SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549


                                    FORM 10-Q

(Mark  One)
/  /   QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR 15 (d) OF THE SECURITIES
      EXCHANGE  ACT  OF  1934

                                       OR

/X/   TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR 15 (d) OF THE SECURITIES
      EXCHANGE  ACT  OF  1934

      For  the  transition  period  from  October  1,  1998 to December 31, 1998


                          Commission File No. 33-47472


                     ANCHOR NATIONAL LIFE INSURANCE COMPANY


      Incorporated  in  Arizona                              86-0198983
                                                           IRS  Employer
                                                        Identification  No.

             1 SunAmerica Center, Los Angeles, California 90067-6022
       Registrant's telephone number, including area code:  (310) 772-6000


     INDICATE  BY  CHECK  MARK  WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED  TO  BE FILED BY SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934  DURING  THE  PRECEDING  12  MONTHS  (OR  FOR  SUCH SHORTER PERIOD THAT THE
REGISTRANT  WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING  REQUIREMENTS  FOR  THE  PAST  90  DAYS  Yes  x  No  ___
                                                    --

     THE  NUMBER  OF  SHARES  OUTSTANDING  OF  THE  REGISTRANT'S COMMON STOCK ON
FEBRUARY  12,  1999  WAS  AS  FOLLOWS:

Common  Stock  (par  value  $1,000 per share)           3,511 shares outstanding





















































<PAGE>
<TABLE>
<CAPTION>

                     ANCHOR NATIONAL LIFE INSURANCE COMPANY

                                      INDEX



                                                                Page
                                                              Number(s)
                                                              ---------
<S>                                                           <C>
Part I - Financial Information

      Consolidated Balance Sheet (Unaudited) -
      December 31, 1998 and September 30, 1998                      3-4

      Consolidated Statement of Income and Comprehensive
      Income (Unaudited) - Three Months Ended December 31,
      1998 and 1997                                                   5

      Consolidated Statement of Cash Flows (Unaudited) -
      Three Months Ended December 31, 1998 and 1997                 6-7

      Notes to Consolidated Financial Statements (Unaudited)          8

      Management's Discussion and Analysis of Financial
      Condition and Results of Operations                          9-25

      Quantitative and Qualitative Disclosures About
      Market Risk                                                    26

Part II - Other Information                                          27



























































</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                     ANCHOR NATIONAL LIFE INSURANCE COMPANY
                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)



                                              December 31,    September 30,
                                                      1998             1998
                                           ---------------  ---------------
<S>                                        <C>              <C>
ASSETS

Investments:
  Cash and short-term investments          $ 3,303,454,000  $   333,735,000
  Bonds, notes and redeemable
    preferred stocks available for sale,
    at fair value (amortized cost:
    December 1998, $4,252,740,000;
    September 1998, $1,934,863,000)          4,248,840,000    1,954,754,000
  Mortgage loans                               388,780,000      391,448,000
  Policy loans                                 320,688,000       11,197,000
  Common stocks available for sale,
    at fair value (cost: December 1998,
    $1,409,000; September 1998, $115,000)        1,419,000          169,000
  Real estate                                   24,000,000       24,000,000
  Other invested assets                         19,762,000       19,439,000
                                           ---------------  ---------------

  Total investments                          8,306,943,000    2,734,742,000

Variable annuity assets held in separate
  accounts                                  13,767,213,000   11,133,569,000
Accrued investment income                       73,441,000       26,408,000
Deferred acquisition costs                     866,053,000      539,850,000
Income taxes currently receivable                      ---        5,869,000
Receivable from brokers for sales of
  securities                                    22,826,000       23,904,000
Other assets                                   109,857,000       85,926,000
                                           ---------------  ---------------

TOTAL ASSETS                               $23,146,333,000  $14,550,268,000
                                           ===============  ===============















































See accompanying notes
</TABLE>


                                        3
<PAGE>
<TABLE>
<CAPTION>

                     ANCHOR NATIONAL LIFE INSURANCE COMPANY
                     CONSOLIDATED BALANCE SHEET (Continued)
                                   (Unaudited)



                                                  December 31,    September 30,
                                                          1998             1998
                                              ----------------  ---------------
<S>                                           <C>               <C>
LIABILITIES AND SHAREHOLDER'S EQUITY

