SECURITIES AND EXCHANGE
      COMMISSIONWASHINGTON, D.C. 20549FORM
      10-Q


(Mark One)/X/
    QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934OR/    /
    TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934For the quarterly
      period ended March 31, 2001 Commission File No. 33-47472ANCHOR NATIONAL LIFE INSURANCE
  COMPANY


Incorporated in Arizona
    86-0198983IRS
      EmployerIdentification No.1 SunAmerica
      Center, Los Angeles, California 90067-6022Registrant's telephone
      number, including area code: (310) 772-6000INDICATE BY
      CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE
      FILED BY SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
      DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
      REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
      SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS Yes 
X  No      THE
      NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK ON MAY 14,
      2001 WAS AS FOLLOWS:Common Stock (par value $1,000 per
      share)
    3,511 shares outstanding





ANCHOR NATIONAL LIFE
      INSURANCE COMPANY INDEX


PageNumber(s)Part I - Financial
      InformationConsolidated Balance Sheet
      (Unaudited) - March 31, 2001 and December 31, 2000
    3-4Consolidated Statement of Income
      and Comprehensive Income (Unaudited) - Three Months Ended March 31,
      2001 and 2000
    5Consolidated Statement of Cash
      Flows (Unaudited) - Three Months Ended March 31, 2001 and 2000
    6-7Notes to Consolidated Financial
      Statements (Unaudited)
    8-10Management's Discussion and
      Analysis of Financial Condition and Results of Operations
    11-26Quantitative and Qualitative
      Disclosures About Market Risk
    27Part II - Other
      Information
    28







ANCHOR NATIONAL LIFE INSURANCE
      COMPANY CONSOLIDATED BALANCE SHEET(Unaudited)March
      31,2001
    
    December
      31,2000(In
    thousands)ASSETSInvestments:Cash and short-term
      investments
    
    $
    236,770
    
    $
    169,701Bonds, notes and
    redeemablepreferred stocks available for
sale,at fair value (amortized cost:March 2001, $4,002,007;December 2000, $4,130,570)
    
    
    3,948,188
    
    
    4,007,902Mortgage loans
    
    
    693,888
    
    
    684,174Policy loans
    
    
    240,796
    
    
    244,436Separate account seed
    money
    
    
    81,955
    
    
    104,678Common stocks available for
      sale,at fair value (cost: March 31, 2001and December 2000, $1,001)
    
    
    847
    
    
    974Partnerships
    
    
    336,667
    
    
    8,216Real estate
    
    
    24,139
    
    
    24,139Other invested assets
    
    
    18,051
    
    
    18,514Total investments and
cash
    
    
    5,581,301
    
    
    5,262,734Variable annuity assets held in
      separateaccounts
    
    
    18,214,780
    
    
    20,393,820Accrued investment income
    
    
    55,823
    
    
    57,555Deferred acquisition
costs
    
    
    1,328,418
    
    
    1,286,456Income taxes currently receivable
      from Parent
    
    
    56,161
    
    
    60,992Due from affiliates
    
    
    92,659
    
    
    ---Other assets
    
    
    115,827
    
    
    127,921TOTAL ASSETS
    
    $
    25,444,969
    
    $
    27,189,478




See accompanying notes3




ANCHOR NATIONAL LIFE INSURANCE
      COMPANYCONSOLIDATED BALANCE SHEET
      (Continued)(Unaudited)March
      31,2001
    
    December
      31,2000(In thousands)LIABILITIES AND SHAREHOLDER'S
      EQUITYReserves, payables and accrued
      liabilities:Reserves for fixed annuity
      contracts
    
    $
    2,821,023
    
    $
    2,778,229Reserves for universal life
      insurancecontracts
    
    
    1,809,948
    
    
    1,832,667Reserves for guaranteed
      investmentcontracts
    
    
    497,388
    
    
    610,672Modified coinsurance deposit
      liability
    
    
    89,592
    
    
    97,647Due to affiliates
    
    
    ---
    
    
    5,744Other liabilities
    
    
    214,142
    
    
    200,933Total reserves, payables and
      accruedliabilities
    
    
    5,432,093
    
    
    5,525,892Variable annuity liabilities
      related toseparate accounts
    
    
    18,214,780
    
    
    20,393,820Subordinated notes payable to
      affiliates
    
    
    56,147
    
    
    55,119Deferred income taxes
    
    
    109,978
    
    
    85,978Shareholder's equity:Common Stock
    
    
    3,511
    
    
    3,511Additional paid-in
capital
    
    
    925,752
    
    
    493,010Retained earnings
    
    
    728,525
    
    
    697,730Accumulated other comprehensive
      loss
    
    
    (25,817
    )
    
    (65,582
    )Total shareholder's
equity
    
    
    1,631,971
    
    
    1,128,669TOTAL LIABILITIES AND SHAREHOLDER'S
      EQUITY
    
    $
    25,444,969
    
    $
    27,189,478




See accompanying notes4




ANCHOR NATIONAL LIFE INSURANCE
      COMPANYCONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE
      INCOMEFor the three months ended March 31, 2001 and
      2000(Unaudited)2001
    
    2000(In thousands)Investment income
    
    $
    87,781
    
    $
    105,776Interest expense on:Fixed annuity contracts
    
    
    (32,098
    )
    
    (37,720
    )Universal life insurance
      contracts
    
    
    (20,462
    )
    
    (23,756
    )Guaranteed investment
      contracts
    
    
    (9,719
    )
    
    (5,268
    )Subordinated notes payable
    to affiliates
    
    
    (1,117
    )
    
    (801
    )Total interest expense
    
    
    (63,396
    )
    
    (67,545
    )NET INVESTMENT INCOME
    
    
    24,385
    
    
    38,231NET REALIZED INVESTMENT
      LOSSES
    
    
    (24,864
    )
    
    (1,769
    )Fee income:Variable annuity fees
    
    
    93,566
    
    
    96,619Net retained commissions
    
    
    12,437
    
    
    13,158Asset management fees
    
    
    17,198
    
    
    17,068Universal life insurance fees,
      net
    
    
    5,229
    
    
    4,503Surrender charges
    
    
    5,899
    
    
    5,025Other fees
    
    
    3,827
    
    
    3,030TOTAL FEE INCOME
    
    
    138,156
    
    
    139,403GENERAL AND ADMINISTRATIVE
      EXPENSES
    
    
    (40,667
    )
    
    (39,751
    )AMORTIZATION OF DEFERRED
      ACQUISITION COSTS
    
    
    (42,264
    )
    
    (37,932
    )ANNUAL COMMISSIONS
    
    
    (13,933
    )
    
    (15,444
    )PRETAX INCOME
    
    
    40,813
    
    
    82,738Income tax expense
    
    
    (10,018
    )
    
    (29,294
    )NET INCOME
    
    
    30,795
    
    
    53,444OTHER COMPREHENSIVE INCOME (LOSS),
      NET OF TAXNet unrealized gains (losses) on
      debt andequity securities available for
saleidentified in the current period (net
      ofincome tax expense of $13,173 for
    2001and income tax benefit of $6,767 for
      2000)
    
    
    24,464
    
    
    (12,568
    )Less reclassification adjustment
      for netrealized losses included in net
    income(net of income tax benefit of $7,135for 2001 and $525 for 2000)
    
    
    13,251
    
    
    976Cumulative effect of change in
      accountingprinciple (Note 5)
    
    
    1,389
    
    
    ---Net change related to cash flow
      hedges(net of income tax expense of $356)
    
    
    661
    
    
    ---OTHER COMPREHENSIVE INCOME
      (LOSS)
    
    
    39,765
    
    
    (11,592
    )COMPREHENSIVE INCOME
    
    $
    70,560
    
    $
    41,852









See accompanying notes5




ANCHOR NATIONAL LIFE INSURANCE
      COMPANYCONSOLIDATED STATEMENT OF CASH FLOWSFor the three months
      ended March 31, 2001 and 2000(Unaudited)2001
    
    2000(In thousands)CASH FLOWS FROM OPERATING
      ACTIVITIES:Net income
    
    $
    30,795
    
    $
    53,444Adjustments to reconcile net income
      to netcash provided by operating
      activities:Interest credited to:Fixed annuity contracts
    
