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







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




See accompanying notes to consolidated
      financial statements3


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




See accompanying notes to consolidated
      financial statements4


ANCHOR NATIONAL LIFE INSURANCE
      COMPANYCONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
      INCOMEFor the three months and six months ended June 30, 2001 and
      2000(Unaudited)Three
      Months
    
    Six
      Months2001
    
    2000
    
    2001
    
    2000(In
    thousands)Investment income
    
    $
    101,202
    
    $
    96,939
    
    $
    188,983
    
    $
    202,715Interest expense on:Fixed annuity contracts
    
    
    (31,018
    )
    
    (33,298
    )
    
    (63,116
    )
    
    (71,018
    )Universal life insurancecontracts
    
    
    (20,326
    )
    
    (19,842
    )
    
    (40,788
    )
    
    (43,598
    )Guaranteed investment
      contracts
    
    
    (6,385
    )
    
    (9,116
    )
    
    (16,104
    )
    
    (14,384
    )Subordinated notes payable
    toaffiliates
    
    
    (1,118
    )
    
    (1,108
    )
    
    (2,235
    )
    
    (1,909
    )Total interest expense
    
    
    (58,847
    )
    
    (63,364
    )
    
    (122,243
    )
    
    (130,909
    )NET INVESTMENT INCOME
    
    
    42,355
    
    
    33,575
    
    
    66,740
    
    
    71,806NET REALIZED INVESTMENT
      LOSSES
    
    
    (14,719
    )
    
    (3,639
    )
    
    (39,583
    )
    
    (5,408
    )Fee income:Variable annuity fees
    
    
    92,683
    
    
    99,397
    
    
    186,249
    
    
    196,016Net retained commissions
    
    
    12,599
    
    
    14,914
    
    
    25,036
    
    
    28,072Asset management fees
    
    
    16,998
    
    
    17,750
    
    
    34,196
    
    
    34,818Universal life insurance fees,
      net
    
    
    4,845
    
    
    1,969
    
    
    10,074
    
    
    6,740Surrender charges
    
    
    5,926
    
    
    5,744
    
    
    11,825
    
    
    10,769Other fees
    
    
    3,117
    
    
    2,135
    
    
    6,944
    
    
    4,897TOTAL FEE INCOME
    
    
    136,168
    
    
    141,909
    
    
    274,324
    
    
    281,312GENERAL, ADMINISTRATIVE AND
      OTHEREXPENSES
    
    
    (45,564
    )
    
    (40,969
    )
    
    (86,231
    )
    
    (80,720
    )AMORTIZATION OF DEFERREDACQUISITION COSTS
    
    
    (51,152
    )
    
    (36,397
    )
    
    (93,416
    )
    
    (74,329
    )ANNUAL COMMISSIONS
    
    
    (14,632
    )
    
    (11,352
    )
    
    (28,565
    )
    
    (26,796
    )PRETAX INCOME BEFORE
      CUMULATIVEEFFECT OF CHANGE INACCOUNTING PRINCIPLE
    
    
    52,456
    
    
    83,127
    
    
    93,269
    
    
    165,865Income tax expense
    
    
    (13,299
    )
    
    (30,559
    )
    
    (23,317
    )
    
    (59,853
    )NET INCOME BEFORE CUMULATIVE
      EFFECTOF CHANGE IN ACCOUNTING
      PRINCIPLE
    
    
    39,157
    
    
    52,568
    
    
    69,952
    
    
    106,012CUMULATIVE EFFECT OF CHANGE
      INACCOUNTING PRINCIPLE, NET OF
      TAX(NOTE 5)
    
    
    (10,342
    )
    
    ---
    
    
    (10,342
    )
    
    ---NET INCOME
    
    
    28,815
    
    
    52,568
    
    
    59,610
    
    
    106,012




See accompanying notes to consolidated
      financial statements5


ANCHOR NATIONAL LIFE INSURANCE
      COMPANYCONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
      (Continued)For the three months and six months ended June 30, 2001 and
      2000(Unaudited)Three
      Months
    
    Six
      Months2001
    
    2000
    
    2001
    
    2000(In
    thousands)OTHER COMPREHENSIVE INCOME
      (LOSS),NET OF TAX:Net unrealized gains
    (losses)on debt and equity securitiesavailable for sale identifiedin the current period (net ofincome tax benefit of $10,988and $7,493 for the secondquarters of 2001 and 2000,respectively, and income taxexpense of $2,185 and incometax benefit of $14,253 for thesix months of 2001 and 2000,respectively)
    
    
    (20,407
    )
    
    (13,916
    )
    
    4,057
    
    
    (26,470
    )Less reclassification
      adjustmentfor net realized lossesincluded in net income (netof income tax benefit of$4,261 and $1,099 forthe second quarters of 2001and 2000, respectively, and$11,396 and $1,617 forthe six months of 2001 and2000, respectively)
    
    
    7,913
    
    
    2,041
    
    
    21,164
    
    
    3,003CUMULATIVE EFFECT OF CHANGE
      INACCOUNTING PRINCIPLE, NET OF TAX(NOTE 5)
    
    
    ---
    
    
    ---
    
    
    1,389
    
    
    ---Net change related to cash
      flowhedges (net of income tax benefitof $89 and income tax expenseof $267 for the secondquarter and six months of2001, respectively)
    
    
    (164
    )
    
    ---
    
    
    497
    
    
    ---OTHER COMPREHENSIVE INCOME
      (LOSS)
    
    
    (12,658
    )
    
    (11,875
    )
    
    27,107
    
    
    (23,467
    )COMPREHENSIVE INCOME
    
    $
    16,157
    
    $
    40,693
    
    $
    86,717
    
    $
    82,545




See accompanying notes to consolidated
      financial statements6


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




See accompanying notes to consolidated
      financial statements7


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




See accompanying notes to consolidated
      financial statements8


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 a direct
      wholly owned subsidiary of SunAmerica Life Insurance Company (the
      "Parent"), which is an indirect wholly owned subsidiary of American
      International Group, Inc. ("AIG"), an international insurance and
      financial services holding company.  The Company is an
      Arizona-domiciled life insurance company which conducts its business
      through three segments:  annuity operations, asset management
      operations and broker-dealer operations.  Annuity operations consist
      of the sale and administration of deposit-type insurance contracts,
      including fixed and variable annuities, universal life insurance contracts
      and guaranteed investment contracts ("GICs").  Asset management
      operations, which include the distribution and management of mutual funds,
      are conducted by SunAmerica Asset Management Corp. ("SunAmerica Asset
      Management"), the Company's registered investment advisor and wholly owned
      subsidiary and its related distributor, SunAmerica Capital Services, Inc.
      ("SACS").  Broker-dealer operations involve the sale of securities
      and financial services products, and are conducted by Royal Alliance
      Associates, Inc. ("Royal"), a wholly owned subsidiary of the
      Company.Effective January 1, 2001, the Parent
      contributed a wholly owned subsidiary, SA Affordable Housing LLC ("SAAH
      LLC"), to the Company.  SAAH LLC was subsequently contributed by the
      Company to SunAmerica Asset Management.  At the time of the
      contribution, SAAH LLC had partnership assets of $432,120,000, other
      assets of $623,000 and shareholder's equity of $432,743,000.  SAAH
      LLC's results of operations are included within the asset management
      operations.In the opinion of the Company, the
      accompanying unaudited consolidated financial statements contain all
      adjustments necessary, consisting of normal recurring items, to present
      fairly the Company's consolidated financial position as of June 30, 2001
      and December 31, 2000, the results of its consolidated operations for the
      three months and six months ended June 30, 2001 and 2000 and its
      consolidated cash flows for the six months ended June 30, 2001 and
      2000.  The results of operations for the three months and six months
      ended June 30, 2001 are not necessarily indicative of the results to be
      expected for the full year.  The accompanying unaudited consolidated
      financial statements should be read in conjunction with the audited
      consolidated financial statements for the year ended December 31, 2000,
      contained in the Company's 2000 Annual Report on Form 10-K.  Certain
      prior year items have been reclassified to conform to the current period's
      presentation.