Reserves, payables and accrued liabilities:
  Reserves for fixed annuity contracts        $ 5,485,272,000   $ 2,189,272,000
  Reserves for universal life insurance
    contracts                                   2,317,365,000               ---
  Reserves for guaranteed investment
    contracts                                     353,137,000       282,267,000
  Payable to brokers for purchases of
    securities                                            ---        50,957,000
  Income taxes currently payable                   11,123,000               ---
  Other liabilities                               150,058,000       106,594,000
                                              ----------------  ---------------

  Total reserves, payables
    and accrued liabilities                     8,316,955,000     2,629,090,000
                                              ----------------  ---------------

Variable annuity liabilities related to
  separate accounts                            13,767,213,000    11,133,569,000
                                              ----------------  ---------------

Subordinated notes payable to affiliates          209,367,000        39,182,000
                                              ----------------  ---------------

Deferred income taxes                             105,772,000        95,758,000
                                              ----------------  ---------------

Shareholder's equity:
  Common Stock                                      3,511,000         3,511,000
  Additional paid-in capital                      378,674,000       308,674,000
  Retained earnings                               366,460,000       332,069,000
  Accumulated other comprehensive
    income (loss)                                  (1,619,000)        8,415,000
                                              ----------------  ---------------

  Total shareholder's equity                      747,026,000       652,669,000
                                              ----------------  ---------------

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY    $23,146,333,000   $14,550,268,000
                                              ================  ===============





































See accompanying notes
</TABLE>


                                        4
<PAGE>

<TABLE>
<CAPTION>

                     ANCHOR NATIONAL LIFE INSURANCE COMPANY
            CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
              For the three months ended December 31, 1998 and 1997
                                   (Unaudited)



                                                      1998           1997
                                             -------------  -------------
<S>                                          <C>            <C>
Investment income                            $ 54,278,000   $ 59,855,000 
                                             -------------  -------------

Interest expense on:
  Fixed annuity contracts                     (22,828,000)   (27,821,000)
  Guaranteed investment contracts              (3,980,000)    (4,550,000)
  Senior indebtedness                             (34,000)      (193,000)
  Subordinated notes payable to affiliates       (471,000)      (809,000)
                                             -------------  -------------

  Total interest expense                      (27,313,000)   (33,373,000)
                                             -------------  -------------

NET INVESTMENT INCOME                          26,965,000     26,482,000 
                                             -------------  -------------

NET REALIZED INVESTMENT GAINS                     271,000     20,935,000 
                                             -------------  -------------

Fee income:
  Variable annuity fees                        58,806,000     44,364,000 
  Net retained commissions                     11,479,000     10,461,000 
  Asset management fees                         8,068,000      6,903,000 
  Surrender charges                             3,239,000      1,289,000 
  Other fees                                    1,738,000        967,000 
                                             -------------  -------------

TOTAL FEE INCOME                               83,330,000     63,984,000 
                                             -------------  -------------

GENERAL AND ADMINISTRATIVE EXPENSES           (22,375,000)   (23,019,000)
                                             -------------  -------------

AMORTIZATION OF DEFERRED ACQUISITION COSTS    (27,070,000)   (17,202,000)
                                             -------------  -------------

ANNUAL COMMISSIONS                             (6,624,000)    (3,526,000)
                                             -------------  -------------

PRETAX INCOME                                  54,497,000     67,654,000 

Income tax expense                            (20,106,000)   (23,306,000)
                                             -------------  -------------

NET INCOME                                     34,391,000     44,348,000 

Other comprehensive income, net of tax:

Net unrealized gains on bonds and notes
  available for sale:
    Net unrealized gains identified in the
      current period                           (8,920,000)    15,841,000 
    Less reclassification adjustment for
      net realized gains included in net
      income                                   (1,114,000)   (16,591,000)
                                             -------------  -------------

OTHER COMPREHENSIVE INCOME (LOSS)             (10,034,000)      (750,000)
                                             -------------  -------------

COMPREHENSIVE INCOME                         $ 24,357,000   $ 43,598,000 
                                             =============  =============

















See accompanying notes
</TABLE>


                                        5
<PAGE>
<TABLE>
<CAPTION>

                     ANCHOR NATIONAL LIFE INSURANCE COMPANY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
              For the three months ended December 31, 1998 and 1997
                                   (Unaudited)