    
    32,098
    
    
    37,720Universal life insurance contracts
    
    
    20,462
    
    
    23,756Guaranteed investment contracts
    
    
    9,719
    
    
    5,268Net realized investment
      losses
    
    
    24,864
    
    
    1,769Accretion (amortization) of netdiscounts (premiums) on
      investments
    
    
    9,568
    
    
    (7,925
    )Universal life insurance
    fees
    
    
    (5,229
    )
    
    (4,503
    )Amortization of goodwill
    
    
    363
    
    
    363Provision for deferred income
      taxes
    
    
    2,589
    
    
    15,382Change in:Accrued investment income
    
    
    1,732
    
    
    3,205Deferred acquisition
costs
    
    
    (52,662
    )
    
    (41,704
    )Other assets
    
    
    17,835
    
    
    528Income taxes currently
      receivable/payablefrom Parent
    
    
    5,347
    
    
    2,826Due from/to affiliates
    
    
    5,372
    
    
    278Other liabilities
    
    
    (14,657
    )
    
    58,965Other, net
    
    
    12,357
    
    
    (5,729
    )NET CASH PROVIDED BY
      OPERATING ACTIVITIES
    
    
    100,553
    
    
    143,643CASH FLOWS FROM INVESTING
      ACTIVITIES:Purchases of:Bonds, notes and redeemable
      preferredstocks
    
    
    (217,032
    )
    
    (81,207
    )Mortgage loans
    
    
    (20,782
    )
    
    (10,055
    )Other investments, excluding
      short-terminvestments
    
    
    (4,726
    )
    
    (20,301
    )Sales of:Bonds, notes and redeemable
      preferredstocks
    
    
    221,761
    
    
    308,909Redemptions and maturities
      of:Bonds, notes and redeemable
      preferredstocks
    
    
    124,177
    
    
    119,052Mortgage loans
    
    
    11,548
    
    
    6,241Other investments, excluding
      short-terminvestments
    
    
    19,813
    
    
    45,435NET CASH PROVIDED BY
      INVESTING ACTIVITIES
    
    
    134,759
    
    
    368,074




See accompanying notes6




ANCHOR NATIONAL LIFE INSURANCE
      COMPANYCONSOLIDATED STATEMENT OF CASH FLOWS (Continued)For the
      three months ended March 31, 2001 and 2000(Unaudited)2001
    
    2000(In thousands)CASH FLOWS FROM FINANCING
      ACTIVITIES:Premium receipts on:Fixed annuity contracts
    
    $
    459,763
    
    $
    379,940Universal life insurance contracts
    
    
    13,512
    
    
    15,013Guaranteed investment contracts
    
    
    40,000
    
    
    150,000Net exchanges from the fixed
      accountsof variable annuity contracts
    
    
    (371,229
    )
    
    (599,675
    )Withdrawal payments on:Fixed annuity contracts
    
    
    (64,231
    )
    
    (141,545
    )Universal life insurance contracts
    
    
    (24,137
    )
    
    (26,258
    )Guaranteed investment contracts
    
    
    (163,037
    )
    
    (4,009
    )Claims and annuity payments
      on:Fixed annuity contracts
    
    
    (24,870
    )
    
    (18,240
    )Universal life insurance contracts
    
    
    (27,359
    )
    
    (45,181
    )Net repayments from (repayments
      of)other short-term financings
    
    
    1,400
    
    
    (8,338
    )Net payment related to a
      modifiedcoinsurance transaction
    
    
    (8,055
    )
    
    (5,697
    )Net receipt from issuances of
      subordinatednotes payable to affiliates
    
    
    ---
    
    
    15,545Dividends paid
    
    
    ---
    
    
    (69,000
    )NET CASH USED BY FINANCING
      ACTIVITIES
    
    
    (168,243
    )
    
    (357,445
    )NET DECREASE IN CASH ANDSHORT-TERM INVESTMENTS
    
    
    67,069
    
    
    154,272CASH AND SHORT-TERM INVESTMENTS
      ATBEGINNING OF PERIOD
    
    
    169,701
    
    
    462,915CASH AND SHORT-TERM INVESTMENTS
      ATEND OF PERIOD
    
    $
    236,770
    
    $
    617,187SUPPLEMENTAL CASH FLOW
      INFORMATION:Interest paid on
    indebtedness
    
    $
    90
    
    $
    256Net income taxes paid to
      Parent
    
    $
    2,082
    
    $
    11,093




See accompanying notes7




ANCHOR NATIONAL LIFE INSURANCE
      COMPANYNOTES TO CONSOLIDATED FINANCIAL
      STATEMENTS(Unaudited)1.
    BASIS OF
  PRESENTATIONAnchor National Life Insurance Company,
      including its wholly owned subsidiaries (the "Company") is an indirect
      wholly owned subsidiary of American International Group, Inc. ("AIG"), an
      international insurance and financial services holding company.  The
      Company is an Arizona-domiciled life insurance company which conducts its
      business through three segments:  annuity operations, asset
      management operations and broker-dealer operations.  Annuity
      operations consist of the sale and administration of deposit-type
      insurance contracts, including fixed and variable annuities, universal
      life insurance contracts and guaranteed investment contracts
      ("GICs").  Asset management operations, which include the
      distribution and management of mutual funds, are conducted by SunAmerica
      Asset Management Corp. ("SunAmerica Asset Management"), the Company's
      registered investment advisor and wholly owned subsidiary and its related
      distributor, SunAmerica Capital Services, Inc. ("SACS"). 
      Broker-dealer operations involve the sale of securities and financial
      services products, and are conducted by Royal Alliance Associates, Inc.
      ("Royal"), a wholly owned subsidiary of the
  Company.Effective January 1, 2001, the Company's
      direct Parent, SunAmerica Life Insurance Company (the "Parent"),
      contributed a wholly-owned subsidiary, SA Affordable Housing LLC ("SAAH
      LLC"), to the Company.  SAAH LLC was subsequently contributed by the
      Company to SunAmerica Asset Management.  At the time of the
      contribution, SAAH LLC had partnership assets of $432,120,000, other
      assets of $623,000 and shareholder's equity of $432,743,000.  SAAH
      LLC's results of operations are included within the asset management
      operations.In the opinion of the Company, the
      accompanying unaudited consolidated financial statements contain all
      adjustments necessary, consisting of normal recurring items, to present
      fairly the Company's consolidated financial position as of March 31, 2001
      and December 31, 2000, the results of its consolidated operations and its
      consolidated cash flows for the three months ended March 31, 2001 and
      2000.  The results of operations for the three months ended March 31,
      2001 are not necessarily indicative of the results to be expected for the
      full year.  The accompanying unaudited consolidated financial
      statements should be read in conjunction with the audited consolidated
      financial statements for the year ended December 31, 2000, contained in
      the Company's 2000 Annual Report on Form 10-K.  Certain items have
      been reclassified to conform to the current period's
      presentation.