9


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




10


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




11


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 June 30, 2001 is
      $925,000,000.  Related to each of these agreements are participation
      agreements with the Parent under which the Parent will share in
      $460,100,000 of these liabilities in exchange for a proportionate
      percentage of the fees received under these agreements.  Management
      does not anticipate any material losses with respect to these
      commitments.The
      Company has entered into an agreement whereby it is committed to purchase
      the remaining principle amount, $398.8 million as of June 30, 2001, of
      various mortgage-backed securities at par value in March 2006.  At
      the present time, management does not anticipate any material losses with
      respect to this agreement.4.
    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 June 30, 2001, the Company had one outstanding Swap
      Agreement subject to the provisions of SFAS 133 (see Note 5 below) with a
      notional principal of $97,000,000 which matures in June 2002.  This
      agreement effectively converts a $97,000,000 floating rate commercial
      mortgage to a fixed rate instrument.  The agreement has been
      designated as a cash flow hedge and accordingly, the market value of the
      Swap Agreement, $2,901,000, has been recorded as an asset in the Company's
      consolidated balance sheet as of June 30, 2001.  In compliance with
      SFAS 133, changes in the market value of this Swap Agreement, net of
      taxes, are recognized as a component of other comprehensive
      income.5.
    RECENTLY ISSUED ACCOUNTING
      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.




12


5.
    RECENTLY ISSUED ACCOUNTING STANDARD
      (continued)In November 1999, the Emerging Issues Task
      Force ("EITF") of the FASB issued EITF 99-20, Recognition of Interest
      Income and Impairment on Purchased and Retained Interests in Securitized
      Financial Assets ("EITF 99-20").  This pronouncement changes the
      accounting requirements for interests in many asset backed securities,
      including collateralized debt obligations, commercial mortgage backed
      securities and residential mortgage backed securities.  EITF 99-20
      requires that interest income on securities within its scope be recognized
      prospectively, with changes in expected future cash flows reflected in
      reported yields going forward.  In addition, if cash flows are
      expected to decrease, EITF 99-20 may require investors to recognize
      impairment losses.  EITF 99-20 is effective for the Company as of
      April 1, 2001.  The adoption of EITF 99-20 on April 1, 2001 resulted
      in a loss of $10,342,000, net of tax, which is being recognized and
      reported in the consolidated statement of income and comprehensive income
      as a cumulative effect of an accounting
  change.




13


ANCHOR NATIONAL LIFE INSURANCE
      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 and six months ended June 30, 2001 and June 30, 2000 follows. 
      Certain prior period amounts have been reclassified to conform to the
      current period's presentation.In connection
      with the "safe harbor" provisions of the Private Securities Litigation
      Reform Act of 1995, the Company cautions readers regarding certain
      forward-looking statements contained in this report and in any other
      statements made by, or on behalf of, the Company, whether or not in future
      filings with the Securities and Exchange Commission (the "SEC").
      Forward-looking statements are statements not based on historical
      information and which relate to future operations, strategies, financial
      results, or other developments.  Statements using verbs such as
      "expect," "anticipate," "believe" or words of similar import generally
      involve forward-looking statements.  Without limiting the foregoing,
      forward-looking statements include statements which represent the
      Company's beliefs concerning future levels of sales and redemptions of the
      Company's products, investment spreads and yields, or the earnings and
      profitability of the Company's activities.Forward-looking statements are
      necessarily based on estimates and assumptions that are inherently subject
      to significant business, economic and competitive uncertainties and
      contingencies, many of which are beyond the Company's control and many of
      which are subject to change.  These uncertainties and contingencies
      could cause actual results to differ materially from those expressed in
      any forward-looking statements made by, or on behalf of, the
      Company.  Whether or not actual results differ materially from
      forward-looking statements may depend on numerous foreseeable and
      unforeseeable developments.  Some may be national in scope, such as
      general economic conditions, changes in tax law and changes in interest
      rates.  Some may be related to the insurance industry generally, such
      as pricing competition, regulatory developments and industry
      consolidation.  Others may relate to the Company specifically, such
      as credit, volatility and other risks associates with the Company's
      investment portfolio.  Investors are also directed to consider other
      risks and uncertainties discussed in documents filed by the Company with
      the SEC.  The Company disclaims any obligation to update
      forward-looking information.**RESULTS OF
      OPERATIONS**The Company
      has three business segments, as presented in Note 2 of Notes to
      Consolidated Financial Statements: annuity operations, asset management
      operations and broker-dealer operations.  Annuity operations consist
      of the sale and administration of deposit-type insurance contracts, such
      as fixed and variable annuities, universal life insurance contracts and
      guaranteed investment contracts ("GICs").  Annuity operations focus
      primarily on the marketing of variable annuity products and the
      administration of a closed block of universal life business.  The
      variable annuity products offer investors a broad spectrum of fund
      alternatives, with a choice of investment GIC managers, as well as
      guaranteed fixed-rate account options.  The Company earns fee income
      on investments in the variable account options and net investment income
      on the fixed-rate account options.




14


The asset
      management operations are conducted by the Company's registered investment
      advisor subsidiary, SunAmerica Asset Management Corp. ("SunAmerica Asset
      Management"), and its related distributor, SunAmerica Capital Services,
      Inc. ("SACS").  Premiums from variable annuities sold by the Company
      are held in trusts that are owned by the Company, with the assets directly
      supporting policyholder obligations.  SunAmerica Asset Management is
      the investment advisor for all of the trusts as well as trusts owned by an
      affiliate, First SunAmerica Life Insurance Company.  These companies
      earn fee income by distributing and managing a diversified family of
      mutual funds, managing certain subaccounts within the Company's variable
      annuity products and providing professional management of individual,
      corporate and pension plan portfolios.The
      broker-dealer operations are conducted by the Company's broker-dealer
      subsidiary, Royal Alliance Associates, Inc. ("Royal"), which sells
      proprietary annuities and mutual funds, as well as a full range of
      non-proprietary investment products through approximately 2,900
      independent registered representatives.  Royal earns income from
      commissions on sales of these products, net of the portion that is passed
      on to the registered representatives.  Royal is a registered
      broker-dealer under the Securities Exchange Act of 1934 and a member of
      the National Association of Securities Dealers.NET INCOME
      totaled $28.8 million in the second quarter of 2001, compared with $52.6
      million in the second quarter of 2000.  For the six months, net
      income amounted to $59.6 million in 2001, compared with $106.0 million in
      2000.CUMULATIVE
      EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE reflects the adoption of EITF
      99-20 on April 1, 2001.  The Company recorded a loss of $10,342,000,
      net of tax, which is recognized in the consolidated statement of income
      and comprehensive income as a cumulative effect of accounting change (see
      Note 5 of Notes to Consolidated Financial
    Statements).PRETAX INCOME
      BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE totaled $52.5
      million in the second quarter of 2001 and $83.1 million in the second
      quarter of 2000.  For the six months, pretax income before cumulative
      effect of change in accounting principle totaled $93.3 million in 2000,
      compared with $165.9 million in 2000.  The decrease in 2001 primarily
      resulted from increased net realized investment losses and increased
      amortization of deferred acquisition costs.INCOME TAX
      EXPENSE totaled $13.3 million in the second quarter of 2001, $30.6 million
      in the second quarter of 2000, $23.3 million in the six months of 2001 and
      $59.9 million in the six months of 2001, representing effective annualized
      tax rates of 25%, 37%, 25% and 36%, respectively.  The lower tax rate
      in 2001 is due primarily to tax credits generated by SA Affordable Housing
      LLC ("SAAH LLC"), a wholly-owned subsidiary of SunAmerica Asset Management
      (See Note 1).




