $25, currently $10 - -------------------------------------------------------------------------------------------------------------------
VL-R 43 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note D - Security Purchases and Sales For the year ended December 31, 2003, the aggregate cost of purchases and proceeds from the sales of investments were: Proceeds from Divisions Cost of Purchases Sales - -------------------------------------------------------------------------------- AIM V.I. International Growth Fund - Series I shares $ 775,453 $ 792,484 AIM V.I. Premier Equity Fund - Series I shares 1,568,862 1,815,666 Alger American Leveraged AllCap Portfolio - Class O Shares 233,339 2,649 Alger American MidCap Growth Portfolio - Class O Shares 329,156 52,816 American Century VP Value Fund 3,952,497 1,471,884 Ayco Growth Fund 53,675 9,118,199 Credit Suisse Small Cap Growth Portfolio 613,157 99,665 Dreyfus IP MidCap Stock Portfolio - Initial shares 757,937 219,613 Dreyfus VIF Developing Leaders Portfolio - Initial shares 2,028,038 2,141,934 Dreyfus VIF Quality Bond Portfolio - Initial shares 2,352,896 2,171,380 Fidelity VIP Asset Manager Portfolio - Service Class 2 1,863,282 868,946 Fidelity VIP Contrafund Portfolio - Service Class 2 4,135,635 3,522,232 Fidelity VIP Equity-Income Portfolio - Service Class 2 4,156,789 3,217,771 Fidelity VIP Growth Portfolio - Service Class 2 2,874,195 3,137,052 Fidelity VIP Mid Cap Portfolio - Service Class 2 298,926 1,600 Franklin Templeton - Franklin Small Cap Fund - Class 2 14,063 6,510 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 224,585 10,422 Franklin Templeton - Franklin U.S. Government Fund - Class 2 4,870,303 1,744,743 Franklin Templeton - Mutual Shares Securities Fund - Class 2 849,397 448,004 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 1,118,533 397,425 Goldman Sachs Capital Growth Fund 8,332,206 17,567 Janus Aspen Series International Growth Portfolio - Service Shares 900,132 552,919 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 1,645,950 1,108,266 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 2,101,777 1,404,170 JPMorgan Mid Cap Value Portfolio 111,934 -- JPMorgan Small Company Portfolio 478,560 166,039 MFS VIT Capital Opportunities Series 846,659 352,621 MFS VIT Emerging Growth Series 2,985,192 1,745,772 MFS VIT New Discovery Series 1,372,118 648,448 MFS VIT Research Series 351,695 115,293 MFS VIT Total Return Series 118,119 121,453 Neuberger Berman AMT Mid-Cap Growth Portfolio 582,979 1,071,043 Neuberger Berman AMT Partners Portfolio 4,977 2,165 Oppenheimer Global Securities Fund/VA 162,413 5,361 Oppenheimer High Income Fund/VA 14,273 62,286 Oppenheimer Multiple Strategies Fund/VA 110,196 145 PIMCO VIT Real Return Portfolio - Administrative Class 4,929,213 2,787,452 PIMCO VIT Short-Term Portfolio - Administrative Class 3,064,081 1,016,713 PIMCO VIT Total Return Portfolio - Administrative Class 4,645,597 2,441,442 Putnam VT Diversified Income Fund - Class IB 2,221,100 372,338 Putnam VT Growth and Income Fund - Class IB 3,767,667 1,509,588 Putnam VT International Growth and Income Fund - Class IB 1,137,876 2,270,994 VL-R 44 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note D - Security Purchases and Sales - continued For the year ended December 31, 2003, the aggregate cost of purchases and proceeds from the sales of investments were: Divisions Cost of Purchases Sales - -------------------------------------------------------------------------------- Putnam VT Small Cap Value Fund - Class IB $ 31,586 $ 19,873 Putnam VT Vista Fund - Class IB 3,345 57 Putnam VT Voyager Fund - Class IB 80,891 69,815 SAFECO RST Core Equity Portfolio 568,250 857,753 SAFECO RST Growth Opportunities Portfolio 647,876 866,674 Scudder VIT Equity 500 Index Fund - Class A 1,454 802 SunAmerica - Aggressive Growth Portfolio - Class 1 201,227 6,622 SunAmerica - SunAmerica Balanced Portfolio - Class 1 250,651 9,445 UIF Equity Growth Portfolio - Class I 457,510 943,167 UIF High Yield Portfolio - Class I 337,224 260,495 VALIC Company I - International Equities Fund 402,397 265,766 VALIC Company I - Mid Cap Index Fund 2,740,563 1,261,762 VALIC Company I - Money Market I Fund 38,708,540 43,974,303 VALIC Company I - Nasdaq-100 Index Fund 1,903,721 1,056,587 VALIC Company I - Science & Technology Fund 289,808 48,371 VALIC Company I - Small Cap Index Fund 1,264,436 256,026 VALIC Company I - Stock Index Fund 12,579,227 5,771,136 Van Kampen LIT Emerging Growth Portfolio - Class I 14,113 39,549 Van Kampen LIT Government Portfolio - Class I 67,764 36,744 Van Kampen LIT Growth and Income Portfolio - Class I 1,562,517 570,309 Vanguard VIF High Yield Bond Portfolio 5,022,592 3,288,799 Vanguard VIF REIT Index Portfolio 2,450,068 754,848 ----------------- ------------- Total $ 142,541,192 $ 109,371,973 ================= ============= VL-R 45 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note E - Investments The following is a summary of fund shares owned as of December 31, 2003:
Value of Unrealized Net Asset Shares Cost of Appreciation/ Divisions Shares Value at Market Shares Held (Depreciation) - ----------------------------------------------------------------------------------------------------------------------------------- AIM V.I. International Growth Fund - Series I shares 274,010 $ 16.04 $ 4,395,123 $ 4,310,004 $ 85,119 AIM V.I. Premier Equity Fund - Series I shares 591,418 20.23 11,964,389 13,833,972 (1,869,583) Alger American Leveraged AllCap Portfolio - Class O Shares 8,346 28.09 234,433 230,764 3,669 Alger American MidCap Growth Portfolio - Class O Shares 16,447 18.40 302,627 279,578 23,049 American Century VP Value Fund 1,236,143 7.79 9,629,559 8,105,814 1,523,745 Credit Suisse Small Cap Growth Portfolio 91,984 13.80 1,269,377 1,072,238 197,139 Dreyfus IP MidCap Stock Portfolio - Initial shares 180,757 15.82 2,859,569 2,369,227 490,342 Dreyfus VIF Developing Leaders Portfolio - Initial shares 271,485 37.39 10,150,805 9,245,369 905,436 Dreyfus VIF Quality Bond Portfolio - Initial shares 672,861 11.50 7,737,897 7,747,159 (9,262) Fidelity VIP Asset Manager Portfolio - Service Class 2 260,955 14.27 3,723,833 3,378,339 345,494 Fidelity VIP Contrafund Portfolio - Service Class 2 405,304 22.93 9,293,612 7,820,646 1,472,966 Fidelity VIP Equity-Income Portfolio - Service Class 2 494,458 22.96 11,352,744 9,895,510 1,457,234 Fidelity VIP Growth Portfolio - Service Class 2 286,414 30.72 8,798,643 8,081,014 717,629 Fidelity VIP Mid Cap Portfolio - Service Class 2 13,577 23.97 325,435 297,445 27,990 Franklin Templeton - Franklin Small Cap Fund - Class 2 7,763 17.43 135,304 127,216 8,088 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 19,257 12.67 243,988 214,877 29,111 Franklin Templeton - Franklin U.S. Government Fund - Class 2 898,687 13.08 11,754,825 11,833,247 (78,422) Franklin Templeton - Mutual Shares Securities Fund - Class 2 402,388 14.89 5,991,559 4,816,569 1,174,990 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 531,790 12.24 6,509,112 5,003,930 1,505,182 Goldman Sachs Capital Growth Fund 886,451 9.59 8,501,063 8,314,908 186,155 Janus Aspen Series International Growth Portfolio - Service Shares 93,494 22.89 2,140,069 1,862,590 277,479 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 99,167 21.05 2,087,464 1,790,724 296,740 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 132,686 25.70 3,410,017 3,100,428 309,589 JPMorgan Mid Cap Value Portfolio 5,655 21.59 122,094 111,934 10,160 JPMorgan Small Company Portfolio 57,486 14.06 808,258 687,792 120,466 MFS VIT Capital Opportunities Series 272,067 12.11 3,294,729 3,162,616 132,113 MFS VIT Emerging Growth Series 702,180 15.51 10,890,807 12,361,420 (1,470,613) MFS VIT New Discovery Series 220,779 13.96 3,082,073 2,819,900 262,173 MFS VIT Research Series 96,248 13.35 1,284,913 1,204,067 80,846 MFS VIT Total Return Series 38,446 19.58 752,768 694,865 57,903 Neuberger Berman AMT Mid-Cap Growth Portfolio 121,416 15.33 1,861,300 1,726,225 135,075 Neuberger Berman AMT Partners Portfolio 7,571 15.40 116,590 109,903 6,687 Oppenheimer Global Securities Fund/VA 7,083 25.08 177,631 157,711 19,920 Oppenheimer High Income Fund/VA 8,302 8.61 71,478 64,646 6,832 Oppenheimer Multiple Strategies Fund/VA 7,310 15.92 116,380 110,059 6,321 PIMCO VIT Real Return Portfolio - Administrative Class 688,998 12.36 8,516,017 8,151,883 364,134 PIMCO VIT Short-Term Portfolio - Administrative Class 445,224 10.10 4,496,759 4,487,902 8,857 PIMCO VIT Total Return Portfolio - Administrative Class 1,036,714 10.36 10,740,353 10,568,403 171,950 Putnam VT Diversified Income Fund - Class IB 635,209 9.24 5,869,329 5,457,038 412,291 Putnam VT Growth and Income Fund - Class IB 624,290 23.26 14,520,974 13,599,629 921,345 Putnam VT International Growth and Income Fund - Class IB 447,669 11.31 5,063,138 4,324,940 738,198
VL-R 46 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note E - Investments - continued The following is a summary of fund shares owned as of December 31, 2003:
Value of Unrealized Net Asset Shares Cost of Appreciation/ Divisions Shares Value at Market Shares Held (Depreciation) - ----------------------------------------------------------------------------------------------------------------------------------- Putnam VT Small Cap Value Fund - Class IB 22,461 $ 18.12 $ 407,000 $ 317,858 $ 89,142 Putnam VT Vista Fund - Class IB 6,973 10.48 73,077 71,582 1,495 Putnam VT Voyager Fund - Class IB 10,276 25.96 266,767 258,506 8,261 SAFECO RST Equity Core Portfolio 141,235 22.35 3,156,601 3,027,702 128,899 SAFECO RST Growth Opportunities Portfolio 258,693 19.44 5,028,994 4,784,708 244,286 Scudder VIT Equity 500 Index Fund - Class A 1,329 11.64 15,466 15,967 (501) SunAmerica - Aggressive Growth Portfolio - Class 1 27,959 8.73 243,944 213,515 30,429 SunAmerica - SunAmerica Balanced Portfolio - Class 1 27,129 13.31 361,206 336,065 25,141 UIF Equity Growth Portfolio - Class I 294,682 12.78 3,766,040 4,262,478 (496,438) UIF High Yield Portfolio - Class I 255,607 7.09 1,812,256 1,794,001 18,255 VALIC Company I - International Equities Fund 273,891 6.77 1,854,246 1,717,792 136,454 VALIC Company I - Mid Cap Index Fund 711,516 18.83 13,397,850 12,073,088 1,324,762 VALIC Company I - Money Market I Fund 36,676,878 1.00 36,676,878 36,676,878 -- VALIC Company I - Nasdaq-100 Index Fund 714,381 4.12 2,943,249 2,360,133 583,116 VALIC Company I - Science & Technology Fund 81,823 11.33 927,054 819,205 107,849 VALIC Company I - Small Cap Index Fund 265,982 13.72 3,649,280 3,072,810 576,470 VALIC Company I - Stock Index Fund 1,439,633 30.54 43,966,387 42,953,240 1,013,147 Van Kampen LIT Emerging Growth Portfolio - Class I 2,443 24.31 59,393 56,568 2,825 Van Kampen LIT Government Portfolio - Class I 17,090 9.55 163,214 164,316 (1,102) Van Kampen LIT Growth and Income Portfolio - Class I 223,930 17.06 3,820,252 3,278,933 541,319 Vanguard VIF High Yield Bond Portfolio 479,828 8.95 4,294,466 3,961,180 333,286 Vanguard VIF REIT Index Portfolio 378,992 16.09 6,097,988 5,052,639 1,045,349 -------------------------------------------- Total $ 327,578,646 $ 310,801,665 $ 16,776,981 ============================================
VL-R 47 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units Summary of Changes in Units for the Year Ended December 31, 2003:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ AG Legacy Plus Divisions: AIM V.I. International Growth Fund - Series I shares 22,776 1,098 (11,281) 5,176 17,769 American Century VP Value Fund 32,212 918 (6,085) 3,791 30,836 Fidelity VIP Asset Manager Portfolio - Service Class 2 8,505 411 (384) 5,392 13,924 Fidelity VIP Contrafund Portfolio - Service Class 2 25,788 805 (1,041) 11,920 37,472 Fidelity VIP Equity-Income Portfolio - Service Class 2 39,899 1,980 (2,344) 13,675 53,210 Fidelity VIP Growth Portfolio - Service Class 2 21,662 1,349 (1,480) 3,815 25,346 Franklin Templeton - Franklin Small Cap Fund - Class 2 19,916 1,085 (690) 1,040 21,351 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 6,595 214 (401) 7,047 13,455 MFS VIT Emerging Growth Series 7,536 1,006 (495) 1,669 9,716 MFS VIT New Discovery Series 7,546 808 (376) 3,889 11,867 MFS VIT Total Return Series 136,071 1,020 (21,260) 17,708 133,539 Neuberger Berman AMT Partners Portfolio 11,767 626 (368) 119 12,144 Oppenheimer High Income Fund/VA 11,744 151 (5,952) 234 6,177 PIMCO VIT Real Return Portfolio - Administrative Class 32,681 1,849 (2,635) 14,753 46,648 PIMCO VIT Total Return Portfolio - Administrative Class 25,099 1,198 (1,278) 10,418 35,437 Putnam VT Diversified Income Fund - Class IB 7,901 829 (3,626) 3,746 8,850 Putnam VT Small Cap Value Fund - Class IB 24,600 634 (1,007) 1,512 25,739 Putnam VT Vista Fund - Class IB 14,678 655 (436) 567 15,464 Putnam VT Voyager Fund - Class IB 47,406 636 (15,002) 15,282 48,322 VALIC Company I - International Equities Fund 11,056 834 (379) 2,887 14,398 VALIC Company I - Mid Cap Index Fund 17,425 1,196 (920) 2,214 19,915 VALIC Company I - Money Market I Fund 47,333 114,388 (6,240) (101,058) 54,423 VALIC Company I - Stock Index Fund 52,528 1,453 (1,589) (11,466) 40,926 Van Kampen LIT Emerging Growth Portfolio - Class I 20,181 1,603 (10,885) 2,383 13,282 Van Kampen LIT Government Portfolio - Class I 11,024 212 (3,038) 4,884 13,082 Corporate America Divisions: AIM V.I. International Growth Fund - Series I shares 5,928 1,185 (256) 1 6,858 AIM V.I. Premier Equity Fund - Series I shares 6,136 85 (228) -- 5,993 American Century VP Value Fund 5,131 -- (1,159) 703 4,675 Dreyfus VIF Developing Leaders Portfolio - Initial shares 10,128 2,296 (790) 726 12,360 Dreyfus VIF Quality Bond Portfolio - Initial shares 7,235 24 (176) 1 7,084 Fidelity VIP Contrafund Portfolio - Service Class 2 4,783 590 (984) 713 5,102 Fidelity VIP Equity-Income Portfolio - Service Class 2 17,330 2,715 (1,155) 388 19,278 Fidelity VIP Growth Portfolio - Service Class 2 4,366 1,277 (107) -- 5,536 Janus Aspen Series International Growth Portfolio - Service Shares 1,873 1,379 (32) (1) 3,219 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 2,135 -- (742) 951 2,344 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 8,060 2,434 (977) 1,242 10,759 MFS VIT Capital Opportunities Series 3,029 -- (1,058) 1,425 3,396 MFS VIT Emerging Growth Series 1,471 -- (199) -- 1,272 MFS VIT New Discovery Series 3,836 -- (627) 956 4,165
VL-R 48 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2003:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Corporate America Divisions - continued: MFS VIT Research Series 2,002 1,235 (39) (1) 3,197 Neuberger Berman AMT Mid-Cap Growth Portfolio -- 1,001 -- -- 1,001 PIMCO VIT Real Return Portfolio - Administrative Class 3,026 -- (71) (540) 2,415 PIMCO VIT Short-Term Portfolio - Administrative Class 6,727 9,415 (1,405) 1,183 15,920 PIMCO VIT Total Return Portfolio - Administrative Class 4,850 2,196 (117) 1 6,930 Putnam VT Diversified Income Fund - Class IB 190,178 96,479 (4,426) 12,374 294,605 Putnam VT Growth and Income Fund - Class IB 234,304 127,725 (8,235) 18,092 371,886 Putnam VT International Growth and Income Fund - Class IB -- 1,334 -- -- 1,334 Safeco RST Growth Opportunities Portfolio 3,445 40 (114) -- 3,371 VALIC Company I - Mid Cap Index Fund 7,522 57 (594) -- 6,985 VALIC Company I - Money Market I Fund 28,915 8,810 (357) (32,132) 5,236 VALIC Company I - Small Cap Index Fund 3,525 1,669 (271) -- 4,923 VALIC Company I - Stock Index Fund 13,034 2,288 (356) -- 14,966 Vanguard VIF REIT Index Portfolio 4,485 -- (1,097) 455 3,843 Legacy Plus Divisions: AIM V.I. Premier Equity Fund - Series I shares 1 -- -- (1) -- Scudder VIT Equity 500 Index Fund - Class A 1,610 319 (258) (1) 1,670 VALIC Company I - Money Market I Fund 977 126 (100) -- 1,003 Platinum Investor I and II Divisions: AIM V.I. International Growth Fund - Series I shares 368,831 76,995 (74,099) (42,863) 328,864 AIM V.I. Premier Equity Fund - Series I shares 957,563 173,672 (221,362) (53,504) 856,369 American Century VP Value Fund 180,166 15,420 (59,760) 74,841 210,667 Ayco Growth Fund 29,066 151 (1,475) (27,742) -- Credit Suisse Small Cap Growth Portfolio 35,231 2,769 (7,048) 15,865 46,817 Dreyfus IP MidCap Stock Portfolio - Initial shares 63,006 6,887 (6,547) 9,675 73,021 Dreyfus VIF Developing Leaders Portfolio - Initial shares 426,312 76,960 (80,009) (17,781) 405,482 Dreyfus VIF Quality Bond Portfolio - Initial shares 434,524 24,238 (72,482) (34,416) 351,864 Fidelity VIP Asset Manager Portfolio - Service Class 2 174,156 5,594 (76,390) 91,190 194,550 Fidelity VIP Contrafund Portfolio - Service Class 2 243,907 20,250 (50,361) 61,471 275,267 Fidelity VIP Equity-Income Portfolio - Service Class 2 264,111 20,773 (45,650) 62,077 301,311 Fidelity VIP Growth Portfolio - Service Class 2 305,211 25,551 (54,295) 25,218 301,685 Fidelity VIP Mid Cap Portfolio - Service Class 2 -- 7 (85) 14,008 13,930 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 -- 5 (4) 822 823 Franklin Templeton - Franklin U.S. Government Fund - Class 2 19,378 4,513 (7,146) 13,233 29,978 Franklin Templeton - Mutual Shares Securities Fund - Class 2 12,404 1,216 (12,173) 22,823 24,270 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 7,590 6,971 (3,608) 43,821 54,774 Goldman Sachs Capital Growth Fund -- -- (1) 14,862 14,861 Janus Aspen Series International Growth Portfolio - Service Shares 77,304 16,648 (7,844) (1,533) 84,575 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 50,819 13,052 (7,690) (3,876) 52,305 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 154,176 13,898 (57,763) 18,440 128,751
VL-R 49 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2003:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor I and II Divisions - continued: JPMorgan Mid Cap Value Portfolio -- 8 (6) 37 39 JPMorgan Small Company Portfolio 14,260 1,031 (1,758) 11,165 24,698 MFS VIT Capital Opportunities Series 138,353 12,493 (34,270) 7,243 123,819 MFS VIT Emerging Growth Series 734,536 193,938 (166,982) (53,663) 707,829 MFS VIT New Discovery Series 109,936 7,813 (15,701) 16,318 118,366 MFS VIT Research Series 43,887 6,440 (5,841) 1,013 45,499 Neuberger Berman AMT Mid-Cap Growth Portfolio 57,765 6,196 (5,611) (7,261) 51,089 Oppenheimer Global Securities Fund/VA -- -- -- 2,681 2,681 Oppenheimer Multiple Strategies Fund/VA -- -- -- 2 2 PIMCO VIT Real Return Portfolio - Administrative Class 190,024 16,412 (42,078) (48,585) 115,773 PIMCO VIT Short-Term Portfolio - Administrative Class 80,480 20,944 (25,585) 122,837 198,676 PIMCO VIT Total Return Portfolio - Administrative Class 276,366 15,102 (38,960) 6,267 258,775 Putnam VT Diversified Income Fund - Class IB 100,097 11,663 (12,348) (9,520) 89,892 Putnam VT Growth and Income Fund - Class IB 556,852 98,870 (133,933) (12,216) 509,573 Putnam VT International Growth and Income Fund - Class IB 235,399 37,885 (33,485) (219) 239,580 Safeco RST Core Equity Portfolio 332,477 64,154 (87,752) (32,702) 276,177 Safeco RST Growth Opportunities Portfolio 445,419 68,084 (88,295) (28,717) 396,491 SunAmerica - Aggressive Growth Portfolio - Class 1 108 12 (462) 7,917 7,575 SunAmerica - SunAmerica Balanced Portfolio - Class 1 16 252 (114) 41 195 UIF Equity Growth Portfolio - Class I 381,798 77,426 (77,468) (55,550) 326,206 UIF High Yield Portfolio - Class I 128,628 18,326 (20,133) (421) 126,400 VALIC Company I - International Equities Fund 133,568 9,441 (25,193) 4,614 122,430 VALIC Company I - Mid Cap Index Fund 479,617 53,707 (68,946) 9,590 473,968 VALIC Company I - Money Market I Fund 1,576,362 493,219 (385,519) (496,995) 1,187,067 VALIC Company I - Nasdaq-100 Index Fund 88,041 18,417 (18,873) 87,878 175,463 VALIC Company I - Science & Technology Fund 33,591 7,662 (6,346) 14,293 49,200 VALIC Company I - Small Cap Index Fund 101,961 6,930 (4,858) 28,246 132,279 VALIC Company I - Stock Index Fund 1,712,769 221,270 (353,492) 19,982 1,600,529 Van Kampen LIT Growth and Income Portfolio - Class I 154,511 19,967 (33,657) 37,682 178,503 Vanguard VIF High Yield Bond Portfolio 45,524 10,731 (6,396) 23,602 73,461 Vanguard VIF REIT Index Portfolio 70,827 5,742 (14,530) 17,483 79,522 Platinum Investor III Divisions: AIM V.I. International Growth Fund - Series I shares 77,922 45,593 (22,903) 20,387 120,999 AIM V.I. Premier Equity Fund - Series I shares 347,063 175,182 (97,216) 8,099 433,128 Alger American Leveraged AllCap Portfolio - Class O Shares -- 318 (263) 17,952 18,007 Alger American MidCap Growth Portfolio - Class O Shares -- 940 (510) 18,355 18,785 American Century VP Value Fund 221,601 119,261 (61,824) 90,425 369,463 Ayco Growth Fund 30,148 5,914 (6,972) (29,090) -- Credit Suisse Small Cap Growth Portfolio 51,587 29,746 (13,952) 47,309 114,690 Dreyfus IP MidCap Stock Portfolio - Initial shares 121,203 57,835 (31,070) 13,643 161,611
VL-R 50 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2003:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor III Divisions - continued: Dreyfus VIF Developing Leaders Portfolio - Initial shares 271,074 154,259 (73,729) 25,914 377,518 Dreyfus VIF Quality Bond Portfolio - Initial shares 153,439 78,320 (45,402) 24,314 210,671 Fidelity VIP Asset Manager Portfolio - Service Class 2 79,608 47,699 (25,955) 45,570 146,922 Fidelity VIP Contrafund Portfolio - Service Class 2 301,956 211,568 (94,138) 159,576 578,962 Fidelity VIP Equity-Income Portfolio - Service Class 2 359,047 211,691 (98,918) 147,070 618,890 Fidelity VIP Growth Portfolio - Service Class 2 528,324 286,683 (144,998) 136,350 806,359 Fidelity VIP Mid Cap Portfolio - Service Class 2 -- 1,167 (239) 6,662 7,590 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 -- 1,090 (371) 13,201 13,920 Franklin Templeton - Franklin U.S. Government Fund - Class 2 765,913 22,765 (71,552) 276,121 993,247 Franklin Templeton - Mutual Shares Securities Fund - Class 2 485,325 19,815 (39,157) 32,470 498,453 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 517,539 15,326 (38,586) 19,854 514,133 Goldman Sachs Capital Growth Fund -- -- (121) 16,345 16,224 Janus Aspen Series International Growth Portfolio - Service Shares 130,384 71,320 (33,171) 16,011 184,544 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 257,635 149,642 (78,828) 48,694 377,143 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 206,199 124,978 (58,998) 42,376 314,555 JPMorgan Mid Cap Value Portfolio -- 363 (383) 9,352 9,332 JPMorgan Small Company Portfolio 32,094 21,410 (10,824) 19,443 62,123 MFS VIT Capital Opportunities Series 261,521 142,671 (79,215) 26,755 351,732 MFS VIT Emerging Growth Series 407,316 223,811 (126,793) 206,464 710,798 MFS VIT New Discovery Series 128,296 78,121 (35,732) 38,822 209,507 MFS VIT Research Series 95,980 54,405 (31,790) 9,179 127,774 Neuberger Berman AMT Mid-Cap Growth Portfolio 171,461 83,728 (46,044) 37,420 246,565 Oppenheimer Global Securities Fund/VA -- 826 (220) 7,358 7,964 Oppenheimer Multiple Strategies Fund/VA -- 202 (131) 5,604 5,675 PIMCO VIT Real Return Portfolio - Administrative Class 174,421 128,885 (51,006) 104,925 357,225 PIMCO VIT Short-Term Portfolio - Administrative Class 86,224 23,579 (20,485) 47,139 136,457 PIMCO VIT Total Return Portfolio - Administrative Class 301,969 117,628 (59,111) 76,640 437,126 Putnam VT Diversified Income Fund - Class IB 34,162 14,150 (9,086) 18,594 57,820 Putnam VT Growth and Income Fund - Class IB 326,752 156,775 (85,716) 69,550 467,361 Putnam VT International Growth and Income Fund - Class IB 135,756 70,993 (26,550) 18,399 198,598 Safeco RST Core Equity Portfolio 48,012 27,388 (12,632) 1,168 63,936 Safeco RST Growth Opportunities Portfolio 105,618 60,372 (33,663) (11,370) 120,957 SunAmerica - Aggressive Growth Portfolio - Class 1 2,070 5,047 (2,117) 9,418 14,418 SunAmerica - SunAmerica Balanced Portfolio - Class 1 8,391 9,911 (4,748) 14,880 28,434 UIF Equity Growth Portfolio - Class I 49,604 18,969 (8,754) 6,831 66,650 UIF High Yield Portfolio - Class I 13,440 4,307 (2,877) 6,071 20,941 VALIC Company I - International Equities Fund 43,063 17,007 (9,794) 17,195 67,471 VALIC Company I - Mid Cap Index Fund 229,906 120,456 (55,897) 60,842 355,307 VALIC Company I - Money Market I Fund 1,248,697 2,571,974 (393,353) (2,269,568) 1,157,750 VALIC Company I - Nasdaq-100 Index Fund 337,089 154,426 (82,688) 49,557 458,384
VL-R 51 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2003:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor III Divisions - continued: VALIC Company I - Science & Technology Fund 119,566 60,111 (31,248) 16,265 164,694 VALIC Company I - Small Cap Index Fund 89,617 36,971 (23,419) 47,500 150,669 VALIC Company I - Stock Index Fund 1,643,626 797,187 (294,247) 321,808 2,468,374 Van Kampen LIT Growth and Income Portfolio - Class I 77,747 71,112 (27,683) 34,074 155,250 Vanguard VIF High Yield Bond Portfolio 110,201 36,712 (27,695) 84,207 203,425 Vanguard VIF REIT Index Portfolio 157,740 64,856 (30,244) 47,176 239,528 Platinum Investor PLUS Divisions: AIM V.I. International Growth Fund - Series I shares 480 1,361 (620) 2,592 3,813 AIM V.I. Premier Equity Fund - Series I shares 1,706 2,432 (1,310) 6,076 8,904 Alger American Leveraged AllCap Portfolio - Class O Shares -- 218 (69) 1,057 1,206 Alger American MidCap Growth Portfolio - Class O Shares -- 191 (78) 872 985 American Century VP Value Fund 4,788 7,412 (3,542) 11,852 20,510 Ayco Growth Fund 1 26 (22) (5) -- Credit Suisse Small Cap Growth Portfolio 871 1,520 (585) 2,031 3,837 Dreyfus IP MidCap Stock Portfolio - Initial shares 3,019 2,701 (1,374) 6,708 11,054 Dreyfus VIF Developing Leaders Portfolio - Initial shares 4,300 6,882 (3,210) 6,979 14,951 Dreyfus VIF Quality Bond Portfolio - Initial shares 4,878 8,268 (4,000) 3,309 12,455 Fidelity VIP Asset Manager Portfolio - Service Class 2 1,718 2,620 (1,227) 4,360 7,471 Fidelity VIP Contrafund Portfolio - Service Class 2 4,180 6,951 (3,874) 21,093 28,350 Fidelity VIP Equity-Income Portfolio - Service Class 2 6,741 10,284 (4,475) 16,258 28,808 Fidelity VIP Growth Portfolio - Service Class 2 6,371 10,511 (4,617) 23,073 35,338 Fidelity VIP Mid Cap Portfolio - Service Class 2 -- 521 (132) 694 1,083 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 -- 285 (61) 2,050 2,274 Franklin Templeton - Franklin U.S. Government Fund - Class 2 1,443 4,463 (2,565) 28,916 32,257 Franklin Templeton - Mutual Shares Securities Fund - Class 2 2,794 2,849 (1,441) 4,845 9,047 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 1,105 2,148 (675) 2,033 4,611 Goldman Sachs Capital Growth Fund -- -- -- 115 115 Janus Aspen Series International Growth Portfolio - Service Shares 1,057 1,380 (805) 2,015 3,647 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 1,532 1,390 (919) 4,122 6,125 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 1,138 2,930 (1,421) 5,685 8,332 JPMorgan Mid Cap Value Portfolio -- 115 (38) 62 139 JPMorgan Small Company Portfolio 83 780 (373) 1,055 1,545 MFS VIT Capital Opportunities Series 1,935 3,666 (1,681) 9,288 13,208 MFS VIT Emerging Growth Series 1,418 3,986 (1,779) 7,363 10,988 MFS VIT New Discovery Series 2,463 2,566 (1,248) 4,207 7,988 MFS VIT Research Series 444 821 (433) 2,494 3,326 Neuberger Berman AMT Mid-Cap Growth Portfolio 1,371 2,496 (1,367) 6,635 9,135 Oppenheimer Global Securities Fund/VA -- 119 (51) 186 254 Oppenheimer Multiple Strategies Fund/VA -- 93 (25) 423 491 PIMCO VIT Real Return Portfolio - Administrative Class 5,160 8,585 (5,144) 10,993 19,594
VL-R 52 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2003:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor PLUS Divisions - continued: PIMCO VIT Short-Term Portfolio - Administrative Class 560 1,398 (686) 3,793 5,065 PIMCO VIT Total Return Portfolio - Administrative Class 4,990 8,900 (4,211) 14,817 24,496 Putnam VT Diversified Income Fund - Class IB 246 1,311 (738) 3,411 4,230 Putnam VT Growth and Income Fund - Class IB 3,645 6,392 (2,934) 5,899 13,002 Putnam VT International Growth and Income Fund - Class IB 682 1,817 (1,030) 3,060 4,529 Safeco RST Core Equity Portfolio 291 579 (213) 181 838 Safeco RST Growth Opportunities Portfolio 1,743 1,780 (780) 824 3,567 SunAmerica - Aggressive Growth Portfolio - Class 1 124 490 (241) 1,601 1,974 SunAmerica - SunAmerica Balanced Portfolio - Class 1 2,001 2,813 (1,323) 2,961 6,452 UIF Equity Growth Portfolio - Class I 133 807 (273) 1,308 1,975 UIF High Yield Portfolio - Class I -- 174 (54) 312 432 VALIC Company I - International Equities Fund 57 399 (325) 3,593 3,724 VALIC Company I - Mid Cap Index Fund 2,609 3,622 (2,512) 11,464 15,183 VALIC Company I - Money Market I Fund 14,815 409,481 (22,842) (303,244) 98,210 VALIC Company I - Nasdaq-100 Index Fund 457 1,043 (700) 5,049 5,849 VALIC Company I - Science & Technology Fund 48 806 (335) 1,873 2,392 VALIC Company I - Small Cap Index Fund 1,298 1,123 (1,030) 6,490 7,881 VALIC Company I - Stock Index Fund 1,898 3,738 (4,939) 41,470 42,167 Van Kampen LIT Growth and Income Portfolio - Class I 1,758 3,225 (1,497) 6,107 9,593 Vanguard VIF High Yield Bond Portfolio 1,974 2,383 (1,634) 6,563 9,286 Vanguard VIF REIT Index Portfolio 5,814 5,938 (3,363) 5,868 14,257 Platinum Investor Survivor Divisions: AIM V.I. International Growth Fund - Series I shares 50,094 8,299 (8,330) (3,643) 46,420 AIM V.I. Premier Equity Fund - Series I shares 105,247 37,635 (30,144) (3,246) 109,492 Alger American Leveraged AllCap Portfolio - Class O Shares -- 86 (52) 104 138 Alger American MidCap Growth Portfolio - Class O Shares -- 61 (120) 2,233 2,174 American Century VP Value Fund 12,625 6,942 (6,047) 12,005 25,525 Ayco Growth Fund 789,598 -- (49,426) (740,172) -- Credit Suisse Small Cap Growth Portfolio 3,366 1,138 (1,575) 1,601 4,530 Dreyfus IP MidCap Stock Portfolio - Initial shares 20,439 2,359 (3,490) (545) 18,763 Dreyfus VIF Developing Leaders Portfolio - Initial shares 161,430 13,161 (110,273) (5,698) 58,620 Dreyfus VIF Quality Bond Portfolio - Initial shares 19,599 7,219 (2,607) (1,552) 22,659 Fidelity VIP Asset Manager Portfolio - Service Class 2 8,463 1,619 (2,092) 871 8,861 Fidelity VIP Contrafund Portfolio - Service Class 2 272,383 8,069 (237,099) (5,585) 37,768 Fidelity VIP Equity-Income Portfolio - Service Class 2 262,426 13,164 (214,156) 4,355 65,789 Fidelity VIP Growth Portfolio - Service Class 2 404,293 32,144 (348,989) (2,692) 84,756 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 -- -- -- 954 954 Franklin Templeton - Franklin U.S. Government Fund - Class 2 25,055 9,864 (2,253) (32,359) 307 Franklin Templeton - Mutual Shares Securities Fund - Class 2 1,068 493 (109) 1,000 2,452 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 595 134 (962) 6,188 5,955
VL-R 53 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2003:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor Survivor Divisions - continued: Goldman Sachs Capital Growth Fund -- -- (8) 740,046 740,038 Janus Aspen Series International Growth Portfolio - Service Shares 25,566 8,290 (5,554) 7,144 35,446 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 14,436 11,669 (6,331) 9,680 29,454 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 21,524 9,792 (5,284) 10,671 36,703 JPMorgan Small Company Portfolio 1,804 390 (720) (373) 1,101 MFS VIT Capital Opportunities Series 38,315 16,183 (7,343) (4,805) 42,350 MFS VIT Emerging Growth Series 112,158 36,973 (28,380) 7,699 128,450 MFS VIT New Discovery Series 6,447 2,540 (2,059) 5,962 12,890 MFS VIT Research Series 9,598 4,536 (2,886) (1,105) 10,143 Neuberger Berman AMT Mid-Cap Growth Portfolio 175,271 5,537 (165,954) (665) 14,189 Oppenheimer Global Securities Fund/VA -- 103 (11) 1,179 1,271 Oppenheimer Multiple Strategies Fund/VA -- -- -- 433 433 PIMCO VIT Real Return Portfolio - Administrative Class 61,007 2,239 (5,208) (2,046) 55,992 PIMCO VIT Short-Term Portfolio - Administrative Class 17,021 2,155 (3,200) 6,506 22,482 PIMCO VIT Total Return Portfolio - Administrative Class 51,588 2,197 (4,271) 1,838 51,352 Putnam VT Diversified Income Fund - Class IB 4,759 673 (610) (465) 4,357 Putnam VT Growth and Income Fund - Class IB 68,750 23,293 (20,311) (1,334) 70,398 Putnam VT International Growth and Income Fund - Class IB 230,768 8,217 (198,788) 3,000 43,197 Safeco RST Core Equity Portfolio 27,186 8,243 (3,839) 647 32,237 Safeco RST Growth Opportunities Portfolio 30,017 4,534 (13,032) (4,501) 17,018 UIF Equity Growth Portfolio - Class I 49,021 4,492 (19,113) (4,259) 30,141 UIF High Yield Portfolio - Class I 23,236 3,592 (1,656) (370) 24,802 VALIC Company I - International Equities Fund 13,500 3,989 (5,823) 499 12,165 VALIC Company I - Mid Cap Index Fund 60,525 14,035 (6,760) (2,793) 65,007 VALIC Company I - Money Market I Fund 411,443 62,134 (38,561) (54,818) 380,198 VALIC Company I - Nasdaq-100 Index Fund 10,382 2,305 (3,056) 10,761 20,392 VALIC Company I - Science & Technology Fund 6,981 5,169 (1,215) 2,335 13,270 VALIC Company I - Small Cap Index Fund 20,366 3,571 (2,773) 5,203 26,367 VALIC Company I - Stock Index Fund 564,353 152,650 (53,637) 21,802 685,168 Van Kampen LIT Growth and Income Portfolio - Class I 19,931 2,602 (7,068) (311) 15,154 Vanguard VIF High Yield Bond Portfolio 58,997 10,532 (7,959) 9,664 71,234 Vanguard VIF REIT Index Portfolio 18,253 5,291 (2,330) 2 21,216 Platinum Investor Survivor II Divisions: AIM V.I. International Growth Fund - Series I shares 1,368 135 (241) (67) 1,195 AIM V.I. Premier Equity Fund - Series I shares 3,438 1,657 (1,142) 196 4,149 Alger American Leveraged AllCap Portfolio - Class O Shares -- -- (1) 104 103 Alger American MidCap Growth Portfolio - Class O Shares -- 37 (12) 318 343 American Century VP Value Fund 42,508 14,977 (7,441) 16,872 66,916 Ayco Growth Fund 222,735 -- (18,775) (203,960) -- Credit Suisse Small Cap Growth Portfolio 124 180 (96) 541 749
VL-R 54 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2003:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor Survivor II Divisions - continued: Dreyfus IP MidCap Stock Portfolio - Initial shares 1,861 798 (634) 2,375 4,400 Dreyfus VIF Developing Leaders Portfolio - Initial shares 19,192 13,494 (4,922) 15,370 43,134 Dreyfus VIF Quality Bond Portfolio - Initial shares 3,457 981 (644) 1,087 4,881 Fidelity VIP Asset Manager Portfolio - Service Class 2 4,060 1,548 (982) 3,248 7,874 Fidelity VIP Contrafund Portfolio - Service Class 2 4,002 3,176 (1,572) 3,387 8,993 Fidelity VIP Equity-Income Portfolio - Service Class 2 28,086 3,175 (4,125) 4,239 31,375 Fidelity VIP Growth Portfolio - Service Class 2 30,554 4,526 (4,205) 2,624 33,499 Fidelity VIP Mid Cap Portfolio - Service Class 2 -- -- (2) 648 646 Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 -- 106 (3) 304 407 Franklin Templeton - Franklin U.S. Government Fund - Class 2 372 750 (938) 4,256 4,440 Franklin Templeton - Mutual Shares Securities Fund - Class 2 8,126 165 (1,349) 9,147 16,089 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 9,504 555 (1,884) 17,993 26,168 Goldman Sachs Capital Growth Fund -- -- (1,450) 203,960 202,510 Janus Aspen Series International Growth Portfolio - Service Shares 10,266 -- (906) (5,017) 4,343 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares -- -- (35) 1,031 996 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 14,644 18,037 (4,402) 74 28,353 JPMorgan Mid Cap Value Portfolio -- 24 (19) 354 359 JPMorgan Small Company Portfolio 116 -- (23) 376 469 MFS VIT Capital Opportunities Series 1,984 620 (450) 290 2,444 MFS VIT Emerging Growth Series 978 608 (480) 975 2,081 MFS VIT New Discovery Series 18,384 1,063 (2,036) 3,048 20,459 MFS VIT Research Series 2,335 2,230 (709) -- 3,856 Neuberger Berman AMT Mid-Cap Growth Portfolio 2,862 3,113 (1,083) 1,398 6,290 Oppenheimer Global Securities Fund/VA -- -- -- 316 316 Oppenheimer Multiple Strategies Fund/VA -- 8 (8) 3,197 3,197 PIMCO VIT Real Return Portfolio - Administrative Class 5,707 2,273 (2,022) 6,583 12,541 PIMCO VIT Short-Term Portfolio - Administrative Class 34,758 517 (2,751) (2,763) 29,761 PIMCO VIT Total Return Portfolio - Administrative Class 43,725 18,599 (4,162) (5,773) 52,389 Putnam VT Diversified Income Fund - Class IB -- 69 (47) 100 122 Putnam VT Growth and Income Fund - Class IB 2,240 1,035 (816) 1,633 4,092 Putnam VT International Growth and Income Fund - Class IB 12,013 1,434 (1,385) 335 12,397 Safeco RST Core Equity Portfolio 145 28 (66) 80 187 Safeco RST Growth Opportunities Portfolio 12,647 14,080 (3,527) 43 23,243 SunAmerica - Aggressive Growth Portfolio - Class 1 -- 9 (48) 368 329 SunAmerica - SunAmerica Balanced Portfolio - Class 1 -- -- (7) 414 407 UIF Equity Growth Portfolio - Class I 99 -- (20) 62 141 UIF High Yield Portfolio - Class I 2,195 1,420 (452) 520 3,683 VALIC Company I - International Equities Fund 280 -- (119) 186 347 VALIC Company I - Mid Cap Index Fund 19,511 14,248 (4,657) 5,386 34,488 VALIC Company I - Money Market I Fund 514,618 180,009 (52,502) (135,341) 506,784
VL-R 55 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2003:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor Survivor II Divisions - continued: VALIC Company I - Nasdaq-100 Index Fund -- 132 (6) 36 162 VALIC Company I - Science & Technology Fund 506 327 (154) 23 702 VALIC Company I - Small Cap Index Fund 1,287 707 (466) 411 1,939 VALIC Company I - Stock Index Fund 80,956 105,362 (22,458) 8,358 172,218 Van Kampen LIT Growth and Income Portfolio - Class I 451 402 (429) 4,070 4,494 Vanguard VIF High Yield Bond Portfolio 1,345 1,287 (620) 1,140 3,152 Vanguard VIF REIT Index Portfolio 5,625 2,414 (1,266) 2,742 9,515
VL-R 56 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2002:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ AG Legacy Plus Divisions: AIM V.I. International Growth Fund - Series I shares 13,238 4,415 (490) 5,613 22,776 American Century VP Value Fund 19,195 4,131 (2,666) 11,552 32,212 Fidelity VIP Asset Manager Portfolio - Service Class 2 1,530 -- (196) 7,171 8,505 Fidelity VIP Contrafund Portfolio - Service Class 2 6,070 1,736 (1,578) 19,560 25,788 Fidelity VIP Equity-Income Portfolio - Service Class 2 16,085 1,898 (1,307) 23,223 39,899 Fidelity VIP Growth Portfolio - Service Class 2 8,893 596 (2,805) 14,978 21,662 Franklin Templeton - Franklin Small Cap Fund - Class 2 6,998 1,058 (2,003) 13,863 19,916 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 1,036 434 (166) 5,291 6,595 MFS VIT Emerging Growth Series 4,501 403 (365) 2,997 7,536 MFS VIT New Discovery Series 1,314 224 (232) 6,240 7,546 MFS VIT Total Return Series 67,578 10,745 (5,533) 63,281 136,071 Neuberger Berman AMT Partners Portfolio 5,132 362 (260) 6,533 11,767 Oppenheimer High Income Fund/VA 7,783 2,243 (237) 1,955 11,744 PIMCO VIT Real Return Portfolio - Administrative Class 12,784 8,528 (1,492) 12,861 32,681 PIMCO VIT Total Return Portfolio - Administrative Class 10,974 909 (2,370) 15,586 25,099 Putnam VT Diversified Income Fund - Class IB 4,788 1,313 (178) 1,978 7,901 Putnam VT Small Cap Value Fund - Class IB 8,198 1,664 (728) 15,466 24,600 Putnam VT Vista Fund - Class IB 9,574 1,088 (295) 4,311 14,678 Putnam VT Voyager Fund - Class IB 26,218 6,699 (3,763) 18,252 47,406 VALIC Company I - International Equities Fund 1,710 607 (236) 8,975 11,056 VALIC Company I - Mid Cap Index Fund 4,237 1,049 (707) 12,846 17,425 VALIC Company I - Money Market I Fund 57,185 245,567 (15,945) (239,474) 47,333 VALIC Company I - Stock Index Fund 9,606 1,880 (2,727) 43,769 52,528 Van Kampen LIT Emerging Growth Portfolio - Class I 14,444 5,149 (776) 1,364 20,181 Van Kampen LIT Government Portfolio - Class I 3,341 7,238 (510) 955 11,024 Corporate America Divisions: AIM V.I. International Growth Fund - Series I shares 36,330 658 (31,024) (36) 5,928 AIM V.I. Premier Equity Fund - Series I shares 47,372 68 (41,320) 16 6,136 American Century VP Value Fund 2,361 1,495 (122) 1,397 5,131 Dreyfus VIF Developing Leaders Portfolio - Initial shares 39,148 1,349 (31,371) 1,002 10,128 Dreyfus VIF Quality Bond Portfolio - Initial shares 22,578 2,351 (17,759) 65 7,235 Fidelity VIP Contrafund Portfolio - Service Class 2 2,132 1,048 (123) 1,726 4,783 Fidelity VIP Equity-Income Portfolio - Service Class 2 6,677 6,729 (441) 4,365 17,330 Fidelity VIP Growth Portfolio - Service Class 2 2,078 2,354 (78) 12 4,366 Janus Aspen Series International Growth Portfolio - Service Shares 835 1,049 (23) 12 1,873 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 2,288 -- (156) 3 2,135 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 4,448 1,605 (331) 2,338 8,060 MFS VIT Capital Opportunities Series 3,218 -- (213) 24 3,029 MFS VIT Emerging Growth Series 1,597 -- (127) 1 1,471 MFS VIT New Discovery Series 1,712 -- (131) 2,255 3,836