8




2.
    SEGMENT
      INFORMATIONThe Company has three business
      segments:  annuity operations, asset management operations and
      broker-dealer operations.  The Company evaluates performance and
      allocates reserves based on profit or loss from operations before income
      taxes.  Following is selected information pertaining to the Company's
      business segments.AnnuityOperations
    
    AssetManagementOperations
    
    Broker-DealerOperations
    
    Total(In thousands)THREE MONTHS ENDEDMARCH 31, 2001:Investment income
    
    $
    85,099
    
    $
    2,492
    
    $
    190
    
    $
    87,781Interest expense
    
    
    (62,279
    )
    
    (1,027
    )
    
    (90
    )
    
    (63,396
    )Net investment income
    
    
    22,820
    
    
    1,465
    
    
    100
    
    
    24,385Net realized investment
      losses
    
    
    (24,864
    )
    
    ---
    
    
    ---
    
    
    (24,864
    )Total fee income
    
    
    102,699
    
    
    23,092
    
    
    12,365
    
    
    138,156General andadministrative expenses
    
    
    (27,746
    )
    
    (5,244
    )
    
    (7,677
    )
    
    (40,667
    )Amortization of deferredacquisition costs
    
    
    (32,950
    )
    
    (9,314
    )
    
    ---
    
    
    (42,264
    )Annual commissions
    
    
    (13,933
    )
    
    ---
    
    
    ---
    
    
    (13,933
    )Pretax income
    
    $
    26,026
    
    $
    9,999
    
    $
    4,788
    
    $
    40,813Total assets
    
    $
    24,757,609
    
    $
    613,606
    
    $
    73,754
    
    $
    25,444,969THREE MONTHS ENDEDMARCH, 31 2000:Investment income
    
    $
    103,888
    
    $
    1,639
    
    $
    249
    
    $
    105,776Interest expense
    
    
    (66,744
    )
    
    (711
    )
    
    (90
    )
    
    (67,545
    )Net investment income
    
    
    37,144
    
    
    928
    
    
    159
    
    
    38,231Net realized investmentlosses
    
    
    (1,769
    )
    
    ---
    
    
    ---
    
    
    (1,769
    )Total fee income
    
    
    103,679
    
    
    23,238
    
    
    12,486
    
    
    139,403General andadministrative expenses
    
    
    (25,824
    )
    
    (6,414
    )
    
    (7,513
    )
    
    (39,751
    )Amortization of deferredacquisition costs
    
    
    (31,439
    )
    
    (6,493
    )
    
    ---
    
    
    (37,932
    )Annual commissions
    
    
    (15,444
    )
    
    ---
    
    
    ---
    
    
    (15,444
    )Pretax income
    
    $
    66,347
    
    $
    11,259
    
    $
    5,132
    
    $
    82,738Total assets
    
    $
    28,216,358
    
    $
    189,029
    
    $
    71,986
    
    $
    28,477,373




9




3.
    CONTINGENT
    LIABILITIESThe Company has entered into six agreements
      in which it has provided liquidity support for certain short-term
      securities of municipalities and non-profit organizations by agreeing to
      purchase such securities in the event there is no other buyer in the
      short-term marketplace.  In return the Company receives a fee. 
      The maximum liability under these guarantees at March 31, 2001 is
      $925,000,000.  Related to each of these agreements are participation
      agreements with the Parent under which the Parent will share in
      $460,100,000 of these liabilities in exchange for a proportionate
      percentage of the fees received under these agreements.  Management
      does not anticipate any material future losses with respect to these
      commitments.4.
    DERIVATIVESAs a component of its asset and liability
      management strategy, the Company utilizes interest rate swap agreements
      ("Swap Agreements") to match assets more closely to liabilities. 
      Swap Agreements are agreements to exchange with a counterparty interest
      rate payments of differing character (for example, variable-rate payments
      exchanged for fixed-rate payments) based on an underlying principal
      balance (notional principal) to hedge against interest rate changes. 
      The Company typically utilizes Swap Agreements to create a hedge that
      effectively converts floating-rate assets into fixed-rate
      instruments.  At March 31, 2001, the Company had one outstanding Swap
      Agreement subject to the provisions of SFAS 133 (see Note 5 below) with a
      notional principal of $97,000,000 which matures in June 2002.  This
      agreement effectively converts a $97,000,000 floating rate commercial
      mortgage to a fixed rate instrument.  The agreement has been
      designated as a cash flow hedge and accordingly, the market value of the
      Swap Agreement ($3,154,000) has been recorded as an asset in the Company's
      consolidated balance sheet as of March 31, 2001.  In compliance with
      SFAS 133, changes in the market value of this Swap Agreement, net of
      taxes, are recognized as a component of other comprehensive
      income.5.
    RECENTLY ISSUED ACCOUNTING
      STANDARDIn June 1998, the Financial Accounting
      Standards Board ("FASB") issued Statement of Financial Accounting
      Standards No. 133, Accounting for Derivative Instruments and Hedging
      Activities ("SFAS 133").  This statement requires the Company to
      recognize all derivatives in the consolidated balance sheet measuring
      these derivatives at fair value.  The recognition of the change in
      fair value of a derivative depends on a number of factors, including the
      intended use of the derivative and, to the extent it is effective as part
      of a hedge transaction.  SFAS 133 was postponed by SFAS 137,
      Accounting for Derivative Instruments and Hedging Activities - Deferral of
      the Effective Date of FASB No. 133, and is now effective for the Company
      as of January 1, 2001.  The adoption of SFAS 133 as of January 1,
      2001 resulted in an increase of $1,389,000 in other comprehensive
      income.




10




ANCHOR NATIONAL LIFE INSURANCE
      COMPANYMANAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONSManagement's
      discussion and analysis of financial condition and results of operations
      of Anchor National Life Insurance Company (the "Company") for the three
      months ended March 31, 2001 ("2001") and March 31, 2000 ("2000")
      follows.  Certain prior period amounts have been restated to conform
      to the current period's presentation.In connection
      with the "safe harbor" provisions of the Private Securities Litigation
      Reform Act of 1995, the Company cautions readers regarding certain
      forward-looking statements contained in this report and in any other
      statements made by, or on behalf of, the Company, whether or not in future
      filings with the Securities and Exchange Commission (the "SEC").
      Forward-looking statements are statements not based on historical
      information and which relate to future operations, strategies, financial
      results, or other developments.  Statements using verbs such as
      "expect," "anticipate," "believe" or words of similar import generally
      involve forward-looking statements.  Without limiting the foregoing,
      forward-looking statements include statements which represent the
      Company's beliefs concerning future levels of sales and redemptions of the
      Company's products, investment spreads and yields, or the earnings and
      profitability of the Company's activities.Forward-looking statements are
      necessarily based on estimates and assumptions that are inherently subject
      to significant business, economic and competitive uncertainties and
      contingencies, many of which are beyond the Company's control and many of
      which are subject to change.  These uncertainties and contingencies
      could cause actual results to differ materially from those expressed in
      any forward-looking statements made by, or on behalf of, the
      Company.  Whether or not actual results differ materially from
      forward-looking statements may depend on numerous foreseeable and
      unforeseeable developments.  Some may be national in scope, such as
      general economic conditions, changes in tax law and changes in interest
      rates.  Some may be related to the insurance industry generally, such
      as pricing competition, regulatory developments and industry
      consolidation.  Others may relate to the Company specifically, such
      as credit, volatility and other risks associates with the Company's
      investment portfolio.  Investors are also directed to consider other
      risks and uncertainties discussed in documents filed by the Company with
      the SEC.  The Company disclaims any obligation to update
      forward-looking information.**RESULTS OF
      OPERATIONS**The Company
      has three business segments, as presented in Note 2 of Notes to
      Consolidated Financial Statements: annuity operations, asset management
      operations and broker-dealer operations.  Annuity operations consist
      of the sale and administration of deposit-type insurance contracts, such
      as fixed and variable annuities, universal life insurance contracts and
      guaranteed investment contracts.  Annuity operations focus primarily
      on the marketing of variable annuity products and the administration of a
      closed block of universal life  business.  The  variable
      annuity products offer investors a broad spectrum of fund alternatives,
      with a choice of investment managers, as well as guaranteed fixed-rate
      account options.  The Company earns fee income on investments in the
      variable account options and net investment income on the fixed-rate
      account options.