15


**ANNUITY
      OPERATIONS**PRETAX INCOME
      BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE totaled $43.9
      million in the second quarter of 2001, compared with $66.0 million in the
      second quarter of 2000.  For the six months, pretax income before
      cumulative effect of change in accounting principle totaled $70.0 in 2001,
      compared with $132.3 million in 2000.  The decreases in 2001 from
      2000 primarily resulted from increased net realized investment losses,
      increased amortization of deferred acquisition costs and decreased net
      investment income.NET INVESTMENT
      INCOME, which is the spread between the income earned on invested assets
      and the interest paid on fixed annuities and other interest-bearing
      liabilities, totaled $36.4 million in the second quarter of 2001 and $33.1
      million in the second quarter of 2000.  These amounts equal 2.86% on
      average invested assets (computed on a daily basis) of $5.08 billion in
      the second quarter of 2001 and 2.44% on average invested assets of $5.42
      billion in the second quarter of 2000.  For the six months, net
      investment income decreased to $59.2 million in 2001 from $70.2 million in
      2000, representing 2.27% of average invested assets of $5.21 billion in
      2001 and 2.57% of average invested assets of $5.47 billion in
      2000.Net investment
      spreads include the effect of income earned or interest paid on the
      difference between average invested assets and average interest-bearing
      liabilities.  In the second quarter, average interest-bearing
      liabilities exceeded average invested assets by $7.7 million in 2001,
      whereas average invested assets exceeded average interest-bearing
      liabilities by $133.1 million in 2000.  For the six months, average
      invested assets exceeded average interest-bearing liabilities by $64.2
      million in 2001, compared with $176.3 million in 2000.  The decrease
      in 2001 reflects dividends of $94.1 million paid to SunAmerica Life
      Insurance Company (the "Parent") in the second quarter of 2001.  The
      difference between the Company's yield on average invested assets and the
      rate paid on average interest-bearing liabilities (the "Spread
      Difference") was 2.88% in the second quarter of 2001 and 2.33% in the
      second quarter of 2000.  For the six months, the Spread Difference
      was 2.21% in 2001 and 2.41% in 2000.  The decrease in the Spread
      Difference in 2001 compared to 2000 is due primarily to the impact of
      gains and losses on seed money and decreased partnership
      income.Investment
      income (and the related yields on average invested assets) totaled $94.1
      million (7.41%) in the second quarter of 2001, $95.3 million (7.04%) in
      the second quarter of 2000, $179.2 million (6.88%) in the six months of
      2001 and $199.2 million (7.29%) in the six months of 2000.  The
      increase in the investment yield in the second quarter of 2001 over the
      second quarter of 2000 is principally due to the impact of gains and
      losses on seed money and decreased partnership income.  In the second
      quarter of 2001, seed money gains were $3.3 million as compared to seed
      money losses of $4.8 million.  Partnership income was $0.2 million
      and $1.1 million in the second quarters of 2001 and 2000,
      respectively.  Excluding the impact of seed money gains and losses
      and partnership income, investment returns would have been 7.23% in the
      second quarter of 2001 and 7.48% in the second quarter of
      2000.The decrease
      in the investment yield in the six months of 2001 as compared to the six
      months of 2000 is due primarily to the impact of gains and losses on seed
      money and decreased partnership income.  In the six months of 2001,
      seed money losses were $5.6 million as compared to $3.6 million of seed
      money gains in 2000.  Partnership income was $0.5 million and $2.0
      million in the six months of 2001 and 2000, respectively.  Excluding
      seed money gains and losses and partnership income, investment returns
      would have been 7.19% for the six months of 2001 and 7.26% for the six
      months of 2000.




16


Expenses
      incurred to manage the investment portfolio amounted to $1.4 million in
      the second quarter of 2001, $2.0 million in the second quarter of 2000,
      $3.2 million in the six months of 2001 and $3.5 million in the six months
      of 2000.  These expenses are included as a reduction of investment
      income in the consolidated statement of income.Total interest
      expense equaled $57.7 million in the second quarter of 2001 and $62.3
      million in the second quarter of 2000.  For the six months, interest
      expense aggregated $120.0 million in 2001, compared with $129.0 million in
      2000.  The average rate paid on all interest-bearing liabilities was
      4.53% in the second quarter of 2001, compared with 4.71% in the second
      quarter of 2000.  For the six months, the average rate paid on all
      interest-bearing  liabilities  was  4.67% in 2001 and 4.88%
      in 2000.  Interest-bearing liabilities  averaged  $5.09
      billion during the second quarter of 2001, $5.28 billion during the second
      quarter of 2000, $5.14 billion during the six months of 2001 and $5.29
      billion during the six months of 2000.  The decreases in the overall
      rates paid in 2001 as compared to 2000 resulted primarily from reductions
      in crediting rates due to a decline in the interest rate environment
      during 2001.DECLINE IN
      AVERAGE INVESTED ASSETS largely resulted from the surrenders of certain
      closed blocks of fixed annuity policies.  Changes in average invested
      assets also reflect sales of the fixed account options of the Company's
      variable annuity products ("Fixed Annuity Premiums"), and renewal premiums
      on its universal life product ("UL Premiums"), partially offset by net
      exchanges from the fixed accounts into the separate accounts of variable
      annuity contracts.  Fixed Annuity Premiums and UL Premiums totaled
      $453.6 million in the second quarter of 2001, $486.6 million in the second
      quarter of 2000, $926.9 million in the six months of 2001 and $881.6
      million in the six months of 2000, and are largely premiums for the fixed
      accounts of variable annuities.  On an annualized basis, these
      premiums represent 39%, 40%, 40% and 34%, respectively, of the related
      reserve balances at the beginning of the respective
      periods.GIC premiums
      totaled $100.0 million in the second quarter of 2000, $40.0 million in the
      six months of 2001 and $250.0 million in the six months of 2000.  No
      such premiums were written in the second quarter of 2001.  GIC
      surrenders and maturities totaled $12.8 million in the second quarter of
      2001, $4.2 million in the second quarter of 2000, $175.9 million in the
      six months of 2001 and $8.2 million in the six months of 2000.  The
      GICs issued by the Company are generally variable rate contracts which
      guarantee the payment of principal and interest for a term of three to
      five years.  GICS that are purchased by banks for their long-term
      portfolios or by state and local governmental entities either prohibit
      withdrawals or permit scheduled book value withdrawals subject to the
      terms of the underlying indenture or agreement.  GICs purchased by
      asset management firms for their short-term portfolios either prohibit
      withdrawals or permit withdrawals with notice ranging from 90 to 270
      days.  In pricing GICs, the Company analyzes cash flow information
      and prices accordingly so that it is compensated for possible withdrawals
      prior to maturity.