VL-R 57 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2002:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Corporate America Divisions - continued: MFS VIT Research Series 997 1,025 (29) 9 2,002 PIMCO VIT Real Return Portfolio - Administrative Class -- -- (35) 3,061 3,026 PIMCO VIT Short-Term Portfolio - Administrative Class 5,271 843 (230) 843 6,727 PIMCO VIT Total Return Portfolio - Administrative Class 2,554 2,406 (100) (10) 4,850 Putnam VT Diversified Income Fund - Class IB 99,029 77,155 (2,507) 16,501 190,178 Putnam VT Growth and Income Fund - Class IB 110,489 106,054 (3,590) 21,351 234,304 Safeco RST Growth Opportunities Portfolio 26,516 36 (23,235) 128 3,445 VALIC Company I - Mid Cap Index Fund 45,379 1,682 (39,581) 42 7,522 VALIC Company I - Money Market I Fund 2,212 76,482 (403) (49,376) 28,915 VALIC Company I - Small Cap Index Fund 1,347 2,185 (30) 23 3,525 VALIC Company I - Stock Index Fund 59,072 3,190 (49,178) (50) 13,034 Vanguard VIF REIT Index Portfolio 2,407 1,351 (101) 828 4,485 Legacy Plus Divisions: AIM V.I. Premier Equity Fund - Series I shares 15,448 121 (15,568) -- 1 Scudder VIT EAFE Equity Index Fund - Class A 5,923 34 (5,957) -- -- Scudder VIT Equity 500 Index Fund - Class A 18,704 468 (17,562) -- 1,610 UIF Equity Growth Portfolio - Class I 7,382 47 (7,429) -- -- VALIC Company I - Money Market I Fund 5,564 157 (4,744) -- 977 The One VUL Solution Divisions AIM V.I. Capital Appreciation Fund - Series I shares 766 -- (776) 10 -- AIM V.I. International Growth Fund - Series I shares 174 -- (168) (6) -- Franklin Templeton - Franklin Small Cap Fund - Class 2 909 -- (912) 3 -- Franklin Templeton - Templeton Developing Markets Securities Fund - Class 2 335 -- (274) (61) -- MFS VIT Investors Trust Series 593 -- (578) (15) -- One Group Investment Trust Equity Index Portfolio 1,456 -- (1,503) 47 -- One Group Investment Trust Mid Cap Growth Portfolio 319 -- (305) (14) -- One Group Investment Trust Large Cap Growth Portfolio 421 -- (474) 53 -- Oppenheimer High Income Fund/VA 296 -- (293) (3) -- Putnam VT Vista Fund - Class IB 474 -- (479) 5 -- Scudder International Research Portfolio 401 -- (404) 3 -- Scudder Small Cap Value Portfolio 228 -- (182) (46) -- Van Kampen LIT Emerging Growth Portfolio - Class I 1,936 -- (2,062) 126 -- Platinum Investor I and II Divisions: AIM V.I. International Growth Fund - Series I shares 356,170 114,357 (80,766) (20,930) 368,831 AIM V.I. Premier Equity Fund - Series I shares 983,406 268,784 (209,692) (84,935) 957,563 American Century VP Value Fund 111,235 16,703 (52,941) 105,169 180,166 Ayco Growth Fund 21,904 6,952 (2,240) 2,450 29,066 Credit Suisse Small Cap Growth Portfolio 27,893 2,998 (3,485) 7,825 35,231 Dreyfus IP MidCap Stock Portfolio - Initial shares 40,853 4,879 (7,020) 24,294 63,006 Dreyfus VIF Developing Leaders Portfolio - Initial shares 503,048 104,428 (168,715) (12,449) 426,312
VL-R 58 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2002:
Units, at the Units, Beginning Transferred Units, at of the Units, Units, between the End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor I and II Divisions - continued: Dreyfus VIF Quality Bond Portfolio - Initial shares 660,282 85,168 (233,459) (77,467) 434,524 Fidelity VIP Asset Manager Portfolio - Service Class 2 12,000 10,773 (12,062) 163,445 174,156 Fidelity VIP Contrafund Portfolio - Service Class 2 94,909 14,237 (65,327) 200,088 243,907 Fidelity VIP Equity-Income Portfolio - Service Class 2 181,214 25,271 (42,939) 100,565 264,111 Fidelity VIP Growth Portfolio - Service Class 2 193,357 18,769 (38,473) 131,558 305,211 Franklin Templeton - Franklin U.S. Government Fund - Class 2 -- 345 (338) 19,371 19,378 Franklin Templeton - Mutual Shares Securities Fund - Class 2 -- 229 (721) 12,896 12,404 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 -- 613 (370) 7,347 7,590 Janus Aspen Series International Growth Portfolio - Service Shares 63,776 17,675 (9,030) 4,883 77,304 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 32,312 16,709 (9,003) 10,801 50,819 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 51,950 13,836 (12,638) 101,028 154,176 JPMorgan Small Company Portfolio 12,062 1,979 (1,023) 1,242 14,260 MFS VIT Capital Opportunities Series 90,744 20,302 (23,132) 50,439 138,353 MFS VIT Emerging Growth Series 718,589 298,588 (217,864) (64,777) 734,536 MFS VIT New Discovery Series 81,569 5,820 (8,018) 30,565 109,936 MFS VIT Research Series 46,683 12,194 (17,445) 2,455 43,887 Neuberger Berman AMT Mid-Cap Growth Portfolio 40,478 12,851 (10,811) 15,247 57,765 PIMCO VIT Real Return Portfolio - Administrative Class 87,766 12,875 (80,545) 169,928 190,024 PIMCO VIT Short-Term Portfolio - Administrative Class 27,482 3,847 (6,631) 55,782 80,480 PIMCO VIT Total Return Portfolio - Administrative Class 131,290 10,175 (29,371) 164,272 276,366 Putnam VT Diversified Income Fund - Class IB 133,179 19,216 (18,949) (33,349) 100,097 Putnam VT Growth and Income Fund - Class IB 541,025 109,480 (92,596) (1,057) 556,852 Putnam VT International Growth and Income Fund - Class IB 212,113 51,449 (32,944) 4,781 235,399 Safeco RST Core Equity Portfolio 495,182 90,468 (207,963) (45,210) 332,477 Safeco RST Growth Opportunities Portfolio 413,839 96,965 (78,239) 12,854 445,419 SunAmerica - Aggressive Growth Portfolio - Class 1 -- -- (1) 109 108 SunAmerica - SunAmerica Balanced Portfolio - Class 1 -- 19 (3) -- 16 UIF Equity Growth Portfolio - Class I 438,623 101,253 (88,198) (69,880) 381,798 UIF High Yield Portfolio - Class I 183,821 27,633 (19,547) (63,279) 128,628 VALIC Company I - International Equities Fund 152,030 21,321 (15,168) (24,615) 133,568 VALIC Company I - Mid Cap Index Fund 457,875 85,103 (105,367) 42,006 479,617 VALIC Company I - Money Market I Fund 2,030,596 1,636,141 (670,871) (1,419,504) 1,576,362 VALIC Company I - Nasdaq-100 Index Fund 44,914 34,640 (8,379) 16,866 88,041 VALIC Company I - Science & Technology Fund 29,457 15,255 (10,402) (719) 33,591 VALIC Company I - Small Cap Index Fund 46,053 10,381 (5,049) 50,576 101,961 VALIC Company I - Stock Index Fund 1,590,799 380,616 (255,737) (2,909) 1,712,769 Van Kampen LIT Growth and Income Portfolio - Class I -- 16,705 (15,641) 153,447 154,511 Van Kampen LIT Strategic Stock Portfolio - Class I 116,654 9,951 (7,090) (119,515) -- Vanguard VIF High Yield Bond Portfolio 25,137 5,901 (5,473) 19,959 45,524 Vanguard VIF REIT Index Portfolio 15,235 8,036 (28,572) 76,128 70,827
VL-R 59 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2002:
Units, at the Units, Units, Beginning Transferred at the of the Units, Units, between End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor III Divisions: AIM V.I. International Growth Fund - Series I shares 43,539 38,632 (19,029) 14,780 77,922 AIM V.I. Premier Equity Fund - Series I shares 179,841 190,288 (83,889) 60,823 347,063 American Century VP Value Fund 53,553 79,184 (38,312) 127,176 221,601 Ayco Growth Fund 17,986 18,181 (8,600) 2,581 30,148 Credit Suisse Small Cap Growth Portfolio 26,246 21,862 (9,648) 13,127 51,587 Dreyfus IP MidCap Stock Portfolio - Initial shares 47,522 39,704 (21,388) 55,365 121,203 Dreyfus VIF Developing Leaders Portfolio - Initial shares 131,447 105,254 (52,250) 86,623 271,074 Dreyfus VIF Quality Bond Portfolio - Initial shares 76,533 66,505 (34,335) 44,736 153,439 Fidelity VIP Asset Manager Portfolio - Service Class 2 22,872 32,240 (15,844) 40,340 79,608 Fidelity VIP Contrafund Portfolio - Service Class 2 89,776 109,688 (49,009) 151,501 301,956 Fidelity VIP Equity-Income Portfolio - Service Class 2 153,352 143,185 (69,255) 131,765 359,047 Fidelity VIP Growth Portfolio - Service Class 2 221,929 199,397 (105,310) 212,308 528,324 Franklin Templeton - Franklin U.S. Government Fund - Class 2 -- 2,549 (88,489) 851,853 765,913 Franklin Templeton - Mutual Shares Securities Fund - Class 2 -- 1,963 (9,332) 492,694 485,325 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 -- 1,808 (9,761) 525,492 517,539 Janus Aspen Series International Growth Portfolio - Service Shares 66,264 56,134 (24,697) 32,683 130,384 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 129,640 134,673 (66,904) 60,226 257,635 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 89,664 92,117 (39,304) 63,722 206,199 JPMorgan Small Company Portfolio 9,804 13,484 (5,902) 14,708 32,094 MFS VIT Capital Opportunities Series 121,140 132,170 (62,384) 70,595 261,521 MFS VIT Emerging Growth Series 239,529 227,644 (96,219) 36,362 407,316 MFS VIT New Discovery Series 47,211 48,818 (23,477) 55,744 128,296 MFS VIT Research Series 47,757 48,646 (24,211) 23,788 95,980 Neuberger Berman AMT Mid-Cap Growth Portfolio 59,965 63,266 (29,151) 77,381 171,461 PIMCO VIT Real Return Portfolio - Administrative Class 53,040 60,342 (28,365) 89,404 174,421 PIMCO VIT Short-Term Portfolio - Administrative Class 57,361 28,529 (22,659) 22,993 86,224 PIMCO VIT Total Return Portfolio - Administrative Class 126,029 61,280 (39,078) 153,738 301,969 Putnam VT Diversified Income Fund - Class IB 17,175 13,047 (7,309) 11,249 34,162 Putnam VT Growth and Income Fund - Class IB 144,948 126,591 (59,807) 115,020 326,752 Putnam VT International Growth and Income Fund - Class IB 93,038 35,548 (18,202) 25,372 135,756 Safeco RST Core Equity Portfolio 22,815 25,113 (8,628) 8,712 48,012 Safeco RST Growth Opportunities Portfolio 37,394 59,732 (28,886) 37,378 105,618 SunAmerica - Aggressive Growth Portfolio - Class 1 -- 574 (311) 1,807 2,070 SunAmerica - SunAmerica Balanced Portfolio - Class 1 -- 1,234 (667) 7,824 8,391 UIF Equity Growth Portfolio - Class I 28,056 13,933 (5,447) 13,062 49,604 UIF High Yield Portfolio - Class I 11,481 5,460 (2,097) (1,404) 13,440 VALIC Company I - International Equities Fund 21,685 12,197 (5,932) 15,113 43,063 VALIC Company I - Mid Cap Index Fund 115,708 87,012 (38,966) 66,152 229,906 VALIC Company I - Money Market I Fund 1,416,986 4,863,536 (360,825) (4,671,000) 1,248,697 VALIC Company I - Nasdaq-100 Index Fund 207,478 83,274 (61,600) 107,937 337,089
VL-R 60 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2002:
Units, at the Units, Units, Beginning Transferred at the of the Units, Units, between End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor III Divisions - continued: VALIC Company I - Science & Technology Fund 58,814 62,767 (26,833) 24,818 119,566 VALIC Company I - Small Cap Index Fund 44,444 31,610 (13,528) 27,091 89,617 VALIC Company I - Stock Index Fund 266,322 477,724 (163,372) 1,062,952 1,643,626 Van Kampen LIT Growth and Income Portfolio - Class I -- 19,952 (11,497) 69,292 77,747 Van Kampen LIT Strategic Stock Portfolio - Class I 21,837 4,602 (2,332) (24,107) -- Vanguard VIF High Yield Bond Portfolio 66,089 22,888 (14,509) 35,733 110,201 Vanguard VIF REIT Index Portfolio 28,648 50,694 (20,776) 99,174 157,740 Platinum Investor PLUS Divisions: AIM V.I. International Growth Fund - Series I shares -- 126 (39) 393 480 AIM V.I. Premier Equity Fund - Series I shares -- 159 (245) 1,792 1,706 American Century VP Value Fund -- 543 (314) 4,559 4,788 Ayco Growth Fund -- 1 (1) 1 1 Credit Suisse Small Cap Growth Portfolio -- 177 (75) 769 871 Dreyfus IP MidCap Stock Portfolio - Initial shares -- 243 (245) 3,021 3,019 Dreyfus VIF Developing Leaders Portfolio - Initial shares -- 421 (258) 4,137 4,300 Dreyfus VIF Quality Bond Portfolio - Initial shares -- 666 (289) 4,501 4,878 Fidelity VIP Asset Manager Portfolio - Service Class 2 -- 94 (55) 1,679 1,718 Fidelity VIP Contrafund Portfolio - Service Class 2 -- 377 (229) 4,032 4,180 Fidelity VIP Equity-Income Portfolio - Service Class 2 -- 825 (303) 6,219 6,741 Fidelity VIP Growth Portfolio - Service Class 2 -- 632 (285) 6,024 6,371 Franklin Templeton - Franklin U.S. Government Fund - Class 2 -- 81 (87) 1,449 1,443 Franklin Templeton - Mutual Shares Securities Fund - Class 2 -- 124 (68) 2,738 2,794 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 -- 49 (30) 1,086 1,105 Janus Aspen Series International Growth Portfolio - Service Shares -- 111 (80) 1,026 1,057 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares -- 41 (206) 1,697 1,532 Janus Aspen Series Worldwide Growth Portfolio - Service Shares -- 150 (90) 1,078 1,138 JPMorgan Small Company Portfolio -- 4 (7) 86 83 MFS VIT Capital Opportunities Series -- 466 (122) 1,591 1,935 MFS VIT Emerging Growth Series -- 371 (152) 1,199 1,418 MFS VIT New Discovery Series -- 463 (101) 2,101 2,463 MFS VIT Research Series -- 26 (45) 463 444 Neuberger Berman AMT Mid-Cap Growth Portfolio -- 210 (104) 1,265 1,371 PIMCO VIT Real Return Portfolio - Administrative Class -- 1,722 (341) 3,779 5,160 PIMCO VIT Short-Term Portfolio - Administrative Class -- 90 (38) 508 560 PIMCO VIT Total Return Portfolio - Administrative Class -- 569 (276) 4,697 4,990 Putnam VT Diversified Income Fund - Class IB -- 84 (67) 229 246 Putnam VT Growth and Income Fund - Class IB -- 272 (166) 3,539 3,645 Putnam VT International Growth and Income Fund - Class IB -- 120 (85) 647 682 Safeco RST Core Equity Portfolio -- 43 (20) 268 291 Safeco RST Growth Opportunities Portfolio -- 190 (78) 1,631 1,743
VL-R 61 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2002:
Units, at the Units, Units, Beginning Transferred at the of the Units, Units, between End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor PLUS Divisions - continued: SunAmerica - Aggressive Growth Portfolio - Class 1 -- 28 (16) 112 124 SunAmerica - SunAmerica Balanced Portfolio - Class 1 -- 430 (97) 1,668 2,001 UIF Equity Growth Portfolio - Class I -- 18 (14) 129 133 VALIC Company I - International Equities Fund -- 17 (7) 47 57 VALIC Company I - Mid Cap Index Fund -- 340 (209) 2,478 2,609 VALIC Company I - Money Market I Fund -- 94,177 (4,670) (74,692) 14,815 VALIC Company I - Nasdaq-100 Index Fund -- 21 (60) 496 457 VALIC Company I - Science & Technology Fund -- 14 (7) 41 48 VALIC Company I - Small Cap Index Fund -- 164 (136) 1,270 1,298 VALIC Company I - Stock Index Fund -- 155 (124) 1,867 1,898 Van Kampen LIT Growth and Income Portfolio - Class I -- 255 (120) 1,623 1,758 Vanguard VIF High Yield Bond Portfolio -- 107 (202) 2,069 1,974 Vanguard VIF REIT Index Portfolio -- 1,988 (336) 4,162 5,814 Platinum Investor Survivor Divisions: AIM V.I. International Growth Fund - Series I shares 52,572 9,869 (8,630) (3,717) 50,094 AIM V.I. Premier Equity Fund - Series I shares 104,033 41,897 (20,661) (20,022) 105,247 American Century VP Value Fund 7,351 2,214 (1,759) 4,819 12,625 Ayco Growth Fund 689,142 144,100 (44,249) 605 789,598 Credit Suisse Small Cap Growth Portfolio 5,976 1,261 (498) (3,373) 3,366 Dreyfus IP MidCap Stock Portfolio - Initial shares 10,698 2,649 (2,800) 9,892 20,439 Dreyfus VIF Developing Leaders Portfolio - Initial shares 58,732 14,123 (9,375) 97,950 161,430 Dreyfus VIF Quality Bond Portfolio - Initial shares 21,483 3,713 (3,193) (2,404) 19,599 Fidelity VIP Asset Manager Portfolio - Service Class 2 3,038 2,252 (490) 3,663 8,463 Fidelity VIP Contrafund Portfolio - Service Class 2 274,354 277,378 (6,688) (272,661) 272,383 Fidelity VIP Equity-Income Portfolio - Service Class 2 260,014 245,796 (9,588) (233,796) 262,426 Fidelity VIP Growth Portfolio - Service Class 2 40,690 13,314 (11,131) 361,420 404,293 Franklin Templeton - Franklin U.S. Government Fund - Class 2 -- 137 (294) 25,212 25,055 Franklin Templeton - Mutual Shares Securities Fund - Class 2 -- 517 (51) 602 1,068 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 -- 93 (6) 508 595 Janus Aspen Series International Growth Portfolio - Service Shares 24,722 12,079 (5,712) (5,523) 25,566 Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 13,411 9,701 (5,443) (3,233) 14,436 Janus Aspen Series Worldwide Growth Portfolio - Service Shares 13,910 7,810 (4,226) 4,030 21,524 JPMorgan Small Company Portfolio 1,956 478 (524) (106) 1,804 MFS VIT Capital Opportunities Series 18,664 18,067 (7,116) 8,700 38,315 MFS VIT Emerging Growth Series 117,741 45,194 (27,880) (22,897) 112,158 MFS VIT New Discovery Series 5,448 2,880 (1,537) (344) 6,447 MFS VIT Research Series 11,015 4,498 (2,897) (3,018) 9,598 Neuberger Berman AMT Mid-Cap Growth Portfolio 5,636 12,465 (3,929) 161,099 175,271 PIMCO VIT Real Return Portfolio - Administrative Class 15,384 45,204 (4,431) 4,850 61,007 PIMCO VIT Short-Term Portfolio - Administrative Class 8,618 1,697 (2,120) 8,826 17,021
VL-R 62 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2002:
Units, at the Units, Units, Beginning Transferred at the of the Units, Units, between End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor Survivor Divisions - continued: PIMCO VIT Total Return Portfolio - Administrative Class 40,582 8,707 (3,507) 5,806 51,588 Putnam VT Diversified Income Fund - Class IB 5,402 759 (775) (627) 4,759 Putnam VT Growth and Income Fund - Class IB 48,762 29,681 (12,141) 2,448 68,750 Putnam VT International Growth and Income Fund - Class IB 96,186 70,293 (6,642) 70,931 230,768 Safeco RST Core Equity Portfolio 19,841 10,269 (3,520) 596 27,186 Safeco RST Growth Opportunities Portfolio 34,864 7,593 (7,036) (5,404) 30,017 UIF Equity Growth Portfolio - Class I 50,760 14,813 (8,562) (7,990) 49,021 UIF High Yield Portfolio - Class I 25,702 323 (1,765) (1,024) 23,236 VALIC Company I - International Equities Fund 12,156 7,836 (2,219) (4,273) 13,500 VALIC Company I - Mid Cap Index Fund 41,967 12,100 (6,871) 13,329 60,525 VALIC Company I - Money Market I Fund 461,849 240,545 (79,186) (211,765) 411,443 VALIC Company I - Nasdaq-100 Index Fund 84,435 6,640 (84,388) 3,695 10,382 VALIC Company I - Science & Technology Fund 3,006 5,022 (1,164) 117 6,981 VALIC Company I - Small Cap Index Fund 13,430 3,403 (2,640) 6,173 20,366 VALIC Company I - Stock Index Fund 426,976 125,826 (48,585) 60,136 564,353 Van Kampen LIT Growth and Income Portfolio - Class I -- 2,296 (3,684) 21,319 19,931 Van Kampen LIT Strategic Stock Portfolio - Class I 15,021 2,106 (1,001) (16,126) -- Vanguard VIF High Yield Bond Portfolio 6,513 10,138 (4,406) 46,752 58,997 Vanguard VIF REIT Index Portfolio 9,356 6,373 (2,309) 4,833 18,253 Platinum Investor Survivor II Divisions: AIM V.I. International Growth Fund - Series I shares -- 80 (203) 1,491 1,368 AIM V.I. Premier Equity Fund - Series I shares -- 218 (672) 3,892 3,438 American Century VP Value Fund -- 10,075 (4,610) 37,043 42,508 Ayco Growth Fund -- -- (18,964) 241,699 222,735 Credit Suisse Small Cap Growth Portfolio -- 47 (33) 110 124 Dreyfus IP MidCap Stock Portfolio - Initial shares -- 170 (338) 2,029 1,861 Dreyfus VIF Developing Leaders Portfolio - Initial shares -- 10,310 (3,292) 12,174 19,192 Dreyfus VIF Quality Bond Portfolio - Initial shares -- 151 (262) 3,568 3,457 Fidelity VIP Asset Manager Portfolio - Service Class 2 -- -- (304) 4,364 4,060 Fidelity VIP Contrafund Portfolio - Service Class 2 -- 215 (772) 4,559 4,002 Fidelity VIP Equity-Income Portfolio - Service Class 2 -- 704 (2,495) 29,877 28,086 Fidelity VIP Growth Portfolio - Service Class 2 -- 2,219 (3,039) 31,374 30,554 Franklin Templeton - Franklin U.S. Government Fund - Class 2 -- 95 (74) 351 372 Franklin Templeton - Mutual Shares Securities Fund - Class 2 -- -- (666) 8,792 8,126 Franklin Templeton - Templeton Foreign Securities Fund - Class 2 -- -- (878) 10,382 9,504 Janus Aspen Series International Growth Portfolio - Service Shares -- -- (678) 10,944 10,266 Janus Aspen Series Worldwide Growth Portfolio - Service Shares -- 11,197 (2,864) 6,311 14,644 JPMorgan Small Company Portfolio -- -- (7) 123 116 MFS VIT Capital Opportunities Series -- 143 (274) 2,115 1,984 MFS VIT Emerging Growth Series -- 150 (271) 1,099 978
VL-R 63 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note F - Summary of Changes in Units - continued Summary of Changes in Units for the Year Ended December 31, 2002:
Units, at the Units, Units, Beginning Transferred at the of the Units, Units, between End of Divisions Year Purchased Withdrawn Funds the Year - ------------------------------------------------------------------------------------------------------------------------------------ Platinum Investor Survivor II Divisions - continued: MFS VIT New Discovery Series -- 359 (1,528) 19,553 18,384 MFS VIT Research Series -- 143 (384) 2,576 2,335 Neuberger Berman AMT Mid-Cap Growth Portfolio -- -- (499) 3,361 2,862 PIMCO VIT Real Return Portfolio - Administrative Class -- 525 (718) 5,900 5,707 PIMCO VIT Short-Term Portfolio - Administrative Class -- -- (1,824) 36,582 34,758 PIMCO VIT Total Return Portfolio - Administrative Class -- 163 (2,468) 46,030 43,725 Putnam VT Growth and Income Fund - Class IB -- 112 (160) 2,288 2,240 Putnam VT International Growth and Income Fund - Class IB -- -- (882) 12,895 12,013 Safeco RST Core Equity Portfolio -- -- (38) 183 145 Safeco RST Growth Opportunities Portfolio -- 11,475 (2,575) 3,747 12,647 UIF Equity Growth Portfolio - Class I -- -- (6) 105 99 UIF High Yield Portfolio - Class I -- -- (268) 2,463 2,195 VALIC Company I - International Equities Fund -- -- (58) 338 280 VALIC Company I - Mid Cap Index Fund -- 9,911 (2,986) 12,586 19,511 VALIC Company I - Money Market I Fund 925,288 303,260 (55,021) (658,909) 514,618 VALIC Company I - Science & Technology Fund -- -- (138) 644 506 VALIC Company I - Small Cap Index Fund -- -- (157) 1,444 1,287 VALIC Company I - Stock Index Fund -- 110 (14,855) 95,701 80,956 Van Kampen LIT Growth and Income Portfolio - Class I -- -- (63) 514 451 Vanguard VIF High Yield Bond Portfolio -- -- (172) 1,517 1,345 Vanguard VIF REIT Index Portfolio -- 232 (511) 5,904 5,625
VL-R 64 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ---------------------------------------------------------------------------------------------------------------------------------- AG Legacy Plus Divisions: AIM V.I. International Growth Fund - Series I shares 2003 17,769 $ 6.53 $ 116,061 0.48% 0.75% 28.10% 2002 22,776 5.10 116,132 0.77% 0.75% -16.30% 2001 13,238 6.09 80,644 0.60% 0.75% -24.11% American Century VP Value Fund 2003 30,836 14.83 457,376 1.07% 0.75% 28.00% 2002 32,212 11.59 373,282 6.03% 0.75% -13.27% 2001 19,195 13.36 256,488 0.11% 0.75% 11.97% Fidelity VIP Asset Manager Portfolio - Service Class 2 2003 13,924 10.24 142,609 2.47% 0.75% 16.78% 2002 8,505 8.77 74,595 3.64% 0.75% -9.71% 2001 1,530 9.71 14,862 0.00% 0.75% 7.29% Fidelity VIP Contrafund Portfolio - Service Class 2 2003 37,472 10.85 406,531 0.24% 0.75% 27.24% 2002 25,788 8.53 219,877 0.37% 0.75% -10.28% 2001 6,070 9.50 57,689 0.00% 0.75% 7.01% Fidelity VIP Equity-Income Portfolio - Service Class 2 2003 53,210 9.98 531,275 1.36% 0.75% 29.06% 2002 39,899 7.74 308,675 1.30% 0.75% -17.77% 2001 16,085 9.41 151,336 0.00% 0.75% -2.82% Fidelity VIP Growth Portfolio - Service Class 2 2003 25,346 7.93 201,055 0.10% 0.75% 31.55% 2002 21,662 6.03 130,618 0.19% 0.75% -30.82% 2001 8,893 8.72 77,514 0.00% 0.75% 15.79% Franklin Templeton - Franklin Small Cap Fund - Class 2 2003 21,351 6.34 135,309 0.00% 0.75% 36.22% 2002 19,916 4.65 92,656 0.37% 0.75% -29.22% 2001 6,998 6.57 45,997 0.33% 0.75% -15.89% Franklin Templeton - Templeton Foreign Securities Fund - Class 2 2003 13,455 8.43 113,465 1.09% 0.75% 31.23% 2002 6,595 6.43 42,380 2.31% 0.75% -19.17% 2001 1,036 7.95 8,238 5.44% 0.75% -16.63% MFS VIT Emerging Growth Series 2003 9,716 9.57 92,944 0.00% 0.75% 29.25% 2002 7,536 7.40 55,771 3.14% 0.75% -32.52% 2001 4,501 10.97 49,365 1.78% 0.75% -0.51%
VL-R 65 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ---------------------------------------------------------------------------------------------------------------------------------- AG Legacy Plus Divisions - continued: MFS VIT New Discovery Series 2003 11,867 $ 7.40 $ 87,852 0.00% 0.75% 32.72% 2002 7,546 5.58 42,092 0.00% 0.75% -32.14% 2001 1,314 8.22 10,801 0.00% 0.75% 1.95% MFS VIT Total Return Series 2003 133,539 5.64 752,783 1.61% 0.75% 15.45% 2002 136,071 4.88 664,385 0.00% 0.75% -8.30% 2001 67,578 5.32 359,828 0.00% 0.75% -6.20% Neuberger Berman AMT Partners Portfolio 2003 12,144 9.60 116,594 0.00% 0.75% 34.08% 2002 11,767 7.16 84,258 0.73% 0.75% -24.71% 2001 5,132 9.51 48,812 0.00% 0.75% 3.17% Oppenheimer High Income Fund/VA 2003 6,177 11.57 71,478 9.13% 0.75% 23.03% 2002 11,744 9.40 110,445 9.93% 0.75% -3.12% 2001 7,783 9.71 75,555 0.00% 0.75% 6.15% PIMCO VIT Real Return Portfolio - Administrative Class 2003 46,648 12.95 604,251 4.06% 0.75% 8.04% 2002 32,681 11.99 391,822 4.35% 0.75% 16.92% 2001 12,784 10.25 131,088 0.86% 0.75% -2.03% PIMCO VIT Total Return Portfolio - Administrative Class 2003 35,437 11.94 423,015 3.11% 0.75% 4.26% 2002 25,099 11.45 287,373 5.62% 0.75% 8.27% 2001 10,974 10.57 116,044 0.84% 0.75% 0.45% Putnam VT Diversified Income Fund - Class IB 2003 8,850 12.66 112,000 8.11% 0.75% 19.15% 2002 7,901 10.62 83,918 8.29% 0.75% 5.11% 2001 4,788 10.10 48,381 0.00% 0.75% 1.10% Putnam VT Small Cap Value Fund - Class IB 2003 25,739 15.81 407,015 0.33% 0.75% 48.53% 2002 24,600 10.65 261,902 1.33% 0.75% -18.88% 2001 8,198 13.12 107,603 0.11% 0.75% 12.25% Putnam VT Vista Fund - Class IB 2003 15,464 4.73 73,086 0.00% 0.75% 32.17% 2002 14,678 3.58 52,485 0.00% 0.75% -31.12% 2001 9,574 5.19 49,700 3.48% 0.75% -25.32%
VL-R 66 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ---------------------------------------------------------------------------------------------------------------------------------- AG Legacy Plus Divisions - continued: Putnam VT Voyager Fund - Class IB 2003 48,322 $ 5.52 $ 266,775 0.37% 0.75% 23.98% 2002 47,406 4.45 211,102 0.59% 0.75% -27.08% 2001 26,218 6.11 160,112 5.39% 0.75% -22.99% VALIC Company I - International Equities Fund 2003 14,398 7.02 101,091 1.46% 0.75% 28.67% 2002 11,056 5.46 60,328 0.64% 0.75% -19.40% 2001 1,710 6.77 11,582 3.61% 0.75% -8.95% VALIC Company I - Mid Cap Index Fund 2003 19,915 11.17 222,472 0.66% 0.75% 34.11% 2002 17,425 8.33 145,149 0.99% 0.75% -15.54% 2001 4,237 9.86 41,782 0.78% 0.75% -1.68% VALIC Company I - Money Market I Fund 2003 54,423 10.51 572,075 0.59% 0.75% -0.15% 2002 47,333 10.53 498,304 1.45% 0.75% 0.49% 2001 57,185 10.48 599,077 1.89% 0.75% 2.91% VALIC Company I - Stock Index Fund 2003 40,926 7.61 311,432 1.36% 0.75% 27.24% 2002 52,528 5.98 314,131 1.85% 0.75% -23.01% 2001 9,606 7.77 74,618 0.99% 0.75% -13.25% Van Kampen LIT Emerging Growth Portfolio - Class I 2003 13,282 4.47 59,393 0.00% 0.75% 26.39% 2002 20,181 3.54 71,398 0.31% 0.75% -32.99% 2001 14,444 5.28 76,262 0.16% 0.75% -32.01% Van Kampen LIT Government Portfolio - Class I 2003 13,082 12.48 163,224 4.12% 0.75% 0.99% 2002 11,024 12.36 136,202 2.14% 0.75% 8.80% 2001 3,341 11.36 37,946 0.00% 0.75% -0.61% Corporate America Divisions: AIM V.I. International Growth Fund - Series I shares 2003 6,858 6.30 43,188 0.57% 0.35% 28.61% 2002 5,928 4.90 29,029 0.16% 0.35% -15.97% 2001 36,330 5.83 211,710 0.42% 0.35% -21.33% AIM V.I. Premier Equity Fund - Series I shares 2003 5,993 5.92 35,462 0.30% 0.35% 24.64% 2002 6,136 4.75 29,131 0.07% 0.35% -30.50% 2001 47,372 6.83 323,619 0.17% 0.35% -12.02%
VL-R 67 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ---------------------------------------------------------------------------------------------------------------------------------- Corporate America Divisions - continued: American Century VP Value Fund 2003 4,675 $ 13.57 $ 63,443 1.07% 0.35% 28.51% 2002 5,131 10.56 54,184 3.98% 0.35% -12.93% 2001 2,361 12.13 28,631 0.00% 0.35% 7.59% Dreyfus VIF Developing Leaders Portfolio - Initial shares 2003 12,360 10.38 128,308 0.03% 0.35% 31.23% 2002 10,128 7.91 80,120 0.05% 0.35% -19.41% 2001 39,148 9.82 384,247 0.45% 0.35% -0.64% Dreyfus VIF Quality Bond Portfolio - Initial shares 2003 7,084 12.97 91,852 6.03% 0.35% 4.58% 2002 7,235 12.40 89,712 4.91% 0.35% 7.39% 2001 22,578 11.55 260,682 5.11% 0.35% 4.85% Fidelity VIP Contrafund Portfolio - Service Class 2 2003 5,102 9.63 49,147 0.29% 0.35% 27.75% 2002 4,783 7.54 36,062 0.48% 0.35% -9.92% 2001 2,132 8.37 17,848 0.00% 0.35% -4.15% Fidelity VIP Equity-Income Portfolio - Service Class 2 2003 19,278 10.22 197,063 1.46% 0.35% 29.57% 2002 17,330 7.89 136,717 1.05% 0.35% -17.44% 2001 6,677 9.56 63,802 0.00% 0.35% -6.16% Fidelity VIP Growth Portfolio - Service Class 2 2003 5,536 6.72 37,208 0.10% 0.35% 32.08% 2002 4,366 5.09 22,219 0.10% 0.35% -30.54% 2001 2,078 7.33 15,225 0.00% 0.35% -10.33% Janus Aspen Series International Growth Portfolio - Service Shares 2003 3,219 6.78 21,839 1.12% 0.35% 34.06% 2002 1,873 5.06 9,478 0.94% 0.35% -26.02% 2001 835 6.84 5,714 0.69% 0.35% -14.91% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 2003 2,344 4.50 10,540 0.00% 0.35% 34.29% 2002 2,135 3.35 7,151 0.00% 0.35% -28.37% 2001 2,288 4.68 10,698 0.00% 0.35% -19.52% Janus Aspen Series Worldwide Growth Portfolio - Service Shares 2003 10,759 6.34 68,223 0.91% 0.35% 23.25% 2002 8,060 5.14 41,468 0.79% 0.35% -25.97% 2001 4,448 6.95 30,911 0.26% 0.35% -14.84%
VL-R 68 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ---------------------------------------------------------------------------------------------------------------------------------- Corporate America Divisions - continued: MFS VIT Capital Opportunities Series 2003 3,396 $ 6.05 $ 20,562 0.21% 0.35% 26.94% 2002 3,029 4.77 14,449 0.05% 0.35% -29.94% 2001 3,218 6.81 21,907 0.01% 0.35% -6.96% MFS VIT Emerging Growth Series 2003 1,272 4.40 5,594 0.00% 0.35% 29.77% 2002 1,471 3.39 4,984 0.00% 0.35% -33.99% 2001 1,597 5.13 8,196 0.00% 0.35% -14.85% MFS VIT New Discovery Series 2003 4,165 8.03 33,449 0.00% 0.35% 33.25% 2002 3,836 6.03 23,116 0.00% 0.35% -31.87% 2001 1,712 8.85 15,146 0.00% 0.35% 13.77% MFS VIT Research Series 2003 3,197 6.60 21,110 0.49% 0.35% 24.27% 2002 2,002 5.31 10,636 0.19% 0.35% -24.80% 2001 997 7.07 7,047 0.00% 0.35% -12.40% Neuberger Berman AMT Mid-Cap Growth Portfolio 2003 1,001 5.61 5,612 0.00% 0.35% 27.62% PIMCO VIT Real Return Portfolio - Administrative Class 2003 2,415 14.29 34,504 4.19% 0.35% 8.47% 2002 3,026 13.17 39,867 4.98% 0.35% 0.00% PIMCO VIT Short-Term Portfolio - Administrative Class 2003 15,920 11.19 178,227 1.65% 0.35% 1.69% 2002 6,727 11.01 74,053 3.01% 0.35% 2.66% 2001 5,271 10.72 56,523 3.04% 0.35% 4.35% PIMCO VIT Total Return Portfolio - Administrative Class 2003 6,930 12.67 87,796 3.44% 0.35% 4.68% 2002 4,850 12.10 58,703 5.80% 0.35% 8.71% 2001 2,554 11.13 28,440 2.87% 0.35% 6.13% Putnam VT Diversified Income Fund - Class IB 2003 294,605 12.87 3,792,813 7.25% 0.35% 19.63% 2002 190,178 10.76 2,046,636 5.68% 0.35% 5.53% 2001 99,029 10.20 1,009,835 4.85% 0.35% 1.71% Putnam VT Growth and Income Fund - Class IB 2003 371,886 10.16 3,778,936 1.40% 0.35% 26.94% 2002 234,304 8.01 1,875,663 1.39% 0.35% -19.27% 2001 110,489 9.92 1,095,612 1.68% 0.35% -5.20% Putnam VT International Growth and Income Fund - Class IB 2003 1,334 9.20 12,264 0.00% 0.35% 37.37%
VL-R 69 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Corporate America Divisions - continued: Safeco RST Growth Opportunities Portfolio 2003 3,371 $ 8.87 $ 29,895 0.00% 0.35% 42.44% 2002 3,445 6.23 21,447 0.00% 0.35% -37.89% 2001 26,516 10.02 265,808 0.00% 0.35% 20.27% VALIC Company I - Mid Cap Index Fund 2003 6,985 12.09 84,411 0.67% 0.35% 34.65% 2002 7,522 8.98 67,512 0.64% 0.35% -15.20% 2001 45,379 10.58 480,286 0.61% 0.35% 4.52% VALIC Company I - Money Market I Fund 2003 5,236 10.89 57,007 0.20% 0.35% 0.25% 2002 28,915 10.86 314,038 0.40% 0.35% 0.89% 2001 2,212 10.76 23,807 0.42% 0.35% 3.32% VALIC Company I - Small Cap Index Fund 2003 4,923 11.46 56,403 0.54% 0.35% 45.95% 2002 3,525 7.85 27,671 1.27% 0.35% -21.10% 2001 1,347 9.95 13,400 0.71% 0.35% 0.01% VALIC Company I - Stock Index Fund 2003 14,966 7.59 113,624 1.41% 0.35% 27.75% 2002 13,034 5.94 77,457 1.03% 0.35% -22.70% 2001 59,072 7.69 454,174 0.76% 0.35% -11.20% Vanguard VIF REIT Index Portfolio 2003 3,843 17.00 65,316 4.11% 0.35% 35.01% 2002 4,485 12.59 56,465 2.71% 0.35% 3.17% 2001 2,407 12.20 29,373 0.00% 0.35% 9.62% Legacy Plus Divisions: AIM V.I. Premier Equity Fund - Series I shares 2003 -- 6.34 -- 0.00% 0.75% 20.44% 2002 1 5.27 3 0.00% 0.75% -30.78% 2001 15,448 7.61 117,549 0.13% 0.75% -3.49% Scudder VIT EAFE Equity Index Fund - Class A 2003 -- 8.30 -- 0.00% 0.75% 32.36% 2002 -- 6.27 -- 0.00% 0.75% -22.13% 2001 5,923 8.06 47,720 0.00% 0.75% -25.25% Scudder VIT Equity 500 Index Fund - Class A 2003 1,670 9.25 15,448 1.15% 0.75% 27.20% 2002 1,610 7.27 11,703 0.15% 0.75% -22.86% 2001 18,704 9.43 176,303 0.63% 0.75% -12.84%
VL-R 70 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Legacy Plus Divisions - continued: UIF Equity Growth Portfolio - Class I 2002 -- $ 7.69 $ -- 0.00% 0.75% -28.40% 2001 7,382 10.75 79,326 0.00% 0.75% -15.75% VALIC Company I - Money Market I Fund 2003 1,003 11.07 11,107 0.60% 0.75% -0.15% 2002 977 11.09 10,830 0.61% 0.75% 0.49% 2001 5,564 11.03 61,395 0.66% 0.75% 2.91% The One Vul Solution Divisions: AIM V.I. Capital Appreciation Fund - Series I shares 2002 -- 4.77 -- 0.00% 0.75% -24.92% 2001 766 6.36 4,870 0.00% 0.75% -23.86% AIM V.I. International Growth Fund - Series I shares 2002 -- 4.65 -- 1.13% 0.75% -16.31% 2001 174 5.56 966 0.41% 0.75% -24.11% Franklin Templeton - Franklin Small Cap Fund - Class 2 2002 -- 4.23 -- 0.30% 0.75% -29.22% 2001 909 5.97 5,427 0.40% 0.75% -15.89% Franklin Templeton - Templeton Developing Markets Securities Fund - Class 2 2002 -- 6.18 -- 2.91% 0.75% -0.89% 2001 335 6.24 2,088 1.14% 0.75% -8.77% MFS VIT Investors Trust Series 2002 -- 6.78 -- 0.75% 0.75% -21.56% 2001 593 8.64 5,122 0.61% 0.75% -16.59% One Group Investment Trust Equity Index Portfolio 2002 -- 6.19 -- 0.00% 0.75% -23.06% 2001 1,456 8.04 11,713 1.05% 0.75% -13.00% One Group Investment Trust Large Cap Growth Portfolio 2002 -- 4.33 -- 0.00% 0.75% -29.01% 2001 421 6.10 2,566 0.00% 0.75% -20.88% One Group Investment Trust Mid Cap Growth Portfolio 2002 -- 6.71 -- 0.00% 0.75% -20.73% 2001 319 8.46 2,700 0.00% 0.75% -11.32% Oppenheimer High Income Fund/VA 2002 -- 8.41 -- 20.28% 0.75% -3.13% 2001 296 8.68 2,567 11.72% 0.75% 1.20% Putnam VT Vista Fund - Class IB 2002 -- 3.97 -- 0.00% 0.75% -31.12% 2001 474 5.76 2,733 9.45% 0.75% -34.00%
VL-R 71 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- The One Vul Solution Divisions - continued: Scudder International Research Portfolio 2002 -- $ 5.42 $ -- 0.87% 0.75% -14.13% 2001 401 6.31 2,530 0.78% 0.75% -25.00% Scudder Small Cap Value Portfolio 2002 -- 10.75 -- 0.79% 0.75% -12.01% 2001 228 12.22 2,784 0.00% 0.75% 16.78% VALIC Company I - Money Market I Fund 2002 -- 10.82 -- 0.00% 0.75% 0.49% 2001 -- 10.77 -- 0.07% 0.75% 2.91% Van Kampen LIT Emerging Growth Portfolio - Class I 2002 -- 3.49 -- 0.40% 0.75% -32.99% 2001 1,936 5.20 10,077 0.11% 0.75% -32.01% Platinum Investor I and II Divisions: AIM V.I. International Growth Fund - Series I shares 2003 328,864 9.04 2,972,642 0.51% 0.75% 28.10% 2002 368,831 7.06 2,602,616 0.60% 0.75% -16.30% 2001 356,170 8.43 3,002,893 0.30% 0.75% -24.11% AIM V.I. Premier Equity Fund - Series I shares 2003 856,369 9.47 8,106,816 0.29% 0.75% 24.15% 2002 957,563 7.63 7,301,703 0.32% 0.75% -30.78% 2001 983,406 11.02 10,833,308 0.12% 0.75% -13.22% American Century VP Value Fund 2003 210,667 13.40 2,822,824 0.96% 0.75% 28.00% 2002 180,166 10.47 1,886,100 5.62% 0.75% -13.27% 2001 111,235 12.07 1,342,709 0.04% 0.75% 12.85% Ayco Growth Fund 2003 -- 8.36 -- 0.47% 0.75% 26.35% 2002 29,066 6.62 192,386 0.35% 0.75% -29.83% 2001 21,904 9.43 206,620 0.64% 0.75% -2.99% Credit Suisse Small Cap Growth Portfolio 2003 46,817 7.43 347,984 0.00% 0.75% 47.44% 2002 35,231 5.04 177,610 0.00% 0.75% -34.19% 2001 27,893 7.66 213,657 0.00% 0.75% -3.32% Dreyfus IP MidCap Stock Portfolio - Initial shares 2003 73,021 10.70 781,298 0.29% 0.75% 30.74% 2002 63,006 8.18 515,639 0.34% 0.75% -13.15% 2001 40,853 9.42 384,960 0.31% 0.75% -3.99%
VL-R 72 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor I and II Divisions - continued: Dreyfus VIF Developing Leaders Portfolio - Initial shares 2003 405,482 $ 12.59 $ 5,106,276 0.03% 0.75% 30.71% 2002 426,312 9.63 4,107,348 0.05% 0.75% -19.73% 2001 503,048 12.00 6,037,816 0.43% 0.75% -6.82% Dreyfus VIF Quality Bond Portfolio - Initial shares 2003 351,864 12.99 4,571,955 5.73% 0.75% 4.16% 2002 434,524 12.47 5,420,598 4.83% 0.75% 6.96% 2001 660,282 11.66 7,700,907 6.17% 0.75% 5.89% Fidelity VIP Asset Manager Portfolio - Service Class 2 2003 194,550 9.75 1,896,730 3.14% 0.75% 16.78% 2002 174,156 8.35 1,453,875 0.54% 0.75% -9.71% 2001 12,000 9.25 110,946 0.00% 0.75% 2.78% Fidelity VIP Contrafund Portfolio - Service Class 2 2003 275,267 9.51 2,618,131 0.26% 0.75% 27.24% 2002 243,910 7.48 1,823,252 0.62% 0.75% -10.28% 2001 94,909 8.33 790,743 0.09% 0.75% -10.27% Fidelity VIP Equity-Income Portfolio - Service Class 2 2003 301,311 10.09 3,041,231 1.46% 0.75% 29.06% 2002 264,111 7.82 2,065,557 1.65% 0.75% -17.77% 2001 181,214 9.51 1,723,532 0.03% 0.75% -5.94% Fidelity VIP Growth Portfolio - Service Class 2 2003 301,685 6.64 2,002,210 0.10% 0.75% 31.55% 2002 305,211 5.04 1,539,790 0.12% 0.75% -30.82% 2001 193,357 7.29 1,410,013 0.01% 0.75% -18.48% Fidelity VIP Mid Cap Portfolio - Service Class 2 2003 13,930 14.00 194,978 0.00% 0.75% 39.97% Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 2003 823 13.27 10,925 0.00% 0.75% 32.71% Franklin Templeton - Franklin U.S. Government Fund - Class 2 2003 29,978 11.09 332,384 4.44% 0.75% 1.45% 2002 19,378 10.93 211,781 0.20% 0.75% 0.00% Franklin Templeton - Mutual Shares Securities Fund - Class 2 2003 24,270 10.88 264,074 0.65% 0.75% 24.21% 2002 12,404 8.76 108,650 2.37% 0.75% 0.00% Franklin Templeton - Templeton Foreign Securities Fund - Class 2 2003 54,774 10.55 578,054 1.04% 0.75% 31.23% 2002 7,590 8.04 61,042 0.76% 0.75% 0.00% Goldman Sachs Capital Growth Fund 2003 14,861 8.55 127,035 0.00% 0.75% 2.21%
VL-R 73 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor I and II Divisions - continued: Janus Aspen Series International Growth Portfolio - Service Shares 2003 84,575 $ 6.70 $ 566,508 0.97% 0.75% 33.53% 2002 77,304 5.02 387,785 0.72% 0.75% -26.31% 2001 63,776 6.81 434,164 1.01% 0.75% -24.01% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 2003 52,305 4.44 232,264 0.00% 0.75% 33.76% 2002 50,819 3.32 168,710 0.00% 0.75% -28.66% 2001 32,312 4.65 150,356 0.00% 0.75% -40.04% Janus Aspen Series Worldwide Growth Portfolio - Service Shares 2003 128,751 6.26 806,098 0.94% 0.75% 22.76% 2002 154,176 5.10 786,343 0.86% 0.75% -26.26% 2001 51,950 6.92 359,328 0.51% 0.75% -23.20% JPMorgan Mid Cap Value Portfolio 2003 39 12.37 482 0.00% 0.75% 23.67% JPMorgan Small Company Portfolio 2003 24,698 9.04 223,279 0.00% 0.75% 34.96% 2002 14,260 6.70 95,522 0.21% 0.75% -22.24% 2001 12,062 8.61 103,902 0.01% 0.75% -8.72% MFS VIT Capital Opportunities Series 2003 123,819 5.98 740,269 0.26% 0.75% 26.44% 2002 138,353 4.73 654,212 0.04% 0.75% -30.22% 2001 90,744 6.78 614,880 0.01% 0.75% -24.06% MFS VIT Emerging Growth Series 2003 707,829 9.31 6,592,132 0.00% 0.75% 29.25% 2002 734,536 7.21 5,292,534 0.00% 0.75% -34.26% 2001 718,589 10.96 7,875,453 0.00% 0.75% -33.99% MFS VIT New Discovery Series 2003 118,366 7.93 938,613 0.00% 0.75% 32.72% 2002 109,936 5.97 656,847 0.00% 0.75% -32.14% 2001 81,569 8.81 718,214 0.00% 0.75% -5.74% MFS VIT Research Series 2003 45,499 6.52 296,621 0.62% 0.75% 23.77% 2002 43,887 5.27 231,157 0.25% 0.75% -25.10% 2001 46,683 7.03 328,283 0.01% 0.75% -21.84% Neuberger Berman AMT Mid-Cap Growth Portfolio 2003 51,089 5.54 282,942 0.00% 0.75% 27.11% 2002 57,765 4.36 251,677 0.00% 0.75% -29.87% 2001 40,478 6.21 251,465 0.00% 0.75% -25.21%
VL-R 74 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor I and II Divisions - continued: Oppenheimer Global Securities Fund/VA 2003 2,681 $ 14.22 $ 38,121 0.00% 0.75% 42.19% Oppenheimer Multiple Strategies Fund/VA 2003 2 11.87 18 0.00% 0.75% 18.74% PIMCO VIT Real Return Portfolio - Administrative Class 2003 115,773 14.11 1,633,587 3.56% 0.75% 8.04% 2002 190,024 13.06 2,481,720 6.14% 0.75% 16.92% 2001 87,766 11.17 980,348 6.95% 0.75% 8.83% PIMCO VIT Short-Term Portfolio - Administrative Class 2003 198,676 11.05 2,196,210 2.23% 0.75% 1.29% 2002 80,480 10.91 878,341 3.04% 0.75% 2.25% 2001 27,482 10.67 293,345 5.19% 0.75% 5.98% PIMCO VIT Total Return Portfolio - Administrative Class 2003 258,775 12.51 3,237,164 3.21% 0.75% 4.26% 2002 276,366 12.00 3,315,961 5.57% 0.75% 8.27% 2001 131,290 11.08 1,454,930 2.82% 0.75% 7.58% Putnam VT Diversified Income Fund - Class IB 2003 89,892 12.22 1,098,789 9.11% 0.75% 19.15% 2002 100,097 10.26 1,026,852 9.81% 0.75% 5.11% 2001 133,179 9.76 1,299,777 7.31% 0.75% 2.73% Putnam VT Growth and Income Fund - Class IB 2003 509,573 10.57 5,386,247 1.85% 0.75% 26.43% 2002 556,852 8.36 4,655,525 2.26% 0.75% -19.59% 2001 541,025 10.40 5,625,378 2.61% 0.75% -7.10% Putnam VT International Growth and Income Fund - Class IB 2003 239,580 10.72 2,568,951 1.40% 0.75% 36.82% 2002 235,399 7.84 1,844,874 0.53% 0.75% -14.41% 2001 212,113 9.16 1,942,305 5.80% 0.75% -21.40% Safeco RST Core Equity Portfolio 2003 276,177 8.77 2,421,492 0.89% 0.75% 23.85% 2002 332,477 7.08 2,353,833 0.83% 0.75% -26.46% 2001 495,182 9.63 4,767,218 0.68% 0.75% -10.07% Safeco RST Growth Opportunities Portfolio 2003 396,491 8.69 3,446,391 0.00% 0.75% 41.87% 2002 445,419 6.13 2,728,943 0.00% 0.75% -38.14% 2001 413,839 9.90 4,098,507 0.00% 0.75% 18.25% SunAmerica - Aggressive Growth Portfolio - Class 1 2003 7,575 9.99 75,636 0.00% 0.75% 27.50% 2002 108 7.83 842 0.00% 0.75% 0.00%