                                                        1998            1997
                                             ---------------  --------------
<S>                                           <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                    $   34,391,000   $  44,348,000 
Adjustments to reconcile net income to net
  cash provided by operating activities:
    Interest credited to:
      Fixed annuity contracts                     22,828,000      27,821,000 
      Guaranteed investment contracts              3,980,000       4,550,000 
    Net realized investment gains                   (271,000)    (20,935,000)
    Amortization (accretion) of net premiums
      (discounts) on investments                  (1,199,000)      1,966,000 
    Amortization of goodwill                         356,000         293,000 
    Provision for deferred income taxes           15,417,000       1,682,000 
Change in:
  Accrued investment income                       (1,512,000)     (1,569,000)
  Deferred acquisition costs                     (37,562,000)    (28,376,000)
  Other assets                                   (21,070,000)    (10,320,000)
  Income taxes currently payable                  16,992,000      20,953,000 
  Other liabilities                                4,278,000      (4,036,000)
Other, net                                         6,038,000         126,000 
                                              ---------------  --------------

NET CASH PROVIDED BY OPERATING
  ACTIVITIES                                      42,666,000      36,503,000 
                                              ---------------  --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of:
    Bonds, notes and redeemable preferred
      stocks                                    (392,515,000)   (456,172,000)
    Mortgage loans                                (4,962,000)            --- 
    Other investments, excluding short-term
      investments                                 (1,992,000)            --- 
  Sales of:
    Bonds, notes and redeemable preferred
      stocks                                     265,039,000     288,402,000 
    Other investments, excluding short-term
      investments                                    142,000      43,135,000 
  Redemptions and maturities of:
    Bonds, notes and redeemable preferred
      stocks                                      37,290,000     214,105,000 
    Mortgage loans                                 7,699,000       5,996,000 
    Other investments, excluding short-term
      investments                                    853,000      67,475,000 
  Cash and short-term investments acquired
    in coinsurance transaction with
    MBL Life Assurance Corporation             3,083,211,000             --- 
                                              ---------------  --------------

NET CASH PROVIDED BY INVESTING ACTIVITIES      2,994,765,000     162,941,000 
                                              ---------------  --------------




























See accompanying notes
</TABLE>


                                        6

<PAGE>
<TABLE>
<CAPTION>

                     ANCHOR NATIONAL LIFE INSURANCE COMPANY
                CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
              For the three months ended December 31, 1998 and 1997
                                   (Unaudited)



                                                      1998            1997
                                           ---------------  --------------

<S>                                         <C>              <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Premium receipts on:
    Fixed annuity contracts                 $  352,955,000   $ 261,968,000 
    Guaranteed investment contracts                    ---       5,619,000 
  Net exchanges from the fixed
    accounts of variable annuity contracts    (448,762,000)   (242,466,000)
  Withdrawal payments on:
    Fixed annuity contracts                    (41,554,000)    (49,414,000)
    Guaranteed investment contracts             (3,797,000)     (4,131,000)
  Claims and annuity payments on fixed
    annuity contracts                           (9,333,000)     (8,876,000)
  Net receipts from (repayments of) other
    short-term financings                        9,545,000     (11,548,000)
  Net payment for recapture of a
    modified coinsurance transaction          (167,202,000)            --- 
  Receipts from issuance of subordinated
    note payable to affiliate                  170,436,000             --- 
  Capital contribution received                 70,000,000             --- 
                                            ---------------  --------------

NET CASH USED BY FINANCING ACTIVITIES          (67,712,000)    (48,848,000)
                                            ---------------  --------------

NET INCREASE IN CASH AND SHORT-TERM
  INVESTMENTS                                2,969,719,000     150,596,000 

CASH AND SHORT-TERM INVESTMENTS AT
  BEGINNING OF PERIOD                          333,735,000     113,580,000 
                                            ---------------  --------------

CASH AND SHORT-TERM INVESTMENTS AT
  END OF PERIOD                             $3,303,454,000   $ 264,176,000 
                                            ===============  ==============

SUPPLEMENTAL CASH FLOW INFORMATION:

  Interest paid on indebtedness             $      536,000   $     318,000 
                                            ===============  ==============


  Net income taxes paid                     $    1,335,000   $     794,000 
                                            ===============  ==============




































See accompanying notes
</TABLE>


                                        7
<PAGE>
                     ANCHOR NATIONAL LIFE INSURANCE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.     Basis  of  Presentation
       -----------------------

     At  December  31,  1998,  Anchor  National  Life  Insurance  Company  (the
"Company")  was a wholly owned indirect subsidiary of SunAmerica Inc. On January
1, 1999, SunAmerica Inc. merged with and into American International Group, Inc.
("AIG")  in  a  tax-free  reorganization  that  has been treated as a pooling of
interests for accounting purposes. Thus, SunAmerica Inc. ceased to exist on that
date.  However,  on  the  date of merger, substantially all of the net assets of
SunAmerica  Inc.  were  contributed  to  a  newly formed subsidiary of AIG named
SunAmerica  Inc.  ("SunAmerica").