17


NET REALIZED
      INVESTMENT LOSSES totaled $5.7 million in the second quarter of 2001,
      compared with $3.6 million in the second quarter of 2000 and include
      impairment writedowns of $8.9 million and $5.8 million,
      respectively.  For the six months, net realized investment losses
      totaled $30.5 million in 2001, compared with $5.4 million in 2000 and
      include impairment writedowns of $34.7 million and $8.4 million,
      respectively.  Thus, net realized gains from sales and redemptions of
      investments totaled $3.2 million in the second quarter of 2001, $2.2
      million in the second quarter of 2000, $4.2 million in the six months of
      2001 and $3.0 million in the six months of 2000.The Company
      sold or redeemed invested assets, principally bonds and notes, aggregating
      $350.3 million in the second quarter of 2001, $212.5 million in the second
      quarter of 2000, $730.0 million in the six months of 2001 and $621.5
      million in the six months of 2000.  Sales of investments result from
      the active management of the Company's investment portfolio.  Because
      redemptions of investments are generally involuntary and sales of
      investments are made in both rising and falling interest rate
      environments, net gains and losses from sales and redemptions of
      investments fluctuate from period to period, and represent, on an
      annualized basis, 0.25%, 0.16%, 0.16% and 0.11% of average invested assets
      in the second quarter of 2001, the second quarter of 2000, the six months
      of 2001 and the six months of 2000, respectively.  Active portfolio
      management involves the ongoing evaluation of asset sectors, individual
      securities within the investment portfolio and the reallocation of
      investments from sectors that are perceived to be relatively overvalued to
      sectors that are perceived to be relatively undervalued.  The intent
      of the Company's active portfolio management is to maximize total returns
      on the investment portfolio, taking into account credit, option, liquidity
      and interest-rate risk.Impairment
      writedowns include $8.9 million, $5.8 million, $34.7 million and $8.4
      million of provisions applied to high yield bonds in the second quarter of
      2001, the second quarter of 2000, the six months of 2001 and the six
      months of 2000, respectively.  On an annualized basis, impairment
      writedowns represent 0.70%, 0.43%, 1.33% and 0.31% of average invested
      assets in the second quarter of 2001, the second quarter of 2000, the six
      months of 2001 and the six months of 2000, respectively.  For the
      twenty quarters ended June 30, 2001, impairment writedowns as an
      annualized percentage of average invested assets have ranged up to 2.62%
      and have averaged 0.50%.  Such writedowns are made when the Company
      has determined that the applicable assets have suffered other than
      temporary declines in net realizable value.   Actual realization
      will be dependent upon future events.  The Company recorded $15.9
      million ($10.3 million, net of tax) of additional impairments pursuant to
      the implementation of EITF 99-20 (See Note 5 of Notes to Consolidated
      Financial Statements).  This adjustment was recorded as a cumulative
      effect of change in accounting principle in the accompanying consolidated
      statement of income and comprehensive income.VARIABLE
      ANNUITY FEES are based on the market value of assets in separate accounts
      supporting variable annuity contracts.  Such fees totaled $89.8
      million in the second quarter 2001 and $95.8 million in the second quarter
      of 2000.  For the six months, variable annuity fees totaled $180.4
      million in 2001, compared with $188.8 million in 2000.  The decreased
      fees reflect a decline in average variable annuity assets, principally due
      to a decline in market values and to surrenders, partially offset by
      receipt of variable annuity premiums and net exchanges into the separate
      accounts from the fixed accounts of variable annuity contracts.  On
      an annualized basis, variable annuity fees represent 1.8% of average
      variable annuity assets in all periods presented.  Variable annuity
      assets averaged $19.44 billion, $21.00 billion, $19.63 billion and $20.71
      billion during the second quarter of 2001 and 2000 and the six months of
      2001 and 2000, respectively.  Variable annuity premiums, which
      exclude premiums allocated to the fixed accounts of variable annuity
      products, totaled $427.2 million and $498.0 in the second quarters of 2001
      and 2000, respectively.  For the six months, variable annuity
      premiums totaled $839.1 million in 2001, compared with $972.3 million in
      2000.  On an annualized basis, these amounts represent 9%, 9%, 8% and
      10% of variable annuity reserves at the beginning of the respective
      periods.  Transfers from the fixed accounts of the Company's variable
      annuity products to the separate accounts (see "Decline in Average
      Invested Assets") are not classified as variable annuity premiums. 
      Accordingly, changes in variable are not necessarily indicative of the
      ultimate allocation by customers among fixed and variable account options
      of the Company's variable annuity
products.




18


Sales of
      variable annuity products (which include premiums allocated to the fixed
      accounts) ("Variable Annuity Product Sales") amounted to $868.1 million,
      $970.0 million, $1.74 billion and $1.83 billion in the second quarters of
      2001 and 2000 and six months of 2001 and 2000, respectively. Variable
      Annuity Product Sales primarily reflect sales of the Company's flagship
      variable annuity line, Polaris.  Polaris is a multimanager variable
      annuity that offers investors a choice of 31 variable funds and a number
      of guaranteed fixed-rate funds.  Variable Annuity Product Sales have
      decreased as a result of unfavorable stock market
      conditions.The Company
      has encountered increased competition in the variable annuity marketplace
      during recent years and anticipates that the market will remain highly
      competitive for the foreseeable future.  Also, from time to time,
      Federal initiatives are proposed that could affect the taxation of
      variable annuities and annuities generally (See
      "Regulation").UNIVERSAL LIFE
      INSURANCE FEES amounted to $4.8 million and $2.0 million in the second
      quarter of 2001 and 2000, respectively.  For the six months,
      universal life insurance fees totaled $10.1 million in 2001 and $6.7
      million in 2000.  Universal life insurance fees consist of mortality
      changes, up-front fees earned on premiums received and administrative
      fees, net of the excess mortality expense on these contracts.  The
      Company does not actively market universal life insurance contracts. 
      Such fees annualized represent 1.08%, 0.41%, 1.12% and 0.70% of average
      reserves for universal life insurance contracts in the respective
      periods.  Universal life insurance fees have increased in 2001,
      principally as a result of improved mortality experience, which fluctuates
      and cannot necessarily be expected to continue in future
      periods.SURRENDER
      CHARGES on fixed and variable annuity contracts and  universal life
      contracts totaled $5.9 million in the second quarter of 2001 and $5.7
      million in the second quarter of 2000.  For the six months, such
      surrender charges totaled $11.8 million in 2001 and $10.8 million in
      2000.  Surrender charges generally are assessed on withdrawals at
      declining rates during the first seven years of a contract. 
      Withdrawal payments, which exclude claims and lump-sum annuity benefits,
      totaled $491.6 million in the second quarter of 2001, compared with $532.3
      million in the second quarter of 2000.  For the six months, such
      withdrawal payments totaled $1.02 billion in 2001 and $1.19 billion in
      2000.  Annualized, these payments when expressed as a percentage of
      average fixed and variable annuity and universal life reserves represent
      8.3%, 8.4%, 8.5% and 9.4% for the second quarters of 2001 and 2000 and six
      months of 2001 and 2000, respectively.  Withdrawal rates were higher
      in 2000 due to higher surrenders on certain closed blocks of fixed annuity
      business.  Withdrawals include variable annuity payments from the
      separate accounts totaling $402.2 million (8.3% of average variable
      annuity reserves), $408.9 million (7.8% of average variable annuity
      reserves), $841.5 million (8.6% of average variable annuity reserves) and
      $903.9 million (8.8% of average variable annuity reserves) in the second
      quarters of 2001 and 2000 and the six months of 2001 and 2000,
      respectively.  Management does not anticipate a significant increase
      in the level of withdrawal payments relative to fixed and variable annuity
      and universal life reserves.