11




The asset
      management operations are conducted by the Company's registered investment
      advisor subsidiary, SunAmerica Asset Management Corp. ("SunAmerica Asset
      Management"), and its related distributor, SunAmerica Capital Services,
      Inc. ("SACS").  Premiums from variable annuities sold by the Company
      are held in trusts that are owned by the Company, with the assets directly
      supporting policyholder obligations.  SunAmerica Asset Management is
      the investment advisor for all of the trusts as well as trusts owned by an
      affiliate, First SunAmerica Life Insurance Company.  These companies
      earn fee income by distributing and managing a diversified family of
      mutual funds, managing certain subaccounts within the Company's variable
      annuity products and providing professional management of individual,
      corporate and pension plan portfolios.The
      broker-dealer operations are conducted by the Company's broker-dealer
      subsidiary, Royal Alliance Associates, Inc. ("Royal"), which sells
      proprietary annuities and mutual funds, as well as a full range of
      non-proprietary investment products through approximately 2,900
      independent registered representatives.  Royal earns income from
      commissions on sales of these products, net of the portion that is passed
      on to the registered representatives.  Royal is a registered
      broker-dealer under the Securities Exchange Act of 1934 and a member of
      the National Association of Securities Dealers.NET INCOME
      totaled $30.8 million in 2001, compared with $53.4 million in
      2000.PRETAX INCOME
      totaled $40.8 million in 2001 and $82.7 million in 2000.  The
      decrease in 2001 primarily resulted from increased net realized investment
      losses and decreased net investment income.INCOME TAX
      EXPENSE totaled $10.0 million in 2001 and $29.3 million in 2000,
      representing effective tax rates of 25% in 2001 and 35% in 2000.  The
      decrease in 2001 is due primarily to tax credits generated by SA
      Affordable Housing ("SAAH LLC"), a wholly-owned subsidiary of SunAmerica
      Asset Management (See Note 1).**ANNUITY
      OPERATIONS**PRETAX INCOME
      totaled $26.0 million in 2001, compared with $66.3 million in 2000. 
      The decrease in 2001 from 2000 primarily resulted from increased net
      realized investment losses and decreased net investment
      income.NET INVESTMENT
      INCOME, which is the spread between the income earned on invested assets
      and the interest paid on fixed annuities and other interest-bearing
      liabilities, totaled $22.8 million in 2001 and $37.1 million in
      2000.  These amounts equal 1.71% on average invested assets (computed
      on a daily basis) of $5.33 billion in 2001 and 2.69% on average invested
      assets of $5.52 billion in 2000.Net investment
      spreads include the effect of income earned or interest paid on the
      difference between average invested assets and average interest-bearing
      liabilities.  Average invested assets exceeded average
      interest-bearing liabilities by  $136.4 million in 2001, compared
      with $219.5 million in 2000.




12




The difference
      between the Company's yield on average invested assets and the rate paid
      on average interest-bearing liabilities (the "Spread Difference") was
      1.59% in 2001 and 2.49% in 2000.  The decrease in the Spread
      Difference in 2001 compared to 2000 is due primarily to the impact of
      gains and losses on seed
  money.Investment
      income (and the related yields on average invested assets) totaled $85.1
      million (6.38%) in 2001 and $103.9 million (7.53%) in 2000. The decrease
      in the investment yield is due to the impact of $8.9 million of seed money
      losses in 2001 versus $8.3 million of seed money gains in 2000. 
      Excluding the impact of seed money investment losses, investment returns
      would have been 7.17% in 2001 and 7.10% in 2000.Expenses
      incurred to manage the investment portfolio amounted to $1.8 million in
      2001 and $1.5 million in 2000.  These expenses are included as a
      reduction to investment income in the income
    statement.Total interest
      expense equaled $62.3 million in 2001 and $66.7 million in 2000.  The
      average rate paid on all interest-bearing liabilities was 4.79% in 2001,
      compared with 5.04% in 2000.  Interest-bearing liabilities averaged
      $5.20 billion during 2001, compared with $5.30 billion during 2000. The
      decreases in the overall rates paid in 2001 as compared to 2000 result
      primarily from the continued reduction of crediting rates on certain
      closed blocks of business.DECLINE IN
      AVERAGE INVESTED ASSETS largely results from the surrenders of certain
      closed blocks of fixed annuity business.  Changes in average invested
      assets also reflect sales of fixed annuities and the fixed account options
      of the Company's variable annuity products ("Fixed Annuity Premiums"), and
      renewal premiums on its universal life product ("UL Premiums"), partially
      offset by net exchanges from fixed accounts into the separate accounts of
      variable annuity contracts.  Fixed Annuity Premiums and UL Premiums
      totaled $473.3 million in 2001 and $395.0 million in 2000, and are largely
      premiums for the fixed accounts of variable annuities.  On an
      annualized basis, these premiums represent 41% and 30%, respectively, of
      the related reserve balances at the beginning of 2001 and
      2000.Guaranteed
      investment contract ("GIC") premiums totaled $40.0 million in 2001 and
      $150.0 million in 2000.  GIC surrenders and maturities totaled $163.0
      million in 2001 and $4.0 million in 2000.  The GICs issued by the
      Company are generally variable rate contracts which guarantee the payment
      of principal and interest for a term of three to five years.  GICS
      that are purchased by banks for their long-term portfolios or by state and
      local governmental entities either prohibit withdrawals or permit
      scheduled book value withdrawals subject to the terms of the underlying
      indenture or agreement.  GICs purchased by asset management firms for
      their short-term portfolios either prohibit withdrawals or permit
      withdrawals with notice ranging from 90 to 270 days.  In pricing
      GICs, the Company analyzes cash flow information and prices accordingly so
      that it is compensated for possible withdrawals prior to
      maturity.NET REALIZED
      INVESTMENT LOSSES totaled $24.9 million in 2001 and $1.8 million in 2000
      and include impairment writedowns of $25.8 million in 2001 and $2.6
      million in 2000.  Thus, net realized gains from sales and redemptions
      of investments totaled $0.9 million in 2001 and $0.8 million in
      2000.




13




The Company
      sold or redeemed invested assets, principally bonds and notes, aggregating
      $379.3 million in 2001 and $409.0 million in 2000.  Sales of
      investments result from the active management of the Company's investment
      portfolio.  Because redemptions of investments are generally
      involuntary and sales of investments are made in both rising and falling
      interest rate environments, net gains and losses from sales and
      redemptions of investments fluctuate from period to period, and represent
      0.07% and 0.06% of average invested assets for 2001 and 2000,
      respectively.  Active portfolio management involves the ongoing
      evaluation of asset sectors, individual securities within the investment
      portfolio and the reallocation of investments from sectors that are
      perceived to be relatively overvalued to sectors that are perceived to be
      relatively undervalued.  The intent of the Company's active portfolio
      management is to maximize total returns on the  investment portfolio,
      taking into account credit, option, liquidity and interest-rate
      risk.Impairment
      writedowns include $25.8 million and $2.6 million of provisions applied to
      bonds in 2001 and 2000, respectively.  On an annualized basis,
      impairment writedowns represent 1.94% and 0.19% of average invested assets
      for 2001 and 2000, respectively.  For the twenty quarters ended March
      31, 2001, impairment writedowns as an annualized percentage of average
      invested assets have ranged up to 2.62% and have averaged 0.47%. 
      Such writedowns are made when the Company has determined that the
      applicable assets have suffered other than temporary declines in net
      realizable value.   Actual realization will be dependent upon
      future events.VARIABLE
      ANNUITY FEES are based on the market value of assets in separate accounts
      supporting variable annuity contracts.  Such fees totaled $90.6
      million in 2001 and $93.0 million in 2000.  The decreased fees
      reflect a decline in average variable annuity assets, principally due to a
      decline in market values and to surrenders, partially offset by receipt of
      variable annuity premiums and net exchanges into the separate accounts
      from the fixed accounts of variable annuity contracts.  On an
      annualized basis, variable annuity fees represent 1.9% and 1.8%,
      respectively, of average variable annuity assets in 2001 and 2000. 
      Variable annuity assets averaged $19.83 billion during 2001 and $20.43
      billion during 2000.  Variable annuity premiums, which exclude
      premiums allocated to the fixed accounts of variable annuity products,
      totaled $411.9 million in 2001 and $474.4 million in 2000.  On an
      annualized basis, these amounts represent 8% and 10% of variable annuity
      reserves at the beginning of the respective periods.  Transfers from
      the fixed accounts of the Company's variable annuity products to the
      separate accounts (see "Decline in Average Invested Assets") are not
      classified as variable annuity premiums.  Accordingly, changes in
      variable annuity premiums are not necessarily indicative of the ultimate
      allocation by customers among fixed and variable account options of the
      Company's variable annuity products.Sales of
      variable annuity products (which include premiums allocated to the fixed
      accounts) ("Variable Annuity Product Sales") amounted to $871.7 million
      and $857.8 million in 2001 and 2000, respectively.  Variable Annuity
      Product Sales primarily reflect sales of the Company's flagship variable
      annuity line, Polaris.  Polaris is a multimanager variable annuity
      that offers investors a choice of 31 variable funds and a number of
      guaranteed fixed-rate funds.