VL-R 75 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor I and II Divisions - continued: SunAmerica - SunAmerica Balanced Portfolio - Class 1 2003 195 $ 10.11 $ 1,968 2.38% 0.75% 14.26% 2002 16 8.85 143 0.00% 0.75% 0.00% UIF Equity Growth Portfolio - Class I 2003 326,206 9.60 3,130,767 0.00% 0.75% 23.99% 2002 381,798 7.74 2,955,218 0.15% 0.75% -28.40% 2001 438,623 10.81 4,741,984 0.00% 0.75% -15.75% UIF High Yield Portfolio - Class I 2003 126,400 10.25 1,295,523 0.00% 0.75% 24.77% 2002 128,628 8.21 1,056,625 7.67% 0.75% -7.96% 2001 183,821 8.93 1,640,658 11.27% 0.75% -5.19% VALIC Company I - International Equities Fund 2003 122,430 9.01 1,102,745 1.35% 0.75% 28.67% 2002 133,568 7.00 935,013 0.36% 0.75% -19.40% 2001 152,030 8.68 1,320,380 1.71% 0.75% -22.56% VALIC Company I - Mid Cap Index Fund 2003 473,968 16.56 7,850,709 0.65% 0.75% 34.11% 2002 479,617 12.35 5,923,609 0.70% 0.75% -15.54% 2001 457,875 14.62 6,695,315 0.74% 0.75% -1.68% VALIC Company I - Money Market I Fund 2003 1,187,067 11.59 13,752,956 0.59% 0.75% -0.15% 2002 1,576,362 11.60 18,291,099 1.32% 0.75% 0.49% 2001 2,030,596 11.55 23,446,471 2.93% 0.75% 2.91% VALIC Company I - Nasdaq-100 Index Fund 2003 175,463 4.44 778,806 0.00% 0.75% 48.16% 2002 88,041 3.00 263,750 0.00% 0.75% -38.72% 2001 44,914 4.89 219,563 0.10% 0.75% -32.99% VALIC Company I - Science & Technology Fund 2003 49,200 3.95 194,220 0.00% 0.75% 50.34% 2002 33,591 2.63 88,200 0.00% 0.75% -40.66% 2001 29,457 4.42 130,333 0.00% 0.75% -41.62% VALIC Company I - Small Cap Index Fund 2003 132,279 11.31 1,496,516 0.51% 0.75% 45.37% 2002 101,961 7.78 793,503 1.37% 0.75% -21.41% 2001 46,053 9.90 456,049 0.96% 0.75% 1.23% VALIC Company I - Stock Index Fund 2003 1,600,529 10.43 16,687,793 1.37% 0.75% 27.24% 2002 1,712,769 8.19 14,034,484 1.18% 0.75% -23.01% 2001 1,590,799 10.64 16,931,644 0.96% 0.75% -12.86%
VL-R 76 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor I and II Divisions - continued: Van Kampen LIT Growth and Income Portfolio - Class I 2003 178,503 $ 10.51 $ 1,876,564 0.86% 0.75% 27.07% 2002 154,511 8.27 1,278,271 2.59% 0.75% 0.00% Van Kampen LIT Strategic Stock Portfolio - Class I Shares 2001 116,654 11.35 1,324,028 1.90% 0.75% 0.32% Vanguard VIF High Yield Bond Portfolio 2003 73,461 11.85 870,269 5.46% 0.75% 16.00% 2002 45,524 10.21 464,933 4.37% 0.75% 0.78% 2001 25,137 10.13 254,726 0.05% 0.75% 2.55% Vanguard VIF REIT Index Portfolio 2003 79,522 16.78 1,334,528 3.27% 0.75% 34.47% 2002 70,827 12.48 883,918 1.60% 0.75% 2.76% 2001 15,235 12.14 185,034 0.81% 0.75% 11.29% Platinum Investor III Divisions: AIM V.I. International Growth Fund - Series I shares 2003 120,999 7.59 917,986 0.60% 0.70% 28.16% 2002 77,922 5.92 461,268 0.76% 0.70% -16.26% 2001 43,539 7.07 307,788 0.62% 0.70% -22.63% AIM V.I. Premier Equity Fund - Series I shares 2003 433,128 7.04 3,047,453 0.33% 0.70% 24.21% 2002 347,063 5.66 1,965,988 0.44% 0.70% -30.75% 2001 179,841 8.18 1,471,008 0.25% 0.70% -12.13% Alger American Leveraged AllCap Portfolio - Class O Shares 2003 18,007 12.05 217,007 0.00% 0.70% 20.51% Alger American MidCap Growth Portfolio - Class O Shares 2003 18,785 13.58 255,035 0.00% 0.70% 35.76% American Century VP Value Fund 2003 369,463 13.31 4,919,113 0.80% 0.70% 28.06% 2002 221,601 10.40 2,303,966 4.19% 0.70% -13.23% 2001 53,553 11.98 641,684 0.04% 0.70% 13.41% Ayco Growth Fund 2003 -- 8.38 -- 0.52% 0.70% 26.41% 2002 30,148 6.63 199,755 0.39% 0.70% -29.80% 2001 17,986 9.44 169,749 0.64% 0.70% -0.51% Credit Suisse Small Cap Growth Portfolio 2003 114,690 7.28 834,569 0.00% 0.70% 47.51% 2002 51,587 4.93 254,477 0.00% 0.70% -34.15% 2001 26,246 7.49 196,626 0.00% 0.70% -14.59%
VL-R 77 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor III Divisions - continued: Dreyfus IP MidCap Stock Portfolio - Initial shares 2003 161,611 $ 10.52 $ 1,699,951 0.30% 0.70% 30.80% 2002 121,203 8.04 974,668 0.41% 0.70% -13.10% 2001 47,522 9.25 439,789 0.30% 0.70% 2.31% Dreyfus VIF Developing Leaders Portfolio - Initial shares 2003 377,518 9.70 3,660,894 0.03% 0.70% 30.77% 2002 271,074 7.42 2,010,122 0.05% 0.70% -19.69% 2001 131,447 9.23 1,213,678 0.49% 0.70% -7.14% Dreyfus VIF Quality Bond Portfolio - Initial shares 2003 210,671 12.30 2,591,291 6.30% 0.70% 4.21% 2002 153,439 11.80 1,811,076 5.31% 0.70% 7.01% 2001 76,533 11.03 844,136 5.11% 0.70% 3.67% Fidelity VIP Asset Manager Portfolio - Service Class 2 2003 146,922 9.72 1,428,653 2.37% 0.70% 16.84% 2002 79,608 8.32 662,518 2.09% 0.70% -9.66% 2001 22,872 9.21 210,711 1.26% 0.70% -4.25% Fidelity VIP Contrafund Portfolio - Service Class 2 2003 578,962 9.38 5,432,050 0.23% 0.70% 27.30% 2002 301,956 7.37 2,225,469 0.41% 0.70% -10.24% 2001 89,776 8.21 737,107 0.01% 0.70% -8.21% Fidelity VIP Equity-Income Portfolio - Service Class 2 2003 618,890 10.10 6,252,170 1.23% 0.70% 29.12% 2002 359,047 7.82 2,809,110 1.33% 0.70% -17.73% 2001 153,352 9.51 1,458,364 0.08% 0.70% -4.21% Fidelity VIP Growth Portfolio - Service Class 2 2003 806,359 6.57 5,300,495 0.09% 0.70% 31.62% 2002 528,324 4.99 2,638,612 0.10% 0.70% -30.78% 2001 221,929 7.22 1,601,302 0.00% 0.70% -14.92% Fidelity VIP Mid Cap Portfolio - Service Class 2 2003 7,590 14.00 106,267 0.00% 0.70% 40.01% Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 2003 13,920 13.28 184,793 0.01% 0.70% 32.75% Franklin Templeton - Franklin U.S. Government Fund - Class 2 2003 993,247 11.10 11,023,739 4.48% 0.70% 1.50% 2002 765,913 10.93 8,374,946 22.84% 0.70% 0.00% Franklin Templeton - Mutual Shares Securities Fund - Class 2 2003 498,453 10.89 5,428,832 1.01% 0.70% 24.28% 2002 485,325 8.76 4,253,340 0.00% 0.70% 0.00%
VL-R 78 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor III Divisions - continued: Franklin Templeton - Templeton Foreign Securities Fund - Class 2 2003 514,133 $ 10.56 $ 5,431,242 1.63% 0.70% 31.29% 2002 517,539 8.05 4,164,199 0.01% 0.70% 0.00% Goldman Sachs Capital Growth Fund 2003 16,224 8.56 138,901 0.00% 0.70% 2.22% Janus Aspen Series International Growth Portfolio - Service Shares 2003 184,544 6.65 1,227,085 0.93% 0.70% 33.60% 2002 130,384 4.98 648,942 0.79% 0.70% -26.28% 2001 66,264 6.75 447,356 0.79% 0.70% -23.85% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 2003 377,143 4.33 1,633,083 0.00% 0.70% 33.82% 2002 257,635 3.24 833,628 0.00% 0.70% -28.62% 2001 129,640 4.53 587,668 0.00% 0.70% -35.87% Janus Aspen Series Worldwide Growth Portfolio - Service Shares 2003 314,555 6.20 1,951,654 0.84% 0.70% 22.82% 2002 206,199 5.05 1,041,675 0.76% 0.70% -26.23% 2001 89,664 6.85 613,987 0.31% 0.70% -22.64% JPMorgan Mid Cap Value Portfolio 2003 9,332 12.37 115,457 0.00% 0.70% 23.72% JPMorgan Small Company Portfolio 2003 62,123 8.89 552,395 0.00% 0.70% 35.03% 2002 32,094 6.59 211,344 0.17% 0.70% -22.20% 2001 9,804 8.46 82,981 0.01% 0.70% -8.11% MFS VIT Capital Opportunities Series 2003 351,732 6.03 2,121,183 0.22% 0.70% 26.50% 2002 261,521 4.77 1,246,756 0.05% 0.70% -30.18% 2001 121,140 6.83 827,153 0.00% 0.70% -22.19% MFS VIT Emerging Growth Series 2003 710,798 4.93 3,503,311 0.00% 0.70% 29.32% 2002 407,316 3.81 1,552,389 0.00% 0.70% -34.22% 2001 239,529 5.79 1,387,886 0.00% 0.70% -28.03% MFS VIT New Discovery Series 2003 209,507 7.76 1,626,577 0.00% 0.70% 32.79% 2002 128,296 5.85 750,133 0.00% 0.70% -32.11% 2001 47,211 8.61 406,590 0.00% 0.70% 0.95%
VL-R 79 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor III Divisions - continued: MFS VIT Research Series 2003 127,774 $ 6.49 $ 829,360 0.60% 0.70% 23.84% 2002 95,980 5.24 503,077 0.25% 0.70% -25.06% 2001 47,757 6.99 334,043 0.01% 0.70% -24.62% Neuberger Berman AMT Mid-Cap Growth Portfolio 2003 246,565 5.44 1,342,011 0.00% 0.70% 27.18% 2002 171,461 4.28 733,802 0.00% 0.70% -29.83% 2001 59,965 6.10 365,744 0.00% 0.70% -26.67% Oppenheimer Global Securities Fund/VA 2003 7,964 14.22 113,286 0.00% 0.70% 42.24% Oppenheimer Multiple Strategies Fund/VA 2003 5,675 11.88 67,413 0.00% 0.70% 18.78% PIMCO VIT Real Return Portfolio - Administrative Class 2003 357,225 14.16 5,058,921 4.48% 0.70% 8.10% 2002 174,421 13.10 2,285,113 4.42% 0.70% 16.98% 2001 53,040 11.20 594,024 3.55% 0.70% 5.56% PIMCO VIT Short-Term Portfolio - Administrative Class 2003 136,457 11.06 1,509,539 1.59% 0.70% 1.34% 2002 86,224 10.92 941,253 2.98% 0.70% 2.30% 2001 57,361 10.67 612,107 2.63% 0.70% 5.62% PIMCO VIT Total Return Portfolio - Administrative Class 2003 437,126 12.57 5,495,000 3.42% 0.70% 4.31% 2002 301,969 12.05 3,639,057 5.65% 0.70% 8.33% 2001 126,029 11.12 1,402,056 3.72% 0.70% 7.45% Putnam VT Diversified Income Fund - Class IB 2003 57,820 13.09 756,793 6.90% 0.70% 19.21% 2002 34,162 10.98 375,082 7.36% 0.70% 5.17% 2001 17,175 10.44 179,305 0.93% 0.70% -0.90% Putnam VT Growth and Income Fund - Class IB 2003 467,361 9.54 4,459,408 1.57% 0.70% 26.49% 2002 326,752 7.54 2,464,769 1.86% 0.70% -19.55% 2001 144,948 9.38 1,359,119 0.84% 0.70% -5.78% Putnam VT International Growth and Income Fund - Class IB 2003 198,598 9.49 1,884,181 1.43% 0.70% 36.89% 2002 135,756 6.93 940,907 0.51% 0.70% -14.37% 2001 93,038 8.09 753,038 3.50% 0.70% -19.27%
VL-R 80 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor III Divisions - continued: Safeco RST Core Equity Portfolio 2003 63,936 $ 7.64 $ 488,773 1.08% 0.70% 23.91% 2002 48,012 6.17 296,218 1.53% 0.70% -26.43% 2001 22,815 8.39 191,314 1.43% 0.70% -11.82% Safeco RST Growth Opportunities Portfolio 2003 120,957 9.29 1,124,048 0.00% 0.70% 41.95% 2002 105,618 6.55 691,469 0.00% 0.70% -38.11% 2001 37,394 10.58 395,539 0.00% 0.70% 11.63% SunAmerica - Aggressive Growth Portfolio - Class 1 2003 14,418 9.99 144,087 0.00% 0.70% 27.56% 2002 2,070 7.83 16,214 0.24% 0.70% 0.00% SunAmerica - SunAmerica Balanced Portfolio - Class 1 2003 28,434 10.12 287,813 2.66% 0.70% 14.31% 2002 8,391 8.85 74,301 2.13% 0.70% 0.00% UIF Equity Growth Portfolio - Class I 2003 66,650 6.44 429,207 0.00% 0.70% 24.06% 2002 49,604 5.19 257,495 0.22% 0.70% -28.37% 2001 28,056 7.25 203,316 0.00% 0.70% -16.43% UIF High Yield Portfolio - Class I 2003 20,941 10.62 222,461 0.00% 0.70% 24.83% 2002 13,440 8.51 114,370 10.10% 0.70% -7.92% 2001 11,481 9.24 106,103 22.46% 0.70% -11.85% VALIC Company I - International Equities Fund 2003 67,471 7.79 525,299 1.44% 0.70% 28.73% 2002 43,063 6.05 260,439 0.40% 0.70% -19.36% 2001 21,685 7.50 162,625 2.31% 0.70% -21.61% VALIC Company I - Mid Cap Index Fund 2003 355,307 10.88 3,864,025 0.67% 0.70% 34.18% 2002 229,906 8.10 1,863,384 0.72% 0.70% -15.50% 2001 115,708 9.59 1,109,764 0.72% 0.70% 4.22% VALIC Company I - Money Market I Fund 2003 1,157,750 10.43 12,072,544 0.64% 0.70% -0.10% 2002 1,248,697 10.44 13,034,287 1.00% 0.70% 0.54% 2001 1,416,986 10.38 14,711,205 1.97% 0.70% 2.96% VALIC Company I - Nasdaq-100 Index Fund 2003 458,384 4.36 1,998,388 0.00% 0.70% 48.24% 2002 337,089 2.94 991,382 0.00% 0.70% -38.69% 2001 207,478 4.80 995,213 0.02% 0.70% -31.28%
VL-R 81 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor III Divisions - continued: VALIC Company I - Science & Technology Fund 2003 164,694 $ 3.91 $ 644,460 0.00% 0.70% 50.42% 2002 119,566 2.60 311,051 0.00% 0.70% -40.63% 2001 58,814 4.38 257,697 0.00% 0.70% -45.69% VALIC Company I - Small Cap Index Fund 2003 150,669 11.13 1,677,464 0.50% 0.70% 45.44% 2002 89,617 7.65 686,001 0.98% 0.70% -21.37% 2001 44,444 9.74 432,683 0.85% 0.70% -1.61% VALIC Company I - Stock Index Fund 2003 2,468,374 7.89 19,467,096 1.46% 0.70% 27.31% 2002 1,643,626 6.19 10,182,125 1.35% 0.70% -22.98% 2001 266,322 8.04 2,141,961 0.73% 0.70% -13.22% Van Kampen LIT Growth and Income Portfolio - Class I 2003 155,250 10.52 1,633,472 0.92% 0.70% 27.14% 2002 77,747 8.28 643,529 1.74% 0.70% 0.00% Van Kampen LIT Strategic Stock Portfolio - Class I Shares 2001 21,837 10.72 234,031 1.36% 0.70% 1.08% Vanguard VIF High Yield Bond Portfolio 2003 203,425 11.93 2,427,400 4.89% 0.70% 16.05% 2002 110,201 10.28 1,133,078 5.72% 0.70% 0.84% 2001 66,089 10.20 673,900 0.10% 0.70% -2.38% Vanguard VIF REIT Index Portfolio 2003 239,528 16.78 4,019,190 3.19% 0.70% 34.54% 2002 157,740 12.47 1,967,344 3.68% 0.70% 2.81% 2001 28,648 12.13 347,535 0.08% 0.70% 14.22% Platinum Investor PLUS Divisions: AIM V.I. International Growth Fund - Series I shares 2003 3,813 10.50 40,027 0.82% 0.70% 28.16% 2002 480 8.19 3,927 0.81% 0.70% 0.00% AIM V.I. Premier Equity Fund - Series I shares 2003 8,904 10.21 90,916 0.46% 0.70% 24.21% 2002 1,706 8.22 14,024 0.81% 0.70% 0.00% Alger American Leveraged AllCap Portfolio - Class O Shares 2003 1,206 12.05 14,534 0.00% 0.70% 20.51% Alger American MidCap Growth Portfolio - Class O Shares 2003 985 13.58 13,374 0.00% 0.70% 35.76%
VL-R 82 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor PLUS Divisions - continued: American Century VP Value Fund 2003 20,510 $ 11.28 $ 231,350 0.69% 0.70% 28.06% 2002 4,788 8.81 42,174 0.00% 0.70% 0.00% Ayco Growth Fund 2003 -- 10.23 -- 120.86% 0.70% 26.41% 2002 1 8.10 7 0.00% 0.70% 0.00% Credit Suisse Small Cap Growth Portfolio 2003 3,837 11.62 44,567 0.00% 0.70% 47.51% 2002 871 7.87 6,859 0.00% 0.70% 0.00% Dreyfus IP MidCap Stock Portfolio - Initial shares 2003 11,054 11.05 122,113 0.39% 0.70% 30.80% 2002 3,019 8.45 25,502 0.58% 0.70% 0.00% Dreyfus VIF Developing Leaders Portfolio - Initial shares 2003 14,951 10.47 156,515 0.04% 0.70% 30.77% 2002 4,300 8.01 34,423 0.03% 0.70% 0.00% Dreyfus VIF Quality Bond Portfolio - Initial shares 2003 12,455 10.90 135,822 6.92% 0.70% 4.21% 2002 4,878 10.46 51,041 1.39% 0.70% 0.00% Fidelity VIP Asset Manager Portfolio - Service Class 2 2003 7,471 11.12 83,043 1.34% 0.70% 16.84% 2002 1,718 9.51 16,348 0.00% 0.70% 0.00% Fidelity VIP Contrafund Portfolio - Service Class 2 2003 28,350 11.23 318,302 0.09% 0.70% 27.30% 2002 4,180 8.82 36,867 0.00% 0.70% 0.00% Fidelity VIP Equity-Income Portfolio - Service Class 2 2003 28,808 10.88 313,370 0.72% 0.70% 29.12% 2002 6,741 8.42 56,792 0.00% 0.70% 0.00% Fidelity VIP Growth Portfolio - Service Class 2 2003 35,338 10.58 373,837 0.03% 0.70% 31.62% 2002 6,371 8.04 51,207 0.00% 0.70% 0.00% Fidelity VIP Mid Cap Portfolio - Service Class 2 2003 1,083 14.00 15,161 0.00% 0.70% 40.01% Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 2003 2,274 13.28 30,194 0.00% 0.70% 32.75% Franklin Templeton - Franklin U.S. Government Fund - Class 2 2003 32,257 10.74 346,310 8.97% 0.70% 1.50% 2002 1,443 10.58 15,262 0.00% 0.70% 0.00%
VL-R 83 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor PLUS Divisions - continued: Franklin Templeton - Mutual Shares Securities Fund - Class 2 2003 9,047 $ 10.71 $ 96,887 0.81% 0.70% 24.28% 2002 2,794 8.62 24,079 0.00% 0.70% 0.00% Franklin Templeton - Templeton Foreign Securities Fund - Class 2 2003 4,611 10.21 47,094 0.83% 0.70% 31.29% 2002 1,105 7.78 8,596 0.00% 0.70% 0.00% Goldman Sachs Capital Growth Fund 2003 115 10.46 1,202 0.00% 0.70% 2.22% Janus Aspen Series International Growth Portfolio - Service Shares 2003 3,647 10.66 38,856 0.94% 0.70% 33.60% 2002 1,057 7.98 8,431 0.62% 0.70% 0.00% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 2003 6,125 11.31 69,306 0.00% 0.70% 33.82% 2002 1,532 8.45 12,952 0.00% 0.70% 0.00% Janus Aspen Series Worldwide Growth Portfolio - Service Shares 2003 8,332 9.91 82,556 0.88% 0.70% 22.82% 2002 1,138 8.07 9,184 0.70% 0.70% 0.00% JPMorgan Mid Cap Value Portfolio 2003 139 12.37 1,723 0.00% 0.70% 23.72% JPMorgan Small Company Portfolio 2003 1,545 11.07 17,103 0.00% 0.70% 35.03% 2002 83 8.20 678 0.00% 0.70% 0.00% MFS VIT Capital Opportunities Series 2003 13,208 10.16 134,162 0.13% 0.70% 26.50% 2002 1,935 8.03 15,536 0.00% 0.70% 0.00% MFS VIT Emerging Growth Series 2003 10,988 10.38 114,037 0.00% 0.70% 29.32% 2002 1,418 8.03 11,383 0.00% 0.70% 0.00% MFS VIT New Discovery Series 2003 7,988 10.55 84,253 0.00% 0.70% 32.79% 2002 2,463 7.94 19,562 0.00% 0.70% 0.00% MFS VIT Research Series 2003 3,326 10.26 34,120 0.32% 0.70% 23.84% 2002 444 8.28 3,676 0.00% 0.70% 0.00% Neuberger Berman AMT Mid-Cap Growth Portfolio 2003 9,135 10.15 92,709 0.00% 0.70% 27.18% 2002 1,371 7.98 10,937 0.00% 0.70% 0.00% Oppenheimer Global Securities Fund/VA 2003 254 14.22 3,614 0.00% 0.70% 42.24%
VL-R 84 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor PLUS Divisions - continued: Oppenheimer Multiple Strategies Fund/VA 2003 491 $ 11.88 $ 5,829 0.00% 0.70% 18.78% PIMCO VIT Real Return Portfolio - Administrative Class 2003 19,594 11.96 234,262 4.60% 0.70% 8.10% 2002 5,160 11.06 57,074 0.91% 0.70% 0.00% PIMCO VIT Short-Term Portfolio - Administrative Class 2003 5,065 10.30 52,148 1.40% 0.70% 1.34% 2002 560 10.16 5,689 0.84% 0.70% 0.00% PIMCO VIT Total Return Portfolio - Administrative Class 2003 24,496 10.96 268,413 3.30% 0.70% 4.31% 2002 4,990 10.50 52,417 3.01% 0.70% 0.00% Putnam VT Diversified Income Fund - Class IB 2003 4,230 12.13 51,314 3.90% 0.70% 19.21% 2002 246 10.18 2,502 0.00% 0.70% 0.00% Putnam VT Growth and Income Fund - Class IB 2003 13,002 10.68 138,850 1.12% 0.70% 26.49% 2002 3,645 8.44 30,768 0.00% 0.70% 0.00% Putnam VT International Growth and Income Fund - Class IB 2003 4,529 11.15 50,500 0.85% 0.70% 36.89% 2002 682 8.15 5,553 0.00% 0.70% 0.00% Safeco RST Core Equity Portfolio 2003 838 10.47 8,774 1.36% 0.70% 23.91% 2002 291 8.45 2,455 1.58% 0.70% 0.00% Safeco RST Growth Opportunities Portfolio 2003 3,567 10.04 35,811 0.00% 0.70% 41.95% 2002 1,743 7.07 12,330 0.00% 0.70% 0.00% SunAmerica - Aggressive Growth Portfolio - Class 1 2003 1,974 10.61 20,949 0.00% 0.70% 27.56% 2002 124 8.32 1,030 0.00% 0.70% 0.00% SunAmerica - SunAmerica Balanced Portfolio - Class 1 2003 6,452 10.44 67,366 3.13% 0.70% 14.31% 2002 2,001 9.13 18,277 0.00% 0.70% 0.00% UIF Equity Growth Portfolio - Class I 2003 1,975 10.26 20,256 0.00% 0.70% 24.06% 2002 133 8.27 1,099 0.36% 0.70% 0.00% UIF High Yield Portfolio - Class I 2003 432 11.86 5,121 0.00% 0.70% 24.83% 2002 0 9.50 1 0.00% 0.70% 0.00%
VL-R 85 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor PLUS Divisions - continued: VALIC Company I - International Equities Fund 2003 3,724 $ 10.19 $ 37,962 2.18% 0.70% 28.73% 2002 57 7.92 453 0.00% 0.70% 0.00% VALIC Company I - Mid Cap Index Fund 2003 15,183 11.20 169,998 0.77% 0.70% 34.18% 2002 2,609 8.34 21,775 0.27% 0.70% 0.00% VALIC Company I - Money Market I Fund 2003 98,210 10.02 983,952 0.77% 0.70% -0.10% 2002 14,815 10.03 148,586 0.65% 0.70% 0.00% VALIC Company I - Nasdaq-100 Index Fund 2003 5,849 12.50 73,115 0.00% 0.70% 48.24% 2002 457 8.43 3,855 0.00% 0.70% 0.00% VALIC Company I - Science & Technology Fund 2003 2,392 12.13 29,006 0.00% 0.70% 50.42% 2002 48 8.06 387 0.00% 0.70% 0.00% VALIC Company I - Small Cap Index Fund 2003 7,881 11.78 92,804 0.50% 0.70% 45.44% 2002 1,298 8.10 10,508 0.65% 0.70% 0.00% VALIC Company I - Stock Index Fund 2003 42,167 10.81 455,713 1.52% 0.70% 27.31% 2002 1,898 8.49 16,117 0.56% 0.70% 0.00% Van Kampen LIT Growth and Income Portfolio - Class I 2003 9,593 10.72 102,840 0.39% 0.70% 27.14% 2002 1,758 8.43 14,822 0.00% 0.70% 0.00% Vanguard VIF High Yield Bond Portfolio 2003 9,286 11.47 106,560 3.50% 0.70% 16.05% 2002 1,974 9.89 19,522 0.00% 0.70% 0.00% Vanguard VIF REIT Index Portfolio 2003 14,257 12.62 179,968 3.31% 0.70% 34.54% 2002 5,814 9.38 54,551 0.00% 0.70% 0.00% Platinum Investor Survivor Divisions: AIM V.I. International Growth Fund - Series I shares 2003 46,420 6.29 292,156 0.52% 0.40% 28.55% 2002 50,094 4.90 245,264 0.63% 0.40% -16.01% 2001 52,572 5.83 306,461 0.34% 0.40% -23.84%
VL-R 86 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor Survivor Divisions - continued: AIM V.I. Premier Equity Fund - Series I shares 2003 109,492 $ 5.91 $ 647,508 0.31% 0.40% 24.58% 2002 105,247 4.75 499,599 0.34% 0.40% -30.54% 2001 104,033 6.83 710,934 0.15% 0.40% -12.91% Alger American Leveraged AllCap Portfolio - Class O Shares 2003 138 12.08 1,666 0.00% 0.40% 20.75% Alger American MidCap Growth Portfolio - Class O Shares 2003 2,174 13.60 29,576 0.00% 0.40% 36.03% American Century VP Value Fund 2003 25,525 13.55 345,829 0.72% 0.40% 28.44% 2002 12,625 10.55 133,175 6.45% 0.40% -12.97% 2001 7,351 12.12 89,101 0.00% 0.40% 12.40% Ayco Growth Fund 2003 -- 8.45 -- 0.86% 0.40% 26.78% 2002 789,598 6.67 5,264,612 0.32% 0.40% -29.58% 2001 689,142 9.47 6,525,212 0.31% 0.40% -14.80% Credit Suisse Small Cap Growth Portfolio 2003 4,530 7.52 34,045 0.00% 0.40% 47.95% 2002 3,366 5.08 17,097 0.00% 0.40% -33.96% 2001 5,976 7.69 45,963 0.00% 0.40% -16.35% Dreyfus IP MidCap Stock Portfolio - Initial shares 2003 18,763 10.82 202,999 0.27% 0.40% 31.20% 2002 20,439 8.25 168,544 0.34% 0.40% -12.84% 2001 10,698 9.46 101,217 0.32% 0.40% -3.65% Dreyfus VIF Developing Leaders Portfolio - Initial shares 2003 58,620 10.37 608,130 0.04% 0.40% 31.16% 2002 161,430 7.91 1,276,781 0.07% 0.40% -19.45% 2001 58,732 9.82 576,659 0.51% 0.40% -6.49% Dreyfus VIF Quality Bond Portfolio - Initial shares 2003 22,659 12.96 293,621 6.18% 0.40% 4.52% 2002 19,599 12.40 242,975 5.20% 0.40% 7.33% 2001 21,483 11.55 248,130 4.94% 0.40% 6.26% Fidelity VIP Asset Manager Portfolio - Service Class 2 2003 8,861 9.86 87,351 3.52% 0.40% 17.19% 2002 8,463 8.41 71,189 2.40% 0.40% -9.39% 2001 3,038 9.28 28,207 0.41% 0.40% -4.77%
VL-R 87 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor Survivor Divisions - continued: Fidelity VIP Contrafund Portfolio - Service Class 2 2003 37,768 $ 9.62 $ 363,221 0.54% 0.40% 27.68% 2002 272,383 7.53 2,051,592 0.66% 0.40% -9.97% 2001 274,354 8.37 2,295,149 0.01% 0.40% -12.82% Fidelity VIP Equity-Income Portfolio - Service Class 2 2003 65,789 10.21 671,430 2.70% 0.40% 29.51% 2002 262,426 7.88 2,068,007 1.67% 0.40% -17.48% 2001 260,014 9.55 2,483,113 0.03% 0.40% -5.61% Fidelity VIP Growth Portfolio - Service Class 2 2003 84,756 6.71 568,779 0.20% 0.40% 32.01% 2002 404,293 5.08 2,055,203 0.29% 0.40% -30.57% 2001 40,690 7.32 297,940 0.01% 0.40% -18.20% Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 2003 954 13.30 12,687 0.00% 0.40% 33.02% Franklin Templeton - Franklin U.S. Government Fund - Class 2 2003 307 11.17 3,422 9.35% 0.40% 1.81% 2002 25,055 10.97 274,784 0.00% 0.40% 0.00% Franklin Templeton - Mutual Shares Securities Fund - Class 2 2003 2,452 10.96 26,861 0.59% 0.40% 24.65% 2002 1,068 8.79 9,384 0.00% 0.40% 0.00% Franklin Templeton - Templeton Foreign Securities Fund - Class 2 2003 5,955 10.63 63,285 0.15% 0.40% 31.69% 2002 595 8.07 4,799 0.00% 0.40% 0.00% Goldman Sachs Capital Growth Fund 2003 740,038 8.64 6,394,727 0.00% 0.40% 2.23% Janus Aspen Series International Growth Portfolio - Service Shares 2003 35,446 6.77 240,071 1.09% 0.40% 34.00% 2002 25,566 5.05 129,225 0.79% 0.40% -26.05% 2001 24,722 6.84 168,986 1.20% 0.40% -23.74% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 2003 29,454 4.49 132,254 0.00% 0.40% 34.23% 2002 14,436 3.35 48,291 0.00% 0.40% -28.41% 2001 13,411 4.67 62,664 0.00% 0.40% -39.83% Janus Aspen Series Worldwide Growth Portfolio - Service Shares 2003 36,703 6.33 232,358 0.94% 0.40% 23.19% 2002 21,524 5.14 110,615 0.71% 0.40% -26.00% 2001 13,910 6.95 96,604 0.29% 0.40% -22.93%
VL-R 88 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor Survivor Divisions - continued: JPMorgan Small Company Portfolio 2003 1,101 $ 9.14 $ 10,060 0.00% 0.40% 35.43% 2002 1,804 6.75 12,176 0.26% 0.40% -21.96% 2001 1,956 8.65 16,915 0.03% 0.40% -8.40% MFS VIT Capital Opportunities Series 2003 42,350 6.05 256,019 0.22% 0.40% 26.88% 2002 38,315 4.76 182,558 0.06% 0.40% -29.97% 2001 18,664 6.80 126,985 0.00% 0.40% -23.79% MFS VIT Emerging Growth Series 2003 128,450 4.39 564,347 0.00% 0.40% 29.71% 2002 112,158 3.39 379,908 0.00% 0.40% -34.02% 2001 117,741 5.13 604,496 0.00% 0.40% -33.75% MFS VIT New Discovery Series 2003 12,890 8.02 103,356 0.00% 0.40% 33.18% 2002 6,447 6.02 38,816 0.00% 0.40% -31.90% 2001 5,448 8.84 48,169 0.00% 0.40% -5.41% MFS VIT Research Series 2003 10,143 6.59 66,864 0.69% 0.40% 24.21% 2002 9,598 5.31 50,938 0.31% 0.40% -24.84% 2001 11,015 7.06 77,779 0.01% 0.40% -21.57% Neuberger Berman AMT Mid-Cap Growth Portfolio 2003 14,189 5.60 79,457 0.00% 0.40% 27.56% 2002 175,271 4.39 769,462 0.00% 0.40% -29.62% 2001 5,636 6.24 35,155 0.00% 0.40% -24.95% Oppenheimer Global Securities Fund/VA 2003 1,271 14.25 18,122 0.00% 0.40% 42.53% Oppenheimer Multiple Strategies Fund/VA 2003 433 11.90 5,158 0.00% 0.40% 19.02% PIMCO VIT Real Return Portfolio - Administrative Class 2003 55,992 14.27 798,850 4.08% 0.40% 8.42% 2002 61,007 13.16 802,807 4.53% 0.40% 17.33% 2001 15,384 11.22 172,540 8.44% 0.40% 6.84% PIMCO VIT Short-Term Portfolio - Administrative Class 2003 22,482 11.18 251,288 1.66% 0.40% 1.64% 2002 17,021 11.00 187,177 2.54% 0.40% 2.61% 2001 8,618 10.72 92,365 4.87% 0.40% 4.96%
VL-R 89 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor Survivor Divisions - continued: PIMCO VIT Total Return Portfolio - Administrative Class 2003 51,352 $ 12.65 $ 649,546 3.18% 0.40% 4.63% 2002 51,588 12.09 623,682 5.08% 0.40% 8.65% 2001 40,582 11.13 451,552 2.94% 0.40% 8.38% Putnam VT Diversified Income Fund - Class IB 2003 4,357 12.87 56,062 8.28% 0.40% 19.57% 2002 4,759 10.76 51,212 8.76% 0.40% 5.48% 2001 5,402 10.20 55,105 0.76% 0.40% 3.10% Putnam VT Growth and Income Fund - Class IB 2003 70,398 10.15 714,878 1.73% 0.40% 26.87% 2002 68,750 8.00 550,273 2.12% 0.40% -19.31% 2001 48,762 9.92 483,692 2.84% 0.40% -6.77% Putnam VT International Growth and Income Fund - Class IB 2003 43,197 9.19 396,996 2.62% 0.40% 37.30% 2002 230,768 6.69 1,544,705 0.76% 0.40% -14.11% 2001 96,186 7.79 749,630 3.50% 0.40% -21.13% Safeco RST Core Equity Portfolio 2003 32,237 7.31 235,796 1.04% 0.40% 24.28% 2002 27,186 5.89 160,003 1.28% 0.40% -26.20% 2001 19,841 7.98 158,237 1.08% 0.40% -9.76% Safeco RST Growth Opportunities Portfolio 2003 17,018 8.86 150,834 0.00% 0.40% 42.37% 2002 30,017 6.23 186,867 0.00% 0.40% -37.92% 2001 34,864 10.03 349,608 0.00% 0.40% 18.66% UIF Equity Growth Portfolio - Class I 2003 30,141 6.12 184,561 0.00% 0.40% 24.43% 2002 49,021 4.92 241,240 0.17% 0.40% -28.15% 2001 50,760 6.85 347,677 0.00% 0.40% -15.45% UIF High Yield Portfolio - Class I 2003 24,802 9.93 246,395 0.00% 0.40% 25.21% 2002 23,236 7.93 184,358 8.91% 0.40% -7.64% 2001 25,702 8.59 220,794 11.50% 0.40% -4.86% VALIC Company I - International Equities Fund 2003 12,165 6.88 83,664 1.61% 0.40% 29.12% 2002 13,500 5.33 71,906 0.42% 0.40% -19.11% 2001 12,156 6.59 80,045 1.60% 0.40% -22.29%
VL-R 90 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor Survivor Divisions - continued: VALIC Company I - Mid Cap Index Fund 2003 65,007 $ 12.08 $ 785,117 0.67% 0.40% 34.58% 2002 60,525 8.97 543,149 0.73% 0.40% -15.24% 2001 41,967 10.59 444,325 0.75% 0.40% -1.34% VALIC Company I - Money Market I Fund 2003 380,198 10.88 4,136,738 0.58% 0.40% 0.20% 2002 411,443 10.86 4,467,881 1.33% 0.40% 0.84% 2001 461,849 10.77 4,973,259 2.62% 0.40% 3.27% VALIC Company I - Nasdaq-100 Index Fund 2003 20,392 4.49 91,524 0.00% 0.40% 48.68% 2002 10,382 3.02 31,341 0.00% 0.40% -38.50% 2001 84,435 4.91 414,455 0.00% 0.40% -40.69% VALIC Company I - Science & Technology Fund 2003 13,270 3.99 52,968 0.00% 0.40% 50.87% 2002 6,981 2.65 18,470 0.00% 0.40% -40.45% 2001 3,006 4.44 13,356 0.00% 0.40% -49.92% VALIC Company I - Small Cap Index Fund 2003 26,367 11.44 301,623 0.51% 0.40% 45.88% 2002 20,366 7.84 159,702 1.03% 0.40% -21.14% 2001 13,430 9.94 133,536 1.80% 0.40% 1.59% VALIC Company I - Stock Index Fund 2003 685,168 7.59 5,198,479 1.39% 0.40% 27.69% 2002 564,353 5.94 3,353,318 1.24% 0.40% -22.74% 2001 426,976 7.69 3,283,914 1.04% 0.40% -12.55% Van Kampen LIT Growth and Income Portfolio - Class I 2003 15,154 10.57 160,247 1.05% 0.40% 27.52% 2002 19,931 8.29 165,277 2.74% 0.40% 0.00% Van Kampen LIT Strategic Stock Portfolio - Class I Shares 2001 15,021 11.38 170,935 2.00% 0.40% 0.68% Vanguard VIF High Yield Bond Portfolio 2003 71,234 11.98 853,280 6.64% 0.40% 16.40% 2002 58,997 10.29 607,114 8.53% 0.40% 1.14% 2001 6,513 10.17 66,273 0.40% 0.40% -2.99% Vanguard VIF REIT Index Portfolio 2003 21,216 16.97 360,003 3.49% 0.40% 34.94% 2002 18,253 12.57 229,533 3.78% 0.40% 3.12% 2001 9,356 12.19 114,091 2.22% 0.40% 11.49%
VL-R 91 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor Survivor II Divisions: AIM V.I. International Growth Fund - Series I shares 2003 1,195 $ 11.00 $ 13,144 0.51% 0.75% 28.10% 2002 1,368 8.59 11,750 1.20% 0.75% 0.00% AIM V.I. Premier Equity Fund - Series I shares 2003 4,149 8.81 36,534 0.33% 0.75% 24.15% 2002 3,438 7.09 24,384 0.80% 0.75% 0.00% Alger American Leveraged AllCap Portfolio - Class O Shares 2003 103 12.05 1,236 0.00% 0.75% 20.47% Alger American MidCap Growth Portfolio - Class O Shares 2003 343 13.57 4,651 0.00% 0.75% 35.72% American Century VP Value Fund 2003 66,916 11.80 789,838 0.79% 0.75% 28.00% 2002 42,508 9.22 391,994 0.07% 0.75% 0.00% Ayco Growth Fund 2003 -- 8.89 -- 0.83% 0.75% 26.35% 2002 222,735 7.03 1,566,422 0.72% 0.75% 0.00% Credit Suisse Small Cap Growth Portfolio 2003 749 11.01 8,249 0.00% 0.75% 47.44% 2002 124 7.47 929 0.00% 0.75% 0.00% Dreyfus IP MidCap Stock Portfolio - Initial shares 2003 4,400 12.11 53,278 0.36% 0.75% 30.74% 2002 1,861 9.26 17,237 0.63% 0.75% 0.00% Dreyfus VIF Developing Leaders Portfolio - Initial shares 2003 43,134 11.38 490,913 0.04% 0.75% 30.71% 2002 19,192 8.71 167,114 0.05% 0.75% 0.00% Dreyfus VIF Quality Bond Portfolio - Initial shares 2003 4,881 10.95 53,463 6.36% 0.75% 4.16% 2002 3,457 10.52 36,349 4.29% 0.75% 0.00% Fidelity VIP Asset Manager Portfolio - Service Class 2 2003 7,874 10.86 85,505 2.22% 0.75% 16.78% 2002 4,060 9.30 37,752 0.00% 0.75% 0.00% Fidelity VIP Contrafund Portfolio - Service Class 2 2003 8,993 11.84 106,506 0.19% 0.75% 27.24% 2002 4,002 9.31 37,252 0.00% 0.75% 0.00% Fidelity VIP Equity-Income Portfolio - Service Class 2 2003 31,375 11.04 346,431 1.49% 0.75% 29.06% 2002 28,086 8.56 240,289 0.10% 0.75% 0.00%
VL-R 92 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor Survivor II Divisions - continued: Fidelity VIP Growth Portfolio - Service Class 2 2003 33,499 $ 9.41 $ 315,255 0.11% 0.75% 31.55% 2002 30,554 7.15 218,579 0.00% 0.75% 0.00% Fidelity VIP Mid Cap Portfolio - Service Class 2 2003 646 14.00 9,039 0.00% 0.75% 39.97% Franklin Templeton - Franklin Small Cap Value Securities Fund - Class 2 2003 407 13.27 5,400 0.00% 0.75% 32.71% Franklin Templeton - Franklin U.S. Government Fund - Class 2 2003 4,440 11.09 49,231 2.42% 0.75% 1.45% 2002 372 10.93 4,064 0.00% 0.75% 0.00% Franklin Templeton - Mutual Shares Securities Fund - Class 2 2003 16,089 10.88 175,057 0.99% 0.75% 24.21% 2002 8,126 8.76 71,181 0.97% 0.75% 0.00% Franklin Templeton - Templeton Foreign Securities Fund - Class 2 2003 26,168 10.55 276,165 1.34% 0.75% 31.23% 2002 9,504 8.04 76,434 1.64% 0.75% 0.00% Goldman Sachs Capital Growth Fund 2003 202,510 9.08 1,839,317 0.00% 0.75% 2.21% Janus Aspen Series International Growth Portfolio - Service Shares 2003 4,343 10.53 45,738 1.20% 0.75% 33.53% 2002 10,266 7.89 80,958 1.54% 0.75% 0.00% Janus Aspen Series Mid Cap Growth Portfolio - Service Shares 2003 996 10.11 10,066 0.00% 0.75% 33.76% Janus Aspen Series Worldwide Growth Portfolio - Service Shares 2003 28,353 9.49 269,186 0.61% 0.75% 22.76% 2002 14,644 7.73 113,257 0.83% 0.75% 0.00% JPMorgan Mid Cap Value Portfolio 2003 359 12.37 4,435 0.00% 0.75% 23.67% JPMorgan Small Company Portfolio 2003 469 11.62 5,450 0.00% 0.75% 34.96% 2002 116 8.61 998 0.00% 0.75% 0.00% MFS VIT Capital Opportunities Series 2003 2,444 9.26 22,624 0.23% 0.75% 26.44% 2002 1,984 7.32 14,526 0.01% 0.75% 0.00% MFS VIT Emerging Growth Series 2003 2,081 8.93 18,588 0.00% 0.75% 29.25% 2002 978 6.91 6,758 0.00% 0.75% 0.00%
VL-R 93 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor Survivor II Divisions - continued: MFS VIT New Discovery Series 2003 20,459 $ 10.17 $ 208,046 0.00% 0.75% 32.72% 2002 18,384 7.66 140,857 0.00% 0.75% 0.00% MFS VIT Research Series 2003 3,856 9.56 36,872 0.50% 0.75% 23.77% 2002 2,335 7.73 18,040 0.64% 0.75% 0.00% Neuberger Berman AMT Mid-Cap Growth Portfolio 2003 6,290 9.32 58,612 0.00% 0.75% 27.11% 2002 2,862 7.33 20,977 0.00% 0.75% 0.00% Oppenheimer Global Securities Fund/VA 2003 316 14.22 4,494 0.00% 0.75% 42.19% Oppenheimer Multiple Strategies Fund/VA 2003 3,197 11.87 37,965 0.00% 0.75% 18.74% PIMCO VIT Real Return Portfolio - Administrative Class 2003 12,541 12.12 152,019 4.25% 0.75% 8.04% 2002 5,707 11.22 64,033 4.75% 0.75% 0.00% PIMCO VIT Short-Term Portfolio - Administrative Class 2003 29,761 10.40 309,375 1.79% 0.75% 1.29% 2002 34,758 10.26 356,732 3.93% 0.75% 0.00% PIMCO VIT Total Return Portfolio - Administrative Class 2003 52,389 11.07 579,689 3.72% 0.75% 4.26% 2002 43,725 10.61 464,046 7.26% 0.75% 0.00% Putnam VT Diversified Income Fund - Class IB 2003 122 12.47 1,524 0.00% 0.75% 19.15% Putnam VT Growth and Income Fund - Class IB 2003 4,092 10.48 42,897 1.32% 0.75% 26.43% 2002 2,240 8.29 18,571 0.00% 0.75% 0.00% Putnam VT International Growth and Income Fund - Class IB 2003 12,397 12.12 150,271 1.33% 0.75% 36.82% 2002 12,013 8.86 106,432 0.53% 0.75% 0.00% Safeco RST Core Equity Portfolio 2003 187 9.24 1,733 1.11% 0.75% 23.85% 2002 145 7.46 1,081 2.53% 0.75% 0.00% Safeco RST Growth Opportunities Portfolio 2003 23,243 10.41 242,035 0.00% 0.75% 41.87% 2002 12,647 7.34 92,822 0.00% 0.75% 0.00% SunAmerica - Aggressive Growth Portfolio - Class 1 2003 329 9.99 3,284 0.00% 0.75% 27.50%
VL-R 94 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued A summary of units outstanding, unit values, and net assets for the variable life policies and the investment income ratios, expense ratios (excluding expenses of the underlying Divisions) and total return for the years ended December 31, 2003, 2002 and 2001 are as follows:
Invest- ment Income Expense Total Ratio Ratio Return Divisions Units Unit Value Net Assets (a) (b) (c) - ----------------------------------------------------------------------------------------------------------------------------------- Platinum Investor Survivor II Divisions - continued: SunAmerica - SunAmerica Balanced Portfolio - Class 1 2003 407 $ 10.11 $ 4,119 0.00% 0.75% 14.26% UIF Equity Growth Portfolio - Class I 2003 141 9.06 1,280 0.00% 0.75% 23.99% 2002 99 7.31 726 0.00% 0.75% 0.00% UIF High Yield Portfolio - Class I 2003 3,683 11.58 42,672 0.00% 0.75% 24.77% 2002 2,195 9.28 20,376 19.91% 0.75% 0.00% VALIC Company I - International Equities Fund 2003 347 10.60 3,680 1.13% 0.75% 28.67% 2002 280 8.24 2,305 0.93% 0.75% 0.00% VALIC Company I - Mid Cap Index Fund 2003 34,488 12.22 421,438 0.63% 0.75% 34.11% 2002 19,511 9.11 177,774 0.87% 0.75% 0.00% VALIC Company I - Money Market I Fund 2003 506,784 10.05 5,091,299 0.62% 0.75% -0.15% 2002 514,618 10.06 5,177,910 1.05% 0.75% 0.49% 2001 925,288 10.01 9,264,381 0.00% 0.75% 0.00% VALIC Company I - Nasdaq-100 Index Fund 2003 162 9.41 1,520 0.00% 0.75% 48.16% VALIC Company I - Science & Technology Fund 2003 702 9.11 6,393 0.00% 0.75% 50.34% 2002 506 6.06 3,062 0.00% 0.75% 0.00% VALIC Company I - Small Cap Index Fund 2003 1,939 12.67 24,572 0.55% 0.75% 45.37% 2002 1,287 8.72 11,216 0.91% 0.75% 0.00% VALIC Company I - Stock Index Fund 2003 172,218 10.06 1,733,298 1.35% 0.75% 27.24% 2002 80,956 7.91 640,336 2.27% 0.75% 0.00% Van Kampen LIT Growth and Income Portfolio - Class I 2003 4,494 10.51 47,245 0.19% 0.75% 27.07% 2002 451 8.27 3,734 0.00% 0.75% 0.00% Vanguard VIF High Yield Bond Portfolio 2003 3,152 11.75 37,022 4.95% 0.75% 16.00% 2002 1,345 10.13 13,622 0.00% 0.75% 0.00% Vanguard VIF REIT Index Portfolio 2003 9,515 14.62 139,141 3.01% 0.75% 34.47% 2002 5,625 10.87 61,169 0.00% 0.75% 0.00%
VL-R 95 AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R NOTES TO FINANCIAL STATEMENTS - CONTINUED Note G - Financial Highlights - continued (a) These amounts represent the dividends, excluding capital gain distributions from mutual funds, received by the Division from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense guarantee charges, that result in direct reduction in the unit value. The recognition of investment income by the Division is affected by the timing of the declaration of dividends by the underlying fund in which the Divisions invest. (b) These amounts represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. These ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund have been excluded. (c) These amounts represent the total return for the periods indicated, including changes in the value of the underlying Division, and reflect deductions for all items included in the fee rate. The total return does not include contract charges deducted directly from account values. For the years ended December 31, 2002 and 2001, no total return was calculated if the Division became an available investment option during the year. For the year ended December 31.2003, a total return was calculated using the initial unit value for the Division if the Division became an available investment option during the year and the underlying Fund was not available at the beginning of the year. VL-R 96 [LOGO OF AIG AMERICAN GENERAL] Policies issued by: American General Life Insurance Company A member company of American International Group, Inc. 2727-A Allen Parkway, Houston, TX 77019 AG Legacy Plus Variable Universal Life Insurance Policy Form Number 99616 Corporate America Variable Universal Life Insurance Policy Form Number 99301 Legacy Plus Variable Universal Life Insurance Policy Form Number 98615 Platinum Investor I Variable Universal Life Insurance Policy Form Number 97600 Platinum Investor II Variable Universal Life Insurance Policy Form Number 97610 Platinum Investor III Variable Universal Life Insurance Policy Form Number 00600 Platinum Investor PLUS Variable Universal Life Insurance Policy Form Number 02600 Platinum Investor Survivor Variable Universal Life Insurance Policy Form Number 99206 Platinum Investor Survivor II Variable Universal Life Insurance Policy Form Number 01206 Policies issued by American General Life Insurance Company (AGL) are solely its individual, contractual and financial responsibility. AGL does not solicit business in the state of New York. Policies not available in all states. Variable universal life insurance policies are distributed by American General Equity Services Corporation, member NASD and a member company of American International Group, Inc. (C) 2004 American International Group, Inc. All rights reserved. [LOGO OF PRICEWATERHOUSECOOPERS LLP] ================================================================================ PricewaterhouseCoopers LLP Suite 2900 1201 Louisiana St. Houston TX 77002-5678 Telephone (713) 356 4000 Report of Independent Auditors To the Board of Directors and Shareholder American General Life Insurance Company: In our opinion, the accompanying consolidated balance sheets as of December 31, 2003 and 2002 and the related consolidated statements of income, shareholder's equity, comprehensive income, and of cash flows present fairly, in all material respects, the financial position of American General Life Insurance Company and subsidiaries (an indirect wholly-owned subsidiary of American International Group, Inc.) at December 31, 2003 and 2002, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 2, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets as of January 1, 2002. /s/ PRICEWATERHOUSECOOPERS LLP - ------------------------------- Houston, Texas April 14, 2004 F-1 American General Life Insurance Company Consolidated Balance Sheets