19


GENERAL,
      ADMINISTRATIVE AND OTHER EXPENSES totaled $32.8 million in the second
      quarter of 2001 and $27.5 million in the second quarter of 2000.  For
      the six months, general, administrative and other expenses totaled $60.5
      million in 2001 and $53.3 million in 2000.  General, administrative
      and other expenses have increased principally due to guaranteed death
      benefits paid pursuant to the Company's separate account contracts. 
      These guarantee payments, net of reinsurance, totaled $3.6 million in the
      second quarter of 2001 and $67,000 in the second quarter of 2000. 
      For the six months, such payments totaled $6.5 million in 2001 and
      $186,000 million in 2000.  The increase in these guaranteed minimum
      death benefit payments is principally due to unfavorable stock market
      conditions which resulted in decreases in the market values of the assets
      within the separate accounts.  General, administrative and other
      expenses remain closely controlled through a company-wide cost containment
      program and continue to represent less than 1% of average total
      assets.AMORTIZATION
      OF DEFERRED ACQUISITION COSTS totaled $40.8 million in the second quarter
      of 2001, compared with $28.8 million in the second quarter of 2000. 
      For the six months, such amortization totaled $73.8 million in 2001
      compared with $60.2 million in 2000.  The increase in amortization
      was primarily due to additional fixed and variable annuity sales and the
      subsequent amortization of related deferred commissions and other
      direct  selling costs.ANNUAL
      COMMISSIONS totaled $14.6 million in the second quarter of 2001, compared
      with $11.4 million in the second quarter of 2000.  For the six
      months, annual commissions amounted to $28.6 million in 2001 and $26.8
      million in 2000.  Annual commissions represent renewal commissions
      paid quarterly in arrears to maintain the persistency of certain of the
      Company's variable annuity contracts.  Substantially all of the
      Company's currently available variable annuity products allow for an
      annual commission payment option in return for a lower immediate
      commission.  The Company estimates that approximately 54% of the
      average balances of its variable annuity products is currently subject to
      such annual commissions.  Based on current sales, this percentage is
      expected to increase in future
periods.




20


**ASSET MANAGEMENT
      OPERATIONS**PRETAX INCOME
      BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE totaled $3.8
      million in the second quarter of 2001 and $10.6 million in the second
      quarter of 2000.  For the six months, pretax income before cumulative
      effect of change in accounting principle totaled $13.8 million in 2001 and
      $21.9 million in 2000.  The decrease in 2001 from 2000 primarily
      resulted from increased net realized investment losses and increased
      amortization of deferred acquisition costs, partially offset by an
      increase in net investment income.NET REALIZED
      INVESTMENT LOSSES totaled $9.1 million in the second quarter of 2001 and
      six months of 2001 and include impairment writedowns of $7.5 million in
      the second quarter of 2001 and six months of 2001.   There were
      no realized investment losses in 2000.  Thus, net realized losses
      from sales and redemptions of investments totaled $1.6 million in the
      second quarter and six months of 2001.  Impairment writedowns include
      $7.5 million of provisions applied to partnerships of SAAH LLC in the
      second quarter and six months of 2001.  Such writedowns are made when
      the Company has determined that the applicable assets have suffered other
      than temporary declines in net realizable value.   Actual
      realization will be dependent upon future events.VARIABLE
      ANNUITY FEES totaled $2.9 million in the second quarter of 2001, compared
      to $3.6 million in the second quarter of 2000.  For the six months,
      variable annuity fees totaled $5.9 million in 2001 and $7.3 million in
      2000.  The decreased fees reflect a decline in average variable
      annuity assets, principally due to a decline in market
      values.ASSET
      MANAGEMENT FEES, which include investment advisory fees and 12b-1
      distribution fees, are based on the market value of assets managed in
      mutual funds  by  SunAmerica  Asset  Management. 
      Such fees totaled $17.0 million on average assets managed of $6.64 billion
      in the second quarter of 2001 and $17.8 million on average assets managed
      of $6.33 billion in the second quarter of 2000.  For the six months,
      asset management fees totaled $34.2 million on average assets managed of
      $6.65 billion in 2001, compared with $34.8 million on average assets
      managed of $6.18 billion in 2000.  Asset management fees are not
      necessarily proportionate to average assets managed, principally due to
      changes in product mix.  Mutual fund sales, excluding sales of money
      market accounts, totaled $529.7 million in the second quarter of 2001,
      compared to $727.2 million in the second quarter of 2000.  For the
      six months, mutual fund sales amounted to $1.03 billion in 2001, compared
      with $1.56 billion in 2000.  Redemptions of mutual funds, excluding
      redemptions of money market accounts, amounted to $271.1 million in the
      second quarter of 2001, $185.7 million in the second quarter of 2000,
      $528.4 million in the six months of 2001 and $405.8 million in the six
      months of 2000, which, annualized, represent 19.3%, 13.5%, 18.8% and
      15.3%, respectively, of average related mutual fund assets.  The
      decrease in sales and the increase in redemptions in 2001 principally
      reflect lower demand for growth funds, which have been out of favor with
      investors due to unfavorable stock market
  conditions.GENERAL,
      ADMINISTRATIVE AND OTHER EXPENSES totaled $5.2 million in the second
      quarter of 2001 and $5.7 million in the second quarter of 2000.  For
      the six months, general, administrative and other expenses totaled $10.5
      million in 2001 and $12.2 million in 2000.  The decrease in expenses
      in 2001 principally reflects  the lower sales of mutual funds and
      related marketing costs.




21


AMORTIZATION
      OF DEFERRED ACQUISITION COSTS totaled $10.3 million in the second quarter
      of 2001, compared with $7.6 million in the second quarter of 2000. 
      For the six months, such amortization totaled $19.6 million in 2001 and
      $14.1 million in 2000.  The increase in amortization was primarily
      due to additional mutual fund sales and the subsequent amortization of
      related deferred commissions and other direct selling
      costs.**BROKER DEALER
      OPERATIONS**PRETAX INCOME
      BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE totaled $4.7
      million in 2001 and $6.5 million in 2000.  For the six months, pretax
      income before cumulative effect of change in accounting principle totaled
      $9.5 million in 2001 and $11.6 million in 2000.  The decrease in 2001
      from 2000 primarily resulted from a decline in net retained
      commissions.NET RETAINED
      COMMISSIONS totaled $11.9 million in 2001 and $14.0 million in 2000. 
      For the six months, net retained commissions totaled $23.8 million in 2001
      and $26.2 million in 2000.  Net retained commissions are derived from
      commissions on the sales of proprietary and nonproprietary investment
      products, after deducting approximately 90% of such commissions that is
      passed on to registered representatives and have decreased as a result of
      lower sales.  Fluctuations in net retained commissions may not
      necessarily be limited to fluctuations in sales primarily due to changes
      in sales mix.  Broker-dealer sales (mainly sales of general
      securities, mutual funds and annuities) totaled $2.65 billion in the
      second quarter of 2001 and $3.73 billion in the second quarter of 2000,
      $5.83 billion in the six months of 2001 and $6.61 billion in the six
      months of 2000.  The decrease in broker-dealer sales in 2001 reflects
      lower demand for mutual funds due to unfavorable stock market
      conditions.GENERAL,
      ADMINISTRATIVE AND OTHER EXPENSES totaled $7.5 million in 2001, compared
      with $7.7 million in 2000.  For the six months, general,
      administrative and other expenses totaled $15.2 million in 2001 and
      2000.**FINANCIAL CONDITION AND
      LIQUIDITY**SHAREHOLDER'S
      EQUITY increased to $1.55 billion at June 30, 2001 from $1.13 billion at
      December 31, 2000, due principally to a $432.7 million capital
      contribution from the Parent of its wholly-owned subsidiary, SAAH LLC, to
      the Company.  In addition, the Company recorded net income of $59.6
      million and other comprehensive income of $27.1 million, offset by
      ordinary and extraordinary dividends totaling $94.1 million paid to the
      Parent on April 2, 2001.INVESTED
      ASSETS at June 30, 2001 totaled $5.27 billion, compared with $5.26 billion
      at December 31, 2000.  The Company manages most of its invested
      assets internally.  The Company's general investment philosophy is to
      hold fixed-rate assets for long-term investment.  Thus, it does not
      have a trading portfolio.  However, the Company has determined that
      all of its portfolio of bonds, notes and redeemable preferred stocks (the
      "Bond Portfolio") is available to be sold in response to changes in market
      interest rates, changes in relative value of asset sectors and individual
      securities, changes in  prepayment risk, changes in the credit
      quality outlook for certain securities, the Company's need for liquidity
      and other similar factors.