14




The 
      Company  has  encountered increased competition in the variable
      annuity marketplace during recent years and anticipates that the market
      will remain highly competitive for the foreseeable future.  Also,
      from time to time, Federal initiatives are proposed that could affect the
      taxation of variable annuities and annuities generally (See
      "Regulation").UNIVERSAL LIFE
      INSURANCE FEES, NET amounted to $5.2 million and $4.5 million in 2001 and
      2000, respectively.  Universal life insurance fees, net consist of
      mortality changes, up-front fees earned on premiums received and
      administrative fees, net of the excess  mortality expense on these
      contracts.  The Company does not actively market  universal life
      insurance contracts. Such fees annualized represent 1.15% and 0.94% of
      average reserves for universal life insurance contracts in the respective
      periods.SURRENDER
      CHARGES on fixed and variable annuity contracts and  universal life
      contracts totaled $5.9 million in 2001 and $5.0 million in 2000. 
      Surrender charges generally are assessed on withdrawals at declining rates
      during the first seven years of a contract.  Withdrawal payments,
      which exclude claims and lump-sum annuity benefits, totaled $527.6 million
      in 2001, compared with $657.5 million in 2000.  Annualized, these
      payments when expressed as a percentage of average fixed and variable
      annuity and universal life reserves represent 8.8% and 10.5% for 2001 and
      2000, respectively.  Withdrawals include variable annuity payments
      from the separate accounts totaling $439.3 million (8.9% of average
      variable annuity reserves) in 2001 and $495.0 million (9.7% of average
      variable annuity reserves) in 2000.  Management anticipates that
      withdrawal rates will gradually rise in the foreseeable
      future.GENERAL AND
      ADMINISTRATIVE EXPENSES totaled $27.7 million in 2001,  compared with
      $25.8 million in 2000.  General and administrative expenses remain
      closely controlled through a company-wide cost containment program and
      continue to represent less than 1% of average total
      assets.AMORTIZATION
      OF DEFERRED ACQUISITION COSTS totaled $33.0 million in 2001, compared with
      $31.4 million in 2000.  The increase in amortization was primarily
      due to additional fixed and variable annuity sales and the subsequent
      amortization of related deferred commissions and other direct selling
      costs.ANNUAL
      COMMISSIONS totaled $13.9 million in 2001, compared with $15.4 million in
      2000.  Annual commissions represent renewal commissions paid
      quarterly in arrears to maintain the persistency of certain of the
      Company's variable annuity contracts.  Substantially all of the
      Company's currently available variable annuity products allow for an
      annual commission payment option in return for a lower immediate
      commission.  The decrease in annual commissions reflects declines in
      the market value of variable annuity assets upon which such commissions
      are paid.  The Company estimates that approximately 60% of the
      average balances of its variable annuity products is currently subject to
      such annual commissions.  Based on current sales, this percentage is
      expected to increase in future periods.**ASSET MANAGEMENT
      OPERATIONS**PRETAX INCOME
      totaled $10.0 million in 2001 and $11.3 million in 2000.  The 11.2%
      decrease in 2001 from 2000 primarily resulted from increased amortization
      of deferred acquisition costs, partially offset by a decrease in general
      and administrative expenses.




15




VARIABLE
      ANNUITY FEES totaled $3.0 million in 2001, compared to $3.6 million in
      2000.ASSET
      MANAGEMENT FEES, which include investment advisory fees and 12b-1
      distribution fees, are based on the market value of assets managed in
      mutual funds by SunAmerica Asset Management.  Such fees totaled $17.2
      million on average assets managed of $6.67 billion in 2001 and $17.1
      million on average assets managed of $6.03 billion in 2000.  Asset
      management fees are not necessarily proportionate to average assets
      managed, principally due to changes in product mix.  Mutual fund
      sales, excluding sales of money market accounts, totaled $497.8 million in
      2001 and $836.9 million in 2000.  The decrease in sales in 2001
      principally reflects unfavorable stock market conditions. 
      Redemptions of mutual funds, excluding redemptions of money market
      accounts, amounted to $257.3 million in 2001 and $220.1 million in 2000,
      which, annualized, represent 18.2% and 17.1%, respectively, of average
      related mutual fund assets.GENERAL AND
      ADMINISTRATIVE EXPENSES totaled $5.2 million in 2001, compared with $6.4
      million in 2000.  The decrease in expenses in 2001 principally
      reflect the lower sales of mutual funds and related marketing
      costs.AMORTIZATION
      OF DEFERRED ACQUISITION COSTS totaled $9.3 million in 2001, compared with
      $6.5 million in 2000.  The increase in amortization was primarily due
      to additional mutual fund sales and the subsequent amortization of related
      deferred commissions and other direct selling
  costs.**BROKER DEALER
      OPERATIONS**PRETAX INCOME
      totaled $4.8 million in 2001 and $5.1 million in 2000.  The 6.7%
      decrease in 2001 from 2000 resulted from a decline in net retained
      commissions and increased general and administrative
      expenses.NET RETAINED
      COMMISSIONS totaled $11.8 million in 2001 and $12.3 million in 2000. 
      Net retained commissions are derived from commissions on the sales of
      proprietary and nonproprietary investment products, after deducting
      approximately 90% of such commissions that is passed on to registered
      representatives.  Broker-dealer sales (mainly sales of general
      securities, mutual funds and annuities) totaled $3.18 billion in 2001 and
      $2.88 billion in 2000.  Fluctuations in net retained commissions may
      not be proportionate to fluctuations in sales primarily due to changes in
      sales mix.GENERAL AND
      ADMINISTRATIVE EXPENSES totaled $7.7 million in 2001, compared with $7.5
      million in 2000.**FINANCIAL CONDITION AND
      LIQUIDITY**SHAREHOLDER'S
      EQUITY increased to $1.63 billion at March 31, 2001 from $1.13 billion at
      December 31, 2000, due principally to a $432.7 million capital
      contribution from the Parent of its wholly-owned subsidiary, SAAH LLC, to
      the Company.  In addition, the Company recorded net income of $30.8
      million and accumulated other comprehensive income of $39.8 million in
      2001.




16




INVESTED
      ASSETS at March 31, 2001 totaled $5.58 billion, compared with $5.26
      billion at December 31, 2000.  The Company manages most of its
      invested  assets internally.  The Company's general investment
      philosophy is to hold fixed-rate assets for long-term investment. 
      Thus, it does not have a trading portfolio.  However, the Company has
      determined that all of its portfolio of bonds, notes and redeemable
      preferred stocks (the "Bond Portfolio") is available to be sold in
      response to changes in market interest rates, changes in relative value of
      asset sectors and individual securities,  changes  in 
      prepayment  risk,  changes  in  the credit quality
      outlook for certain securities, the Company's need for liquidity and other
      similar factors.THE BOND
      PORTFOLIO, which constituted 71% of the Company's total investment
      portfolio at March 31, 2001, had an amortized cost that was $53.8 million
      greater than its aggregate fair value at March 31, 2001 and $122.7 million
      greater than its aggregate fair value at December 31, 2000.  The
      decrease in net unrealized losses on the Bond Portfolio during 2001
      principally reflects the decline in prevailing interest rates and the
      corresponding effect on the fair value of the Bond Portfolio at March 31,
      2001.At March 31,
      2001, the Bond Portfolio (excluding $1.4 million of redeemable preferred
      stocks) included $3.90 billion of bonds rated by Standard & Poor's
      ("S&P"), Moody's Investors Service ("Moody's"), Fitch ("Fitch") or the
      Securities Valuation Office of the National Association of Insurance
      Commissioners ("NAIC"), and $44.0 million of bonds rated by the Company
      pursuant to statutory ratings guidelines established by the NAIC.  At
      March 31, 2001, approximately $3.70 billion of the Bond Portfolio was
      investment grade, including $1.60 billion of U.S. government/agency
      securities and mortgage-backed securities
("MBS").At March 31,
      2001, the Bond Portfolio included $250.1 million of bonds that were not
      investment grade.  These non-investment-grade bonds accounted for
      approximately 1.0% of the Company's total assets and approximately 4.5% of
      its invested assets.Non-investment-grade securities
      generally provide higher yields and involve greater risks than
      investment-grade securities because their issuers typically are more
      highly leveraged and more vulnerable to adverse economic conditions than
      investment-grade issuers. In addition, the trading market for these
      securities is usually more limited than for investment-grade
      securities.  The Company had no material concentrations of
      non-investment-grade securities at March 31,
2001.The table on
      the next page summarizes the Company's rated bonds by rating
      classification as of March 31, 2001.