In the opinion of the Company, the accompanying unaudited consolidated financial
statements  contain  all  adjustments  (consisting  of  only  normal  recurring
accruals)  necessary  to  present  fairly  the  Company's consolidated financial
position  as of December 31, 1998 and September 30, 1998, and the results of its
consolidated  operations  and  its  consolidated cash flows for the three months
ended  December  31,  1998  and  1997.  The  results of operations for the three
months  ended December 31, 1998 are not necessarily indicative of the results to
be  expected  for  the  full  year.  The  accompanying  unaudited  consolidated
financial statements should be read in conjunction with the audited consolidated
financial  statements for the fiscal year ended September 30, 1998, contained in
the  Company's  Annual Report on Form 10-K. Certain items have been reclassified
to  conform  to  the  current  period's  presentation.

2.     Reinsurance
       -----------

On  December 31, 1998, the Company acquired the individual life business and the
individual  and  group  annuity business of MBL Life Assurance Corporation ("MBL
Life"),  via  a  100%  coinsurance  transaction,  for  a  cash purchase price of
$128,420,000.  As  part  of this transaction, the Company acquired assets having
an aggregate fair value of $5,718,227,000, composed primarily of invested assets
totaling  $5,715,010,000.  Liabilities  assumed  in  this  acquisition  totaled
$5,831,266,000,  including  $3,413,827,000  of  fixed  annuity  reserves,
$2,317,365,000  of  universal  life  reserves  and  $70,687,000  of  guaranteed
investment  contract  reserves.  Reserves for universal life contracts are based
on  fund  value.  The  excess  of  the purchase price over the fair value of net
assets received amounted to $113,039,000 and is included in Deferred Acquisition
Costs  in  the  accompanying  consolidated  balance  sheet.

     This  business  was  assumed  from MBL life subject to existing reinsurance
ceded  agreements.  At  December  31,  1998, the maximum retention on any single
life was $2 million, and a total credit of $5,057,000 was taken against the life
insurance  reserves,  representing  predominantly  yearly  renewable  term
reinsurance.  In  order to limit even further the exposure to loss on any single
insured  and  to  recover  an  additional portion of the benefits paid over such
limits,  the Company entered into a reinsurance treaty effective January 1, 1999
under which the Company retains no more than $100,000 of risk on any one insured
life.  With  respect  to  these coinsurance agreements, the Company could become
liable  for  all obligations of the reinsured policies if the reinsurers were to
become  unable  to meet the obligations assumed under the respective reinsurance
agreements.







































                                        8
<PAGE>
                     ANCHOR NATIONAL LIFE INSURANCE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

2.     Reinsurance  (continued)
       -----------

     Included  in  the block of business acquired from MBL Life is approximately
$250,000,000  of  individual  life  business  and  $500,000,000 of group annuity
business  whose  contract  owners are residents of New York State ("the New York
Business").  Approximately  six  months  subsequent  to  completion  of  the
transaction,  the  New  York Business will be acquired by the Company's New York
affiliate,  First  SunAmerica  Life  Insurance  Company,  via  an  assumption
reinsurance agreement, and the remainder of the business will be acquired by the
Company  via  an  assumption  reinsurance  agreement  with  MBL Life, which will
supersede  the  coinsurance  agreement.  The $128,420,000 purchase price will be
allocated  between  the  Company  and  its  affiliate  based on their respective
assumed  reserves.

     On  December 31, 1998, the Company recaptured the business previously ceded
through  a modified coinsurance transaction to ANLIC Insurance Company (Cayman).
As part of this recapture, the Company paid cash of $170,436,000 and recorded an
increase in deferred amortization costs ("DAC") of $167,202,000 with the balance
of  $3,234,000  being  recorded  as  DAC  amortization  in the income statement.