22


THE BOND
      PORTFOLIO, which constituted 74% of the Company's total investment
      portfolio at June 30, 2001, had an amortized cost that was $78.7 million
      greater than its aggregate fair value at June 30, 2001 and $122.7
      million  greater  than  its  aggregate fair value at
      December 31, 2000.  The decrease in net unrealized losses on the Bond
      Portfolio during 2001 reflects impairment writedowns recorded in 2001 as
      well as the decline in prevailing interest rates and the corresponding
      effect on the fair value of the Bond  Portfolio at June 30,
      2001.At June 30,
      2001, the Bond Portfolio (excluding $1.4 million of redeemable preferred
      stocks) included $3.89 billion of bonds rated by Standard & Poor's
      ("S&P"), Moody's Investors Service ("Moody's"), Fitch ("Fitch") or the
      Securities Valuation Office of the National Association of Insurance
      Commissioners ("NAIC"), and $26.4 million of bonds rated by the Company
      pursuant to statutory ratings guidelines established by the NAIC.  At
      June 30, 2001, approximately $3.69 billion of the Bond Portfolio was
      investment grade, including $1.68 billion of U.S. government/agency
      securities and mortgage-backed securities
("MBS").At June 30,
      2001, the Bond Portfolio included $223.1 million of bonds that were not
      investment grade.  These non-investment-grade bonds accounted for
      approximately 0.8% of the Company's total assets and approximately 4.2% of
      its invested assets.Non-investment-grade securities
      generally provide higher yields and involve greater risks than
      investment-grade securities because their issuers typically are more
      highly leveraged and more vulnerable to adverse economic conditions than
      investment-grade issuers. In addition, the trading market for these
      securities is usually more limited than for investment-grade
      securities.  The Company had no material concentrations of
      non-investment-grade securities at June 30, 2001.The table on
      the next page summarizes the Company's rated bonds by rating
      classification as of June 30, 2001.




23


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-}
    
    $2,923,062
    
    $2,911,186
    
    1
    
    $83,502
    
    $85,512
    
    $3,006,564
    
    $2,996,698
    
    56.88
    %BBB+ to
      BBB-(Baa1 to Baa3)[BBB+ to BBB-]{BBB+ to BBB-}
    
    596,604
    
    586,577
    
    2
    
    112,628
    
    110,627
    
    709,232
    
    697,204
    
    13.23
    %BB+ to
      BB-(Ba1 to Ba3)[BB+ to BB-]{BB+ to BB-}
    
    65,098
    
    54,776
    
    3
    
    1,682
    
    1,474
    
    66,780
    
    56,250
    
    1.07
    %B+ to
    B-(B1 to B3)[B+ to B-]{B+ to B-}
    
    171,174
    
    136,526
    
    4
    
    4,320
    
    4,168
    
    175,494
    
    140,694
    
    2.67
    %CCC+ to
      C(Caa to C)[CCC]{CCC+ to C-}
    
    29,188
    
    18,801
    
    5
    
    6,000
    
    5,875
    
    35,188
    
    24,676
    
    0.47
    %CI to
    D[DD]{D}
    
    2,458
    
    1,509
    
    6
    
    ---
    
    ---
    
    2,458
    
    1,509
    
    0.03
    %TOTAL RATED
      ISSUES
    
    $3,787,584
    
    $3,709,375
    
    
    
    $208,132
    
    $207,656
    
    $3,995,716
    
    $3,917,031Footnotes appear on the following
      page.




24


Footnotes to the table of Rated Bonds by
      Rating Classification(1)
    S&P and Fitch rate debt securities in
      rating categories ranging from AAA (the highest) to D (in payment
      default).  A plus (+) or minus (-) indicates the debt's relative
      standing within the rating category.  A security rated BBB- or higher
      is considered investment grade.  Moody's rates debt securities in
      rating categories ranging from Aaa (the highest) to C (extremely poor
      prospects of ever attaining any real investment standing).  The
      number 1, 2 or 3 (with 1 the highest and 3 the lowest) indicates the
      debt's relative standing within the rating category.  A security
      rated Baa3 or higher is considered investment grade. Issues are
      categorized based on the highest of the S&P, Moody's and Fitch ratings
      if rated by multiple agencies.(2)
    Bonds and short-term promissory instruments
      are divided into six quality categories for NAIC rating purposes, ranging
      from 1 (highest) to 5 (lowest) for nondefaulted bonds plus one category,
      6, for bonds in or near default.  These six categories correspond
      with the S&P/Moody's/Fitch rating groups listed above, with categories
      1 and 2 considered investment grade.  The NAIC categories include
      $26.4 million of assets that were rated by the Company pursuant to
      applicable NAIC rating
guidelines.




25


Senior secured
      loans ("Secured Loans") are included in the Bond Portfolio and aggregated
      $155.7 million at June 30, 2001.  Secured Loans are senior to
      subordinated debt and equity and are secured by assets of the
      issuer.  At June 30, 2001, Secured Loans consisted of $52.3 million
      of publicly traded securities and $103.4 million of privately traded
      securities.  These Secured Loans are composed of loans to 37
      borrowers spanning 15 industries, with 28% of these assets concentrated in
      utilities and 17% concentrated in energy.  No other industry
      constituted more than 10% of these assets.While the
      trading market for the Company's privately traded Secured Loans is more
      limited than for publicly traded issues, management believes that
      participation in these transactions has enabled the Company to improve its
      investment yield.  As a result of restrictive financial covenants,
      these Secured Loans involve greater risk of technical default than do
      publicly traded investment-grade securities.  However, management
      believes that the risk of loss upon default for these Secured Loans is
      mitigated by such financial covenants and the collateral values underlying
      the Secured Loans. The Company's Secured Loans are rated by S&P,
      Moody's, Fitch, the NAIC or by the Company, pursuant to comparable
      statutory ratings guidelines established by the
  NAIC.MORTGAGE LOANS
      aggregated $694.0 million at June 30, 2001 and consisted of 130 commercial
      first mortgage loans with an average loan balance of approximately $5.3
      million, collateralized by properties located in 30 states. 
      Approximately 30% of this portfolio was office, 19% was manufactured
      housing, 18% was multifamily residential, 9% was hotels, 9% was
      industrial, 5% was retail, and 10% was other types.  At June 30,
      2001, approximately 32% and 9% of this portfolio were secured by
      properties located in California and New York, respectively, and no more
      than 8% of this portfolio was secured by properties located in any other
      single state. At June 30, 2001, there were 13 mortgage loans with
      outstanding balances of $10 million or more, which collectively aggregated
      approximately 39% of this portfolio.  At June 30, 2001, approximately
      28% of the mortgage loan portfolio consisted of loans with balloon
      payments due before July 1, 2004.  During 2001 and 2000, loans
      delinquent by more than 90 days, foreclosed loans and restructured loans
      have not been significant in relation to the total mortgage loan
      portfolio.Substantially
      all of the mortgage loan portfolio has been originated by the Company
      under strict underwriting standards.  Commercial mortgage loans on
      properties such as offices, hotels and shopping centers generally
      represent a higher level of risk than do mortgage loans secured by
      multifamily residences.  This greater risk is due to several factors,
      including the larger size of such loans and the more immediate effects of
      general economic conditions on these commercial property types. 
      However, due to the Company's strict underwriting standards, the Company
      believes that it has prudently managed the risk attributable to its
      mortgage loan portfolio while maintaining attractive
      yields.POLICY LOANS
      totaled $231.8 million at June 30, 2001, compared to $244.4 million at
      December 31, 2000,  and are primarily  loans taken against
      universal life policies.SEPARATE
      ACCOUNT SEED MONEY totaled $58.1 million at June 30, 2001, compared to
      $104.7 million at December 31, 2000, and consists of seed money for mutual
      funds used as investment vehicles for the Company's variable annuity
      separate accounts and SunAmerica Asset Management's mutual
      funds.   The decrease reflects a decline in the market value of
      the Company's variable annuity
assets.