17




RATED BONDS BY RATING
      CLASSIFICATION(Dollars in thousands)**Issues Rated
      by S&P/Moody's/Fitch**
    
    **Issues not rated by
      S&P/Moody's/ Fitch, by NAIC Category**
    
    **Total****S&P/Moody's/ Fitchcategory
    (1)**
    
    **Amortizedcost**
    
    **Estimatedfairvalue**
    
    **NAICcategory(2)**
    
    **Amortizedcost**
    
    **Estimatedfairvalue**
    
    **Amortizedcost**
    
    **Estimatedfairvalue**
    
    **Percent ofinvestedassets**AAA+ to
      A-(Aaa to A3)[AAA to A-{AAA to A-}
    
    $2,845,449
    
    $2,855,772
    
    1
    
    $113,685
    
    $116,275
    
    $2,959,134
    
    $2,972,047
    
    53.25
    %BBB+ to
      BBB-(Baa1 to Baa3)[BBB+ to BBB-]{BBB+ to BBB-}
    
    627,674
    
    617,315
    
    2
    
    108,365
    
    107,372
    
    736,039
    
    724,687
    
    12.98
    %BB+ to
      BB-(Ba1 to Ba3)[BB+ to BB-]{BB+ to BB-}
    
    59,702
    
    48,757
    
    3
    
    0
    
    0
    
    59,702
    
    48,757
    
    0.87
    %B+ to
    B-(B1 to B3)[B+ to B-]{B+ to B-}
    
    198,738
    
    167,369
    
    4
    
    6,565
    
    5,989
    
    205,303
    
    173,358
    
    3.11
    %CCC+ to
      C(Caa to C)[CCC]{CCC+ to C-}
    
    31,618
    
    20,325
    
    5
    
    6,000
    
    5,917
    
    37,618
    
    26,242
    
    0.47
    %CI to
    D[DD]{D}
    
    1,836
    
    938
    
    6
    
    1,000
    
    784
    
    2,836
    
    1,722
    
    0.03
    %TOTAL RATED
      ISSUES
    
    $3,765,017
    
    $3,710,476
    
    
    
    $235,615
    
    $236,337
    
    $4,000,632
    
    $3,946,813Footnotes appear on the following
      page.




18




Footnotes to the table of Rated Bonds by
      Rating Classification(1)
    S&P and Fitch rate debt securities in
      rating categories ranging from AAA (the highest) to D (in payment
      default).  A plus (+) or minus (-) indicates the debt's relative
      standing within the rating category.  A security rated BBB- or higher
      is considered investment grade.  Moody's rates debt securities in
      rating categories ranging from Aaa (the highest) to C (extremely poor
      prospects of ever attaining any real investment standing).  The
      number 1,2 or 3 (with 1 the highest and 3 the lowest) indicates the debt's
      relative standing within the rating category.  A security rated Baa3
      or higher is considered investment grade. Issues are categorized based on
      the highest of the S&P, Moody's and Fitch ratings if rated by multiple
      agencies.(2)
    Bonds and short-term promissory instruments
      are divided into six quality categories for NAIC rating purposes, ranging
      from 1 (highest) to 5 (lowest) for nondefaulted bonds plus one category,
      6, for bonds in or near default.  These six categories correspond
      with the S&P/Moody's/Fitch rating groups listed above, with categories
      1 and 2 considered investment grade.  The NAIC categories include
      $44.0 million of assets that were rated by the Company pursuant to
      applicable NAIC rating
guidelines.




19




Senior secured
      loans ("Secured Loans") are included in the Bond Portfolio and aggregated
      $246.3 million at March 31, 2001. Secured Loans are senior to
      subordinated debt and equity and are secured by assets of the
      issuer. At March 31, 2001, Secured Loans consisted of $71.1 million
      of publicly traded securities and $175.2 million of privately traded
      securities. These Secured Loans are composed of loans to 51 borrowers
      spanning 15 industries, with 18% of these assets concentrated in
      utilities, 9% concentrated in technology and 8% concentrated in financial
      institutions. No other industry constituted more than 8% of these
      assets.While the
      trading market for the Company's privately traded Secured Loans is more
      limited than for publicly traded issues, management believes that
      participation in these transactions has enabled the Company to improve its
      investment yield. As a result of restrictive financial covenants,
      these Secured Loans involve greater risk of technical default than do
      publicly traded investment-grade securities. However, management
      believes that the risk of loss upon default for these Secured Loans is
      mitigated by such financial covenants and the collateral values underlying
      the Secured Loans. The Company's Secured Loans are rated by S&P,
      Moody's, Fitch, the NAIC or by the Company, pursuant to comparable
      statutory ratings guidelines established by the
  NAIC.MORTGAGE LOANS
      aggregated $693.9 million at March 31, 2001 and consisted of 131
      commercial first mortgage loans with an average loan balance of
      approximately $5.3 million, collateralized by properties located in 30
      states. Approximately 30% of this portfolio was office, 19% was
      manufactured housing, 18% was multifamily residential, 10% was hotels, 9%
      was industrial, 5% was retail, and 9% was other types.  At March 31,
      2001, approximately 32% and 10% of this portfolio were secured by
      properties located in California and New York, respectively, and no more
      than 8% of this portfolio was secured by properties located in any other
      single state. At March 31, 2001, there were 13 mortgage loans with
      outstanding balances of $10 million or more, which collectively aggregated
      approximately 39% of this portfolio. At March 31, 2001, approximately 26%
      of the mortgage loan portfolio consisted of loans with balloon payments
      due before April 1, 2004.  During 2001 and 2000, loans delinquent by
      more than 90 days, foreclosed loans and restructured loans have not been
      significant in relation to the total mortgage loan
      portfolio.At March 31,
      2001, approximately 9% of the mortgage loans were seasoned loans
      underwritten to the Company's standards and purchased at or near par from
      other financial institutions. Such loans generally have higher
      average interest rates than loans that could be originated today. 
      The balance of the mortgage loan portfolio has been originated by the
      Company under strict underwriting standards. Commercial mortgage loans on
      properties such as offices, hotels and shopping centers generally
      represent a higher level of risk than do mortgage loans secured by
      multifamily residences. This greater risk is due to several factors,
      including the larger size of such loans and the more immediate effects of
      general economic conditions on these commercial property types. However,
      due to the seasoned nature of the Company's mortgage loan portfolio and
      its strict underwriting standards, the Company believes that it has
      prudently managed the risk attributable to its mortgage loan portfolio
      while maintaining attractive yields.