December 31 ------------------------- 2003 2002 ------------------------- (In Thousands) Assets Investments: Fixed maturity securities, available for sale, at fair value (amortized cost - $43,133,011 - 2003; $39,509,415- 2002) $45,349,130 $41,075,428 Fixed maturity securities, trading securities, at fair value (amortized cost - $52,000 - 2003) 58,953 -- Equity securities, at fair value (cost - $93,182 - 2003; $106,611 - 2002) 98,523 88,597 Equity securities, trading securities (cost - $7,000 - 2003) 10,000 -- Mortgage loans on real estate, net of allowance ($7,124 - 2003; $10,945 - 2002) 2,953,495 2,799,436 Policy loans 1,705,891 1,700,487 Investment real estate 44,543 44,331 Other long-term investments 1,895,974 761,341 Separate account seed money (cost - $90,670 - 2003; $90,000 - 2002) 91,670 74,000 Securities lending collateral 4,451,135 3,216,000 Short-term investments 112,440 315,757 Derivatives assets 9,560 30,732 ------------------------- Total investments 56,781,314 50,106,109 Cash 297,209 93,943 Restricted Cash 88,781 -- Investment in ultimate Parent Company (cost - $8,597 in 2003 and 2002) 53,697 46,867 Notes receivable from affiliates 537,241 493,677 Indebtedness from affiliates 19,756 21,223 Accrued investment income 651,815 626,681 Accounts receivable 1,023,451 867,788 Deferred policy acquisition costs/cost of insurance purchased 3,250,287 3,129,162 Property and equipment 61,893 96,627 Other assets 314,685 429,013 Assets held in separate accounts 22,930,750 17,317,645 ------------------------- Total assets $86,010,879 $73,228,735 =========================
See accompanying notes to consolidated financial statements. F-2 American General Life Insurance Company Consolidated Balance Sheets
December 31 ------------------------- 2003 2002 ------------------------- (In Thousands) Liabilities, Minority Interest and Shareholder's Equity Liabilities: Future policy benefits $ 7,898,915 $ 6,818,132 Policyholder contract deposits 36,559,454 34,194,958 Other policy claims and benefits payable 273,008 145,388 Other policyholders' funds 2,204,767 1,865,441 Federal income taxes 1,104,182 815,101 Indebtedness to affiliates 362,749 -- Securities lending payable 4,451,135 3,216,000 Other liabilities 1,240,035 1,656,308 Derivative liabilities 27,165 -- Liabilities related to separate accounts 22,930,750 17,317,645 ------------------------- Total liabilities 77,052,160 66,028,973 Minority interest 96,741 -- Shareholder's equity: Preferred stock, $100 par value, 8,500 shares authorized, issued, and outstanding 850 850 Common stock, $10 par value, 600,000 shares authorized, issued, and outstanding 6,000 6,000 Additional paid-in capital 3,507,238 3,167,462 Accumulated other comprehensive income 1,097,788 736,299 Retained earnings 4,250,102 3,289,151 ------------------------- Total shareholder's equity 8,861,978 7,199,762 ------------------------- Total liabilities and shareholder's equity $86,010,879 $73,228,735 =========================
See accompanying notes to consolidated financial statements. F-3 American General Life Insurance Company Consolidated Statements of Income 2003 2002 ----------------------- (In Thousands) Revenues: Premiums and other considerations $2,403,951 $2,138,833 Net investment income 3,288,686 3,054,530 Net realized investment losses (56,779) (295,344) Other 175,663 175,528 ----------------------- Total revenues 5,811,521 5,073,547 Benefits and expenses: Policyholders' benefits 1,544,535 1,284,087 Interest credited 2,039,015 2,051,698 Operating costs and expenses 939,785 753,033 ----------------------- Total benefits and expenses 4,523,335 4,088,818 ----------------------- Income before income tax expense 1,288,186 984,729 Income tax expense: Current 250,906 107,502 Deferred 75,649 64,917 ----------------------- Total income tax expense 326,555 172,419 ----------------------- Net income $ 961,631 $ 812,310 ======================= See accompanying notes to consolidated financial statements. F-4 American General Life Insurance Company Consolidated Statements of Shareholder's Equity Year ended December 31 ----------------------- 2003 2002 ----------------------- (in Thousands) Preferred stock: Balance at beginning and end of year $ 850 $ 850 ----------------------- Common stock: Balance at beginning and end of year 6,000 6,000 ----------------------- Additional paid-in capital: Balance at beginning of year 3,167,462 2,691,492 Capital contribution from Parent Company 339,776 475,970 ----------------------- Balance at end of year 3,507,238 3,167,462 Accumulated other comprehensive income: Balance at beginning of year 736,299 175,507 Change in net unrealized investment gains during year net of reclassification 405,943 557,525 Change in hedging activities during year (44,454) 3,267 ----------------------- Balance at end of year 1,097,788 736,299 Retained earnings: Balance at beginning of year 3,289,151 2,922,422 Net income 961,631 812,310 Dividends paid (680) (445,581) ----------------------- Balance at end of year 4,250,102 3,289,151 ----------------------- Total shareholder's equity $8,861,978 $7,199,762 ======================= See accompanying notes to consolidated financial statements. F-5 American General Life Insurance Company Consolidated Statements of Comprehensive Income 2003 2002 ----------------------- (in Thousands) Net income $ 961,631 $ 812,310 Other comprehensive income: Gross change in unrealized gains (losses) on securities (pretax: 2003 - $549,834; 2002 - $720,641) 357,392 468,416 Hedging activities (pretax: 2003 - $(68,391); 2002 - $5,025) (44,454) 3,267 Reclassification adjustment for losses included in net income 48,551 89,109 ----------------------- Other comprehensive income 361,489 560,792 ----------------------- Comprehensive income $1,323,120 $1,373,102 ======================= See accompanying notes to consolidated financial statements. F-6 American General Life Insurance Company Consolidated Statements of Cash Flows
2003 2002 --------------------------- (in Thousands) Operating activities Net income $ 961,631 $ 812,310 Adjustments to reconcile net income to net cash provided by operating activities: Change in accounts receivable (155,662) (3,438) Change in future policy benefits and other policy claims 2,255,284 3,148,281 Amortization of policy acquisition costs and cost of insurance purchased 311,029 165,269 Policy acquisition costs deferred (583,939) (466,779) Change in other policyholders' funds 339,326 62,893 Provision for deferred income tax expense 267,645 357,510 Depreciation and amortization, including premiums and discounts 170,474 150,310 Change in indebtedness to (from) affiliates 320,652 68,133 Change in amounts payable to brokers (614,174) 384,634 Change in trading securities (68,953) -- Change in restricted cash (88,781) -- Net loss on sale of investments 315,144 422,536 Other, net 522,312 35,272 --------------------------- Net cash provided by operating activities 3,951,988 5,136,931 Investing activities Purchases of : Fixed maturity and equity securities (34,541,457) (34,652,736) Mortgages (443,541) (286,385) Other long-term investments (14,902,823) (17,511,338) Sales of: Fixed maturity and equity securities 31,495,361 32,155,688 Mortgages 291,851 236,727 Other long-term investments 13,862,846 15,080,395 Sales and purchases of property, equipment, and software, net (1,056,323) (23,816) --------------------------- Net cash used in investing activities (5,294,086) (5,001,465)
See accompanying notes to consolidated financial statements. F-7 American General Life Insurance Company Consolidated Statements of Cash Flows (continued) 2003 2002 ---------------------- (in Thousands) Financing activities Net policyholder account deposits/withdrawals 1,206,268 277,303 Dividends paid (680) (445,581) Capital contribution from parent 339,776 28,000 Other -- (1,289) ---------------------- Net cash provided by (used in) financing activities 1,545,364 (141,567) ---------------------- Increase (decrease) in cash 203,266 (6,101) Cash at beginning of year 93,943 100,044 ---------------------- Cash at end of year $ 297,209 $ 93,943 ====================== Interest paid amounted to approximately $2,117,000 and $2,315,000 in 2003 and 2002, respectively. Income taxes paid amounted to approximately $240,802 and $127,376 in 2003 and 2002, respectively. See accompanying notes to consolidated financial statements. F-8 American General Life Insurance Company Notes to Consolidated Financial Statements December 31, 2003 1. Nature of Operations American General Life Insurance Company ("AGL" or the "Company") is a wholly owned subsidiary of AGC Life Insurance Company ("Parent Company"), and its ultimate parent is American International Group, Inc. ("AIG"). Effective December 31, 2002, AGL merged with certain affiliated entities, including The Franklin Life Insurance Company ("The Franklin") and its subsidiary, The American Franklin Life Insurance Company ("AMFLIC"), and All American Life Insurance Company ("All American") and became the surviving entity. Effective March 31, 2003, AGL merged with it's affiliate Old Line Life Insurance Company ("Old Line") and became the surviving entity. Additionally, effective December 31, 2002, AGL's wholly owned life insurance subsidiary, American General Life Insurance Company of New York ("AGNY") was merged with The United States Life Insurance Company in the City of New York, an affiliated entity. These mergers have been accounted for at historical cost in a manner similar to a pooling of interests business combination. Accordingly, the accompanying consolidated financial statements as of and for the years ended December 31, 2003 and 2002 include the financial position, operating results, and cash flows of The Franklin, AMFLIC, All American, Old Line and exclude AGNY. The Company operates through two divisions: Life Insurance and Retirement Savings. The Life Insurance Division offers a complete portfolio of the standard forms of universal life, variable universal life, interest-sensitive whole life, term life, structured settlements, and fixed and variable annuities throughout the United States of America. This Division serves the estate planning needs of middle- and upper-income households and the life insurance needs of small- to medium-sized businesses. The Life Insurance Division, through its subsidiaries American General Life Companies ("AGLC") and American General Enterprise Services ("AGES") also provides support services to certain affiliated insurance companies. The Retirement Savings Division includes the results of the Variable Annuity Life Insurance Company ("VALIC"), a wholly owned subsidiary. VALIC provides tax-deferred retirement annuities and employer-sponsored retirement plans to employees of health care, educational, public sector, and other not-for-profit organizations throughout the United States of America. F-9 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies 2.1 Preparation of Financial Statements The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of the Company and its wholly owned subsidiaries. Transactions with the Parent Company and other subsidiaries of the Parent Company are not eliminated from the financial statements of the Company. All other material intercompany transactions have been eliminated in consolidation. On September 23, 2003, the Company purchased 68 percent of the non-voting preferred equity issued by Castle 2003-1 Trust ("Castle Trust") for $182.3 million. The remaining non-voting preferred equity and 100 percent of the voting equity of Castle Trust are held by affiliates of the Company. Castle Trust is a Delaware statutory trust established on July 31, 2003. The business of Castle Trust and its wholly owned subsidiaries is limited to buying, owning, leasing and selling a portfolio of commercial jets. In December 2003, the FASB issued a "Revision to Interpretation No. 46, Consolidation of Variable Interest Entities" ("FIN46R") (See Note 2.14). In accordance with FIN46R, Castle Trust has been consolidated in the Company's consolidated financial statements during 2003. The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and disclosures of contingent assets and liabilities. These estimates and assumptions are particularly significant with respect to investments, deferred acquisition costs, and policyholder benefits. Ultimate results could differ from those estimates. Certain prior year amounts have been reclassified to conform with the current year presentation. 2.2 Statutory Accounting The Company and its wholly owned life insurance subsidiaries are required to file financial statements with state regulatory authorities. State insurance laws and regulations prescribe accounting practices for calculating statutory net income and equity. In addition, state regulators may permit statutory accounting practices that differ from prescribed practices. The use of such permitted practices by the Company and its wholly owned life insurance subsidiaries did not have a material effect on statutory capital and surplus at December 31, 2003. F-10 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.2 Statutory Accounting (continued) Statutory net income and capital and surplus of the Company at December 31 is as follows: 2003 2002 ----------------------- (in Thousands) Statutory net income $ 115,031 $ 530,214 Statutory capital and surplus $4,067,314 $3,007,515 The more significant differences between GAAP and statutory accounting principles are that under GAAP: (a) acquisition costs related to acquiring new business are deferred and amortized (generally in proportion to the present value of expected gross profits from surrender charges and investment, mortality, and expense margins), rather than being charged to operations as incurred; (b) future policy benefits are based on estimates of mortality, interest, and withdrawals generally representing the Company's experience, which may differ from those based on statutory mortality and interest requirements without consideration of withdrawals; (c) certain assets (principally furniture and equipment, agents' debit balances, computer software, and certain other receivables) are reported as assets rather than being charged to retained earnings; (d) acquisitions are accounted for using the purchase method of accounting rather than being accounted for as equity investments; and (e) fixed maturity investments are carried at fair value rather than amortized cost. In addition, statutory accounting principles require life insurance companies to establish an asset valuation reserve ("AVR") and an interest maintenance reserve ("IMR"). The AVR is designed to address the credit-related risk for bonds, preferred stocks, derivative instruments, and mortgages and market risk for common stocks, real estate, and other invested assets. The IMR is composed of investment- and liability-related realized gains and losses that result from interest rate fluctuations. These realized gains and losses, net of tax, are amortized into income over the expected remaining life of the asset sold or the liability released. F-11 American General Life Insurance Company Notes to Consolidated Financial Statements 2. Accounting Policies (continued) 2.3 Insurance Contracts The insurance contracts accounted for in these financial statements include primarily long-duration contracts. Long-duration contracts include traditional whole life, limited payment, endowment, guaranteed renewable term life, universal life, and investment contracts. Long-duration contracts generally require the performance of various functions and services over a period of more than one year. The contract provisions generally cannot be changed or canceled by the insurer during the contract period; however, most new contracts written by the Company allow the insurer to revise certain elements used in determining premium rates or policy benefits, subject to guarantees stated in the contracts. 2.4 Investments Fixed Maturity and Equity Securities Fixed maturity and equity securities classified as available-for-sale are recorded at fair value at December 31, 2003 and 2002. Unrealized gains (losses), net of deferred taxes, are recorded in accumulated other comprehensive income (loss), within shareholder's equity. If the fair value of a security classified as available-for-sale declines below its cost and this decline is considered to be other than temporary, the security's amortized cost is reduced to its fair value, and the reduction is recorded as a realized loss. Fixed maturity and equity securities classified as trading securities are carried at market value, as it is the Company's intention to sell these securities in the near future. Unrealized gains and losses are reflected in income currently. Mortgage Loans Mortgage loans are reported at the unpaid principal balance, net of an allowance for losses. The allowance for losses covers estimated losses based on our assessment of risk factors such as potential non-payment or non-monetary default. The allowance is primarily based on a loan-specific review. Loans for which the Company determines that collection of all amounts due under the contractual terms is not probable are considered to be impaired. The Company generally looks to the underlying collateral for repayment of impaired loans. Therefore, impaired loans are reported at the lower of amortized cost or fair value of the underlying collateral, less estimated cost to sell. F-12 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.4 Investments (continued) Policy Loans Policy loans are reported at the aggregate unpaid principal balance. There is no allowance for policy loans as these loans serve to reduce the death benefits paid when the death claim is made and the balances are effectively collateralized by the cash surrender value of the policy. Real Estate Real estate is classified as held for investment or available for sale, based on management's intent. Real estate held for investment is carried at cost, less accumulated depreciation and impairment write-downs. Real estate available for sale is carried at the lower of cost (less accumulated depreciation, if applicable) or fair value less cost to sell. Other Long-Term Investments Other long-term investments consist of equity partnerships and other investments not classified elsewhere herein. The equity partnerships in which the Company holds less than a five percent interest are carried at fair value and the change in fair value is recognized as a component of other comprehensive income. Partnerships in which the Company holds a five percent or more interest are also carried at fair value and the change in fair value is recorded to investment income, consistent with the equity method of accounting. Included in other long-term investments are preferred equity investments in partially owned companies. Generally, the equity method of accounting is used for the Company's investment in companies in which the Company's ownership interest approximates 20 percent but is not greater than 50 percent. As part of the consolidation of Castle Trust (see Note 2.1), included in other long-term investments is an investment in commercial aircrafts totaling $1,033 million, net of accumulated depreciation of $13.9 million. These aircrafts are recorded at cost and depreciated on a straight-line basis over their estimated lives of 25 years from the date of manufacture to a residual value that is 15 percent of the Castle Trust cost. Total depreciation expense for the year ended December 31, 2003 was $13.9 million. F-13 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.4 Investments (continued) Securities Lending Collateral and Securities Lending Payable The Company loans securities through a securities lending agreement with an affiliated lending agent, which authorizes the agent to lend securities held in the Company's portfolio to a list of authorized borrowers. The Company receives primarily cash collateral in an amount in excess of the market value of the securities loaned. The affiliated lending agent monitors the daily market value of securities loaned with respect to the collateral value and obtains additional collateral when necessary to ensure that collateral is maintained at a minimum of 102 percent of the value of the loaned securities. Such collateral is not available for the general use of the Company. Income earned on the collateral, net of interest paid on the securities lending agreements and the related management fees paid to administer the program, is recorded as investment income in the consolidated statement of income and comprehensive income. Dollar Roll Agreements Throughout the year, the Company enters into dollar roll repurchase agreements, which involve the sale (delivery) of mortgage-backed securities ("MBS") and the repurchase of substantially the same pool of securities at a specific price in the future. Such transactions typically involve highly-rated government agency securities and are short-term in nature, typically with a period of 30 days. The roll agreements are utilized by the Company as a financing strategy to enhance the return on its MBS portfolio. At December 31, 2003 and 2002, the Company had no dollar roll agreements outstanding as the Company has historically closed out all dollar roll agreements at year-end. Investment Income Interest on fixed maturity securities and performing mortgage loans is recorded as income when earned and is adjusted for any amortization of premium or discount. Premiums and discounts on investments are amortized to investment income by using the interest method over the contractual lives or expected payment period of the investments. Interest on delinquent mortgage loans is recorded as income when received. Dividends are recorded as income on ex-dividend dates. F-14 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.4 Investments (continued) Investment Income Income on mortgage-backed securities is recognized using a constant effective yield based on estimated prepayments of the underlying mortgages. If actual prepayments differ from estimated prepayments, a new effective yield is calculated and the net investment in the security is adjusted accordingly. The adjustment is recognized in net investment income. In January 2001, 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 changed the accounting requirements for interests in many asset-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. Realized Investment Gains Realized investment gains (losses) are recognized using the specific-identification method and reported in net realized investment gains (losses). Where declines in values of securities below cost or amortized cost are considered to be other than temporary, a charge is reflected in income as a realized loss for the difference between cost or amortized cost and estimated net fair value. The Company regularly reviews its investments for possible impairment based on criteria including economic conditions, market prices, past experience, the Company's ability and intent to hold the investment until recovery and other issuer-specific developments among other factors. If there is a decline in a security's net realizable value, a determination is made as to whether that decline is temporary or other than temporary. If it is believed that a decline in the value of a particular investment is temporary, the decline is recorded as an unrealized loss in accumulated other comprehensive income. If it is believed that the decline is other than temporary, the Company writes down the carrying value of the investment and records a realized loss in the statement of income. F-15 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.5 Separate Accounts Separate Accounts are assets and liabilities associated with certain contracts, principally annuities, for which the investment risk lies solely with the contract holder, except to the extent of minimum guarantees made by the Company with respect to certain amounts. Therefore, the Company's liability for these accounts equals the value of the account assets. Investment income, realized investment gains (losses), and policyholder account deposits and withdrawals related to separate accounts are excluded from the consolidated statements of income, comprehensive income, and cash flows. Assets held in Separate Accounts are primarily shares in mutual funds, which are carried at fair value based on the quoted net asset value per share. The Company receives administrative fees for managing the funds and other fees for assuming mortality and certain expense risks. Such fees are included in premiums and other considerations in the consolidated statements of income. 2.6 Deferred Policy Acquisition Costs ("DPAC") and Cost of Insurance Purchased ("CIP") Certain costs of writing an insurance policy, including commissions, underwriting, and marketing expenses, are deferred and reported as DPAC. The cost assigned to certain insurance contracts in force at January 31, 1995, the date of American General Corporation's ("AGC") acquisition of The Franklin, is reported as CIP. DPAC and CIP associated with interest-sensitive life contracts, insurance investment contracts, and participating life insurance contracts are charged to expense in relation to the estimated gross profits of those contracts. If estimated gross profits change significantly, DPAC and CIP balances are recalculated using the new assumptions. Any resulting adjustment is included in current earnings as an adjustment to DPAC or CIP amortization. DPAC and CIP associated with all other insurance contracts are charged to expense over the premium-paying period or as the premiums are earned over the life of the contract. Interest is accreted on the unamortized balance of DPAC at rates used to compute policyholder reserves and on the unamortized balance of CIP at rates of 3.00 percent to 9.94 percent. F-16 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.6 Deferred Policy Acquisition Costs ("DPAC") and Cost of Insurance Purchased ("CIP") (continued) With respect to the Company's variable life and annuity contracts, the assumption for the long-term annual growth of the separate and variable account assets used by the Company in the determination of DPAC amortization is approximately 10 percent (the "long-term growth rate assumption"). The Company uses a "reversion to the mean" methodology which allows the Company to maintain this 10 percent long-term growth rate assumption, while also giving consideration to the effect of short-term swings in the equity markets. For example, if performance were 15 percent during the first year following the introduction of a product, the DPAC model would assume that market returns for the following five years (the "short-term growth rate assumption") would approximate 9 percent, resulting in an average annual growth rate of 10 percent during the life of the product. Similarly, following periods of below 10 percent performance, the model will assume a short-term growth rate higher than 10 percent. An adjustment to DPAC will occur if management considers the short-term growth rate (i.e., the growth rate required to revert to the mean 10 percent growth rate over a five-year period) to be unachievable. The use of a reversion to the mean assumption is common within the industry; however, the parameters used in the methodology are subject to judgment and vary among companies. DPAC and CIP are adjusted for the impact on estimated future gross profits as if net unrealized gains (losses) on securities had been realized at the balance sheet date. The impact of this adjustment, net of deferred taxes, is included in unrealized investment gains (losses) in accumulated other comprehensive income within shareholder's equity. The Company reviews the carrying amounts of DPAC and CIP on at least an annual basis. Management considers estimated future gross profits or future premiums, expected mortality, interest earned and credited rates, persistency, and expenses in determining whether the carrying amount is recoverable. Any amounts deemed unrecoverable are charged to expense. 2.7 Policy and Contract Claims Reserves Substantially all of the Company's insurance and annuity liabilities relate to long duration contracts. The contracts normally cannot be changed or canceled by the Company during the contract period. F-17 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.7 Policy and Contract Claims Reserves (continued) Future policy benefits and policyholder contract deposits liabilities were as follows at December 31: 2003 2002 ------------------------- (In Thousands) Future policy benefits: Ordinary life 4,337,180 4,326,621 Group life 29,797 24,248 Group annuities 93,072 40,369 Life contingent annuities 2,799,407 1,666,570 Terminal funding 414,630 539,409 Accident and health 224,829 220,915 ------------------------- Total $ 7,898,915 $ 6,818,132 ========================= Policyholder contract deposits: Annuities $30,891,794 $28,881,490 Corporate-owned life insurance 439,088 433,587 Universal life 5,228,572 4,879,881 ------------------------- Total $36,559,454 $34,194,958 ========================= For interest-sensitive life insurance and investment contracts, reserves equal the sum of the policy account balance and deferred revenue charges. Reserves for other contracts are based on estimates of the cost of future policy benefits. Interest, mortality, and surrender assumptions vary by product and are generally based upon actual experience at the time of issue. Interest assumptions used to compute individual life reserves ranged from 2 percent to 11 percent. The liability for policyholder contract deposits has been established based on various assumptions. Interest rates credited for deferred annuities vary by year of issuance and range from 3.0 percent to 5.75 percent. Current declared interest rates are generally guaranteed to remain in effect for a period of one year, though some are guaranteed for longer periods. Withdrawal charges generally range from 0.0 percent to 17.0 percent, grading to zero over a F-18 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) period of 0 to 20 years. Interest rates on corporate-owned life insurance are guaranteed at 3.0 percent and the weighted average rate credited in 2003 was 5.69 percent. 2. Accounting Policies (continued) 2.8 Guaranteed Minimum Death Benefits A majority of the Company's variable annuity products are issued with a death benefit feature which provides that, upon the death of a contract holder, the contract holder's beneficiary will receive the greater of (1) the contract holder's account value, or (2) a guaranteed minimum death benefit that varies by product ("the GMDB"). Depending on the product, the GMDB may equal the principal invested, adjusted for withdrawals; or the principal invested, adjusted for withdrawals, accumulated with interest at rates up to 3 percent per annum (subject to certain caps). The GMDB has issue age and other restrictions to reduce mortality risk exposure. The Company bears the risk that death claims following a decline in the financial markets may exceed contract holder account balances, and that the fees collected under the contract are insufficient to cover the costs of the benefit to be provided. Prior to January 1, 2004, the Company expensed GMDB-related benefits in the period incurred, and therefore did not provide reserves for future benefits. Effective January 1, 2004, the Company does provide reserves for future GMDB-related benefits pursuant to the adoption of Statement of Position 03-01, Accounting and Reporting by Insurance Enterprises for Certain Non-traditional Long-Duration Contracts and for Separate Accounts ("SOP 03-01"). GMDB-related variable annuity contract holder benefits were $16.6 million, and $14.2 million for the years ended December 31, 2003, and 2002, respectively. 2.9 Premium Recognition Most receipts for annuities and interest-sensitive life insurance policies are classified as deposits instead of revenue. Revenues for these contracts consist of mortality, expense, and surrender charges. Policy charges that compensate the Company for future services are deferred and recognized in income over the period earned, using the same assumptions used to amortize DPAC. Premiums for traditional life insurance products are recognized when due. For limited-payment contracts, net premiums are recorded as revenue. The difference between the gross received and the net premium is deferred and recognized in a constant relationship to insurance in force for life insurance contracts and to the amount of expected future benefit payments for annuity contracts. F-19 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) Variable annuity fees, asset management fees and surrender charges are recorded as income when earned. Net retained commissions are recognized as income on a trade date basis. 2. Accounting Policies (continued) 2.10 Reinsurance The Company limits its exposure to loss on any single insured to $2.5 million by ceding additional risks through reinsurance contracts with other insurers. The Company diversifies its risk of reinsurance loss by using a number of reinsurers that have strong claims-paying ability ratings. If the reinsurer could not meet its obligations, the Company would reassume the liability as the Company remains primarily liable to the policyholder. A receivable is recorded for the portion of benefits paid and insurance liabilities that have been reinsured. Total reinsurance recoverables on ceded reinsurance contracts are included in accounts receivable. The cost of reinsurance is recognized over the life of the reinsured policies using assumptions consistent with those used to account for the underlying policies. 2.11 Participating Policy Contracts Participating life insurance accounted for approximately 4 percent of life insurance in force at December 31, 2003. The portion of earnings allocated to participating policyholders is excluded from net income and shareholder's equity. Dividends to be paid on participating life insurance contracts are determined annually based on estimates of the contracts' earnings. Policyholder dividends were $67.9 million and $76.1 million in 2003 and 2002, respectively, and were included in policyholders' benefits. 2.12 Income Taxes The Company joins in the filing of a consolidated federal income tax return with the Parent Company and its life insurance company subsidiaries. The Company has a written agreement with the Parent Company setting forth the manner in which the total consolidated federal income tax is allocated to each entity that joins in the consolidation. Under this agreement, the Parent Company agrees not to charge the Company a greater portion of the consolidated tax liability than would have been paid by the Company had it filed a separate federal income tax return. In addition, the Parent Company agrees to reimburse the Company for the tax benefits from net losses, if any, within a reasonable period of time after the filing of the consolidated federal income tax return for the year in which the losses are used. F-20 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.12 Income Taxes (continued) Deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities, at the enacted tax rates expected to be in effect when the temporary differences reverse. The effect of a tax rate change is recognized in income in the period of enactment. State income taxes are included in income tax expense. A valuation allowance for deferred tax assets is provided if it is more likely than not that some portion of the deferred tax asset will not be realized. An increase or decrease in a valuation allowance that results from a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset is included in income. Changes related to fluctuations in the fair value of available-for-sale securities are included in the consolidated statements of comprehensive income and accumulated other comprehensive income in shareholder's equity. 2.13 Derivatives The Company takes positions from time to time in certain derivative financial instruments in order to mitigate the impact of changes in interest rates or equity markets on cash flows or certain policyholder liabilities. Financial instruments used by the Company for such purposes include interest rate swaps and foreign currency swaps. The Company recognizes all derivatives in the consolidated balance sheet at fair value. The financial statement recognition of the change in the fair value of a derivative depends on a number of factors, including the intended use of the derivative and the extent to which it is effective as part of a hedge transaction. On the date the derivative contract is entered into, the Company designates the derivative as a fair value hedge or cash flow hedge. It is a fair value hedge if it hedges subsequent changes in the fair value of a recognized asset or liability or of an unrecognized firm commitment ("fair value" hedge). It is a cash flow hedge if it hedges a forecasted transaction, or the variability of cash flows to be received or paid related to a recognized asset or liability ("cash flow" hedge). The gain or loss in the fair value of a derivative that is designated, qualifies and is highly effective as a fair value hedge is recorded in current period earnings, along with the loss or gains on the hedged F-21 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) item attributed to the hedged risk. The gain or loss in the fair value of a derivative that is designated, qualifies and is highly effective as a cash flow hedge, is recorded in other comprehensive income until earnings are affected by the variability of cash flows. 2. Accounting Policies (continued) 2.13 Derivatives (continued) The Company documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as hedges to specific assets or liabilities on the balance sheet, or specific firm commitments. The Company also assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in fair values of hedged items. During 2003, there were no hedges that were discontinued or otherwise no longer qualify as hedges. The impact of fair value adjustments on derivatives which do not qualify for hedge accounting and any ineffectiveness resulting from hedging activities have been recorded in net realized investment gains (losses). 