26


PARTNERSHIPS
      totaled $177.1 million at June 30, 2001, constituting investments in 536
      partnerships with an average size of approximately $0.3 million, most of
      which are partnership assets of SAAH LLC which was contributed to the
      Company effective January 1, 2001 (see Note 1).   This portfolio
      includes $168.9 million of partnerships that make tax-advantaged
      investments in affordable housing properties, currently involving
      approximately 530 multifamily projects in 48 states, and $8.2 million of
      partnerships managed by independent money managers that invest in a broad
      selection of equity and fixed-income securities, currently including 419
      separate issuers.  The risks generally associated with partnerships
      include those related to their underlying investments (i.e., equity
      securities, debt securities and real estate), plus a level of illiquidity,
      which is mitigated, to some extent, for the affordable housing
      partnerships by the marketability of the tax credits they generate, and in
      the case of many of the other partnerships, by the existence of
      contractual termination provisions.OTHER INVESTED
      ASSETS aggregated $11.7 million at June 30, 2001, compared with $18.5
      million at December 31, 2000, and consist of collateralized bond
      obligations and other mutual fund investments.ASSET-LIABILITY MATCHING is utilized
      by the Company to minimize the risks of interest rate fluctuations and
      disintermediation.  The Company believes that its fixed-rate
      liabilities should be backed by a portfolio principally composed of
      fixed-rate investments that generate predictable rates of return. 
      The Company does not have a specific target rate of return.  Instead,
      its rates of return vary over time depending on the current interest rate
      environment, the slope of the yield curve, the spread at which fixed-rate
      investments are priced over the yield curve, default rates and general
      economic conditions.  Its portfolio strategy is constructed with a
      view to achieve adequate risk-adjusted returns consistent with its
      investment objectives of effective asset-liability matching, liquidity and
      safety.  The Company's fixed-rate products incorporate surrender
      charges or other restrictions in order to encourage persistency.
      Approximately 82% of the Company's fixed annuity, universal life and GIC
      reserves had surrender penalties or other restrictions at June 30,
      2001.As part of its
      asset-liability matching discipline, the Company conducts detailed
      computer simulations that model its fixed-rate assets and liabilities
      under commonly used stress-test interest rate scenarios.  With the
      results of these computer simulations, the Company can measure the
      potential gain or loss in fair value of its interest-rate sensitive
      instruments and seek to protect its economic value and achieve a
      predictable spread between what it earns on its invested assets and what
      it pays on its liabilities by designing its fixed-rate products and
      conducting its investment operations to closely match the duration of the
      fixed-rate assets to that of its fixed-rate liabilities.  The
      Company's fixed-rate assets include: cash and short-term investments;
      bonds, notes and redeemable preferred stocks; mortgage loans; policy
      loans; and investments in limited partnerships that invest primarily in
      fixed-rate securities.  At June 30, 2001, these assets had an
      aggregate fair value of $5.04 billion with a duration of 3.4.  The
      Company's fixed-rate liabilities include fixed annuity, GIC and universal
      life reserves and subordinated notes.  At June 30, 2001, these
      liabilities had an aggregate fair value (determined by discounting future
      contractual cash flows by related market rates of interest) of $4.70
      billion with a duration of 3.1.  The Company's potential exposure due
      to a 10% increase in prevailing interest rates from their June 30, 2001
      levels is a loss of approximately $13.7 million, representing the increase
      in the fair value of its fixed-rate liabilities that is not offset by an
      increase in the fair value of its fixed-rate assets.  Because the
      Company actively manages its assets and liabilities and has strategies in
      place to minimize its exposure to loss as interest rate changes occur, it
      expects that actual losses would be less than the estimated potential
      loss.




27


Duration is a common
      option-adjusted measure for the price sensitivity of a fixed-maturity
      portfolio to changes in interest rates.  It measures the approximate
      percentage change in the market value of a portfolio if interest rates
      change by 100 basis points, recognizing the changes in cash flows
      resulting from embedded options such as policy surrenders, investment
      prepayments and bond calls.  It also incorporates the assumption that
      the Company will continue to utilize its existing strategies of pricing
      its fixed annuity, universal life and GIC products, allocating its
      available cash flow amongst its various investment portfolio sectors and
      maintaining sufficient levels of liquidity.  Because the calculation
      of duration involves estimation and incorporates assumptions, potential
      changes in portfolio value indicated by the portfolio's duration will
      likely be different from the actual changes experienced under given
      interest rate scenarios, and the differences may be
      material.As a component
      of its asset and liability management strategy, the Company utilizes
      interest rate swap agreements ("Swap Agreements") to match assets more
      closely to liabilities.  Swap Agreements are agreements to exchange
      with a counterparty interest rate payments of differing character (for
      example, variable-rate payments exchanged for fixed-rate payments) based
      on an underlying principal balance (notional principal) to hedge against
      interest rate changes.  The Company typically utilizes Swap
      Agreements to create a hedge that effectively converts floating-rate
      assets and liabilities into fixed-rate instruments.  At June 30,
      2001, the Company had two outstanding Swap Agreements with a total
      notional principal of $126.8 million.  These agreements mature in
      June 2002 and December 2024.The Company
      also seeks to provide liquidity from time to time by using reverse
      repurchase agreements ("Reverse Repos") and by investing in MBSs. It also
      seeks to enhance its spread income by using Reverse Repos.  Reverse
      Repos involve a sale of securities and an agreement to repurchase the same
      securities at a later date at an agreed upon price and are generally
      over-collateralized.  MBSs are generally investment-grade securities
      collateralized by large pools of mortgage loans.  MBSs generally pay
      principal and interest monthly.  The amount of principal and interest
      payments may fluctuate as a result of repayments of the underlying
      mortgage loans.There are
      risks associated with some of the techniques the Company uses to provide
      liquidity, enhance its spread income and match its assets and
      liabilities.  The primary risk associated with the Company's Reverse
      Repos and Swap Agreements is counterparty risk.  The Company
      believes, however, that the counterparties to its Reverse Repos and Swap
      Agreements are financially responsible and that the counterparty risk
      associated with those transactions is minimal.  It is the Company's
      policy that these agreements are entered into with counterparties who have
      a debt rating of A/A2 or better from both S&P and Moody's.  The
      Company continually monitors its credit exposure with respect to these
      agreements.  In addition to counterparty risk, Swap Agreements also
      have interest rate risk.  However, the Company's Swap Agreements
      typically hedge variable-rate assets or liabilities, and interest rate
      fluctuations that adversely affect the net cash received or paid under the
      terms of a Swap Agreement would be offset by increased interest income
      earned on the variable-rate assets or reduced interest expense paid on the
      variable-rate liabilities.  The primary risk associated with MBSs is
      that a changing interest rate environment might cause prepayment of the
      underlying obligations at speeds slower or faster than anticipated at the
      time of their purchase.  As part of its decision to purchase an MBS,
      the Company assesses the risk of prepayment by analyzing the security's
      projected performance over an array of interest-rate scenarios.  Once
      an MBS is purchased, the Company monitors its actual prepayment experience
      monthly to reassess the relative attractiveness of the security with the
      intent to maximize total return.