20




POLICY LOANS
      totaled $240.8 million at March 31, 2001, compared to $244.4 million at
      December 31, 2000, and are primarily loans taken against universal life
      policies.SEPARATE
      ACCOUNT SEED MONEY totaled $82.0 million at March 31, 2001, compared to
      $104.7 million at December 31, 2000, and consists of seed money for mutual
      funds used as investment vehicles for the Company's variable annuity
      separate accounts and SunAmerica Asset Management's mutual
      funds.PARTNERSHIPS
      totaled $336.7 million at March 31, 2001, constituting investments in 530
      partnerships with an average size of approximately $0.635 million, most of
      which are partnership assets of SAAH LLC which was contributed to the
      Company effective January 1, 2001 (see Note 1). This portfolio
      includes $328.5 million of partnerships that make tax-advantaged
      investments in affordable housing properties, currently involving
      approximately 524 multifamily projects in 41 states, and $8.2 million of
      partnerships managed by independent money managers that invest in a broad
      selection of equity and fixed-income securities, currently including 421
      separate issuers. The risks generally associated with partnerships
      include those related to their underlying investments (i.e., equity
      securities, debt securities and real estate), plus a level of illiquidity,
      which is mitigated, to some extent, for the affordable housing
      partnerships by the marketability of the tax credits they generate, and in
      the case of many of the other partnerships, by the existence of
      contractual termination provisions.OTHER INVESTED
      ASSETS aggregated $18.1 million at March 31, 2001, compared with $18.5
      million at December 31, 2000, and consist of collateralized bond
      obligations and other mutual fund investments.ASSET-LIABILITY MATCHING is utilized
      by the Company to minimize the risks of interest rate fluctuations and
      disintermediation. The Company believes that its fixed-rate liabilities
      should be backed by a portfolio principally composed of fixed-rate
      investments that generate predictable rates of return. The Company
      does not have a specific target rate of return. Instead, its rates of
      return vary over time depending on the current interest rate environment,
      the slope of the yield curve, the spread at which fixed-rate investments
      are priced over the yield curve, default rates and general economic
      conditions. Its portfolio strategy is constructed with a view to
      achieve adequate risk-adjusted returns consistent with its investment
      objectives of effective asset-liability matching, liquidity and
      safety. The Company's fixed-rate products incorporate surrender
      charges or other restrictions in order to encourage persistency.
      Approximately 80% of the Company's fixed annuity, universal life and GIC
      reserves had surrender penalties or other restrictions at March 31,
      2001.As part of its
      asset-liability matching discipline, the Company conducts detailed
      computer simulations that model its fixed-rate assets and liabilities
      under commonly used stress-test interest rate scenarios. With the results
      of these computer simulations, the Company can measure the potential gain
      or loss in fair value of its interest-rate sensitive instruments and seek
      to protect its economic value and achieve a predictable spread between
      what it earns on its invested assets and what it pays on its liabilities
      by designing  its fixed-rate products and conducting its investment
      operations to closely match the duration of the fixed-rate assets to that
      of its fixed-rate liabilities. The Company's fixed-rate assets include:
      cash and short-term investments; bonds, notes and redeemable preferred
      stocks; mortgage loans; policy loans; and investments in limited
      partnerships that invest primarily in fixed-rate
  securities.




21




At March 31, 2001, these assets had an
      aggregate fair value of $5.23 billion with a duration of 2.9. The
      Company's fixed-rate liabilities include fixed annuity, GIC and universal
      life reserves and subordinated notes. At March 31, 2001, these liabilities
      had an aggregate fair value (determined by discounting future contractual
      cash flows by related market rates of interest) of $4.69 billion with a
      duration of 3.1. The Company's potential exposure due to a 10% decrease in
      prevailing interest rates from their March 31, 2001 levels is a loss of
      approximately $2.4 million, representing the increase in the fair value of
      its fixed-rate liabilities that is not offset by an increase in the fair
      value of its fixed-rate assets. Because the Company actively manages its
      assets and liabilities and has strategies in place to minimize its
      exposure to loss as interest rate changes occur, it expects that actual
      losses would be less than the estimated potential
    loss.Duration is a
      common option-adjusted measure for the price sensitivity of a
      fixed-maturity portfolio to changes in interest rates. It measures the
      approximate percentage change in the market value of a portfolio if
      interest rates change by 100 basis points, recognizing the changes in cash
      flows resulting from embedded options such as policy surrenders,
      investment prepayments and bond calls. It also incorporates the assumption
      that the Company will continue to utilize its existing strategies of
      pricing its fixed annuity, universal life and GIC products, allocating its
      available cash flow amongst its various investment portfolio sectors and
      maintaining sufficient levels of liquidity. Because the calculation of
      duration involves estimation and incorporates assumptions, potential
      changes in portfolio value indicated by the portfolio's duration will
      likely be different from the actual changes experienced under given
      interest rate scenarios, and the differences may be
      material.As a component
      of its asset and liability management strategy, the Company utilizes
      interest rate swap agreements ("Swap Agreements") to match assets more
      closely to liabilities. Swap Agreements are agreements to exchange with a
      counterparty interest rate payments of differing character (for example,
      variable-rate payments exchanged for fixed-rate payments) based on an
      underlying principal balance (notional principal) to hedge against
      interest rate changes. The Company typically utilizes Swap Agreements to
      create a hedge that effectively converts floating-rate assets and
      liabilities into fixed-rate instruments. At March 31, 2001, the Company
      had two outstanding Swap Agreements with a total notional principal of
      $125.7 million. These agreements mature in June 2002 and December
      2024.The Company
      also seeks to provide liquidity from time to time by using reverse
      repurchase agreements ("Reverse Repos") and by investing in MBSs. It also
      seeks to enhance its spread income by using Reverse Repos. Reverse Repos
      involve a sale of securities and an agreement to repurchase the same
      securities at a later date at an agreed upon price and are generally
      over-collateralized. MBSs are generally investment-grade securities
      collateralized by large pools of mortgage loans. MBSs generally pay
      principal and interest monthly. The amount of principal and interest
      payments may fluctuate as a result of repayments of the underlying
      mortgage loans.




22




There are
      risks associated with some of the techniques the Company uses to provide
      liquidity, enhance its spread income and match its assets and liabilities.
      The primary risk associated with the Company's Reverse Repos and Swap
      Agreements is counterparty risk. The Company believes, however, that the
      counterparties to its Reverse Repos and Swap Agreements are financially
      responsible and that the counterparty risk associated with those
      transactions is minimal. It is the Company's policy that these agreements
      are entered into with counterparties who have a debt rating of A/A2 or
      better from both S&P and Moody's. The Company continually monitors its
      credit exposure with respect to these agreements. In addition to
      counterparty risk, Swap Agreements also have interest rate risk. However,
      the Company's Swap Agreements typically hedge variable-rate assets or
      liabilities, and interest rate fluctuations that adversely affect the net
      cash received or paid under the terms of a Swap Agreement would be offset
      by increased interest income earned on the variable-rate assets or reduced
      interest expense paid on the variable-rate liabilities. The primary risk
      associated with MBSs is that a changing interest rate environment might
      cause prepayment of the underlying obligations at speeds slower or faster
      than anticipated at the time of their purchase. As part of its decision to
      purchase an MBS, the Company assesses the risk of prepayment by analyzing
      the security's projected performance over an array of interest-rate
      scenarios. Once an MBS is purchased, the Company monitors its actual
      prepayment experience monthly to reassess the relative attractiveness of
      the security with the intent to maximize total
    return.INVESTED
      ASSETS EVALUATION is routinely conducted by the Company. Management
      identifies monthly those investments that require additional monitoring
      and carefully reviews the carrying values of such investments at least
      quarterly to determine whether specific investments should be placed on a
      nonaccrual basis and to determine declines in value that may be other than
      temporary. In making these reviews for bonds, management principally
      considers the adequacy of any collateral, compliance with contractual
      covenants, the borrower's recent financial performance, new reports and
      other externally generated information concerning the creditor's affairs.
      In the case of publicly traded bonds, management also considers market
      value quotations, if available. For mortgage loans, management generally
      considers information concerning the mortgaged property and, among other
      things, factors impacting the current and expected payment status of the
      loan and, if available, the current fair value of the underlying
      collateral. For investments in partnerships, management reviews the
      financial statements and other information provided by the general
      partners.The carrying
      values of investments that are determined to have declines in value that
      are other than temporary are reduced to net realizable value and, in the
      case of bonds, no further accruals of interest are made. The provisions
      for impairment on mortgage loans are based on losses expected by
      management to be realized on transfers of mortgage loans to real estate,
      on the disposition and settlement of mortgage loans and on mortgage loans
      that management believes may not be collectible in full. Accrual of
      interest is suspended when principal and interest payments on mortgage
      loans are past due more than 90 days.DEFAULTED
      INVESTMENTS, comprising all investments that are in default as to the
      payment of principal or interest, totaled $3.9 million of bonds at March
      31, 2001, and constituted less than 0.1% of total invested assets. At
      December 31, 2000, defaulted investments totaled $3.6 million of bonds and
      constituted less than 0.1% of total invested
  assets.