2.14 Accounting Changes In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets" ("FAS 142"). As of January 1, 2002, the Company adopted FAS 142. FAS 142 requires the Company to discontinue the amortization of goodwill in its statements of income. FAS 142 requires goodwill to be subject to an assessment of impairment on an annual basis, or more frequently if circumstances indicate that a possible impairment has occurred. The assessment of impairment involves a two-step process prescribed in FAS 142; whereby an initial assessment for potential impairment is performed, followed by a measurement of the amount of impairment, if any. FAS 142 also requires the completion of a transitional impairment test in the year of adoption, with any identified impairments recognized as a cumulative effect of change in accounting principles. The Company has evaluated the impact of the impairment provisions of FAS 142, and determined that no impairment is required to be recorded to the carrying value of the Company's goodwill balance at December 31, 2003. F-22 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.14 Accounting Changes (continued) In November 2002, FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN45"). FIN45 requires that, for guarantees within its scope that are issued or amended after December 31, 2002, a liability for the fair value of the obligation undertaken in issuing the guarantee be established and recognized through earnings. FIN45 also requires additional disclosures in financial statements starting with the Company's 2002 year-end financial statements. The adoption of FIN45 did not have a significant impact on the Company's consolidated results of operations or financial condition. In January 2003, FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN46"). FIN46 changes the method of determining whether certain entities should be consolidated in the Company's consolidated financial statements. An entity is subject to FIN46 and is called a Variable Interest Entity ("VIE") if it has (i) equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (ii) equity investors that cannot make significant decisions about the entity's operations, or do not absorb the expected losses or receive the expected returns of the entity. All other entities are evaluated for consolidation under existing guidance. A VIE is consolidated by its primary beneficiary, which is the party that has a majority of the expected losses or a majority of the expected residual returns of the VIE, or both. In December 2003, the FASB issued FIN46R. The provisions of FIN46R are to be applied immediately to VIEs created after January 31, 2003, and to VIEs in which the Company obtains an interest after that date. For VIEs in which the Company holds a variable interest that is acquired before February 1, 2003, FIN46R was applied as of December 31, 2003. For any VIEs that must be consolidated under FIN46R that were created before February 1, 2003, the assets, liabilities and noncontrolling interest of the VIE would be initially measured at their carrying amounts with any difference between the net amount added to the balance sheet and any previously recognized interest being recognized as the cumulative effect of an accounting change. F-23 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 2. Accounting Policies (continued) 2.14 Accounting Changes (continued) The following VIE activities are not consolidated by the Company under FIN46R: i. The Company manages collateralized bond and loan obligation trusts (collectively, collateralized debt obligation trust or CDO trust). As asset manager, the Company receives fees for management of the assets held in the CDO trust, which support the issuance of securities sold by the CDO trust. The Company may take minority equity and/or fixed-income security interest in the CDO trust. The Company has entered into such arrangements to expand its asset management activities. Third-party investors have recourse only to the CDO trust, and have no recourse to the Company. The Company does not consolidate these CDO trusts, pursuant to FIN46R. ii. The Company also invests in assets of VIEs. These VIEs are established by unrelated third parties. Investments include collateralized mortgage backed securities and similar securities backed by pools of mortgages, consumer receivables or other assets. The investment in these VIEs allows the Company to purchase assets permitted by insurance regulations while maximizing their return on these assets. These VIEs are not consolidated by the Company, pursuant to FIN46R. In July 2003, the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position 03-01, Accounting and Reporting by Insurance Enterprises for Certain Non-traditional Long-Duration Contracts and for Separate Accounts" ("SOP 03-01"). This statement is effective as of January 1, 2004. Under SOP 03-01, variable annuity assets held in separate accounts will continue to be measured at fair value and reported in summary total on the Company's financial statements, with an equivalent summary total reported for related liabilities, if the separate account arrangement meets certain specified conditions. Assets underlying the Company's interest in a separate account ("separate account seed money") do not qualify for separate account accounting and reporting. The Company will be required to "look through" the separate account for the purposes of accounting for its interest therein, and account for and classify separate account seed money based on its nature as if the assets of the separate account underlying the Company's interest were held directly by the general account rather than through the separate account structure. The adoption of SOP 03-01 will not have a material impact on the Company's separate accounts or separate account seed money. In addition, SOP 03-01 will require the Company to recognize a liability for guaranteed minimum death benefits and modify certain disclosures and financial statement presentations for these benefits. Management currently expects the one-time cumulative accounting charge upon adoption to approximate $17.4 million after taxes, to be recorded in the first quarter of 2004. F-24 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments 3.1 Investment Income Investment income by type of investment was as follows for the years ended December 31: 2003 2002 ----------------------- (In Thousands) Investment income: Fixed maturities $2,983,484 $2,789,590 Equity securities 13,148 2,199 Mortgage loans on real estate 240,745 226,329 Investment real estate 8,229 15,303 Policy loans 105,214 102,479 Other long-term investments (35,388) (69,064) Short-term investments 18,431 23,078 ----------------------- Gross investment income 3,333,863 3,089,914 Investment expenses 45,177 35,384 ----------------------- Net investment income $3,288,686 $3,054,530 ======================= The carrying value of investments that produced no investment income during 2003 was less than 0.5 percent of total invested assets. The ultimate disposition of these investments is not expected to have a material effect on the Company's results of operations and financial position. Derivative financial instruments did not have a material effect on net investment income in 2003 and 2002. During 2003 and 2002, investment losses from other long-term investments relates to losses associated with various partnership interests. F-25 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.2 Net Realized Investment Gains (Losses) Realized gains (losses) by type of investment were as follows for the years ended December 31: 2003 2002 --------------------- (In Thousands) Fixed maturities: Gross gains $ 357,694 $ 398,239 Gross losses (400,061) (697,068) --------------------- Total fixed maturities (42,367) (298,829) Equity securities 2,099 (191) Derivatives (735) (104) Other long-term investments (9,424) (6,145) Other (6,352) 9,925 --------------------- Net realized investment losses before tax (56,779) (295,344) Income tax benefit (19,873) (103,370) --------------------- Net realized investment losses after tax $ (36,906) $(191,974) ===================== During 2003 and 2002, the Company's realized losses included write-downs of $274 million and $316.9 million, respectively, for certain available for sale fixed maturity investments that experienced declines deemed other than temporary. The determination that a security has incurred an other than temporary decline in value and the amount of loss recognition requires the judgement of the Company's management and a continual review of its investments. F-26 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.3 Fixed Maturity and Equity Securities The following table summarizes the Company's gross unrealized losses and estimated fair values on fixed maturity securities available for sale, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as December 31, 2003 (In thousands):
Less than 12 Months 12 Months or More Total ----------------------- ----------------------- ------------------------ Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses ---------- ---------- ---------- ---------- ----------- ---------- Fixed maturity securities $6,508,726 $156,500 $3,943,337 $229,241 $10,452,063 $385,741 Equity securities 34,963 8,525 -- -- 34,963 8,525 ---------- -------- ---------- -------- ----------- -------- Total $6,543,689 $162,025 $3,943,337 $229,241 $10,487,026 $391,266 ========== ======== ========== ======== =========== ========
The determination that a security has incurred an other than temporary decline in value and the amount of any loss recognition requires the judgment of the Company's management and a continual review of its investments. F-27 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.3 Fixed Maturity and Equity Securities (continued) Fixed maturity and equity securities classified as available-for-sale are reported at fair value. Amortized cost and fair value at December 31, 2003 and 2002 were as follows:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value --------------------------------------------------- (In Thousands) December 31, 2003 Fixed maturity securities: Corporate securities: Investment-grade $20,145,794 $1,625,822 $ (73,506) $21,698,110 Below investment-grade 3,502,062 188,123 (146,796) 3,543,389 Mortgage-backed securities* 11,821,766 296,385 (102,944) 12,015,207 U.S. government obligations 285,458 33,931 (1,932) 317,457 Foreign governments 336,692 37,805 (255) 374,242 State and political subdivisions 3,011,190 173,206 (17,916) 3,166,480 Collateralized bonds 416,372 22,705 (10,740) 428,337 Industrial & miscellaneous 2,344,555 115,894 (24,864) 2,435,585 Public Utilities 1,241,176 105,118 (5,969) 1,340,325 Redeemable preferred stocks 27,946 2,871 (819) 29,998 --------------------------------------------------- Total fixed maturity securities $43,133,011 $2,601,860 $(385,741) $45,349,130 =================================================== Equity securities $ 93,182 $ 13,866 $ (8,525) $ 98,523 =================================================== Separate account seed money $ 90,670 $ 6,000 $ (5,000) $ 91,670 =================================================== Investment in ultimate Parent Company $ 8,597 $ 45,100 $ -- $ 53,697 ===================================================
* Primarily include pass-through securities guaranteed by and mortgage obligations ("CMOs") collateralized by the U.S. government and government agencies. F-28 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.3 Fixed Maturity and Equity Securities (continued)
Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value --------------------------------------------------- (In Thousands) December 31, 2002 Fixed maturity securities: Corporate securities: Investment-grade $19,957,983 $1,536,505 $(590,811) $20,903,676 Below investment-grade 5,156,623 240,507 (243,742) 5,153,388 Mortgage-backed securities* 10,059,372 448,275 (7,323) 10,500,324 U.S. government obligations 413,196 42,563 (2,019) 453,740 Foreign governments 135,850 15,689 -- 151,539 State and political subdivisions 1,266,093 14,453 (2,143) 1,278,403 Collateralized bonds 500,831 27,626 (16,758) 511,699 Industrial & miscellaneous 913,591 56,889 (12,235) 958,245 Derivatives 1,099,356 93,014 (31,631) 1,160,739 Redeemable preferred stocks 6,520 4 (2,849) 3,675 --------------------------------------------------- Total fixed maturity securities $39,509,415 $2,475,525 $(909,511) $41,075,428 =================================================== Equity securities $ 106,611 $ 156 $ (18,170) $ 88,597 =================================================== Separate account seed money $ 90,000 $ -- $ (16,000) $ 74,000 =================================================== Investment in ultimate Parent Company $ 8,597 $ 38,270 $ -- $ 46,867 ===================================================
* Primarily include pass-through securities guaranteed by and mortgage obligations ("CMOs") collateralized by the U.S. government and government agencies. F-29 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.3 Fixed Maturity and Equity Securities (continued) Net unrealized gains (losses) on securities included in accumulated other comprehensive income in shareholders' equity at December 31 were as follows: 2003 2002 ----------------------- (In Thousands) Gross unrealized gains $2,666,826 $2,513,951 Gross unrealized losses (399,266) (943,681) DPAC and other fair value adjustments (544,476) (456,081) Deferred federal income (taxes) benefit (609,027) (406,075) ----------------------- Net unrealized gains (losses) on securities $1,114,057 $ 708,114 ======================= The contractual maturities of fixed maturity securities at December 31 were as follows:
2003 2002 ----------------------------------------------------- Amortized Market Amortized Market Cost Value Cost Value ----------------------------------------------------- (In Thousands) (In Thousands) Fixed maturity securities, excluding mortgage-backed securities: Due in one year or less $ 953,126 $ 977,818 $ 824,080 $ 844,953 Due after one year through five years 4,367,245 4,673,895 5,160,986 5,446,014 Due after five years through ten years 10,562,527 11,362,160 10,311,814 10,730,521 Due after ten years 15,428,448 16,320,150 13,153,163 13,553,616 Mortgage-backed securities 11,821,665 12,015,107 10,059,372 10,500,324 ----------------------------------------------------- Total fixed maturity securities $43,133,011 $45,349,130 $39,509,415 $41,075,428 =====================================================
Actual maturities may differ from contractual maturities, since borrowers may have the right to call or prepay obligations. In addition, corporate requirements and investment strategies may result in the sale of investments before maturity. Proceeds from sales of fixed maturities were $31.5 billion and $30.5 billion, during 2003 and 2002, respectively. At December 31, 2003, $51.6 million of bonds, at amortized cost, were on deposit with regulatory authorities in accordance with statutory requirements. F-30 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.4 Mortgage Loans on Real Estate Diversification of the geographic location and type of property collateralizing mortgage loans reduces the concentration of credit risk. For new loans, the Company requires loan-to-value ratios of 75 percent or less, based on management's credit assessment of the borrower. The mortgage loan portfolio was distributed as follows at December 31, 2003 and 2002: Outstanding Percent of Percent Amount Total Nonperforming ---------------------------------------- (In Millions) December 31, 2003 Geographic distribution: South Atlantic $ 711 24.1% 0.0% Pacific 506 17.1 0.0 Mid-Atlantic 506 17.1 0.0 East North Central 459 15.5 0.0 Mountain 70 2.4 0.0 West South Central 197 6.7 0.0 East South Central 251 8.5 0.0 West North Central 121 4.1 0.8 New England 139 4.7 0.0 Allowance for losses (7) (0.2) 0.0 ------------------------ Total $2,953 100.0% 0.0% ======================== Property type: Office $1,261 42.7% 0.0% Retail 844 28.5 0.1 Industrial 386 13.1 0.0 Apartments 312 10.6 0.0 Hotel/motel 55 1.9 0.0 Other 102 3.4 0.0 Allowance for losses (7) (0.2) 0.0 ------------------------ Total $2,953 100.0% 0.0% ======================== F-31 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 3. Investments (continued) 3.4 Mortgage Loans on Real Estate (continued) Outstanding Percent of Percent Amount Total Nonperforming ----------------------------------------- (In Millions) December 31, 2002 Geographic distribution: South Atlantic $ 662 23.7% 0.4% Pacific 451 16.1 0.0 Mid-Atlantic 470 16.8 0.0 East North Central 448 16.0 1.6 Mountain 112 4.0 1.8 West South Central 222 7.9 0.0 East South Central 237 8.5 0.0 West North Central 110 3.9 2.7 New England 98 3.5 0.0 Allowance for losses (11) (0.4) 0.0 ------------------------ Total $2,799 100.0% 0.4% ======================== Property type: Office $1,171 41.9% 0.3% Retail 836 29.9 1.3 Industrial 334 11.8 0.0 Apartments 268 9.6 0.0 Hotel/motel 103 3.7 0.0 Other 98 3.5 0.0 Allowance for losses (11) (0.4) 0.0 ------------------------ Total $2,799 100.0% 0.4% ======================== Impaired mortgage loans on real estate and related interest income is not material. F-32 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 4. Deferred Policy Acquisitions Costs and Cost of Insurance Purchased The following reflects deferred policy acquisition costs (commissions, direct solicitation and other costs) which will be amortized against future income and the related current amortization charges to income, excluding certain amounts deferred and amortized in the same period: 2003 2002 ----------------------- (In Thousands) Balance at January 1 $2,777,562 $2,752,571 Capitalization 578,665 460,253 Accretion of interest/amortization (326,641) (196,028) Effect of unrealized losses (gains) on securities (108,572) (280,942) Effect of realized losses (gains) on securities (9,247) 41,708 ---------- ---------- Balance at December 31 $2,911,767 $2,777,562 ========== ========== The Company adjusts DAC amortization ("a DAC unlocking") when estimates of current or future gross profits to be realized are revised. In 2002, DAC amortization was reduced by $46.5 million to reflect a change in the amortization period and reduced by $56 million due to improved persistency offset by a $56 million increase to reflect lower earnings for equity markets. A roll-forward of cost of insurance purchased (CIP) for the years ended December 31, were as follows: 2003 2002 ------------------- (In Thousands) Balance at January 1 $351,600 $312,609 Deferral of renewal commissions 5,274 6,391 Accretion of interest/amortization 15,612 (2,300) Effect of unrealized (gains) losses on securities (33,966) 33,700 Effect of realized (gains) losses on securities -- 1,200 ------------------- Balance at December 31 $338,520 $351,600 =================== During 2003, the Company reduced their CIP amortization by $34 million primarily due to improved mortality. CIP amortization expected to be recorded in each of the next five years is $21.2 million, $20.4 million, $20.3 million, $20.4 million, and $19.1 million, respectively. F-33 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 5.Other Assets Other assets consisted of the following: December 31 2003 2002 ------------------- (In Thousands) Goodwill $ 38,973 $ 38,973 Computer software, net 121,866 106,715 Account receivable from brokers, net 84,794 152,304 Prepaid expenses 36,869 34,794 Other 32,183 96,227 ------------------- Total other assets $314,685 $429,013 =================== FAS 142 requires that the Company reclassify any separable intangible assets and, for intangible assets with definitive useful lives, to amortize their cost over their useful lives. Upon adoption of FAS 142 at January 1, 2002, the Company reclassified $8.7 million of separable intangible assets out of goodwill and has recorded amortization totaling $0.7 million during 2003 and 2002. 6. Restructuring Charges In connection with the Parent's merger with AGC during 2001, the Company incurred $180.4 million in restructuring costs. Of the total restructuring charges, approximately $169.6 million has been paid as of December 31, 2003. The remaining balance is included in Other Liabilities. F-34 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 7. Federal Income Taxes 7.1 Tax Liabilities Income tax liabilities were as follows: December 31 2003 2002 --------------------- (In Thousands) Current tax liabilities (receivables) $ (19,844) $(41,280) Deferred tax liabilities (assets) 1,124,026 856,381 --------------------- Income tax payable $1,104,182 $815,101 ===================== The components of deferred tax liabilities and assets at December 31 were as follows: 2003 2002 ----------------------- (In Thousands) Deferred tax liabilities applicable to: Deferred policy acquisition costs $ 997,483 $ 854,728 Basis differential of investments 72,232 137,339 Net unrealized gains on debt and equity securities available for sale 597,954 399,873 Capitalized EDP 30,702 33,735 Prepaid expenses 12,679 11,788 Other 58,044 37,393 ----------------------- Total deferred tax liabilities 1,769,094 1,474,856 Deferred tax assets applicable to: Policy reserves (639,638) (578,052) Other (5,430) (40,423) ----------------------- Total deferred tax assets (645,068) (618,475) ----------------------- Net deferred tax liabilities $1,124,026 $ 856,381 ======================= F-35 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 7. Federal Income Taxes 7.1 Tax Liabilities (continued) Under prior Federal income tax law, one-half of the excess of a life insurance company's income from operations over its taxable investment income was not taxed, but was set aside in a special tax account designated as "policyholders' surplus." At December 31, 2003, the Company had approximately $382 million of policyholders' surplus on which no payment of Federal income taxes will be required unless it is distributed as a dividend, or under other specified conditions. Barring the passage of unfavorable tax legislation, the Company does not believe that any significant portion of the account will be taxed in the foreseeable future. Accordingly, no deferred tax liability has been recognized in relation to the policyholders' surplus account. If the entire balance of the policyholders' surplus became taxable at the current federal income tax rates, the tax would be approximately $134 million. 7.2 Tax Expense Components of income tax expense (benefit) for the years ended December 31 were as follows: 2003 2002 -------------------- (In Thousands) Income tax at statutory percentage of GAAP pretax income $450,865 $ 344,654 Non-conventional fuel source credits (93,655) (101,917) DRD (18,632) (21,641) State taxes 9,114 7,659 Low income housing & other tax credits (6,718) (6,607) Other current taxes related to IRS settlements (6,700) (46,237) Prior year corrections (3,225) (1,956) NQO/ISO adjustments (2,215) (3,872) Other (2,279) 2,336 -------------------- Income tax expense $326,555 $ 172,419 ==================== F-36 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 8. Transactions With Affiliates Notes receivable from affiliates were as follows:
December 31, 2003 December 31, 2002 ----------------------------------------------- Par Value Book Value Par Value Book Value ----------------------------------------------- (In Thousands) American General Corporation, 9 3/8%, due 2008 $ 4,725 $ 3,795 $ 4,725 $ 3,677 American General Corporation, Promissory notes, 5 1/2% due 2004 2,446 2,446 -- -- AGC Life, Promissory notes, 6 3/4% due 2005 116,000 116,000 116,000 116,000 American General Corporation, Promissory notes, 1.939% due 2006 415,000 415,000 374,000 374,000 ----------------------------------------------- Total notes receivable from affiliates 538,171 537,241 494,725 493,677 ===============================================
Various AIG companies provide services to the Company, principally mortgage servicing and investment management services, provided by American International Group Global Investment Corporation ("AIGGIC") on a fee basis. The Company paid approximately $54.4 million and $52.9 million for such services in 2003 and 2002, respectively. Accounts payable for such services at December 31, 2003 and 2002 were not material. The Company rents facilities and provides services on an allocated cost basis to various AIG companies. Beginning in 1998, amounts received by the Company from affiliates include amounts received by its wholly owned, non-life insurance subsidiary, AGLC. AGLC provides shared services, including technology, to a number of AIG's life insurance subsidiaries. The Company received approximately $311.4 million and $261.3 million for such services and rent in 2003 and 2002, respectively. Accounts receivable for rent and services at December 31, 2003 and 2002 were not material. F-37 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 8. Transactions With Affiliates (continued) On December 31, 2002, the Company sold certain partnership interests to an affiliate, Pine Street Holdings I LLC ("Pine Street Holdings"). Total proceeds received were $59.8 million, resulting in a realized gain of $5.4 million. The consideration received included $20.7 million of 1.38 percent secured term notes due December 31, 2012, and $14.1 million of preferred membership equity interests, issued by Pine Street Holdings. 9. Benefit Plans Effective January 1, 2002, the Company's employees participate in various benefit plans sponsored by AIG, including a noncontributory qualified defined benefit retirement plan, various stock option and purchase plans, a 401(k) plan and a post retirement benefit program for medical care and life insurance. AIG's U.S. plans do not separately identify projected benefit obligations and plan assets attributable to employees of participating affiliates. AIG's projected benefit obligations exceeded the plan assets at December 31, 2003 by $478 million. AIG applies APB Opinion 25 "Accounting for Stock Issued to Employees" and related interpretations in accounting for its stock-based compensation plans. Employees of the Company participate in certain stock option and stock purchase plans of AIG. In general, under the stock option plan, officers and other key employees are granted options to purchase AIG's common stock at a price not less than fair market value at the date of grant. In general, the stock purchase plan provides for eligible employees to receive privileges to purchase AIG's common stock at a price equal to 85 percent of the fair market value on the date of grant of the purchase privilege. AIG has not recognized compensation costs for either plan. The effect of the compensation costs, as determined consistent with Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation" (FAS 123), was not computed on a subsidiary basis, but rather on a consolidated basis for all subsidiaries of AIG and, therefore, are not presented herein. Disclosures required by FAS 123 are included in the Annual Report of AIG. F-38 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 10. Derivative Financial Instruments 10.1 Use of Derivative Financial Instruments The Company's use of derivative financial instruments is generally limited to interest rate and currency swap agreements, and at times, options to enter into interest rate swap agreements (call and put swaptions). The Company is neither a dealer nor a trader in derivative financial instruments. Hedge accounting requires a high correlation between changes in fair values or cash flows of the derivative financial instrument and the specific item being hedged, both at inception and throughout the life of the hedge. For fair value hedges, to the extent the hedge is effective, gains and losses on both the derivative and the hedged item attributable to the risk being hedged are recognized in earnings. For both cash flow hedges and foreign currency hedges, to the extent the hedge is effective, gains and losses on both the derivative and the hedged item attributable to the risk being hedged are recognized as a component of other comprehensive income in shareholder's equity. Any ineffective portion of both cash flow hedges and foreign currency hedges are reported in net realized investment gains (losses). 10.2 Interest Rate and Currency Swap Agreements Interest rate swap agreements are used to convert specific investment securities from a floating to a fixed rate basis, or vice versa, and to hedge against the risk of declining interest rates on anticipated security purchases. Interest rate swaps in which the Company agrees to pay a fixed rate and receive a floating rate are accounted for as fair value hedges. Interest rate swaps in which the Company agrees to pay a floating rate and receive a fixed rate are accounted for as cash flow hedges. Currency swap agreements are used to convert cash flows from specific investment securities denominated in foreign currencies into U.S. dollars at specific exchange rates and to hedge against currency rate fluctuation on anticipated security purchases. F-39 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 10. Derivative Financial Instruments (continued) 10.2 Interest Rate and Currency Swap Agreements The difference between amounts paid and received on swap agreements is recorded on an accrual basis as an adjustment to net investment income or interest expense, as appropriate, over the periods covered by the agreements. The related amount payable to or receivable from counterparties is included in other liabilities or assets. The fair values of swap agreements are recognized in the consolidated balance sheets if the hedge investments are carried at fair value or if they hedge anticipated purchases of such investments. In this event, changes in the fair value of a swap agreement are reported in net unrealized gains on securities included in accumulated other comprehensive income in shareholders' equity, consistent with the treatment of the related investment security. For swap agreements hedging anticipated investment purchases, the net swap settlement amount or unrealized gain or loss is deferred and included in the measurement of the anticipated transaction when it occurs. Swap agreements generally have terms of two to ten years. Any gain or loss from early termination of a swap agreement is deferred and amortized into income over the remaining term of the related investment. If the underlying investment is extinguished or sold, any related gain or loss on swap agreements is recognized in income. F-40 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 10. Derivative Financial Instruments (continued) 10.2 Interest Rate and Currency Swap Agreements Interest rate and currency swap agreements related to investment securities at December 31 were as follows:
2003 2002 --------------------- (Dollars in Millions) Interest rate swap agreements to receive fixed rate: Notional amount $ 71 $145 Fair value 6 15 Currency swap agreements (receive U.S. dollars/pay Canadian dollars): Notional amount (in U.S. dollars) 97 97 Fair Value (16) 12 Currency swap agreements (receive U.S. dollars/pay Australian dollars): Notional amount (in U.S. dollars) 23 23 Fair value (4) 3 Currency swap agreements (receive U.S. dollars/pay Japanese Yen): Notional amount (in U.S. dollars) 12 12 Fair value (1) -- Currency swap agreements (receive U.S. dollars/pay LIBOR and Euro-based floating rate): Notional amount (in U.S. dollars) 21 -- Fair value (5) --
10.3 Swaptions Options to enter into interest rate swap agreements are used to limit the Company's exposure to reduced spreads between investment yields and interest crediting rates should interest rates decline significantly over prolonged periods. During such periods, the spread between investment yields and interest crediting rates may be reduced as a result of certain limitations on the Company's ability to manage interest crediting rates. Call swaptions allow the Company to enter into interest rate swap agreements to receive fixed rates and pay lower floating rates, effectively increasing the spread between investment yields and interest crediting rates. F-41 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 10. Derivative Financial Instruments (continued) 10.3 Swaptions (continued) During prolonged periods of decreasing interest rates, the spread between investment yields and interest crediting rates may be reduced as a result of minimum rate guarantees on certain annuity contracts, which limit the Company's ability to reduce interest crediting rates. Call swaptions, which allow the Company to enter into interest rate swap agreements to receive fixed rates and pay lower floating rates, effectively maintain the spread between investment yields and interest crediting rates during such periods. Conversely, during prolonged periods of increasing interest rates, the spread between investment yields and interest crediting rates may be reduced if the Company decides to increase interest crediting rates to limit surrenders. Put swaptions, which allow the Company to enter into interest rate swap agreements to pay fixed rates and receive higher floating rates, effectively maintain the spread between investment yields and interest crediting rates during such periods. Premiums paid to purchase swaptions and subsequent changes in fair value are included in other long-term investments. The Company's swaptions do not qualify for hedge accounting due to the inability to establish hedge effectiveness. The change in the fair value of the swaptions is recognized in net realized investment losses. Gains or losses from swaptions are recognized at the time of expiration or when the option to enter into a swap is exercised. Swaptions that were outstanding at December 31, 2002 expired in 2003. The Company's swaptions were not material to the Company's consolidated results of operations or financial condition in 2003 or 2002. Swaptions at December 31 were as follows: 2003 2002 --------------------- (Dollars in Millions) Put swaptions: Notional amount -- $3,360 Fair value -- -- F-42 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 10. Derivative Financial Instruments (continued) 10.4 Credit and Market Risk Derivative financial instruments expose the Company to credit risk in the event of non-performance by counterparties. The Company limits this exposure by entering into agreements with counterparties having high credit ratings and by regularly monitoring the ratings. The Company does not expect any counterparty to fail to meet its obligation; however, non-performance would not have a material impact on the Company's consolidated results of operations or financial position. The Company's exposure to market risk is mitigated by the offsetting effects of changes in the value of the agreements and the related items being hedged. 11. Fair Value of Financial Instruments Statement of Financial Accounting Standards No. 107 "Disclosures about Fair Value of Financial Instruments" ("FASB 107") requires disclosure of fair value information about financial instruments for which it is practicable to estimate such fair value. In the measurement of the fair value of certain of the financial instruments, where quoted market prices were not available, other valuation techniques were utilized. These fair value estimates are derived using internally developed valuation methodologies based on available and observable market information. FASB 107 excludes certain financial instruments, including those related to investment contracts. Carrying amounts and fair values for certain of the Company's financial instruments at December 31 are presented below. Care should be exercised in drawing conclusions based on fair value, since (1) the fair values presented do not include the value associated with all of the Company's assets and liabilities, and (2) the reporting of investments at fair value without a corresponding evaluation of related policyholders liabilities can be misinterpreted. F-43 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 11. Fair Value of Financial Instruments (continued)
2003 2002 --------------------------------------- Fair Carrying Fair Carrying Value Amount Value Amount --------------------------------------- (In Millions) Assets Fixed maturity and equity securities $45,517 $45,517 $41,164 $41,164 Mortgage loans on real estate 3,246 2,954 3,203 2,799 Policy loans 1,749 1,706 1,794 1,700 Short-term investments 112 112 316 316 Derivative assets 10 10 31 31 Other long-term investments 1,896 1,896 761 761 Separate account seed money 92 92 74 74 Investment in ultimate Parent Company 54 54 47 47 Notes receivable from affiliates 537 537 494 494 Securities lending collateral 4,451 4,451 3,216 3,216 Assets held in separate accounts 22,931 22,931 17,318 17,318 Liabilities Investment contracts 29,176 31,760 28,562 30,235 Dividend accumulations 901 901 892 892 Derivative liabilities 27 27 -- -- Securities lending payable 4,451 4,451 3,216 3,216 Liabilities related to separate accounts 22,931 22,931 17,318 17,318
The following methods and assumptions were used to estimate the fair value of financial instruments: Fixed Maturity and Equity Securities Fair values of fixed maturity and equity securities were based on quoted market prices, where available. For investments not actively traded, fair values were estimated using values obtained from independent pricing services or, in the case of some private placements, by discounting expected future cash flows using a current market rate applicable to yield, credit quality, and average life of investments. Mortgage Loans on Real Estate Fair value of mortgage loans was estimated primarily using discounted cash flows, based on contractual maturities and risk-adjusted discount rates. F-44 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 11. Fair Value of Financial Instruments (continued) Policy Loans Fair value of policy loans was estimated using discounted cash flows and actuarially determined assumptions incorporating market rates. Investment in ultimate Parent Company The fair value of the investment in the ultimate Parent Company is based on quoted market prices of AIG common stock. Assets and Liabilities Related to Separate Accounts The fair value of Separate Account assets and liabilities was based on quoted net asset value per share of the underlying mutual funds held in separate accounts. Derivative Financial Instruments Fair values for derivative assets and liabilities were based upon quoted market prices. Investment Contracts Fair value of insurance investment contracts was estimated using cash flows discounted at market interest rates. Notes Receivable from Affiliates The fair value of notes receivable was estimated using discounted cash flows based on contractual maturities and discount rates that were based on U.S. Treasury rates for similar maturity ranges. F-45 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 11. Fair Value of Financial Instruments (continued) Other Long-Term Investments Fair value of other long term investments is based upon the fair value of the net assets of these investments as determined by the general partners. Separate Account Seed Money Fair value is considered to be the market value of the underlying securities. 12. Commitments and Contingencies The Company has various leases, substantially all of which are for office space and facilities. Rentals under financing leases, contingent rentals, and future minimum rental commitments and rental expense under operating leases are not material. In recent years, various life insurance companies have been named as defendants in class action lawsuits relating to life insurance pricing and sales practices, and a number of these lawsuits have resulted in substantial settlements. On December 16, 1998, American General Corporation, former parent of the company, acquired by AIG on August 29, 2001, announced that certain of its life insurance subsidiaries had entered into agreements to resolve all pending market conduct class action lawsuits. In conjunction with the proposed settlements, the Company recorded a charge of $218.1 million ($141.8 million after-tax) in the fourth quarter of 1998. The charge covered the cost of policyholder benefits and other anticipated expenses resulting from the proposed settlements, as well as other administrative and legal costs. On December 31, 1999, the Company entered into an agreement with the Parent Company whereby the Company assigned, and the Parent Company assumed, 100 percent of the liabilities of the Company related to the proposed resolution. As consideration for the assumption of the liabilities, the Company paid the Parent Company an amount equal to the liabilities recorded with respect to the proposed resolution of the litigation. F-46 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 12. Commitments and Contingencies (continued) The Company is party to various other lawsuits and proceedings arising in the ordinary course of business. These lawsuits and proceedings include certain class action claims and claims filed by individuals who have excluded themselves from settlement of class action lawsuits relating to life insurance pricing and sales practices. In addition, many of these proceedings are pending in jurisdictions that permit damage awards disproportionate to the actual economic damages alleged to have been incurred. Based upon information presently available, the Company believes that the total amounts that will ultimately be paid, if any, arising from these lawsuits and proceedings will not have a material adverse effect on the Company's results of operations and financial position. However, it should be noted that the frequency of large damage awards, including large punitive damage awards, that bear little or no relation to actual economic damages incurred by plaintiffs in some jurisdictions continues to create the potential for an unpredictable judgment in any given suit. The Company had $106.5 million of unfunded commitments for its investments in limited partnerships at December 31, 2003. All fifty states have laws requiring solvent life insurance companies to pay assessments to protect the interests of policyholders of insolvent life insurance and annuity companies. The Company recognizes a liability for insurance-related assessments when all of the following three conditions have been met: (i) an assessment has been imposed or information available prior to the issuance of financial statements indicates it is probable that an assessment will be imposed, (ii) the event obligating the Company to pay an imposed or probable assessment occurred on or before the date of the financial statements and (iii) the amount of the assessment can be reasonably estimated. The December 31, 2003 liability was estimated by the Company using the latest information available from the National Organization of Life and Health Insurance Guaranty Associations. The liability is not material to the Company's consolidated statement of position. While it is not possible to exactly estimate the portion of the industry assessments for which the Company will be responsible, it is expected that any difference between the estimated assessments and the actual assessments will not be material to the Company's consolidated results of operations and financial position. Although the amount accrued represents the Company's best estimate of its liability, this estimate may change in the future. F-47 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 12. Commitments and Contingencies (continued) On November 1, 2002, the Company and various affiliates entered into a one-year inter-affiliate credit facility (the "facility"), under which the Company commits to make loans to AIG in amounts aggregating to not more than $90.0 million. Such loans may take the form of variable rate loans that pay the higher of the federal funds rate plus 0.5 percent or the prime rate, or fixed rate loans that pay LIBOR plus a specific margin. AIG has the option, at the commitment termination date to convert any outstanding loan balances to one-year term loans. Effective October 31, 2003, the original commitment was amended to extend the commitment termination date to October 31, 2004. The Company received annual facility fees of 0.045 percent on its commitment. There were no borrowings outstanding under the facility as of December 31, 2003. On June 23, 2003, VALIC, a subsidiary of the Company, extended credit in the amount of $52.5 million (the "Credit Extension") to Highstar Renewable Fuels, LLC ("Highstar"), an indirect wholly owned subsidiary of AIG. The Credit Extension is evidenced by a note dated June 23, 2003 (the "Note"). The Credit Extension is comprised of the following: (i) a loan in the amount of $37.5 million to Highstar (the "Loan"), (ii) a commitment to make an additional loan to Highstar in an aggregate amount not to exceed $2.5 million (the "Commitment") and (iii) a guaranty (the "Guaranty") to a bank that is not affiliated with the Company (the "Bank"). The Loan matures and the Commitment expires on June 30, 2004 (the "Maturity Date"). Interest on the Note, which accrues on the outstanding principal amount of the Note at a rate of 12 percent per annum, is due on the Maturity Date. A commitment fee of $0.5 million is also due on the Maturity Date. The Company recognized interest income on the Note of $2.4 million for the year ended December 31, 2003. Pursuant to the terms of the Guaranty, VALIC has a maximum liability of $12.5 million plus cost of enforcement and collection, if any (the "Guaranteed Amount"). VALIC guarantees the obligations of another company (the "LOC Applicant") to the Bank, which obligations are set forth in a reimbursement agreement related to a standby letter of credit (the "Letter of Credit") issued by the Bank. Highstar has a non-controlling partial ownership interest in the LOC Applicant. The beneficiary of the Letter of Credit is partially owned by the LOC Applicant. If the beneficiary of the Letter of Credit draws against the Letter of Credit, VALIC may be required to pay the Bank an amount equal to the amount of the draws against the Letter of Credit, but not more than the Guaranteed Amount. Pursuant to the terms of the Note, Highstar must reimburse VALIC for all amounts paid by VALIC under the Guaranty. The carrying amount of the VALIC's obligations under the Guaranty is less than $1.0 million as of December 31, 2003. F-48 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 13. Reinsurance Reinsurance transactions for the years ended December 31, 2003 and 2002 were as follows:
Percentage Ceded to Assumed of Amount Other From Other Assumed Gross Amount Companies Companies Net Amount to Net -------------------------------------------------------------------- (In Thousands) December 31, 2003 Life insurance in force $314,862,729 $211,992,953 $2,628,269 $105,498,045 2.49% ======================================================= Premiums: Life insurance and annuities 1,758,005 305,828 6,641 1,458,818 0.46% Accident and health insurance 24,827 (6,252) (7,296) 23,783 -30.68% ------------------------------------------------------- Total premiums $ 1,782,832 $ 299,576 $ (655) $ 1,482,601 -0.04% ======================================================= December 31, 2002 Life insurance in force $278,188,433 $170,693,613 $2,407,609 $109,902,429 2.19% ======================================================= Premiums: Life insurance and annuities 1,760,974 397,686 21,125 1,384,413 1.53% Accident and health insurance 25,713 983 (583) 24,147 -2.41% ------------------------------------------------------- Total premiums $ 1,786,687 $ 398,669 $ 20,542 $ 1,408,560 1.46% =======================================================
Reinsurance recoverable on paid losses was approximately $47.5 million, and $24.1 million, at December 31, 2003 and 2002, respectively. Reinsurance recoverable on unpaid losses was approximately $150.2 million, and $48.5 million at December 31, 2003 and 2002, respectively. 14. Shareholders' Equity The Company has 8,500 shares of $100 par value cumulative preferred stock authorized and outstanding with an $80 dividend rate, redeemable at $1,000 per share after December 31, 2000. The Company's stock is held by it's immediate parent, AGC Life. The Company paid $0 and $445 million in dividends on common stock to the Parent Company in 2003 and 2002, respectively. The Company also paid $680 thousand in dividends on preferred stock to the Parent Company in 2003 and 2002. F-49 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 14. Shareholders' Equity (continued) On December 31, 2002, the Parent contributed to the Company a 100 percent interest in SunAmerica Hedge Fund Holdings LLC ("SAHFH"). SAHFH was formed on December 13, 2002. SAHFH's assets consist solely of investments in partnerships, which are included in other long term investments in the consolidated balance sheets. The capital contribution was recorded in the amount of $443.8 million, representing the equity of SAHFH. The Company and its insurance subsidiaries are restricted by state insurance laws as to the amounts they may pay as dividends without prior approval from their respective state insurance departments. At December 31, 2003, approximately $8.5 billion of consolidated shareholder's equity represents net assets of the Company, which cannot be transferred, in the form of dividends, loans, or advances to the Parent Company. Approximately $3.9 billion of consolidated shareholders' equity is similarly restricted as to transfer from its subsidiaries to the Company. Generally, the net assets of the Company's subsidiaries available for transfer to the Parent are limited to the amounts that the subsidiaries' net assets, as determined in accordance with statutory accounting practices, exceed minimum statutory capital requirements. However, payments of such amounts as dividends may be subject to approval by regulatory authorities and are generally limited to the greater of 10 percent of policyholders' surplus or the previous year's statutory net gain from operations. 15. Division Operations 15.1 Nature of Operations The Company manages its business operation through two divisions, which are based on products and services offered. Retirement Savings The Retirement Savings Division, which primarily relates to the operation of VALIC, a wholly owned subsidiary of the Company, provides tax-deferred retirement annuities and employer-sponsored retirement plans to employees of educational, health care, public sector, and other not-for-profit organizations marketed nationwide through exclusive sales representatives. F-50 American General Life Insurance Company Notes to Consolidated Financial Statements (continued) 15. Division Operations (continued) 15.1 Nature of Operations (continued) Life Insurance The Life Insurance division provides traditional, interest-sensitive, and variable life insurance and annuities to a broad spectrum of customers through multiple distribution channels focused on specific market segments. 15.2 Division Results Results of each division exclude net realized investment gains. Division earnings information was as follows:
Revenues Income Before Taxes Earnings ----------------------------------------------------- 2003 2002 2003 2002 2003 2002 ----------------------------------------------------- (In Millions) Retirement Services $2,301 $2,133 $ 878 $ 772 $593 $ 552 Life Insurance 3,568 3,235 467 508 406 452 ----------------------------------------------------- Total divisions 5,869 5,368 1,345 1,280 999 1,004 Realized investment gains (losses) (57) (295) (57) (295) (37) (192) ----------------------------------------------------- Total consolidated $5,812 $5,073 $1,288 $ 985 $962 $ 812 =====================================================
Division balance sheet information was as follows: Assets Liabilities ------------------------------------- December 31 ------------------------------------- 2003 2002 2003 2002 ------------------------------------- (In Millions) Retirement Services $58,738 $49,274 $54,213 $45,771 Life Insurance 27,273 23,955 22,839 20,258 ------------------------------------- Total consolidated $86,011 $73,229 $77,052 $66,029 ===================================== F-51 PART C: OTHER INFORMATION Item 26. Exhibits (a) Board of Directors Resolution. (1) Resolutions of Board of Directors of American General Life Insurance Company authorizing the establishment of Separate Account VL-R. (1) (b) Custodian Agreements. Inapplicable. (c) Underwriting Contracts. (1) Distribution Agreement between American General Life Insurance Company and American General Equity Services Corporation, effective October 1, 2002. (26) (2) Form of Selling Group Agreement. (27) (3) Schedule of Commissions (Incorporated by reference from the text included under the heading "Distribution of the Policies" in the Statement of Additional Information that is filed as part of this amended Registration Statement). (d) Contracts. (1) Specimen form of the "Platinum Investor(R) III" Flexible Premium Variable Life Insurance Policy (Policy Form No. 00600). (28) (e) Applications. (1) Specimen form of Life Insurance Application - Part A, Form No. AGLC 100565-2003. (24) (2) Specimen form of Life Insurance Application - Part B, Form No. AGLC 100566-2003. (24) (3) Specimen form of Variable Universal Life Insurance Supplemental Application, Form No. AGLC 0198-00 0403. (32) (4) Form of Service Request Form, Form No. AGLC0223 Rev1203. (34) (5) Form of Cash Disbursement Request Form, Form No. AGLC 0109 Rev0103. (27) (6) Form of Assignment Form, Form No. AGLC 0205 Rev0103. (27) C-1 (7) Form of Electronic Funds Authorization Form, Form No. AGLC 0220 Rev0103. (27) (8) Form of Name and Address Change Form, Form No. AGLC 0222 Rev0103. (27) (9) Form of Request for Change of Ownership on a Life Insurance Policy Form, Form No. VUL 0013 Rev1202. (27) (10) Form of Request for Full Cash Surrender Value Form, Form No. VUL 0015 Rev1202. (27) (11) Form of Change of Beneficiary Form, Form No. VUL 0016 Rev1202. (27) (f) Depositor's Certificate of Incorporation and By-Laws. (1) Amended and Restated Articles of Incorporation of American General Life Insurance Company, effective December 31, 1991. (2) (2) Amendment to the Amended and Restated Articles of Incorporation of American General Life Insurance Company, effective July 13, 1995. (5) (3) By-laws of American General Life Insurance Company, adopted January 22, 1992. (3) (g) Reinsurance Contracts. Inapplicable. (h) Participation Agreements. (1)(a) Form of Participation Agreement by and Among AIM Variable Insurance Funds, Inc., A I M Distributors, Inc., American General Life Insurance Company, on Behalf of Itself and its Separate Accounts, and American General Securities Incorporated. (6) (1)(b) Form of Amendment Four to Participation Agreement by and among AIM Variable Insurance Funds, Inc., A I M Distributors, Inc., American General Life Insurance Company, on Behalf of Itself and its Separate Accounts, and American General Securities Incorporated. (17) (1)(c) Form of Amendment Six to Participation Agreement by and among AIM Variable Insurance Funds, Inc., A I M Distributors, Inc., American General Life Insurance Company, on Behalf of Itself and its Separate Accounts, and American General Securities Incorporated. (29) C-2 (2)(a) Form of Participation Agreement by and between The Variable Annuity Life Insurance Company, American General Series Portfolio Company, American General Securities Incorporated and American General Life Insurance Company. (10) (2)(b) Amendment One to Participation Agreement by and between The Variable Annuity Life Insurance Company, American General Series Portfolio Company, American General Securities Incorporated and American General Life Insurance Company dated as of July 21, 1998. (8) (2)(c) Form of Amendment Two to Participation Agreement by and between The Variable Annuity Life Insurance Company, American General Series Portfolio Company, American General Securities Incorporated and American General Life Insurance Company. (19) (2)(d) Form of Amendment Three to Participation Agreement by and between The Variable Annuity Life Insurance Company, American General Series Portfolio Company, American General Securities Incorporated and American General Life Insurance Company. (17) (3)(a) Form of Participation Agreement Between American General Life Insurance Company, Dreyfus Variable Investment Fund, The Dreyfus Socially Responsible Growth Fund, Inc. and Dreyfus Life and Annuity Index Fund, Inc. (6) (3)(b) Amendment One to Participation Agreement by and among American General Life Insurance Company, Dreyfus Variable Investment Fund, The Dreyfus Socially Responsible Growth Fund, Inc. and Dreyfus Life and Annuity Index Fund, Inc. dated December 1, 1998. (8) (4)(a) Form of Participation Agreement Among MFS Variable Insurance Trust, American General Life Insurance Company and Massachusetts Financial Services Company. (6) (4)(b) Form of Amendment Five to Participation Agreement by and among MFS Variable Insurance Trust, American General Life Insurance Company and Massachusetts Financial Services Company. (19) (5)(a) Participation Agreement by and among Morgan Stanley Universal Funds, Inc., Morgan Stanley Asset Management Inc., Miller Anderson & Sherrerd LLP., Van Kampen American Capital Distributors, Inc., American General Life Insurance Company and American General Securities Incorporated. (9) (5)(b) Amendment Number 1 to Participation Agreement by and among Morgan Stanley Universal Funds, Inc., Morgan Stanley Asset Management Inc., C-3 Miller Anderson & Sherrerd LLP, Van Kampen American Capital Distributors, Inc., American General Life Insurance Company and American General Securities Incorporated. (11) (5)(c) Form of Amendment Seven to Participation Agreement among Morgan Stanley Universal Funds, Inc., Van Kampen American Capital Distributors, Inc., Morgan Stanley Asset Management Inc., Miller Anderson & Sherrerd LLP, American General Life Insurance Company and American General Securities Incorporated. (17) (5)(d) Form of Amendment Ten to Participation Agreement among Morgan Stanley Universal Funds, Inc., Van Kampen American Capital Distributors, Inc., Morgan Stanley Asset Management Inc., Miller Anderson & Sherrerd LLP, American General Life Insurance Company and American General Distributors, Inc. (30) (6)(a) Form of Participation Agreement Among Putnam Variable Trust, Putnam Mutual Funds Corp., and American General Life Insurance Company. (6) (7)(a) Form of Participation Agreement Among American General Life Insurance Company, American General Securities Incorporated, SAFECO Resources Series Trust, and SAFECO Securities, Inc. (6) (7)(b) Form of Amendment Four to Participation Agreement Among American General Life Insurance Company, American General Securities Incorporated, SAFECO Resources Series Trust, and SAFECO Securities, Inc. (17) (7)(c) Form of Amendment Seven to Participation Agreement Among American General Life Insurance Company, American General Securities Incorporated, SAFECO Resources Series Trust, and SAFECO Securities, Inc. (30) (8)(a) Amended and Restated Participation Agreement by and among American General Life Insurance Company, American General Securities Incorporated, Van Kampen American Capital Life Investment Trust, Van Kampen American Capital Asset Management, Inc., and Van Kampen American Capital Distributors, Inc. (9) (8)(b) Amendment One to Amended and Restated Participation Agreement by and among American General Life Insurance Company, American General Securities Incorporated, Van Kampen American Capital Life Investment Trust, Van Kampen American Capital Asset Management, Inc., and Van Kampen American Capital Distributors, Inc. (8) (8)(c) Form of Amendment Six to Amended and Restated Participation Agreement among Van Kampen Life Investment Trust, Van C-4 Kampen Funds Inc., Van Kampen Asset Management, Inc., American General Life Insurance Company and American General Securities Incorporated. (17) (8)(d) Form of Amendment Nine to Amended and Restated Participation Agreement among Van Kampen Life Investment Trust, Van Kampen Funds Inc., Van Kampen Asset Management, Inc., American General Life Insurance Company and American General Distributors, Inc. (30) (9)(a) Form of Shareholder Services Agreement by and between American General Life Insurance Company and American Century Investment Management, Inc. (15) (10)(a) Sales Agreement by and between American General Life Insurance Company, Neuberger & Berman Advisors Management Trust and Neuberger & Berman Management Incorporated. (15) (11)(a) Form of Assignment and Modification Agreement by and between Neuberger & Berman Management Incorporated and American General Life Insurance Company. (15) (12)(a) Form of Participation Agreement by and between Goldman Sachs Variable Insurance Trust, Goldman, Sachs & Co. and American General Life Insurance Company. (33) (13)(a) Form of Fund Participation Agreement by and between American General Life Insurance Company and Janus Aspen Series. (19) (14)(a) Form of Participation Agreement by and between American General Life Insurance Company and J.P. Morgan Series Trust II. (19) (14)(b) Form of Amendment No. 1 to Participation Agreement by and between American General Life Insurance Company and J.P. Morgan Series Trust II. (32) (15)(a) Form of Participation Agreement by and between American General Life Insurance Company, PIMCO Variable Insurance Trust and PIMCO Funds Distributor LLC. (19) (16)(a) Form of Participation Agreement by and between Vanguard Variable Insurance Funds, The Vanguard Group, Inc., Vanguard Marketing Corporation and American General Life Insurance Company. (19) (17)(a) Form of Participation Agreement by and between American General Life Insurance Company, Warburg Pincus Trust, Credit Suisse Asset Management, LLC and Credit Suisse Asset Management Securities, Inc. (19) C-5 (18)(a) Form of Amended and Restated Participation Agreement by and between Variable Insurance Products Fund II, Fidelity Distributors Corporation and American General Life Insurance Company. (19) (18)(b) Form of Amendment No. 3 to the Amended and Restated Participation Agreement by and between Variable Insurance Products Fund II, Fidelity Distributors Corporation and American General Life Insurance Company. (32) (19)(a) Form of Amended and Restated Participation Agreement by and between Variable Insurance Products Fund, Fidelity Distributors Corporation and American General Life Insurance Company. (19) (19)(b) Form of Amendment No. 3 to the Amended and Restated Participation Agreement by and between Variable Insurance Products Fund, Fidelity Distributors Corporation and American General Life Insurance Company. (32) (20)(a) Form of Participation Agreement by and among American General Life Insurance Company, Franklin Templeton Variable Insurance Products Trust and Franklin Templeton Distributors, Inc. (23) (20)(b) Form of Amendment to Participation Agreement by and among American General Life Insurance Company, Franklin Templeton Variable Insurance Products Trust and Franklin Templeton Distributors, Inc., effective May 1, 2000. (16) (20)(c) Form of Amendment to Participation Agreement by and among American General Life Insurance Company, Franklin Templeton Variable Insurance Products Trust and Franklin Templeton Distributors, Inc., effective November 1, 2001. (22) (20)(d) Form of Amendment to Participation Agreement by and among American General Life Insurance Company, Franklin Templeton Variable Insurance Products Trust and Franklin Templeton Distributors, Inc., effective May 14, 2002. (25) (20)(e) Form of Amendment to Participation Agreement by and among American General Life Insurance Company, Franklin Templeton Variable Insurance Products Trust and Franklin Templeton Distributors, Inc., effective October 1, 2002. (32) (21)(a) Form of Participation Agreement by and between SunAmerica Series Trust and American General Life Insurance Company. (20) C-6 (22)(a) Form of Administrative Services Agreement between American General Life Insurance Company and fund distributor. (5) (23)(a) Form of Administrative Services Agreement between American General Life Insurance Company, Miller Anderson & Sherrard LLP and Morgan Stanley Dean Witter Investment Management Inc. (14) (24)(a) Form of Administrative Services Agreement between American General Life Insurance Company and SAFECO Asset Management Company, effective May 14, 2002. (25) (25)(a) Form of Administrative Services Agreement between Van Kampen Asset Management Inc. and American General Life Insurance Company dated January 1, 2000 (21) (25)(b) Form of Amendment No. 1 to Administrative Services Agreement between Van Kampen Asset Management Inc. and American General Life Insurance Company, dated November 1, 2001. (31) (26)(a) Administrative Services Agreement dated as of June 1, 1998, between American General Life Insurance Company and AIM Advisors, Inc. (4) (27)(a) Administrative Services Agreement dated as of August 11, 1998, between American General Life Insurance Company and The Dreyfus Corporation. (4) (27)(b) Amendment to Administrative Services Agreement dated as of August 11, 1998, between American General Life Insurance Company and The Dreyfus Corporation effective as of December 1, 1998. (4) (28)(a) Form of Administrative Services Agreement by and between Goldman, Sachs & Co. and American General Life Insurance Company. (33) (29)(a) Form of Administrative Services Agreement by and between American General Life Insurance Company and JPMorgan Chase Bank, effective May 1, 2003. (32) (30)(a) Form of Administrative Services Agreement by and between American General Life Insurance Company and Neuberger & Berman Management Incorporated. (15) (31)(a) Form of Services Agreement by and between American General Life Insurance Company and Pacific Investment Management, LLC. (19) C-7 (32)(a) Form of Administrative Services Agreement by and between American General Life Insurance Company and Credit Suisse Asset Management, LLC. (19) (33)(a) Form of Administrative Services Agreement by and among American General Life Insurance Company and Franklin Templeton Services, Inc., dated as of July 1, 1999. (12) (33)(b) Form of Amendment to Administrative Services Agreement by and among American General Life Insurance Company and Franklin Templeton Services, LLC, effective November 1, 2001. (22) (33)(c) Form of Amendment to Administrative Services Agreement by and among American General Life Insurance Company and Franklin Templeton Services, LLC, effective May 1, 2003. (32) (34)(a) Form of Service Contract by and between Fidelity Distributors Corporation and American General Equity Services Corporation, effective October 1, 2002. (32) (35)(a) Form of Service Agreement by and between Fidelity Investments Institutional Operations Company, Inc. and American General Life Insurance Company. (19) (36)(a) Form of Distribution and Shareholder Services Agreement by and between Janus Distributors, Inc. and American General Life Insurance Company. (19) (37)(a) Form of PIMCO Variable Insurance Trust Services Agreement by and between American General Life Insurance Company and PIMCO Variable Insurance Trust. (19) (38)(a) Form of Administrative Services Agreement by and between SunAmerica Asset Management Corp. and American General Life Insurance Company. (20) (39)(a) Form of Participation Agreement by and among The Alger American Fund, American General Life Insurance Company and Fred Alger & Company, Incorporated. (32) (40)(a) Form of Service Agreement Class O between Fred Alger Management, Inc. and American General Life Insurance Company. (32) (41)(a) Form of Participation Agreement by and among American General Life Insurance Company, Oppenheimer Variable Account Funds, and OppenheimerFunds, Inc. (21) C-8 (41)(b) Form of Amendment No. 1 to Participation Agreement by and among American General Life Insurance Company, Oppenheimer Variable Account Funds, and OppenheimerFunds, Inc. (32) (42)(a) Form of Administrative Services Agreement by and among American General Life Insurance Company and OppenheimerFunds, Inc. (21) (42)(b) Form of Amendment No. 1 to Administrative Services Agreement by and among American General Life Insurance Company and OppenheimerFunds, Inc. (32) (43)(a) Form of Participation Agreement by and between Variable Insurance Products Fund III, Fidelity Distributors Corporation and American General Life Insurance Company. (32) (i) Administrative Contracts. (1) Form of services agreement dated July 31, 1975, (limited to introduction and first two recitals, and sections 1-3) among various affiliates of American General Corporation, including American General Life Insurance Company and American General Life Companies. (7) (2)(a) Form of Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company. (Filed herewith) (2)(b) Form of Addendum No. 1 to Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company, dated May 21, 1975. (Filed herewith) (2)(c) Form of Addendum No. 2 to Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company, dated September 23, 1975. (Filed herewith) (2)(d) Form of Addendum No. 24 to Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company, dated December 30, 1998. (Filed herewith) (2)(e) Form of Addendum No. 28 to Service and Expense Agreement dated February 1, 1974, among American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company and American General Life Companies, effective January 1, 2002. (Filed herewith) C-9 (2)(f) Form of Addendum No. 30 to Service and Expense Agreement dated February 1, 1974, among American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company and American General Life Companies, LLC, effective January 1, 2002. (Filed herewith) (j) Other Material Contracts. None (k) Legal Opinion. (1) Opinion and Consent of Pauletta P. Cohn, General Counsel, Life Insurance Operations of American General Life Companies. (28) (l) Actuarial Opinion. (1) Opinion and Consent of American General Life Insurance Company's actuary. (28) (m) Calculation. None (n) Other Opinions. (1) Consent of Independent Accountants, PricewaterhouseCoopers LLP. (Filed herewith) (o) Omitted Financial Statements. None (p) Initial Capital Agreements. None (q) Redeemability Exemption. (1) Description of American General Life Insurance Company's Issuance, Transfer and Redemption Procedures for Variable Universal Life Insurance Policies Pursuant to Rule 6e-3(T)(b)(12)(iii) under the Investment Company Act of 1940. (25) - ---------------------------------------------------- (1) Incorporated by reference to initial filing of Form S-6 Registration Statement (File No. 333-42567) of American General Life Insurance Company Separate Account VL-R filed on December 18, 1997. (2) Incorporated by reference to initial filing of Form N-4 Registration Statement (File No. 033-43390) of American General Life Insurance Company Separate Account D filed on October 16, 1991. (3) Incorporated by reference to Post-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 033-43390) of American General Life Insurance Company Separate Account D filed on April 30, 1992. C-10 (4) Incorporated by reference to initial filing of Form N-4 Registration Statement (File No. 333-70667) of American General Life Insurance Company Separate Account D filed on January 15, 1999. (5) Incorporated by reference to Pre-Effective Amendment No. 3 to Form S-6 Registration Statement (File No. 333-53909) of American General Life Insurance Company Separate Account VL-R filed on August 19, 1998. (6) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-42567) of American General Life Insurance Company Separate Account VL-R filed on March 23, 1998. (7) Incorporated by reference to Pre-Effective Amendment No. 23 to Form N-4 Registration Statement (File No. 033-44745) of American General Life Insurance Company Separate Account A filed on April 24, 1998. (8) Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-70667) of American General Life Insurance Company Separate Account D filed on March 18, 1999. (9) Incorporated by reference to Post-Effective Amendment No. 12 to Form N-4 Registration Statement (File No. 033-43390) of American General Life Insurance Company Separate Account D filed on April 30, 1997. (10) Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4 Registration Statement (File No. 333-40637) of American General Life Insurance Company Separate Account D filed on February 12, 1998. (11) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-80191) of American General Life Insurance Company Separate Account VL-R filed on August 25, 1999. (12) Incorporated by reference to Post-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-87307) of American General Life Insurance Company Separate Account VL-R filed on October 10, 2000. (13) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-90787) of American General Life Insurance Company Separate Account VL-R filed on February 4, 2000. (14) Incorporated by reference to Post-Effective Amendment No. 18 to Form N-4 Registration Statement (File No. 033-43390) of American General Life Insurance Company Separate Account D filed on April 12, 2000. C-11 (15) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-89897) of American General Life Insurance Company Separate Account VL-R filed on January 21, 2000. (16) Incorporated by reference to Post-Effective Amendment No. 2 to Form S-6 Registration Statement (File No. 333-89897) of American General Life Insurance Company Separate Account VL-R filed on April 10, 2001. (17) Incorporated by reference to Post-Effective Amendment No. 4 to Form S-6 Registration Statement (File No. 333-42567) of American General Life Insurance Company Separate Account VL-R filed on October 11, 2000. (18) Incorporated by reference to Post-Effective Amendment No. 3 to Form S-6 Registration Statement (File No. 333-89897) of American General Life Insurance Company Separate Account VL-R filed on April 23, 2002. (19) Incorporated by reference to Post-Effective Amendment No. 2 to Form S-6 Registration Statement (File No. 333-80191) of American General Life Insurance Company Separate Account VL-R filed on September 20, 2000. (20) Incorporated by reference to Post-Effective Amendment No. 2 to Form S-6 Registration Statement (File No. 333-65170) of American General Life Insurance Company Separate Account VL-R filed on April 24, 2002. (21) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-87307) of American General Life Insurance Company Separate Account VL-R filed on January 20, 2000. (22) Incorporated by reference to Post-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-65170) of American General Life Insurance Company Separate Account VL-R filed on December 3, 2001. (23) Incorporated by reference to Post-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-89897) of American General Life Insurance Company Separate Account VL-R filed on April 26, 2000. (24) Incorporated by reference to initial filing of Form N-6 Registration Statement (File No. 333-109613) of American General Life Insurance Company Separate Account VL-R filed on October 10, 2003. (25) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-82982) of American General Life Insurance Company Separate Account VL-R filed on May 13, 2002. C-12 (26) Incorporated by reference to Post-Effective Amendment No. 7 to Form N-4 Registration Statement (File No. 333-40637) of American General Life Insurance Company Separate Account D filed on November 8, 2002. (27) Incorporated by reference to initial filing of Form N-6 Registration Statement (File No. 333-102299) of American General Life Insurance Company Separate Account VUL-2 filed on December 31, 2002. (28) Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-6 Registration Statement (File No. 333-43264) of American General Life Insurance Company Separate Account VL-R filed on October 26, 2000. (29) Incorporated by reference to initial filing of Form N-6 Registration Statement (File No. 333-103361) of American General Life Insurance Company Separate Account VL-R filed on February 21, 2003. (30) Incorporated by reference to Post-Effective Amendment No. 3 to Form N-6 Registration Statement (File No. 333-65170) of American General Life Insurance Company Separate Account VL-R filed on January 23, 2003. (31) Incorporated by reference to Post-Effective Amendment No. 4 to Form N-6 Registration Statement (File No. 333-43264) of American General Life Insurance Company Separate Account VL-R filed on February 10, 2003. (32) Incorporated by reference to Post-Effective Amendment No. 6 to Form N-6 Registration Statement (File No. 333-43264) of American General Life Insurance Company Separate Account VL-R filed on April 30, 2003. (33) Incorporated by reference to Post-Effective Amendment No. 7 to Form N-6 Registration Statement (File No. 333-90787) of American General Life Insurance Company Separate Account VL-R filed on December 19, 2003. (34) Incorporated by reference to Post-Effective Amendment No. 7 to Form N-6 Registration Statement (File No. 333-43264) of American General Life Insurance Company Separate Account VL-R filed on December 19, 2003. Item 27. Directors and Officers of the Depositor Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- Rodney O. Martin, Jr. Director, Chairman of the Board of 2929 Allen Parkway Directors, President and Chief Houston, TX 77019 Executive Officer C-13 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- M. Bernard Aidinoff Director Sullivan and Cromwell 125 Broad Street New York, NY 10004 David J. Dietz Director and Chairman-Affluent & 830 Third Avenue Corporate Markets Profit Center New York, NY 1002 David L. Herzog Director 2929 Allen Parkway Houston, TX 77019 Richard A. Hollar Director, President-AIG Life Brokerage 750 West Virginia Street Profit Center and Chief Executive Milwaukee, WI 53204 Officer-AIG Life Brokerage Profit Center Royce G. Imhoff, II Director, President-Affluent & Corporate 2929 Allen Parkway Markets Profit Center and Chief Houston, TX 77019 Executive Officer-Affluent & Corporate Markets Profit Center Donald P. Kanak, Jr. Director 70 Pine Street New York, NY 10270 Richard J. Miller Director and Chief Executive Officer- 2929 Allen Parkway Agency Building Profit Center Houston, TX 77019 Nicholas A. O'Kulich Director 70 Pine Street New York, NY 10270 Ernest T. Patrikis Director 70 Pine Street New York, NY 10270 Gary D. Reddick Director and Chief Administrative Officer 2929 Allen Parkway Houston, TX 77019 C-14 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- Martin J. Sullivan Director 70 Pine Street New York, NY 10270 Christopher J. Swift Director, Chief Financial Officer and 2929 Allen Parkway Executive Vice President Houston, TX 77019 Thomas L. Booker President-Structured Settlements/SPIA 2727 Allen Parkway Profit Center Houston, TX 77019 Lawrence J. O'Brien President-Agency Building Profit Center 2727 Allen Parkway Houston, TX 77019 James A. Galli Executive Vice President 830 Third Avenue New York, NY 10022 Paul L. Mistretta Executive Vice President 2727-A Allen Parkway Houston, TX 77019 Erik A. Baden Senior Vice President 2727 Allen Parkway Houston, TX 77019 Wayne A. Barnard Senior Vice President 2929 Allen Parkway Houston, TX 77019 Robert M. Beuerlein Senior Vice President 2727-A Allen Parkway Houston, TX 77019 Rebecca G. Campbell Senior Vice President 2929 Allen Parkway Houston, TX 77019 C-15 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- Jeffrey H. Carlson Senior Vice President 2727 Allen Parkway Houston, TX 77019 Larry A. Compton Senior Vice President One Woodfield Lake Schaumburg, IL 60173 William F. Guterding Senior Vice President 830 Third Avenue New York, NY 10022 Robert F. Herbert, Jr. Senior Vice President, Treasurer and 2727-A Allen Parkway Controller Houston, TX 77019 S. Douglas Israel Senior Vice President 2929 Allen Parkway Houston, TX 77019 Kyle L. Jennings Senior Vice President 2929 Allen Parkway Houston, TX 77019 Althea R. Johnson Senior Vice President 2929 Allen Parkway Houston, TX 77019 Glen D. Keller Senior Vice President 2727 Allen Parkway Houston, TX 77019 Simon J. Leech Senior Vice President 2727-A Allen Parkway Houston, TX 77019 Kent D. Major Senior Vice President 2727-A Allen Parkway Houston, TX 77019 C-16 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- Randy J. Marash Senior Vice President 3600 Route 66 Neptune, NJ 07754 Mark R. McGuire Senior Vice President 2727-A Allen Parkway Houston, TX 77019 Laura W. Milazzo Senior Vice President 2727 Allen Parkway Houston, TX 77019 A. Hasan Qureshi Senior Vice President 1 ALICO Plaza 600 King Street Wilmington, DE 19801 Dennis H. Roberts Senior Vice President 2727 Allen Parkway Houston, TX 77019 Richard C. Schuettner Senior Vice President 750 West Virginia Street Milwaukee, WI 53204 James P. Sennett Senior Vice President 2727 Allen Parkway Houston, TX 77019 James P. Steele Senior Vice President 205 E. 10th Street Amarillo, TX 79101 Robert E. Steele Senior Vice President 205 E. 10th Street Amarillo, TX 79101 James M. Sweeney Senior Vice President 3600 Route 66 Neptune, NJ 07754 C-17 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- Alfred M. Thome Senior Vice President One Woodfield Lake Schaumburg, IL 60173 Dan E. Trudan Senior Vice President 750 West Virginia St. Milwaukee, WI 53204 Frederic R. Yopps Senior Vice President 750 West Virginia St. Milwaukee, WI 53204 Steven E. Zimmerman Senior Vice President 2727 Allen Parkway Houston, TX 77019 David R. Armstrong Vice President 3600 Route 66 Neptune, NJ 07754 Edward F. Bacon Vice President 2727-A Allen Parkway Houston, TX 77019 Joan M. Bartel Vice President 2727 Allen Parkway Houston, TX 77019 Walter E. Bednarski Vice President 3600 Route 66 Neptune, NJ 07754 Michael B. Boesen Vice President 2727-A Allen Parkway Houston, TX 77019 Mark E. Bolding Vice President 2929 Allen Parkway Houston, TX 77019 C-18 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- James B. Brown Vice President 2727 Allen Parkway Houston, TX 77019 Joseph S. Cella Vice President 70 Pine Street New York, NY 10270 Phillip L. Chapman Vice President 3600 Route 66 Neptune, NJ 07754 Robert W. Chesner Vice President 2929 Allen Parkway Houston, TX 77019 Valerie A. Childrey Vice President 750 West Virginia Street Milwaukee, WI 53204 Mark E. Childs Vice President 2727 Allen Parkway Houston, TX 77019 Robert M. Cicchi Vice President 2727 Allen Parkway Houston, TX 77019 Donald L. Davis Vice President 205 E. 10th Street Amarillo, TX 79101 Steven A. Dmytrack Vice President 2929 Allen Parkway Houston, TX 77019 Timothy M. Donovan Vice President 2727 Allen Parkway Houston, TX 77019 C-19 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- Farideh N. Farrokhi Vice President 2727-A Allen Parkway Houston, TX 77019 Patrick Froze Vice President 1200 North Mayfair Road, Suite 300 Wauwatosa, WI 53226 Frederick J. Garland, Jr. Vice President 2727 Allen Parkway Houston, TX 77019 Richard L. Gravette Vice President 2727-A Allen Parkway Houston, TX 77019 Kenneth J. Griesemer Vice President 6363 Forest Park Road Dallas, TX 75235 Daniel J. Gutenberger Vice President 70 Pine Street New York, NY 10270 Joel H. Hammer Vice President 1 Chase Manhattan Place New York, NY 10005 Craig H. Harrel Vice President 2929 Allen Parkway Houston, TX 77019 D. Leigh Harrington Vice President 2727 Allen Parkway Houston, TX 77019 Neal C. Hasty Vice President 6363 Forest Park Road Dallas, TX 75235 C-20 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- Keith C. Honig Vice President 1 SunAmerica Center Los Angeles, CA 90067 Walter P. Irby Vice President 2727 Allen Parkway Houston, TX 77019 Sharla A. Jackson Vice President 205 E. 10th Street Amarillo, TX 79101 David S. Jorgensen Vice President 2727 Allen Parkway Houston, TX 77019 Stephen C. Kennedy Vice President 750 West Virginia Street Milwaukee, WI 53204 Gary J. Kleinman Vice President 1 Chase Manhattan Place New York, NY 10005 Frank A. Kophamel Vice President 3600 Route 66 Neptune, NJ 07754 James K. Larson Vice President 1000 E. Woodfield Road Schaumburg, IL 60173 Charles L. Levy Vice President 2727 Allen Parkway Houston, TX 77019 Linda Lewis Vice President 6363 Forest Park Road Dallas, TX 75235 C-21 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- Robert J. Ley Vice President 70 Pine Street New York, NY 10270 Jerry L. Livers Vice President 2727 Allen Parkway Houston, TX 77019 Gwendolyn J. Mallett Vice President 2727 Allen Parkway Houston, TX 77019 W. Larry Mask Vice President 2727 Allen Parkway Houston, TX 77019 Gordon S. Massie Vice President 2929 Allen Parkway Houston, TX 77019 Melvin C. McFall Vice President 2727 Allen Parkway Houston, TX 77019 Richard D. McFarland Vice President 2727 Allen Parkway Houston, TX 77019 Candace A. Michael Vice President 2727 Allen Parkway Houston, TX 77019 Anne K. Milio Vice President 2727 Allen Parkway Houston, TX 77019 Sylvia A. Miller Vice President #1 Franklin Square Springfield, IL 62713 C-22 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- Cheryl E. Morton Vice President #1 Franklin Square Springfield, IL 62713 Michael R. Murphy Vice President 750 West Virginia Street Milwaukee, WI 53204 Carl T. Nichols Vice President 205 E. 10th Street Amarillo, TX 79101 Deanna D. Osmonson Vice President and Chief Compliance 2727 Allen Parkway Officer Houston, TX 77019 Rembert R. Owen, Jr. Vice President 2929 Allen Parkway Houston, TX 77019 Lori J. Payne Vice President 2727 Allen Parkway Houston, TX 77019 Kirsten M. Pedersen Vice President 2929 Allen Parkway Houston, TX 77019 Cathy A. Percival Vice President 2727 Allen Parkway Houston, TX 77019 Terri Robbins Vice President 175 Water Street New York, NY 10038 David M. Robinson Vice President 2929 Allen Parkway Houston, TX 77019 C-23 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- Dale W. Sachtleben Vice President #1 Franklin Square Springfield, IL 62713 Robert C. Sage Vice President 2727 Allen Parkway Houston, TX 77019 Kristin Sather Vice President 1 Chase Manhattan Place New York, NY 10005 Richard W. Scott Vice President 2929 Allen Parkway Houston, TX 77019 Tom L. Scott Vice President 2929 Allen Parkway Houston, TX 77019 T. Clay Spires Vice President 2929 Allen Parkway Houston, TX 77019 Joe L. Thompson Vice President 6363 Forest Park Road Dallas, TX 75235 Gregory R. Thornton Vice President #1 Franklin Square Springfield, IL 62713 Paul Turner Vice President 675 Bering Drive, Suite 600 Houston, TX 77057 Richard P. Vegh Vice President 3600 Route 66 Neptune, NJ 07754 C-24 Name and Principal Positions and Offices with Depositor Business Address American General Life Insurance Company - ------------------ ---------------------------------------- S. Michael Von-Stein Vice President 1478 County C St. Germain, WI 54558 Curt B. Vondrasek Vice President 1832 Baybrook Ct. Naperville, IL 60564 Christian D. Weiss Vice President #1 Franklin Square Springfield, IL 62713 Susan J. Wilhite Vice President One Woodfield Lake Schaumburg, IL 60173 Nancy R. Yasso Vice President 2727 Allen Parkway Houston, TX 77019 Elizabeth M. Tuck Secretary 70 Pine Street New York, NY 10270 Item 28. Persons Controlled by or Under Common Control with the Depositor or the Registrant The Depositor is an indirect wholly-owned subsidiary of American International Group, Inc. ("AIG"). See footnotes to table below at end of Item 28. SUBSIDIARIES OF AIG