28


INVESTED
      ASSETS EVALUATION is routinely conducted by the Company. Management
      identifies monthly those investments that require additional monitoring
      and carefully reviews the carrying values of such investments at least
      quarterly to determine whether specific investments should be placed on a
      nonaccrual basis and to determine declines in value that may be other than
      temporary.  In making these reviews for bonds, management principally
      considers the adequacy of any collateral, compliance with contractual
      covenants, the borrower's recent financial performance, new reports and
      other externally generated information concerning the creditor's affairs.
      In the case of publicly traded bonds, management also considers market
      value quotations, if available.  For mortgage loans, management
      generally considers information concerning the mortgaged property and,
      among other things, factors impacting the current and expected payment
      status of the loan and, if available, the current fair value of the
      underlying collateral. For investments in partnerships, management reviews
      the financial statements and other information provided by the general
      partners.The carrying
      values of investments that are determined to have declines in value that
      are other than temporary are reduced to net realizable value and, in the
      case of bonds, no further accruals of interest are made.  The
      provisions for impairment on mortgage loans are based on losses expected
      by management to be realized on transfers of mortgage loans to real
      estate, on the disposition and settlement of mortgage loans and on
      mortgage loans that management believes may not be collectible in full.
      Accrual of interest is suspended when principal and interest payments on
      mortgage loans are past due more than 90 days.DEFAULTED
      INVESTMENTS, comprising all investments that are in default as to the
      payment of principal or interest, totaled $7.3 million of bonds at June
      30, 2001, and constituted approximately 0.1% of total invested
      assets.  At December 31, 2000, defaulted investments totaled $3.6
      million of bonds and constituted less than 0.1% of total invested
      assets.SOURCES OF
      LIQUIDITY are readily available to the Company in the form of the
      Company's existing portfolio of cash and short-term investments, Reverse
      Repo capacity on invested assets and, if required, proceeds from invested
      asset sales.   At June 30, 2001, approximately $1.80 billion of
      the Company's Bond Portfolio had an aggregate unrealized gain of $32.6
      million, while approximately $2.12 billion of the Bond Portfolio had an
      aggregate unrealized loss of $111.3 million.  In addition, the
      Company's investment portfolio currently provides approximately $50.3
      million of monthly cash flow from scheduled principal and interest
      payments.  Historically, cash flows from operations and from the sale
      of the Company's annuity and GIC products have been more than sufficient
      in amount to satisfy the Company's liquidity
  needs.




29


Management is
      aware that prevailing market interest rates may shift significantly and
      has strategies in place to manage either an increase or decrease in
      prevailing rates.  In a rising interest rate environment, the
      Company's average cost of funds would increase over time as it prices its
      new and renewing annuities and GICs to maintain a generally competitive
      market rate.  Management would seek to place new funds in investments
      that were matched in duration to, and higher yielding than, the
      liabilities assumed.  The Company believes that liquidity to fund
      withdrawals would be available through incoming cash flow, the sale of
      short-term or floating-rate instruments or Reverse Repos on the Company's
      substantial MBS segment of the Bond Portfolio, thereby avoiding the sale
      of fixed-rate assets in an unfavorable bond
  market.In a declining
      rate environment, the Company's cost of funds would decrease over time,
      reflecting lower interest crediting rates on its fixed annuities and
      GICs.  Should increased liquidity be required for withdrawals, the
      Company believes that a significant portion of its investments could be
      sold without adverse consequences in light of the general strengthening
      that would be expected in the bond market.**REGULATION**The Company,
      in common with other insurers, is subject to regulation and supervision by
      the states and other jurisdictions in which it does business.  Within
      the United States, the method of such regulation varies but generally has
      its source in statutes that delegate regulatory and supervisory powers to
      an insurance official.  The regulation and supervision relate
      primarily to approval of policy forms and rates, the standards of solvency
      that must be met and maintained, including risk based capital
      measurements, the licensing of insurers and their agents, the nature of
      and limitations on investments, restrictions on the size of risks which
      may be insured under a single policy, deposits on securities for the
      benefit of policyholders, methods of accounting, periodic examinations of
      the affairs of insurance companies, the form and content of reports of
      financial condition required to be filed, and reserves for unearned
      premiums, losses and other purposes.  In general, such regulation is
      for the protection of policyholders rather than security
      holders.Risk based
      capital ("RBC") standards are designed to measure the adequacy of an
      insurer's statutory capital and surplus in relation to the risks inherent
      in its business.  The standards are intended to help identify
      inadequately capitalized companies and require specific regulatory actions
      in the event an insurer's RBC is deficient.  The RBC formula develops
      a risk adjusted target level of adjusted statutory capital and surplus by
      applying certain factors to various asset, premium and reserve
      items.  Higher factors are applied to more risky items and lower
      factors are applied to less risky items.  Thus, the target level of
      statutory surplus varies not only as a result of the insurer's size, but
      also on the risk profile of the insurer's
  operations.




30


The RBC Model
      Law provides four incremental levels of regulatory attention for insurers
      whose surplus is below  the calculated RBC target.  These levels
      of attention range in severity from requiring the insurer to submit a plan
      for corrective action to actually placing the insurer under regulatory
      control.  The statutory capital and surplus of the Company exceeded
      its RBC requirements by a considerable margin as of June 30,
      2001.In 1998, the
      NAIC adopted the codification of statutory accounting principles
      ("Codification") which replaced the NAIC's previous primary guidance on
      statutory accounting, which became effective January 1, 2001. 
      Codification changed prescribed statutory accounting practices and has
      resulted in changes to the accounting practices that the Company uses to
      prepare its statutory basis financial statements.  Codification has
      been adopted by all fifty states as the prescribed basis of accounting,
      including Arizona.  The adoption of Codification resulted in an
      increase to the Company's statutory surplus of approximately $99.4
      million.Privacy
      provisions of the Gramm-Leach-Bliley Act are fully effective in 2001 and
      establish new consumer protections regarding the security,
      confidentiality, and uses of nonpublic personal information of
      individuals.  The law also requires financial institutions to
      disclose their privacy policies to their customers.  Additional
      privacy legislation pending in the United States Congress and several
      states is designed to provide further privacy protections to consumers of
      financial products and services.  These statutes and regulations may
      result in additional regulatory compliance costs, may limit the Company's
      ability to market its products, and may otherwise constrain the nature or
      scope of the Company's insurance and financial services
      operations.The
      Gramm-Leach-Bliley Act also allows combinations between insurance
      companies, banks and other entities.  It is not yet known what effect
      this legislation will have on insurance companies.  In addition, from
      time to time, Federal initiatives are proposed that could affect the
      Company's businesses.  Such initiatives include employee benefit plan
      regulations and tax law changes affecting the taxation of insurance
      companies and the tax treatment of insurance and other investment
      products.  Proposals made in recent years to limit the tax deferral
      of annuities or otherwise modify the tax rules related to the treatment of
      annuities have not been enacted.  While certain of such proposals, if
      implemented, could have an adverse effect on the Company's sales of
      affected products, and, consequently, on its results of operations, the
      Company believes these proposals have a small likelihood of being enacted,
      because they would discourage retirement savings  and 
      there  is  strong  public  and  industry 
      opposition  to them.SunAmerica
      Asset Management is registered with the Securities and Exchange Commission
      ("SEC") as an investment adviser under the Investment Advisers Act of
      1940.  The mutual funds that it markets are subject to regulations
      under the Investment Company Act of 1940.  SunAmerica Asset
      Management and the mutual funds are also subject to regulation and
      examination by the SEC.  In addition, variable annuities and the
      related separate accounts of the Company are subject to regulation by the
      SEC under the Securities Act of 1933 and the Investment Company Act of
      1940.




31


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




32


QUANTITATIVE AND QUALITATIVE
      DISCLOSURES ABOUT MARKET 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 27 to
      28 herein.




33


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)     
|10(b)     

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



34


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

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




35


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



36