23




SOURCES OF
      LIQUIDITY are readily available to the Company in the form of the
      Company's existing portfolio of cash and short-term investments, Reverse
      Repo capacity on invested assets and, if required, proceeds from invested
      asset sales. At March 31, 2001, approximately $2.18 billion of the
      Company's Bond Portfolio had an aggregate unrealized gain of $48.3
      million, while approximately $1.77 billion of the Bond Portfolio had an
      aggregate unrealized loss of $102.1 million. In addition, the Company's
      investment portfolio currently provides approximately $50.9 million of
      monthly cash flow from scheduled principal and interest payments.
      Historically, cash flows from operations and from the sale of the
      Company's annuity and GIC products have been more than sufficient in
      amount to satisfy the Company's liquidity needs.Management is
      aware that prevailing market interest rates may shift significantly and
      has strategies in place to manage either an increase or decrease in
      prevailing rates. In a rising interest rate environment, the Company's
      average cost of funds would increase over time as it prices its new and
      renewing annuities and GICs to maintain a generally competitive market
      rate. Management would seek to place new funds in investments that were
      matched in duration to, and higher yielding than, the liabilities assumed.
      The Company believes that liquidity to fund withdrawals would be available
      through incoming cash flow, the sale of short-term or floating-rate
      instruments or Reverse Repos on the Company's substantial MBS segment of
      the Bond Portfolio, thereby avoiding the sale of fixed-rate assets in an
      unfavorable bond market.In a declining
      rate environment, the Company's cost of funds would decrease over time,
      reflecting lower interest crediting rates on its fixed annuities and GICs.
      Should increased liquidity be required for withdrawals, the Company
      believes that a significant portion of its investments could be sold
      without adverse consequences in light of the general strengthening that
      would be expected in the bond market.**REGULATION**The Company,
      in common with other insurers, is subject to regulation and supervision by
      the states and other jurisdictions in which it does business. Within the
      United States, the method of such regulation varies but generally has its
      source in statutes that delegate regulatory and supervisory powers to an
      insurance official. The regulation and supervision relate primarily to
      approval of policy forms and rates, the standards of solvency that must be
      met and maintained, including risk based capital measurements, the
      licensing of insurers and their agents, the nature of and limitations on
      investments, restrictions on the size of risks which may be insured under
      a single policy, deposits on securities for the benefit of policyholders,
      methods of accounting, periodic examinations of the affairs of insurance
      companies, the form and content of reports of financial condition required
      to be filed, and reserves for unearned premiums, losses and other
      purposes. In general, such regulation is for the protection of
      policyholders rather than security
holders.




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Risk-based
      capital ("RBC") standards are designed to measure the adequacy of an
      insurer's statutory capital and surplus in relation to the risks inherent
      in its business. The standards are intended to help identify inadequately
      capitalized companies and require specific regulatory actions in the event
      an insurer's RBC is deficient. The RBC formula develops a risk-adjusted
      target level of adjusted statutory capital and surplus by applying certain
      factors to various asset, premium and reserve items. Higher factors are
      applied to more risky items and lower factors are applied to less risky
      items. Thus, the target level of statutory surplus varies not only as a
      result of the insurer's size, but also on the risk profile of the
      insurer's operations.The RBC Model
      Law provides four incremental levels of regulatory attention for insurers
      whose surplus is below the calculated RBC target. These levels of
      attention range in severity from requiring the insurer to submit a plan
      for corrective action to actually placing the insurer under regulatory
      control. The statutory capital and surplus of the Company exceeded its RBC
      requirements by a considerable margin as of March 31,
      2001.In 1998, the
      NAIC adopted the codification of statutory accounting principles
      ("Codification") which replaced the NAIC's previous primary guidance on
      statutory accounting, effective January 1, 2001. Codification changes
      prescribed statutory accounting practices and will result in changes to
      the accounting practices that the Company uses to prepare its statutory
      basis financial statements. Codification has been adopted by all fifty
      states as the prescribed basis of accounting, including Arizona. The
      adoption of Codification resulted in an increase of approximately $99.4
      million to the Company's statutory surplus.Privacy
      provisions of the Gramm-Leach-Bliley Act are fully effective in 2001 and
      establish new consumer protections regarding the security,
      confidentiality, and uses of nonpublic personal information of
      individuals. The law also requires financial institutions to disclose
      their privacy policies to their customers. Additional privacy legislation
      pending in the United States Congress and several states is designed to
      provide further privacy protections to consumers of financial products and
      services. These statutes and regulations may result in additional
      regulatory compliance costs, may limit the Company's ability to market its
      products, and may otherwise constrain the nature or scope of the Company's
      insurance and financial services operations.The
      Gramm-Leach-Bliley Act also allows combinations between insurance
      companies, banks and other entities. It is not yet known what effect this
      legislation will have on insurance companies. In addition, from time to
      time, Federal initiatives are proposed that could affect the Company's
      businesses. Such initiatives include employee benefit plan regulations and
      tax law changes affecting the taxation of insurance companies and the tax
      treatment of insurance and other investment products. Proposals made in
      recent years to limit the tax deferral of annuities or otherwise modify
      the tax rules related to the treatment of annuities have not been enacted.
      While certain of such proposals, if implemented, could have an adverse
      effect on the Company's sales of affected products, and, consequently, on
      its results of operations, the Company believes these proposals have a
      small likelihood of being enacted, because they would discourage
      retirement savings and there is strong public and industry opposition to
      them.




25




SunAmerica
      Asset Management, a subsidiary of the Company, is registered with the
      Securities and Exchange Commission ("SEC") as an investment adviser under
      the Investment Advisers Act of 1940. The mutual funds that it markets are
      subject to regulations under the Investment Company Act of 1940.
      SunAmerica Asset Management and the mutual funds are also subject to
      regulation and examination by the SEC. In addition, variable annuities and
      the related separate accounts of the Company are subject to regulation by
      the SEC under the Securities Act of 1933 and the Investment Company Act of
      1940.The Company's
      broker-dealer subsidiaries are subject to regulation and supervision by
      the states in which they transact business, as well as by the SEC and the
      National Association of Securities Dealers ("NASD"). The SEC and the NASD
      have broad administrative and supervisory powers relative to all aspects
      of business and may examine each subsidiary's business and accounts at any
      time. The SEC also has broad jurisdiction to oversee various activities of
      the Company and its other
subsidiaries.




26




QUANTITATIVE AND QUALITATIVE
      DISCLOSURES ABOUT MARKET RISKThe
      quantitative and qualitative disclosures about market risk are contained
      in the Asset-Liability Matching section of Management's Discussion and
      Analysis of Financial Condition and Results of Operations on pages 21 to
      23 herein.




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ANCHOR NATIONAL
      LIFE INSURANCE COMPANYOTHER INFORMATION**Item
      1.     Legal Proceedings**Not applicable.**Item
      2.     Changes in Securities and Use of
      Proceeds**Not applicable.**Item
      3.     Defaults Upon Senior Securities**Not applicable.**Item
      4.     Submissions of Matters to a Vote of
      Security Holders**Not applicable.**Item
      5.     Other Information**Not applicable.**Item
      6.     Exhibits and Reports on Form 8-K**


|EXHIBITS  
|----------
|ExhibitNo.
|10(a)     

|**REPORTS ON FORM 8-K**                                                                            
|---------------------------------------------------------------------------------------------------
|There were no Current Reports on Form 8-K
      filed during the three months ended March 31, 2001.



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

ANCHOR NATIONAL LIFE INSURANCE COMPANYRegistrantDated:   May  14, 2001
 
 /s/ N. SCOTT GILLISN. Scott GillisSenior Vice President     (Principal Financial Officer)Dated:   May  14, 2001

/s/ MAURICE S. HEBERT
 Maurice S. HebertVice President and Controller
     (Principal Accounting Officer)




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|ANCHOR NATIONAL
      LIFE INSURANCE COMPANYLIST OF EXHIBITS FILED
|------------------------------------------------------------------
|ExhibitNo.                                                        
|10(a)                                                             



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