% of Voting Securities Owned by Jurisdiction of its Incorporation Immediate or Organization Parent(2) --------------- ------------ American International Group, Inc. (1) Delaware (3) AIG Aviation, Inc. Georgia 100% AIG Bulgaria Insurance and Reinsurance Company EAD Bulgaria 100% AIG Capital Corporation Delaware 100% AIG Consumer Finance Group, Inc. Delaware 100% AIG Bank Polska S.A Poland 97.23% AIG Credit S.A Poland 80%
C-25 SUBSIDIARIES OF AIG
% of Voting Securities Owned by Jurisdiction of its Incorporation Immediate or Organization Parent(2) --------------- ------------ Compania Financiera Argentina S.A Argentina 92.7% AIG Global Asset Management Holdings Corp. Delaware 100% AIG Capital Partners, Inc. Delaware 100% AIG Global Investment Corp. New Jersey 100% John McStay Investment Counsel, L.P. Texas 82.84% International Lease Finance Corporation California 64.85% (4) AIG Claim Services, Inc. Delaware 100% A1G Credit Corp. Delaware 100% A.I. Credit Corp. New Hampshire 100% Imperial Premium Finance, Inc. California 100% Imperial Premium Finance, Inc. Delaware 100% AIG Equity Sales Corp. New York 100% AIG Federal Savings Bank Delaware 100% AIG Finance Holdings, Inc. New York 100% AIG Finance (Hong Kong) Limited Hong Kong 100% AIG Financial Advisor Services, Inc. Delaware 100% AIG Financial Advisor Services (Europe), S.A. Luxembourg 100% AIG Financial Products Corp. Delaware 100% AIG Matched Funding Corp. Delaware 100% BanqueAlG France 90% (5) AIG Funding, Inc. Delaware 100% AIG Global Real Estate Investment Corp. Delaware 100% AIG Global Trade & Political Risk Insurance Company New Jersey 100% A.I.G. Golden Insurance Ltd. Israel 50.01% AIG Life Insurance Company Delaware 79% (6) AIG Life Insurance Company of Canada Canada 100% AIG Life Insurance Company of Puerto Rico Puerto Rico 100% AIG Marketing, Inc Delaware 100% AIG Memsa, Inc. Delaware 100% Tata AIG General Insurance Company Limited India 26% AIG Private Bank Ltd. Switzerland 100% AIG Retirement Services, Inc. Delaware 100% (7) SunAmerica Life Insurance Company Arizona 100% SunAmerica Investments, Inc. Georgia 70% (8) AIG Advisor Group, Inc. Maryland 100% Advantage Capital Corporation New York 100% FSC Securities Corporation Delaware 100% Sentra Securities Corporation California 100% Spelman & Co., Inc. California 100% SunAmerica Securities, Inc. Delaware 100% AIG SunAmerica Life Assurance Company Arizona 100% (9) Saamsun Holdings Corp. Delaware 100% SAM Holdings Corporation California 100% AIG SunAmerica Asset Management Corp. Delaware 100% AIG SunAmerica Capital Services. Inc. Delaware 100% Sun Royal Holdings Corporation California 100% Royal Alliance Associates, Inc. Delaware 100% First SunAmerica Life Insurance Company New York 100%
C-26 SUBSIDIARIES OF AIG
% of Voting Securities Owned by Jurisdiction of its Incorporation Immediate or Organization Parent(2) --------------- ------------ AIG Risk Management, Inc. New York 100% AIG Technologies, Inc. New Hampshire 100% AIGTI, Inc. Delaware 100% AIG Trading Group Inc. Delaware 100% AIG International, Inc. Delaware 100% AIU Insurance Company New York 52% (10) AIU North America, Inc. New York 100% American General Corporation Texas 100% American General Bancassurance Services, Inc. Illinois 100% AGC Life Insurance Company Missouri 100% AIG Assurance Canada Canada 100% (11) AIG Life of Bermuda, Ltd. Bermuda 100% American General Life and Accident Insurance Company Tennessee 100% American General Life Insurance Company Texas 100% American General Annuity Service Corporation Texas 100% AIG Enterprise Services, LLC Delaware 100% American General Equity Services Corporation Delaware 100% American General Life Companies, LLC Delaware 100% The Variable Annuity Life Insurance Company Texas 100% VALIC Retirement Services Company Texas 100% VALIC Trust Company Texas 100% American General Property Insurance Company Tennessee 51.85% (12) American General Property Insurance Company of Florida Florida 100% AIG Annuity Insurance Company Texas 100% The United States Life Insurance Company in the City of New York New York 100% American General Finance, Inc. Indiana 100% AGF Investment Corp. Indiana 100% American General Auto Finance, Inc. Delaware 100% American General Finance Corporation Indiana 100% Crossroads Mortgage, Inc. Tennessee 100% ENM, Inc. Tennessee 100% MorEquity, Inc. Nevada 100% Wilmington Finance, Inc. Delaware 100% Merit Life Insurance Co. Indiana 100% Yosemite Insurance Company Indiana 100% CommoLoCo, Inc. Puerto Rico 100% American General Financial Services of Alabama, Inc. Alabama 100% HSA Residential Mortgage Services of Texas, Inc. Delaware 100% American General Investment Management Corporation Delaware 100% American General Realty Investment Corporation Texas 100% American General Assurance Company Illinois 100% American General Indemnity Company Illinois 100% USLIFE Credit Life Insurance Company of Arizona Arizona 100% Knickerbocker Corporation Texas 100% American Home Assurance Company New York 100% AIG Hawaii Insurance Company, Inc. Hawaii 100% American Pacific Insurance Company, Inc. Hawaii 100% American International Insurance Company New York 100%
C-27 SUBSIDIARIES OF AIG
% of Voting Securities Owned by Jurisdiction of its Incorporation Immediate or Organization Parent(2) --------------- ------------ American International Insurance Company of California, Inc. California 100% American International Insurance Company of New Jersey New Jersey 100% Minnesota Insurance Company Minnesota 100% American International Realty Corp. Delaware 31.5% (13) Pine Street Real Estate Holdings Corp. New Hampshire 31.47% (13) Transatlantic Holdings, Inc. Delaware 33.61% (14) Transatlantic Reinsurance Company New York 100% Putnam Reinsurance Company New York 100% Trans Re Zurich Switzerland 100% American International Insurance Company of Delaware Delaware 100% American International Life Assurance Company of New York New York 77.52% (15) American International Reinsurance Company, Ltd. Bermuda 100% AIG Edison Life Insurance Company Japan 90% (16) American International Assurance Company, Limited Hong Kong 100% American International Assurance Company (Australia) Limited Australia 100% American International Assurance Company (Bermuda) Limited Bermuda 100% American International Assurance Co. (Vietnam) Limited Vietnam 100% Tata AIG Life Insurance Company Limited India 26% Nan Shan Life Insurance Company, Ltd. Taiwan 95% American International Underwriters Corporation New York 100% American International Underwriters Overseas, Ltd. Bermuda 100% AIG Europe (Ireland) Limited Ireland 100% AIG Europe (U.K.) Limited England 100% AIG Brasil Companhia de Seguros Brazil 50% Universal Insurance Co., Ltd. Thailand 100% La Seguridad de Centroamerica, Compania de Seguros S.A. Guatemala 100% American International Insurance Company of Puerto Rico Puerto Rico 100% A.I.G. Colombia Seguros Generales S.A. Colombia 100% American International Underwriters GmBH Germany 100% Underwriters Adjustment Company, Inc. Panama 100% American Life Insurance Company Delaware 100% AIG Life (Bulgaria) Z.D. A.D Bulgaria 100% ALICO, S.A France 100% American Life Insurance Company (Kenya) Limited Kenya 66.67% Pharaonic American Life Insurance Company Egypt 71.63% AIG Life Insurance Company (Switzerland) Ltd. Switzerland 100% American Security Life Insurance Company, Ltd. Lichtenstein 100% Birmingham Fire Insurance Company of Pennsylvania Pennsylvania 100% China America Insurance Company, Ltd. Delaware 50% Commerce and Industry Insurance Company New York 100% Commerce and Industry Insurance Company of Canada Ontario 100% Delaware American Life Insurance Company Delaware 100% Hawaii Insurance Consultants, Ltd. Hawaii 100% HSB Group, Inc. Delaware 100% The Hartford Steam Boiler Inspection and Insurance Company Connecticut 100% The Allen Insurance Company, Ltd. Bermuda 100% The Hartford Steam Boiler Inspection and Insurance Company of Connecticut Connecticut 100% HSB Engineering Insurance Limited England 100%
C-28 SUBSIDIARIES OF AIG
% of Voting Securities Owned by Jurisdiction of its Incorporation Immediate or Organization Parent(2) --------------- ------------ The Boiler Inspection and Insurance Company of Canada Canada 100% The Insurance Company of the State of Pennsylvania Pennsylvania 100% Landmark Insurance Company California 100% Mt. Mansfield Company, Inc. Vermont 100% National Union Fire Insurance Company of Pittsburgh, Pa Pennsylvania 100% American International Specialty Lines Insurance Company Alaska 70% (17) Lexington Insurance Company Delaware 70% (17) GE Property & Casualty Insurance Company Pennsylvania 100% GE Casualty Insurance Company Pennsylvania 100% GE Indemnity Insurance Company Pennsylvania 100% GE Auto & Home Assurance Company Pennsylvania 100% Bayside Casualty Insurance Company New Jersey 100% JI Accident & Fire Insurance Co. Ltd. Japan 50% National Union Fire Insurance Company of Louisiana Louisiana 100% National Union Fire Insurance Company of Vermont Vermont 100% 21st Century Insurance Group California 33.03% (18) 21st Century Insurance Company California 100% 21st Century Casualty Company California 100% 21st Century Insurance Company of Arizona Arizona 100% Starr Excess Liability Insurance Company, Ltd. Delaware 100% Starr Excess Liability Insurance International Ltd. Ireland 100% NHIG Holding Corp. Delaware 100% Audubon Insurance Company Louisiana 100% Audubon Indemnity Company Mississippi 100% Agency Management Corporation Louisiana 100% The Gulf Agency, Inc. Alabama 100% New Hampshire Insurance Company Pennsylvania 100% AIG Europe, S.A France (19) AI Network Corporation Delaware 100% American International Pacific Insurance Company Colorado 100% American International South Insurance Company Pennsylvania 100% Granite State Insurance Company Pennsylvania 100% New Hampshire Indemnity Company, Inc. Pennsylvania 100% AIG National Insurance Company, Inc. New York 100% Illinois National Insurance Co. Illinois 100% New Hampshire Insurance Services, Inc. New Hampshire 100% AIG Star Life Insurance Co., Ltd Japan 100% Pharaonic Insurance Company, S.A.E Egypt 89.98% The Philippine American Life and General Insurance Company Philippines 99.78% Pacific Union Assurance Company California 100% Philam Equitable Life Assurance Company, Inc. Philippines 95.31% The Philippine American General Insurance Company, Inc. Philippines 100% Philam Insurance Company, Inc. Philippines 100% Risk Specialist Companies, Inc. Delaware 100% United Guaranty Corporation North Carolina 36.3l% (20) United Guaranty Insurance Company North Carolina 100% United Guaranty Mortgage Insurance Company North Carolina 100% United Guaranty Mortgage Insurance Company of North Carolina North Carolina 100%
C-29 SUBSIDIARIES OF AIG
% of Voting Securities Owned by Jurisdiction of its Incorporation Immediate or Organization Parent(2) --------------- ------------ United Guaranty Partners Insurance Company Vermont 80% United Guaranty Residential Insurance Company of North Carolina North Carolina 100% United Guaranty Residential Insurance Company North Carolina 75.03% (21) United Guaranty Commercial Insurance Company of North Carolina North Carolina 100% United Guaranty Mortgage Indemnity Company North Carolina 100% United Guaranty Credit Insurance Company North Carolina 100% United Guaranty Services, Inc. North Carolina 100%
(1) All subsidiaries listed are consolidated in the accompanying financial statements. Certain subsidiaries have been omitted from the tabulation. The omitted subsidiaries, when considered in the aggregate as a single subsidiary, do not constitute a significant subsidiary. (2) Percentages include directors' qualifing shares. (3) The common stock is owned approximately 11.9 percent by Starr International Company, Inc., 1.8 percent by C. V. Starr & Co., Inc. and 2.0 percent by The Starr Foundation. (4) Also owned 35.15 percent by National Union Fire Insurance Company of Pittsburgh, Pa. (5) Also owned 10 percent by AIG Matched Funding Corp. (6) Also owned 21 percent by Commerce and Industry Insurance Company. (7) Formerly known as AIG SunAmerica Inc. (8) Also owned 30 percent by AIG Retirement Services. Inc. (9) Formerly known as Anchor National Life Insurance Company. (10) Also owned 8 percent by The Insurance Company of the State of Pennsylvania, 32 percent by National Union Fire Insurance Company of Pittsburgh, Pa. and 8 percent by Birmingham Fire Insurance Company of Pennsylvania. (11) Indirect wholly-owned subsidiary. (12) Also owned 48.15 percent by American General Life andAccident Insurance Company. (13) Also owned by 11 other AIG subsidiaries. (14) Also owned 26.06 percent by AIG. (15) Also owned 22.48 percent by American Home Assurance Company. (16) Also owned 10 percent by a subsidiary of American Life Insurance Company. (17) Also owned 20 percent by The Insurance Company of the State of Pennsylvania and 10 percent by Birmingham Fire Insurance Company of Pennsylvania. (18) Also owned 16.85 percent by American Home Assurance Company, 6.34 percent by Commerce and Industry Insurance Company and 6.34 percent by New Hampshire Insurance Company. (19) 100 percent to be held with other AIG companies. (20) Also owned 45.88 percent by National Union Fire Insurance Company of Pittsburgh, Pa., 16.95 percent by New Hampshire Insurance Company and 0.86 percent by The Insurance Company of the State of Pennsylvania. (21) Also owned 24.97 percent by United Guaranty Residential Insurance Company of North Carolina. The Registrant is a separate account of American General Life Insurance Company (Depositor). Item 29. Indemnification Article VII, section 1, of the Company's By-Laws provides, in part, that the Company shall have power to indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the Company) by reason of the fact that such C-30 person is or was serving at the request of the Company, against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with such proceeding if such person acted in good faith and in a manner such person reasonably believed to be in the best interest of the Company and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful. Article VII, section 1 (in part), section 2, and section 3, provide that the Company shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action by or in the right of the Company to procure a judgment in its favor by reason of the fact that such person is or was acting in behalf of the Company, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action if such person acted in good faith, in a manner such person believed to be in the best interests of the Company, and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. No indemnification shall be made under section 1: (a) in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable to the Company, unless and only to the extent that the court in which such action was brought shall determine upon application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for the expenses which such court shall determine; (b) of amounts paid in settling or otherwise disposing of a threatened or pending action with or without court approval; or (c) of expense incurred in defending a threatened or pending action which is settled or otherwise disposed of without court approval. Article VII, section 3, provides that, with certain exceptions, any indemnification under Article VII shall be made by the Company only if authorized in the specific case, upon a determination that indemnification of the person is proper in the circumstances because the person has met the applicable standard of conduct set forth in section 1 of Article VII by (a) a majority vote of a quorum consisting of directors who are not parties to such proceeding; (b) approval of the shareholders, with the shares owned by the person to be indemnified not being entitled to vote thereon; or (c) the court in which such proceeding is or was pending upon application made by the Company or the indemnified person or the attorney or other persons rendering services in connection with the defense, whether or not such application by the attorney or indemnified person is opposed by the Company. Article VII, section 7, provides that for purposes of Article VII, those persons subject to indemnification include any person who is or was a director, officer, or employee of the Company, or is or was serving at the request of the Company as a director, officer, or employee of another foreign or domestic corporation which was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the C-31 Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 30. Principal Underwriters (a) Other Activity. Registrant's principal underwriter, American General Equity Services Corporation, also acts as principal underwriter for American General Life Insurance Company Separate Account A, American General Life Insurance Company Separate Account D, American General Life Insurance Company Separate Account VA-1 and American General Life Insurance Company Separate Account VA-2, which all offer interests in variable annuities. American General Equity Services Corporation also acts as principal underwriter for American General Life Insurance Company Separate Account VUL and American General Life Insurance Company Separate Account VUL-2, which both offer interests in flexible premium variable life insurance policies. American General Equity Services Corporation also acts as principal underwriter for certain other separate accounts of American General Life Insurance Company affiliates. (b) Management. Name and Principal Positions and Offices with Underwriter Business Address American General Equity Services Corporation - ------------------ -------------------------------------------- Rodney O. Martin, Jr. Director and Chairman of the Board of 2929 Allen Parkway Directors Houston, TX 77019 J. Andrew Kalbaugh President and Chief Executive Officer 2929 Allen Parkway Houston, TX 77019 Mark R. McGuire Director and Senior Vice President 2727 Allen Parkway Houston, TX 77019 Ernest T. Patrikis Director 70 Pine Street New York, NY 10270 Gary D. Reddick Director 2929 Allen Parkway Houston, TX 77019 Robert F. Herbert, Jr. Vice President 2727-A Allen Parkway Houston, TX 77019 C-32 Name and Principal Positions and Offices with Underwriter Business Address American General Equity Services Corporation - ------------------ -------------------------------------------- Kathy L. Keith Vice President #1 Franklin Square Springfield, IL 62713 Lucille S. Martinez Vice President, Treasurer and Controller 2727 Allen Parkway Houston, TX 77019 Deborah Langel Chief Compliance Officer 2727 Allen Parkway Houston, TX 77019 Cindy Phillips Chief Compliance Officer 2727 Allen Parkway Houston, TX 77019 Elizabeth M. Tuck Secretary 70 Pine Street New York, NY 10270 Edward F. Andrzejewski Tax Officer 70 Pine Street New York, NY 10270 Steven A. Glover Assistant Secretary 2929 Allen Parkway Houston, TX 77019 Lauren W. Jones Assistant Secretary 2929 Allen Parkway Houston, TX 77019 John D. Fleming Assistant Treasurer 2929 Allen Parkway Houston, TX 77019 Barbara J. Moore Assistant Tax Officer 2919 Allen Parkway Houston, TX 77019 T. Clay Spires Assistant Tax Officer 2727-A Allen Parkway Houston, TX 77019 C-33 (c) Compensation From the Registrant.
Name of Principal Net Underwriting Compensation on Events Brokerage Other Compensation Underwriter Discounts and Occasioning the Commissions Commissions Deduction of a Deferred Sales Load American General Equity 0 0 0 0 Services Corporation
Item 31. Location of Accounts and Records All records referenced under Section 31(a) of the 1940 Act, and Rules 31a-1 through 31a-3 thereunder, are maintained and in the custody of American General Life Insurance Company at its principal executive office located at 2727-A Allen Parkway, Houston, Texas 77019-2191 or at American General Life Insurance Company's Administrative Office located at #1 Franklin Square, Springfield, Illinois 62713. Item 32. Management Services Not applicable. Item 33. Fee Representation American General Life Insurance Company hereby represents that the fees and charges deducted under the Policy, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and risks assumed by American General Life Insurance Company. C-34 POWERS OF ATTORNEY Each person whose signature appears below hereby appoints Robert F. Herbert, Jr., Gary D. Reddick and Kyle L. Jennings and each of them, any one of whom may act without the joinder of the others, as his/her attorney-in-fact to sign on his/her behalf and in the capacity stated below and to file all amendments to this Registration Statement, which amendment or amendments may make such changes and additions to this Registration Statement as such attorney-in-fact may deem necessary or appropriate. SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, American General Life Insurance Company Separate Account VL-R, certifies that it meets all of the requirements for effectiveness of this amended Registration Statement under Rule 485(b) under the Securities Act of 1933 and has duly caused this amended Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Houston, and State of Texas on the 30th day of April, 2004. AMERICAN GENERAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT VL-R (Registrant) BY: AMERICAN GENERAL LIFE INSURANCE COMPANY (On behalf of the Registrant and itself) BY: /s/ ROBERT F. HERBERT , JR. ------------------------------------ Robert F. Herbert, Jr. Senior Vice President, Treasurer and Controller [SEAL] ATTEST: /s/ LAUREN W. JONES -------------------- Lauren W. Jones Assistant Secretary Pursuant to the requirements of the Securities Act of 1933, this amended Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date - --------- ------ ---- /s/ RODNEY O. MARTIN, JR. Director, Chairman, April 30, 2004 - -------------------------- President and Chief Rodney O. Martin, Jr. Executive Officer /s/ CHRISTOPHER J. SWIFT Director and Chief April 30, 2004 - -------------------------- Financial Officer Christopher J. Swift /s/ M. BERNARD AIDINOFF Director April 30, 2004 - -------------------------- M. Bernard Aidinoff /s/ DAVID J. DIETZ Director April 30, 2004 - -------------------------- David J. Dietz /s/ DAVID L. HERZOG Director April 30, 2004 - -------------------------- David L. Herzog /s/ RICHARD A. HOLLAR Director April 30, 2004 - -------------------------- Richard A. Hollar /s/ ROYCE G. IMHOFF II Director April 30, 2004 - -------------------------- Royce G. Imhoff II /s/ DONALD P. KANAK, JR. Director April 30, 2004 - -------------------------- Donald P. Kanak, Jr. Signature Title Date - --------- ------ ---- /s/ RICHARD J. MILLER Director April 30, 2004 - ----------------------- Richard J. Miller Director April __, 2004 - ----------------------- Nicholas A. O'Kulich /s/ ERNEST T. PATRIKIS Director April 30, 2004 - ----------------------- Ernest T. Patrikis /s/ GARY D. REDDICK Director April 30, 2004 - ----------------------- Gary D. Reddick /s/ MARTIN J. SULLIVAN Director April 30, 2004 - ----------------------- Martin J. Sullivan EXHIBIT INDEX ------------- Item 26. Exhibits (i)(2)(a) Form of Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company. (i)(2)(b) Form of Addendum No. 1 to Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company, dated May 21, 1975. (i)(2)(c) Form of Addendum No. 2 to Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company, dated September 23, 1975. (i)(2)(d) Form of Addendum No. 24 to Service and Expense Agreement dated February 1, 1974, between American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company, dated December 30, 1998. (i)(2)(e) Form of Addendum No. 28 to Service and Expense Agreement dated February 1, 1974, among American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company and American General Life Companies, effective January 1, 2002. (i)(2)(f) Form of Addendum No. 30 to Service and Expense Agreement dated February 1, 1974, among American International Group, Inc. and various affiliate subsidiaries, including American General Life Insurance Company and American General Life Companies, LLC, effective January 1, 2002. (n)(1) Consent of Independent Accountants, PricewaterhouseCoopers LLP. E-1 EX-99.I.2.A 3 dex99i2a.txt SERVICE & EXPENSE AGREEMENT EXHIBIT (i)(2)(a) SERVICE AND EXPENSE AGREEMENT between AMERICAN HOME ASSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY BIRMINGHAM FILE INSURANCE COMPANY OF PENNSYLVANIA COMMERCE AND INDUSTRY INSURANCE COMPANY NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA TRANSATLANTIC REINSURANCE COMPANY and AMERICAN INTERNATIONAL GROUP, INC. This agreement made this first day of February 1974 between AMERICAN HOME ASSURANCE COMPANY, AMERICAN INTERNATIONAL INSURANCE COMPANY, BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA, COMMERCE AND INDUSTRY INSURANCE COMPANY, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, TRANSATLANTIC REINSURANCE COMPANY (hereinafter collectively called the "Companies") and AMERICAN INTERNATIONAL GROUP, INC. (hereinafter called "AIG"). W I T N E S S E T H: WHEREAS, the Companies are all subsidiaries of AIG and share among themselves and with certain other subsidiaries and affiliates of AIG certain expenses, equipment, office space, service and personnel, and it is desired that AIG of one or more of its subsidiaries, including one or more of the Companies, furnish certain of such equipment, office space, services and personnel to the Companies and certain of AIG's other subsidiaries and affiliates, and WHEREAS, the Companies are subject to the provisions of Section 69-e of the New York Insurance Law. NOW, THEREFORE, it is agreed as follows: 1. AIG shall furnish or cause to be furnished, at cost, services and facilities to the Companies denominated and classified as follows: (a) Electronic data processing, advertising, marketing and public relations, accounting, actuarial, tax and internal audit services, Law Department, Investment Department, Claims Department, underwriting and production services, systems and planning, corporate insurance including placement, reporting of claims and administration of coverages for all desired forms of property and casualty and architectural and decorating services, the cost of which shall be 1 allocated on the basis of time studies, except for machine bookkeeping in connection with the services provided hereunder, which shall be allocated on the basis of the number of entries made; (b) Pension Plan portfolio management services costs shall be allocated on the basis of the total number of employees per company which are enrolled in the pension programs; (c) Office services (including form design, office layout and construction of same, supervision of moving, planning telephone installation in connection with moves, typing pool, reproduction and maintaining and purging archives) are allocated based upon a weighted average of its two major functions: purchase orders (computed by company) and form requests (computed by company); (d) A New York City situated employee cafeteria, coffee vending service and an executive dining area, the cost of which shall be allocated in proportion to the number of employees entitled to utilize such services; (e) Payroll and Training and Education Departments and pension administration services, the cost of which shall be allocated in proportion to the number of employees (or members) serviced; (f) Office space may be owned by AIG or its subsidiaries, or such subsidiaries may lease from others, including cleaning, elevator service, repair and engineering and warehouse and central files facilities, the cost of which shall be allocated in proportion to the actual space used; (g) A Personnel Department, the recruiting costs of which shall be allocated in proportion to the referrals of prospective employees and the administrative costs of which shall be allocated in proportion to the number of employees on the payroll; (h) Telephone and telephone switchboard services, the overhead costs of which (including equipment, salaries, rent, heat, light, etc.) shall be allocated in proportion to the number of telephone lines assigned; (i) A Licensing Department, the cost of which shall be allocated, as respects agency licensing, in proportion to the number of agents licensed, and as respects company licensing, in proportion to the number of jurisdictions entered; (j) Executive automobiles, the purchase, rental, maintenance and/or operational cost of which shall be allocated to the entity on whose behalf incurred; (k) A Traffic Department, the cost of which shall be allocated in proportion to the number of requests for service processed; (1) Medical and Dental Departments, the cost of which shall be allocated on the basis of the number of employees entitled to service for those employees based in New York City and on the basis of the number of visits for employees who are not based in New York City; (m) The maintenance and operation of a corporate airplane, the cost of which (including 2 the salaries and training costs of flying personnel) shall be allocated in proportion to the number of air miles flown for each company; (n) A company magazine, the publishing cost of which shall be allocated in proportion to the number of copies furnished and the mailing and shipping costs of which shall be allocated to the entity on whose behalf they are incurred; (o) printing and reproduction services, the cost of which shall be allocated on the basis of the number of jobs performed and the number of copies made; (p) A Purchasing Department, the cost of which shall be allocated in proportion to the number of purchase orders processed and filled; (q) A Supply Department, the cost of which shall be allocated 50% in proportion to the number of requisitions and shipping orders filled, and 50% in proportion to the amount of storage space used; (r) A Mail and Communications Department, the cost of which shall be allocated as follows: (i) Cables and teletypes, in proportion to the numbers of such communications handled. (ii) Company messengers, in proportion to the number of errands performed. (iii) Mail handling, including inter-office mail, in proportion to the number of mail stops serviced. (iv) Postage, in proportion to the money volume of mailing per company based on yearly-established factors. 2. Cost shall include salaries, space rental and other overhead expenses, electricity, heat, water, building maintenance services, furniture and other office equipment, supplies and special equipment such as reference libraries, electronic data processing equipment and the like. 3. The allocations of expenses for the above services and facilities may be made by the entity or department furnishing same, or may be made by AIG's Comptroller's Department in accordance with the methods of allocation set forth above. 4. Notwithstanding anything contained above to the contrary, the basis upon which charges are computed by AIG's Comptroller's Department or by the entity furnishing the service or facilities shall be billed to the Companies in accordance with Regulation 30 of the New York Insurance Department and shall not exceed cost to AIG. AIG will cause the departments responsible for supplying the services and performing the functions herein specified to make an analysis at least once during each calendar year of the expenses incurred by the department and of the percentage thereof allocable to the Companies. 3 5. There shall be quarterly billings by AIG to the Companies for all the services and functions hereinabove specified. The amount of such billings may be based upon budgeted costs or some other reasonable estimates, but if based upon other than actual costs, such billings shall be adjusted annually to reflect actual costs. The amount so billed shall be payable upon receipt of billing by the Companies. 6. Any party may cancel this agreement by giving ninety days written notice to all the others, provided that this agreement shall automatically terminate as to any of the Companies which ceases to be a subsidiary or affiliate of AIG. 7. Notwithstanding anything to the contrary in the preceding paragraphs, costs, other than the costs of the Investment Department, charged to any party in the inter-company pooling agreement between American Home Assurance Company, et al, dated as of January 1, 1971, as amended, shall be allocated, as between the parties thereof, in accordance with the terms of such agreement. Likewise, costs, other than the costs of the Investment Department, charged to any party to the reinsurance agreements between New Hampshire Insurance Company, Granite State Insurance Company and American Fidelity Company, effective December 31,1957 and between New Hampshire Insurance Company, Illinois National Insurance Co. and Inland National Insurance Company, effective January 1, 1966, shall be allocated, as between the parties thereof, in accordance with the terms of such agreements. 8. Any party hereto in receipt of facilities, services, space or equipment hereunder shall have the right at all times during business hours, and at its own expense, to inspect the records of the entity providing such facilities, services, space or equipment insofar as such records relate to the computation of charges hereunder. 9. Any party hereto shall have unconditional right of ownership of any records prepared on its behalf under this agreement. 10. All facilities, services, space or equipment supplied hereunder shall be of good quality and suitable for the purpose for which they are intended. IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed in New York, New York on the date first written above. AMERICAN HOME ASSURANCE COMPANY by: /s/ -------------------------------- Vice President AMERICAN INTERNATIONAL INSURANCE COMPANY by: /s/ -------------------------------- Vice President 4 BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA by: /s/ -------------------------------- Vice President COMMERCE AND INDUSTRY INSURANCE COMPANY by: /s/ -------------------------------- Vice President NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. by: /s/ -------------------------------- Vice President THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA by: /s/ -------------------------------- Vice President TRANSATLANTIC REINSURANCE COMPANY by: /s/ -------------------------------- Vice President AMERICAN INTERNATIONAL GROUP, INC. by: /s/ -------------------------------- Vice President & Comptroller 5 EX-99.I.2.B 4 dex99i2b.txt SERVICE & EXPENSE AGREEMENT ADDENDUM NO. 1 EXHIBIT (i)(2)(b) ADDENDUM NO. 1 TO SERVICE AND EXPENSE AGREEMENT between AMERICAN HOME ASSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA COMMERCE AND INDUSTRY INSURANCE COMPANY NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA TRANSATLANTIC REINSURANCE COMPANY and AMERICAN INTERNATIONAL GROUP, INC. The Service and Expense Agreement made February 1, 1974 between American Home Assurance Company, American International Insurance Company, Birminghan Fire Insurance Company of Pennsylvania, Commerce and Industry Insurance Company, National Union Fire Insurance Company of Pittsburgh, Pa., The Insurance Company of the State of Pennsylvania, Transatlantic Reinsurance Company and American International Group, Inc. is hereby amended in the following respects: 1. Paragraph 1(a) is hereby amended to read in its entirety as follows: "(a) Electronic data processing, advertising, marketing and public relations, Treasurer's Department, accounting, actuarial, tax and audit services, Law Department, Investment Department, claims, underwriting and production services, engineering, methods and procedures services, systems and planning, corporate insurance including placement, reporting of claims and administration of coverages for all desired forms of property and casualty and architectural and decorating services, the cost of which shall be allocated on the basis of time studies;". 2. Paragraph 1(g) is hereby amended to read in its entirety as follows: "(g) A Personnel Department, the recruiting costs of which shall be allocated by a weighted average based upon the number of employees hired and the amounts expended in searching, and the administrative costs of which shall be allocated in. proportion to the number of employees on the payroll;". 3. Paragraph 5 is hereby amended to read in its entirety as follows: "5. There shall be quarterly billings by AIG to the Companies for all the services and functions hereinabove specified. The Companies shall pay monthly to AIG an installment advance on the current quarter's billing equal to approximately one-third of the quarter's total 1 billing determined on the basis of previous billings. The amount of the quarterly billing, less installment payments shall be payable upon receipt of billing by the Companies." IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed in New York, New York by their duly authorized representatives this 21/st/ day of May, 1975. AMERICAN HOME ASSURANCE COMPANY by: /s/ ------------------------------- Vice President AMERICAN INTERNATIONAL INSURANCE COMPANY by: /s/ ------------------------------- Vice President BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA by: /s/ ------------------------------- Vice President COMMERCE AND INDUSTRY INSURANCE COMPANY by: /s/ ------------------------------- Vice President NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. by: /s/ ------------------------------- Vice President THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA by: /s/ ------------------------------- Vice President TRANSATLANTIC REINSURANCE COMPANY by: /s/ ------------------------------- Vice President AMERICAN INTERNATIONAL GROUP, INC. by: /s/ ------------------------------- Vice President & Comptroller 2 EX-99.I.2.C 5 dex99i2c.txt SERVICE & EXPENSE AGREEMENT ADDENDUM NO. 2 EXHIBIT (i)(2)(c) ADDENDUM NO. 2 TO SERVICE AND EXPENSE AGREEMENT between AMERICAN HOME ASSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA COMMERCE AND INDUSTRY INSURANCE COMPANY NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA TRANSATLANTIC REINSURANCE COMPANY and AMERICAN INTERNATIONAL GROUP, INC. The Service and Expense Agreement made February 1, 1974 between American Home Assurance Company, American International Insurance Company, Birmingham Fire Insurance Camp any of Pennsylvania, Commerce and Industry Insurance Company, National Union Fire Insurance Company of Pittsburgh, Pa., The Insurance Company of the State of Pennsylvania, Transatlantic Reinsurance Company and American International Group, Inc. (the "Agreement") is hereby amended in the following respects: 1. The title of the Agreement is hereby amended to read in its entirety as follows: SERVICE AND EXPENSE AGREEMENT between AMERICAN HOME ASSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA COMMERCE AND INDUSTRY INSURANCE COMPANY DELAWARE AMERICAN LIFE INSURANCE COMPANY LIFE INSURANCE COMPANY OF NEW HAMPSHIRE NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA TRANSATLANTIC REINSURANCE COMPANY and AMERICAN INTERNATIONAL GROUP, INC. 2. The preamble of the Agreement is hereby amended by adding to the parties set forth therein which are collectively called the "Companies, the following: "AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW 1 YORK, DELAWARE AMERICAN LIFE INSURANCE COMPANY and LIFE INSURANCE COMPANY OF NEW HAMPSHIRE." 3. Paragraph 4 of the Agreement is hereby amended to read in its entirety as follows: "4. Notwithstanding anything contained above to the contrary, the basis upon which charges are computed by AIG's Comptroller's Department or by the entity furnishing the service or facilities shall be billed to the Companies in accordance with Regulation 30, or Regulation 33, as applicable, of the New York Insurance Department and shall not exceed cost to AIG. AIG will cause the departments responsible for supplying the services and performing the functions herein specified to make an analysis at least once during each calendar year of the expenses incurred by the department and of the percentage thereof allocable to the Companies." 4. Paragraph 6 of the Agreement is hereby amended to read in its entirety as follows: "6. Except as provided below with respect to electronic data processing, any party may cancel this agreement by giving ninety days written notice to all the others, provided that this agreement shall automatically terminate as to any of the Companies, except American International Life Assurance Company of New York, which ceases to be a subsidiary or affiliate of AIG. Six months' notice shall be required to cancel this agreement with respect to electronic data process services provided to American International Life Assurance Company of New York." 5. A new paragraph shall be added to the Agreement as follows: "11. American International Life Assurance Company of New York shall develop standards and guidelines for all services to be furnished to it under this Agreement which require the exercise of judgement and the party furnishing such standards and guidelines with respect to such services." IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed in New York, New York by their duly authorized representatives this 23/rd/ day of September, 1975. AMERICAN HOME ASSURANCE COMPANY by: /s/ ------------------------------- Vice President AMERICAN INTERNATIONAL INSURANCE COMPANY by: /s/ ------------------------------- Vice President 2 AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK by: /s/ ------------------------------- Vice President BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA by: /s/ ------------------------------- Vice President COMMERCE AND INDUSTRY INSURANCE COMPANY by: /s/ ------------------------------- Vice President DELAWARE AMERICAN LIFE INSURANCE COMPANY by: /s/ ------------------------------- Vice President LIFE INSURANCE COMPANY OF NEW HAMPSHIRE by: /s/ ------------------------------- Vice President NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. by: /s/ ------------------------------- Vice President THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA by: /s/ ------------------------------- Vice President TRANSATLANTIC REINSURANCE COMPANY by: /s/ ------------------------------- Vice President AMERICAN INTERNATIONAL GROUP, INC. by: /s/ ------------------------------- Vice President & Comptroller 3 EX-99.I.2.D 6 dex99i2d.txt SERVICE & EXPENSE AGREEMENT ADDENDUM NO. 24 EXHIBIT (i)(2)(d) ADDENDUM NO. 24 TO SERVICE AND EXPENSE AGREEMENT between AMERICAN HOME ASSURANCE COMPANY AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK AIG RISK MANAGEMENT, INC. BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA COMMERCE AND INDUSTRY INSURANCE COMPANY DELAWARE AMERICAN LIFE INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC. AIG LIFE INSURANCE COMPANY NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. THE INSURANCE COMPANY OF THE STATE OF PENNYLVANIA PACIFIC UNION ASSURANCE COMPANY AIU NORTH AMERICA, INC. AIU INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY AIG HAWAII INSURANCE COMPANY INC. AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY AMERICAN INTERNATIONAL SURPLUS LINES AGENCY, INC. NORTH AMERICAN MANAGERS, INC. AMERICAN LIFE INSURANCE COMPANY ABEILLE GENERAL INSURANCE COMPANY, INC. AIG CLAIM SERVICES, INC. AIG GLOBAL TRADE & POLITICAL RISK INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF NEW JERSEY AIG EQUITY SALES CORP. AMERICAN PACIFIC INSURANCE COMPANY, INC. and AMERICAN INTERNATIONAL GROUP, INC. The Service and Expense Agreement made February 1, 1974 between American Home Assurance Company, American International Insurance Company, American International Life Assurance Company of New York, Birmingham Fire Insurance Company of Pennsylvania, Commerce and Industry Insurance Company, Delaware American Life Insurance Company, Life Insurance Company of New Hampshire, National Union Fire Insurance Company of Pittsburgh, Pa., The Insurance Company of the State of Pennsylvania, Transatlantic Reinsurance Company and American International Group, Inc. (the "Agreement") is hereby amended effective December 1998, in the following respects: 1 1. The title of the Agreement is hereby amended to read in its entirety as follows: SERVICE AND EXPENSE AGREEMENT among AMERICAN HOME ASSURANCE COMPANY AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK AIG RISK MANAGEMENT, INC. BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA COMMERCE AND INDUSTRY INSURANCE COMPANY DELAWARE AMERICAN LIFE INSURANCE COMPANY AIG LIFE INSURANCE COMPANY NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA PACIFIC UNION ASSURANCE COMPANY AIU NORTH AMERICA, INC. AIU INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC. AIG HAWAII INSURANCE COMPANY INC. AMERICAN INTERNATIONAL INSURANCE COMPANY AMERICAN INTERNATIONAL SURPULUS LINES AGENCY, INC. NORTH AMERICAN MANGERS, INC. AMERICAN LIFE INSURANCE COMPANY AIG NATIONAL INSURANCE COMPANY, INC. (formerly known as Abeille General Insurance Company, Inc.) AIG CLAIM SERVICES, INC. AIG GLOBAL TRADE & POLITICAL RISK INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF NEW JERSEY AIG EQUITY SALES CORP. AMERICAN PACIFIC INSURANCE COMPANY, INC. A. I. CREDIT CORP. LEXINGTON INSURANCE COMPANY LANDMARK INSURANCE COMPANY and AMERICAN INTERNATIONAL GROUP, INC. 2. The title of the Agreement is amended by changing the word "between" to "among" as indicated in item 1. above. 3. The Agreement is amended by adding to the parties set forth that are collectively called the "Companies", "A. I. Credit Corp.", "AIG National Insurance Company, Inc. (formerly known as Abeille General Insurance Company, Inc.)", "Landmark Insurance Company". 4. The first introductory paragraph is revised to read: "WHEREAS, the Companies are all subsidiaries of AIG and share among 2 themselves and with certain other subsidiaries and affiliates of AIG certain expenses, equipment, office space, services and personnel, and it is desired that AIG shall furnish or shall cause one or more of its subsidiaries, including one or more of the Companies, to furnish such equipment, office space, services and personnel to the Companies and certain of AIG's other subsidiaries and affiliates, and" IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed in New York, by their duly authorized representatives this 30th day of December, 1998. AMERICAN HOME ASSURANCE COMPANY by: /s/ ----------------------------------- Senior Vice President AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK by: /s/ ----------------------------------- Vice President AIG RISK MANAGEMENT, INC. by: /s/ ----------------------------------- Senior Vice President BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA by: /s/ ----------------------------------- Senior Vice President COMMERCE AND INDUSTRY INSURANCE COMPANY by: /s/ ----------------------------------- Senior Vice President DELAWARE AMERICAN LIFE INSURANCE COMPANY by: /s/ ----------------------------------- Vice President AIG LIFE INSURANCE COMPANY by: /s/ ----------------------------------- Vice President NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA by: /s/ ----------------------------------- Senior Vice President THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA by: /s/ ----------------------------------- Senior Vice President 3 PACIFIC UNION ASSURANCE COMPANY by: /s/ ----------------------------------- Vice President AIU NORTH AMERICA, INC. by: /s/ ----------------------------------- Secretary AIU INSURANCE COMPANY by: /s/ ----------------------------------- Senior Vice President AMERICAN INTERNATIONAL INSURANCE COMPANY by: /s/ ----------------------------------- Secretary AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC. by: /s/ ----------------------------------- Secretary AIG HAWAII INSURANCE COMPANY INC. by: /s/ ----------------------------------- Secretary AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY by: /s/ ----------------------------------- Secretary AMERICAN INTERNATIONAL SURPLUS LINES AGENCY, INC. by: /s/ ----------------------------------- Secretary NORTH AMERICAN MANAGERS, INC. by: /s/ ----------------------------------- Secretary AMERICAN LIFE INSURANCE COMPANY by: /s/ ----------------------------------- Secretary AIG NATIONAL INSURANCE COMPANY, INC. by: /s/ ----------------------------------- Secretary 4 AIG CLAIM SERVICES, INC. by: /s/ ----------------------------------- Secretary AIG GLOBAL TRADE & POLITICAL RISK INSURANCE COMPANY by: /s/ ----------------------------------- Secretary AMERICAN INTERNATIONAL INSURANCE COMPANY OF NEW JERSEY by: /s/ ----------------------------------- Secretary AIG EQUITY SALES CORP. by: /s/ ----------------------------------- Secretary AMERICAN PACIFIC INSURANCE COMPANY, INC. by: /s/ ----------------------------------- President A.I. CREDIT CORP. by: /s/ ----------------------------------- President LEXINGTON INSURANCE COMPANY by: /s/ ----------------------------------- Senior Vice President LANDMARK INSURANCE COMPANY by: /s/ ----------------------------------- Secretary AMERICAN INTERNATIONAL GROUP, INC. by: /s/ ----------------------------------- Secretary 5 EX-99.I.2.E 7 dex99i2e.txt SERVICE & EXPENSE AGREEMENT ADDENDUM NO. 28 EXHIBIT (i)(2)(e) ADDENDUM NO. 28 TO SERVICE AND EXPENSE AGREEMENT among AMERICAN HOME ASSURANCE COMPANY AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK AIG RISK MANAGEMENT, INC. BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA COMMERCE AND INDUSTRY INSURANCE COMPANY DELAWARE AMERICAN LIFE INSURANCE COMPANY AIG LIFE INSURANCE COMPANY NATIONAL UNION FIRE INSURANCE COMPANY OF PITI'SBURGH, PA. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA PACIFIC UNION ASSURANCE COMPANY AIU NORTH AMERICA, INC. AIU INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC. AIG HAWAII INSURANCE COMPANY INC. AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY AMERICAN INTERNATIONAL SURPLUS LINES AGENCY, INC. NORTH AMERICAN MANAGERS, INC. AMERICAN LIFE INSURANCE COMPANY AIG NATIONAL INSURANCE COMPANY, INC. AIG CLAIM SERVICES, INC. AIG GLOBAL TRADE & POLITICAL RISK INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF NEW JERSEY AIG EQUITY SALES CORP. AMERICAN PACIFIC INSURANCE COMPANY, INC. A.I. CREDIT CORP. LEXINGTON INSURANCE COMPANY LANDMARK INSURANCE COMPANY NEW HAMPSHIRE INDEMNITY COMPANY, INC. AIG ANNUITY INSURANCE COMPANY THE VARIABLE ANNUITY LIFE INSURANCE COMPANY FIRST SUNAMERICA LIFE INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF DELAWARE MINNESOTA INSURANCE COMPANY STARR EXCESS LIABILITY INSURANCE COMPANY, LTD. and AMERICAN INTERNATIONAL GROUP, INC. 1 The Service and Expense Agreement originally incepted February 1, 1974 and to which the entities named above are parties (the "Agreement") is hereby amended effective January 1, 2002, in the following respects: 1. The title of the Agreement is hereby amended to read in its entirety as follows: SERVICE AND EXPENSE AGREEMENT among AMERICAN HOME ASSURANCE COMPANY AMERIAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK AIG RISK MANAGEMENT, INC. BIRMINGHAM FIRE ISNURANCE COMPANY OF PENNSYLVANIA COMMERCE AND INDUSTRY INSURANCE COMPANY DELAWARE AMERICAN LIFE INSURANCE COMPANY AIG LIFE INSURANCE COMPANY NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA PACIFIC UNION ASSURANCE COMPANY AIU NORTH AMERICA, INC. AIU INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC. AIG HAWAII INSURANCE COMPANY INC. AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY AMERICAN INTERNATIONAL SURPLUS LINES AGENCY, INC. NORTH AMERICAN MANAGERS, INC. AMERICAN LIFE INSURANCE COMPANY AIG NATIONAL INSURANCE COMPANY, INC. AIG CLAIM SERVICES, INC. AIG GLOBAL TRADE & POLITICAL RISK INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF NEW JERSEY AIG EQUITY SALES CORP. AMERICAN PACIFIC INSURANCE COMPANY, INC. A. I. CREDIT CORP. LEXINGTON INSURANCE COMPANY LANDMARK INSURANCE COMPANY NEW HAMPSHIRE INDEMNITY COMPANY, INC. AIG ANNUITY INSURANCE COMPANY, FORMERLY AMERICAN GENERAL ANNUITY INSURANCE COMPANY THE VARIABLE ANNUITY LIFE INSURANCE COMPANY FIRST SUNAMERICA LIFE INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF DELAWARE MINNESOTA INSURANCE COMPANY STARR EXCESS LIABILITY INSURANCE COMPANY, LTD. ALL AMERICAN LIFE INSURANCE COMPANY AMERICAN GENERAL ASSURANCE COMPANY THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY AMERICAN GENERAL LIFE INSURANCE COMPANY AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY 2 AMERICAN GENERAL PROPERTY INSURANCE COMPANY THE FRANKLIN LIFE INSURANCE COMPANY MERIT LIFE INSURANCE CO. THE NATIONAL LIFE AND ACCIDENT INSURANCE COMPANY USLIFE CREDIT LIFE INSURANCE COMPANY OF ARIZONA YOSEMITE INSURANCE COMPANY SUNAMERICA FINANCIAL, A DIVISION OF SUNAMERICA LIFE INSURANCE COMPANY AIG SUNAMERICA LIFE ASSURANCE COMPANY dba ANCHOR NATIONAL LIFE INSURANCE COMPANY 2929 ALLEN PARKWAY VENTURE, L. P. AIG FIXED ANNUITY MARKETING GROUP, INC. AMERICAN ATHLETIC CLUB, INC. AMERICAN GENERAL ANNUITY SERVICE CORPORATION AMERICAN GENERAL ASSIGNMENT CORPORATION AMERICAN GENERAL ASSIGNMENT CORPORATION OF NEW YORK AMERICAN GENERAL BANCASSURANCE SERVICES, INC. AMERICAN GENERAL CORPORATION AMERICAN GENERAL DISTRIBUTORS, INC. AMERICAN GENERAL FINANCE CORPORATION AMERICAN GENERAL FINANCE GROUP, INC. AMERICAN GENERAL FINANCE, INC. AMERICAN GENERAL FINANCIAL SERVICES, INC. AMERICAN GENERAL GATEWAY SERVICES, LLC AMERICAN GENERAL INTERNATIONAL INVESTMENTS, INC. AMERICAN GENERAL LIFE COMPANIES AMERICAN GENERAL REALTY INVESTMENT CORPORATION KNICKERBOCKER CORPORATION PAVILIONS CORPORATION VALIC FINANCIAL ADVISORS, INC. VALIC RETIREMENT SERVICES COMPANY VALIC TRUST COMPANY AIG GLOBAL REAL ESTATE INVESTMENT CORP. AIG SUNAMERICA INC. AMERICAN GENRAL INDEMNITY COMPANY AMERICAN GENERAL INVESTMENT ADVISORY SERVICES, INC. AMERICAN GENERAL LIFE INSURANCE COMPANY OF PENNSYLVANIA AMERICAN GENERAL PROPERTY INSURANCE COMPANY OF FLORIDA NORTH CENTRAL CARRIBEAN LIFE, LTD. NORTH CENTRAL LIFE INSURANCE COMPANY SUNAMERICA ASSET MANAGEMENT CORP. SUNAMERICA INVESTMENTS, INC. SUNAMERICA LIFE INSURANCE COMPANY THE OLD LINE LIFE INSURNACE COMPANY OF AMERICA USMRP LTD. and AMERICAN INTERNATIONAL GROUP, INC. The Agreement is amended by adding to the parties set forth that are collectively called the "Companies", "All American Life Insurance Company", "American General Assurance Company", "The American Franklin Life Insurance Company", "American General Life 3 Insurance Company", "American General Life And Accident Insurance Company", "American General Property Insurance Company", "The Franklin Life Insurance Company", "Merit Life Insurance Co.", "The National Life And Accident Insurance Company", "USLife Credit Life Insurance Company Of Arizona", "Yosemite Insurance Company", "SunAmerica Financial, A Division Of SunAmerica Life Insurance Company", "AIG SunAmerica Life Assurance Company dba Anchor National Life Insurance Company", "2929 Allen Parkway Venture, L.P.", "AIG Fixed Annuity Marketing Group, Inc.", "American Athletic Club, Inc.", "American General Annuity Service Corporation", "American General Assignment Corporation", "American General Assignment Corporation Of New York", "American General Bancassurance Services, Inc.", "American General Corporation", "American General Distributors, Inc.", "American General Finance Corporation", "American General Finance Group, Inc.", "American General Finance, Inc.", "American General Financial Services, Inc.", "American General Gateway Services, LLC", "American General International Investments, Inc.", "American General Life Companies", "American General Realty Investment Corporation", "Knickerbocker Corporation", "Pavilions Corporation", "VALIC Financial Advisors, Inc.", "VALIC Retirement Services Company", "VALIC Trust Company", "AIG Global Real Estate Investment Corp.", "AIG SunAmerica Inc.", "American General Indemnity Company", "American General Investment Advisory Services, Inc.", "American General Life Insurance Company Of Pennsylvania", "American General Property Insurance Company Of Florida", "North Central Carribean Life, LTD.", "North Central Life Insurance Company", "SunAmerica Asset Management Corp.", "SunAmerica Investments, Inc.", "SunAmerica Life Insurance Company", "The Old Line Life Insurance Company Of America", "USMRP, LTD.". IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed in New York, by their duly authorized representatives this 1st day of January 2002. AMERICAN HOME ASSURANCE COMPANY By: /s/ ------------------------ AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK By: /s/ ------------------------ AIG RISK MANAGEMENT, INC By: /s/ ------------------------ BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA By: /s/ ------------------------ COMMERCE AND INDUSTRY INSURANCE COMPANY By: /s/ ------------------------ DELAWARE AMERICAN LIFE INSURANCE COMPANY By: /s/ ------------------------ 4 AIG LIFE INSURANCE COMPANY By: /s/ ------------------------ NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA By: /s/ ------------------------ THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA By: /s/ ------------------------ PACIFIC UNION ASSURANCE COMPANY By: /s/ ------------------------ AIU NORTH AMERICA, INC. By: /s/ ------------------------ AIU INSURANCE COMPANY By: /s/ ------------------------ AMERICAN ITNERNATIONAL INSURANCE COMPANY By: /s/ ------------------------ AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC. By: /s/ ------------------------ AIG HAWAII INSURANCE COMPANY INC. By: /s/ ------------------------ AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY By: /s/ ------------------------ AMERICAN INTERNATIONAL SURPLUS LINES AGENCY, INC. By: /s/ ------------------------ NORTH AMERICAN MANAGERS, INC. By: /s/ ------------------------ AMERICAN LIFE INSURANCE COMPANY By: /s/ ------------------------ 5 AIG NATIONAL INSURANCE COMPANY, INC. By: /s/ ------------------------ AIG CLAIM SEVICES, INC. By: /s/ ------------------------ AIG GLOBAL TRADE & POLITICAL RISK INSURANCE COMPANY By: /s/ ------------------------ AMERICAN INTERNATIONAL INSURANCE COMPANY OF NEW JERSEY By: /s/ ------------------------ AIG EQUITY SALES CORP. By: /s/ ------------------------ AMERICAN PACIFIC INSURANCE COMPANY, INC. By: /s/ ------------------------ A.I. CREDIT CORP. By: /s/ ------------------------ LEXINGTON INSURANCE COMPANY By: /s/ ------------------------ LANDMARK INSURANCE COMPANY By: /s/ ------------------------ NEW HAMPSHIRE INDEMNITY COMPANY, INC. By: /s/ ------------------------ AIG ANNUITY INSURANCE COMPANY, FORMERLY AMERICAN GERNERAL ANNUITY INSURANCE COMPANY By: /s/ ------------------------ THE VARIABLE ANNUITY LIFE INSURANCE COMPANY By: /s/ ------------------------ FIRST SUNAMERICA LIFE INSURANCE COMPANY By: /s/ ------------------------ 6 AMERICAN INTERNATIONAL INSURANCE COMPANY OF DELAWARE By: /s/ ------------------------ MINNESOTA INSURANCE COMPANY By: /s/ ------------------------ STARR EXCESS LIABILITY INSURANCE COMPANY, LTD. By: /s/ ------------------------ ALL AMERICAN LIFE INSURANCE COMPANY By: /s/ ------------------------ AMERICAN GENERAL ASSURANCE COMPANY By: /s/ ------------------------ THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY By: /s/ ------------------------ AMERICAN GENERAL LIFE INSURANCE COMPANY By: /s/ ------------------------ AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY By: /s/ ------------------------ AMERICAN GENERAL PROPERTY INSURANCE COMPANY By: /s/ ------------------------ THE FRANKLIN LIFE INSURANCE COMPANY By: /s/ ------------------------ MERIT LIFE INSURANCE CO. By: /s/ ------------------------ THE NATIONAL LIFE AND ACCIDENT INSURANCE COMPANY By: /s/ ------------------------ 7 USLIFE CREDITLIFE INSURANCE COMPANY OF ARIZONA By: /s/ ------------------------ YOSEMITE INSURANCE COMPANY By: /s/ ------------------------ SUNAMERICA LIFE INSURANCE COMPANY By: /s/ ------------------------ AIG SUNAMERICA LIFE INSURANCE COMPANY dba ANCHOR NATIONAL LIFE INSURANCE COMPANY By: /s/ ------------------------ 2929 ALLEN PARKWAY VENTURE, L.P. By: /s/ ------------------------ AIG FIXED ANNUITY MARKETING GROUP, INC. By: /s/ ------------------------ AMERICAN ATHELIC CLUB, INC. By: /s/ ------------------------ AMERICAN GENERAL ANNUITY SERVICE CORPORATION By: /s/ ------------------------ AMERICAN GENERAL ASSIGNMENT CORPORATION By: /s/ ------------------------ AMERICAN GENERAL ASSIGNMENT CORPORATION OF NEW YORK By: /s/ ------------------------ AMERICAN GENERAL BANCASSURANCE SERVICES, INC. By: /s/ ------------------------ AMERICAN GENERAL CORPORATION By: /s/ ------------------------ 8 AMERICAN GENERAL DISTRIBUTORS, INC. By: /s/ ------------------------ AMERICAN GENERAL FINANCE CORPORATION By: /s/ ------------------------ AMERICAN GENERAL FINANCE GROUP, INC. By: /s/ ------------------------ AMERICAN GENERAL FINANCE, INC. By: /s/ ------------------------ AMERICAN GENERAL FINANCIAL SERVICES, INC. By: /s/ ------------------------ AMERICAN GENERAL GATEWAY SERVICES, LLC By: /s/ ------------------------ AMERICAN GENERAL INTERNATIONAL INVESTMENTS, INC. By: /s/ ------------------------ AMERICAN GENERAL LIFE COMPANIES By: /s/ ------------------------ AMERICAN GENERAL REALTY INVESTMENT CORPORATION By: /s/ ------------------------ KNICKERBOCKER CORPORATION By: /s/ ------------------------ PAVILIONS CORPORATIO By: /s/ ------------------------ VALIC FINANCIAL ADVISORS, INC. By: /s/ ------------------------ VALIC RETIREMENT SERVICES COMPANY By: /s/ ------------------------ VALIC TRUST COMPANY By: /s/ ------------------------ 9 AIG SUNAMERICA INC. By: /s/ ------------------------ AMERICAN GENERAL INDEMNITY COMPANY By: /s/ ------------------------ AMERICAN GENERAL INVESTMENT ADVISORY SERVICES, INC. By: /s/ ------------------------ AMERICAN GENERAL LIFE INSURANCE COMPANY OF PENNSYLVANIA By: /s/ ------------------------ AMERICAN GENERAL PROPERTY INSURANCE COMPANY OF FLORIDA By: /s/ ------------------------ NORTH CENTRAL CARRIBEAN LIFE, LTD. By: /s/ ------------------------ NORTH CENTRAL LIFE INSURANCE COMPANY By: /s/ ------------------------ SUNAMERICA ASSET MANAGEMENT CORP. By: /s/ ------------------------ SUNAMERICA INVESTMENTS, INC. By: /s/ ------------------------ SUNAMERICA FINANCIAL, A DIVISION OF SUNAMERICA LIFE INSURANCE COMPANY By: /s/ ------------------------ THE OLD LINE LIFE INSURANCE COMPANY OF AMERICA By: /s/ ------------------------ USMRP. LTD. By: /s/ ------------------------ AIG GLOBAL REAL ESTATE INVESTMENT CORP. By: /s/ ------------------------ AMERICAN INTERNATIONAL GROUP, INC. By: /s/ ------------------------ 10 EX-99.I.2.F 8 dex99i2f.txt SERVICE & EXPENSE AGREEMENT ADDENDUM NO. 30 EXHIBIT (i)(2)(f) ADDENDUM NO. 30 TO SERVICE AND EXPENSE AGREEMENT among AMERICAN HOME ASSURANCE COMPANY AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK AIG RISK MANAGEMENT, INC. BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA COMMERCE AND INDUSTRY INSURANCE COMPANY DELAWARE AMERICAN LIFE INSURANCE COMPANY AIG LIFE INSURANCE COMPANY NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA PACIFIC UNION ASSURANCE COMPANY AIU NORTH AMERICA, INC. AIU INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC. AIG HAWAII INSURANCE COMPANY INC. AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY AMERICAN INTERNATIONAL SURPLUS LINES AGENCY, INC. NORTH AMERICAN MANAGERS, INC. AMERICAN LIFE INSURANCE COMPANY AIG NATIONAL INSURANCE COMPANY, INC. AIG CLAIM SERVICES, INC. AIG GLOBAL TRADE & POLITICAL RISK INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF NEW JERSEY AIG EQUITY SALES CORP. AMERICAN PACIFIC INSURANCE COMPANY, INC. A.I. CREDIT CORP. LEXINGTON INSURANCE COMPANY LANDMARK INSURANCE COMPANY NEW HAMPSHIRE INDEMNITY COMPANY, INC. AIG ANNUITY INSURANCE COMPANY, FORMERLY AMERICAN GENERAL ANNUITY INSURANCE COMPANY THE VARIABLE ANNUITY LIFE INSURANCE COMPANY FIRST SUNAMERICA LIFE INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF DELAWARE MINNESOTA INSURANCE COMPANY STARR EXCESS LIABILITY INSURANCE COMPANY, LTD. AMERICAN GENERAL ASSURANCE COMPANY AMERICAN GENERAL LIFE INSURANCE COMPANY 1 AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY AMERICAN GENERAL PROPERTY INSURANCE COMPANY MERIT LIFE INSURANCE CO. USLIFE CREDIT LIFE INSURANCE COMPANY OF ARIZONA YOSEMITE INSURANCE COMPANY SUNAMERICA FINANCIAL, A DIVISION OF SUNAMERICA LIFE INSURANCE COMPANY AIG SUNAMERICA LIFE ASSURANCE COMPANY 2929 ALLEN PARKWAY VENTURE, L.P. AIG FIXED ANNUITY MARKETING GROUP, INC. AMERICAN ATHLETIC CLUB, INC. AMERICAN GENERAL ANNUITY SERVICE CORPORATION AMERICAN GENERAL ASSIGNMENT CORPORATION AMERICAN GENERAL ASSIGNMENT CORPORATION OF NEW YORK AMERICAN GENERAL BANCASSURANCE SERVICES, INC. AMERICAN GENERAL CORPORATION AMERICAN GENERAL DISTRIBUTORS, INC. AMERICAN GENERAL FINANCE CORPORATION AMERICAN GENERAL FINANCE, INC. AMERICAN GENERAL FINANCIAL SERVICES, INC. AMERICAN GENERAL GATEWAY SERVICES, LLC AMERICAN GENERAL INTERNATIONAL INVESTMENTS, INC. AMERICAN GENERAL LIFE COMPANIES, LLC AMERICAN GENERAL REALTY INVESTMENT CORPORATION KNICKERBOCKER CORPORATION PAVILIONS CORPORATION VALIC FINANCIAL ADVISORS, INC. VALIC RETIREMENT SERVICES COMPANY VALIC TRUST COMPANY AIG GLOBAL REAL ESTATE INVESTMENT CORP. AIG SUNAMERICA INC. AMERICAN GENERAL INDEMNITY COMPANY AMERICAN GENERAL INVESTMENT ADVISORY SERVICES, INC. AMERICAN GENERAL PROPERTY INSURANCE COMPANY OF FLORIDA NORTH CENTRAL CARRIBEAN LIFE, LTD. NORTH CENTRAL LIFE INSURANCE COMPANY SUNAMERICA ASSET MANAGEMENT CORP. SUNAMERICA INVESTMENTS, INC. SUNAMERICA LIFE INSURANCE COMPANY AUDUBON INDEMNITY COMPANY AUDUBON INSURANCE COMPANY NATIONAL UNION FIRE INSURANCE COMPANY OF LOUISIANA and AMERICAN INTERNATIONAL GROUP, INC. The Service and Expense Agreement originally incepted February 1, 1974 and to which the entities named above are parties (the "Agreement") is hereby amended effective January 1, 2002, in the following respects: 2 1. The title of the Agreement is hereby amended to read in its entirety as follows: SERVICE AND EXPENSE AGREEMENT among AMERICAN HOME ASSURANCE COMPANY AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK AIG RISK MANAGEMENT, INC. BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA COMMERCE AND INDUSTRY INSURANCE COMPANY DELAWARE AMERICAN LIFE INSURANCE COMPANY AIG LIFE INSURANCE COMPANY NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA PACIFIC UNION ASSURANCE COMPANY AIU NORTH AMERICA, INC. AIU INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC. AIG HAWAII INSURANCE COMPANY INC. AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY AMERICAN INTERNATIONAL SURPLUS LINES AGENCY, INC. NORTH AMERICAN MANAGERS, INC. AMERICAN LIFE INSURANCE COMPANY AIG NATIONAL INSURANCE COMPANY, INC. AIG CLAIM SERVICES, INC. AIG GLOBAL TRADE & POLITICAL RISK INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF NEW JERSEY AIG EQUITY SALES CORP. AMERICAN PACIFIC INSURANCE COMPANY, INC. A. I. CREDIT CORP. LEXINGTON INSURANCE COMPANY LANDMARK INSURANCE COMPANY NEW HAMPSHIRE INDEMNITY COMPANY, INC. AIG ANNUITY INSURANCE COMPANY, FORMERLY AMERICAN GENERAL ANNUITY INSURANCE COMPANY THE VARIABLE ANNUITY LIFE INSURANCE COMPANY FIRST SUNAMERICA LIFE INSURANCE COMPANY AMERICAN INTERNATIONAL INSURANCE COMPANY OF DELAWARE MINNESOTA INSURANCE COMPANY STARR EXCESS LIABILITY INSURANCE COMPANY, LTD. AMERICAN GENERAL ASSURANCE COMPANY AMERICAN GENERAL LIFE INSURANCE COMPANY AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY AMERICAN GENERAL PROPERTY INSURANCE COMPANY MERIT LIFE INSURANCE CO. USLIFE CREDIT LIFE INSURANCE COMPANY OF ARIZONA YOSEMITE INSURANCE COMPANY SUNAMERICA FINANCIAL, A DIVISION OF SUNAMERICA LIFE INSURANCE COMPANY AIG SUNAMERICA LIFE ASSURANCE COMPANY 2929 ALLEN PARKWAY VENTURE, L.P. AIG FIXED ANNUITY MARKETING GROUP, INC. AMERICAN ATHLETIC CLUB, INC. 3 AMERICAN GENERAL ANNUITY SERVICE CORPORATION AMERICAN GENERAL ASSIGNMENT CORPORATION AMERICAN GENERAL ASSIGNMENT CORPORATION OF NEW YORK AMERICAN GENERAL BANCASSURANCE SERVICES, INC. AMERICAN GENERAL CORPORATION AMERICAN GENERAL DISTRIBUTORS, INC. AMERICAN GENERAL FINANCE CORPORATION AMERICAN GENERAL FINANCE, INC. AMERICAN GENERAL FINANCIAL SERVICES, INC. AMERICAN GENERAL GATEWAY SERVICES, LLC AMERICAN GENERAL INTERNATIONAL INVESTMENTS, INC. AMERICAN GENERAL LIFE COMPANIES, LLC AMERICAN GENERAL REALTY INVESTMENT CORPORATION KNICKERBOCKER CORPORATION PAVILIONS CORPORATION VALIC FINANCIAL ADVISORS, INC. VALIC RETIREMENT SERVICES COMPANY VALIC TRUST COMPANY AIG GLOBAL REAL ESTATE INVESTMENT CORP. AIG SUNAMERICA INC. AMERICAN GENERAL INDEMNITY COMPANY AMERICAN GENERAL INVESTMENT ADVISORY SERVICES, INC. AMERICAN GENERAL PROPERTY INSURANCE COMPANY OF FLORIDA NORTH CENTRAL CARRIBEAN LIFE, LTD. NORTH CENTRAL LIFE INSURANCE COMPANY SUNAMERICA ASSET MANAGEMENT CORP. SUNAMERICA INVESTMENTS, INC. SUNAMERICA LIFE INSURANCE COMPANY AUDUBON INDEMNITY COMPANY AUDUBON INSURANCE COMPANY NATIONAL UNION FIRE INSURANCE COMPANY OF LOUISIANA AGC LIFE INSURANCE COMPANY and AMERICAN INTERNATIONAL GROUP, INC. The Agreement is amended by adding to the parties set forth that are collectively called the "Companies", "AGC Life Insurance Company." IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed in New York, by their duly authorized representatives this 1st day of January, 2002. AMERICAN HOME ASSURANCE COMPANY By: /s/ ----------------------------------- AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK By: /s/ ----------------------------------- 4 AIG RISK MANAGEMENT, INC By: /s/ ----------------------------------- BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA By: /s/ ----------------------------------- COMMERCE AND INDUSTRY INSURANCE COMPANY By: /s/ ----------------------------------- DELAWARE AMERICAN LIFE INSURANCE COMPANY By: /s/ ----------------------------------- AIG LIFE INSURANCE COMPANY By: /s/ ----------------------------------- NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA By: /s/ ----------------------------------- THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA By: /s/ ----------------------------------- PACIFIC UNION ASSURANCE COMPANY By: /s/ ----------------------------------- AIU NORTH AMERICA, INC. By: /s/ ----------------------------------- AIU INSURANCE COMPANY By: /s/ ----------------------------------- AMERICAN INTERNATIONAL INSURANCE COMPANY By: /s/ ----------------------------------- AMERICAN INTERNATIONAL INSURANCE COMPANY OF CALIFORNIA, INC. By: /s/ ----------------------------------- AIG HAWAII INSURANCE COMPANY INC. By: /s/ ----------------------------------- 5 AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY By: /s/ ----------------------------------- AMERICAN INTERNATIONAL SURPLUS LINES AGENCY, INC. By: /s/ ----------------------------------- NORTH AMERICAN MANAGERS, INC. By: /s/ ----------------------------------- AMERICAN LIFE INSURANCE COMPANY By: /s/ ----------------------------------- AIG NATIONAL INSURANCE COMPANY, INC. By: /s/ ----------------------------------- AIG CLAIM SERVICES, INC. By: /s/ ----------------------------------- AIG GLOBAL TRADE & POLITICAL RISK INSURANCE COMPANY By: /s/ ----------------------------------- AMERICAN INTERNATIONAL INSURANCE COMPANY OF NEW JERSEY By: /s/ ----------------------------------- AIG EQUITY SALES CORP. By: /s/ ----------------------------------- AMERICAN PACIFIC INSURANCE COMPANY, INC. By: /s/ ----------------------------------- A.I. CREDIT CORP. By: /s/ ----------------------------------- LEXINGTON INSURANCE COMPANY By: /s/ ----------------------------------- LANDMARK INSURANCE COMPANY By: /s/ ----------------------------------- NEW HAMPSHIRE INDEMNITY COMPANY, INC. By: /s/ ----------------------------------- 6 AIG ANNUITY INSURANCE COMPANY, FORMERLY AMERICAN GENERAL ANNUITY INSURANCE COMPANY By: /s/ ----------------------------------- THE VARIABLE ANNUITY LIFE INSURANCE COMPANY By: /s/ ----------------------------------- FIRST SUNAMERICA LIFE INSURANCE COMPANY By: /s/ ----------------------------------- AMERICAN INTERNATIONAL INSURANCE COMPANY OF DELAWARE By: /s/ ----------------------------------- MINNESOTA INSURANCE COMPANY By: /s/ ----------------------------------- STARR EXCESS LIABILITY INSURANCE COMPANY, LTD. By: /s/ ----------------------------------- AMERICAN GENERAL ASSURANCE COMPANY By: /s/ ----------------------------------- AMERICAN GENERAL LIFE INSURANCE COMPANY By: /s/ ----------------------------------- AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY By: /s/ ----------------------------------- AMERICAN GENERAL PROPERTY INSURANCE COMPANY By: /s/ ----------------------------------- MERIT LIFE INSURANCE CO. By: /s/ ----------------------------------- USLIFE CREDIT LIFE INSURANCE COMPANY OF ARIZONA By: /s/ ----------------------------------- 7 YOSEMITE INSURANCE COMPANY By: /s/ ----------------------------------- SUNAMERICA LIFE INSURANCE COMPANY By: /s/ ----------------------------------- AIG SUNAMERICA LIFE ASSURANCE COMPANY By: /s/ ----------------------------------- 2929 ALLEN PARKWAY VENTURE, L.P. By: /s/ ----------------------------------- AIG FIXED ANNUITY MARKETING GROUP, INC. By: /s/ ----------------------------------- AMERICAN ATHLETIC CLUB, INC. By: /s/ ----------------------------------- AMERICAN GENERAL ANNUITY SERVICE CORPORATION By: /s/ ----------------------------------- AMERICAN GENERAL ASSIGNMENT CORPORATION By: /s/ ----------------------------------- AMERICAN GENERAL ASSIGNMENT CORPORATION OF NEW YORK By: /s/ ----------------------------------- AMERICAN GENERAL BANCASSURANCE SERVICES, INC. By: /s/ ----------------------------------- AMERICAN GENERAL CORPORATION By: /s/ ----------------------------------- AMERICAN GENERAL DISTRIBUTORS, INC. By: /s/ ----------------------------------- 8 AMERICAN GENERAL FINANCE CORPORATION By: /s/ ----------------------------------- AMERICAN GENERAL FINANCE, INC. By: /s/ ----------------------------------- AMERICAN GENERAL FINANCIAL SERVICES, INC. By: /s/ ----------------------------------- AMERICAN GENERAL GATEWAY SERVICES, L.L.C. By: /s/ ----------------------------------- AMERICAN GENERAL INTERNATIONAL INVESTMENTS, INC. By: /s/ ----------------------------------- AMERICAN GENERAL LIFE COMPANIES, LLC By: /s/ ----------------------------------- AMERICAN GENERAL REALTY INVESTMENT CORPORATION By: /s/ ----------------------------------- KNICKERBOCKER CORPORATION By: /s/ ----------------------------------- PAVILIONS CORPORATION By: /s/ ----------------------------------- VALIC FINANCIAL ADVISORS, INC. By: /s/ ----------------------------------- VALIC RETIREMENT SERVICES COMPANY By: /s/ ----------------------------------- VALIC TRUST COMPANY By: /s/ ----------------------------------- AIG SUNAMERICA INC. (n/k/a AIG Retirement Services, Inc.) By: /s/ ----------------------------------- AMERICAN GENERAL INDEMNITY COMPANY By: /s/ ----------------------------------- 9 AMERICAN GENERAL INVESTMENT ADVISORY SERVICES, INC. By: /s/ ----------------------------------- AMERICAN GENERAL PROPERTY INSURANCE COMPANY OF FLORIDA By: /s/ ----------------------------------- NORTH CENTRAL CARRIBEAN LIFE, LTD. By: /s/ ----------------------------------- NORTH CENTRAL LIFE INSURANCE COMPANY By: /s/ ----------------------------------- AIG SUNAMERICA ASSET MANAGEMENT CORP. By: /s/ ----------------------------------- SUNAMERICA INVESTMENTS, INC. By: /s/ ----------------------------------- AIG SUNAMERICA FINANCIAL, A DIVISION OF SUNAMERICA LIFE INSURANCE COMPANY By: /s/ ----------------------------------- AIG GLOBAL REAL ESTATE INVESTMENT CORP. By: /s/ ----------------------------------- AUDUBON INDEMNITY COMPANY By: /s/ ----------------------------------- AUDUBON INSURANCE COMPANY By: /s/ ----------------------------------- NATIONAL UNION FIRE INSURANCE COMPANY OF LOUISIANA By: /s/ ----------------------------------- AGC LIFE INSURANCE COMPANY By: /s/ ----------------------------------- AMERICAN INTERNATIONAL GROUP, INC. By: /s/ ----------------------------------- 10 EX-99.N.1 9 dex99n1.txt PRICEWATERHOUSECOOPERS LLP CONSENT EXHIBIT(n)(1) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in this Post-Effective Amendment No. 8 to the Registration Statement on Form N-6 (Registration Nos. 333-43264 and 811-08561) of our report dated April 6, 2004 relating to the financial statements of American General Life Insurance Company Separate Account VL-R and our report dated April 14, 2004 relating to the consolidated financial statements of American General Life Insurance Company, which appear in such Registration Statement. We also consent to the references to us under the heading "Financial Statements" in such Registration Statement. /s/ PRICEWATERHOUSECOOPERS LLP - ------------------------------- Houston, Texas May 3, 2004 -----END PRIVACY-ENHANCED MESSAGE-----