3.     Subordinated  Notes  Payable  to  Affiliates
       --------------------------------------------

     On  December  30,  1998, the Company received cash totaling $170,436,000 in
exchange  for  issuance  of  a surplus note payable to SunAmerica Life Insurance
Company,  which has been included in Subordinated Notes Payable to Affiliates in
the  accompanying consolidated balance sheet. This note bears interest at a rate
of  7%,  and  is repayable upon approval by the Arizona Department of Insurance.

4.     Capital  Contribution
       ---------------------

     On  December  31,  1998,  SunAmerica  Life  Insurance  Company  contributed
additional  capital  of  $70,000,000  to  the  Company.

5.     Adoption  of  New  Accounting  Standard
       ---------------------------------------

     Effective  October  1,  1998,  the  Company  adopted Statement of Financial
Accounting  Standards  No.  130,  "Reporting  Comprehensive Income" ("SFAS 130")
which  requires  the reporting of comprehensive income in addition to net income
from  operations.  Comprehensive  income is a more inclusive financial reporting
methodology  that  includes  disclosure  of  certain  financial information that
historically  has  not  been  recognized  in the calculation of net income.  The
adoption  of  SFAS  130  did  not  have  an  impact  on the Company's results of
operations,  financial condition or liquidity.  Comprehensive income amounts for
the prior year are disclosed to conform to the current year's presentation.  Net
unrealized losses on bonds and notes available for sale increased by $10,034,000
during  the  three  months  ended  December  31, 1998, and increased by $750,000
during  the  three  months  ended  December  31,  1997.








































                                        9

<PAGE>
                     ANCHOR NATIONAL LIFE INSURANCE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

4.     Adoption  of  New  Accounting  Standard  (continued)
       ---------------------------------------

The  before tax, after tax, and tax (expense) benefit amounts for each component
of  the (decrease) increase in unrealized gains on bonds and notes available for
sale  for  both  the  current  and  prior  periods  are  summarized  below:
<TABLE>
<CAPTION>

                                                  Tax  Benefit
                                     Before  Tax    (Expense)     Net  of  Tax
                                    -------------   ----------   --------------

  Three  months  ended  December  31,
  1998:
<S>                                 <C>            <C>           <C>
  Net unrealized losses on bonds
  and notes available for sale
  identified in the current
  period                            $(22,123,000)  $ 7,743,000   $(14,380,000)

  Increase in Deferred Acquisition
    Cost adjustment identified in
    the current period                 8,400,000    (2,940,000)     5,460,000 
                                    -------------  ------------  -------------

                                     (13,723,000)    4,803,000     (8,920,000)
  Reclassification adjustment for
    net realized gains included
    in net income                     (1,713,000)      599,000     (1,114,000)
                                    -------------  ------------  -------------

    Total decrease in net
      unrealized gains on bonds
      and notes available for
      sale                          $(15,436,000)  $ 5,402,000   $(10,034,000)
                                    =============  ============  =============

  Three months ended December 31,
  1997:

  Net unrealized gains on bonds
  and notes available for sale
  identified in the current
  period                            $ 23,973,000   $(8,391,000)  $ 15,582,000 

  Increase in Deferred Acquisition
    Cost adjustment identified in
    the current period                   400,000      (141,000)       259,000 
                                    -------------  ------------  -------------

                                      24,373,000    (8,532,000)    15,841,000 
  Reclassification adjustment for
    net realized gains included
    in net income                    (25,524,000)    8,933,000    (16,591,000)
                                    -------------  ------------  -------------

    Total increase in net
      unrealized gains on
      bonds and notes
      available for sale            $ (1,151,000)  $   401,000   $   (750,000)
                                    =============  ============  =============
</TABLE>





























                                       10
<PAGE>
                     ANCHOR NATIONAL LIFE INSURANCE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Management's  discussion and analysis of financial condition and results of
operations  of  Anchor  National  Life Insurance Company (the "Company") for the
three  months  ended  December  31, 1998 ("1998") and December 31, 1997 ("1997")
follows.  The  Company  is  in  the  process  of changing its fiscal year end to
December  31.  Accordingly,  the quarter ended December 31, 1998 is a transition
period.

     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 or profitability of the
Company's  activities.

     Forward-looking  statements  are  necessarily  based  upon  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  associated 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

     NET  INCOME  totaled  $34.4 million in 1998, compared with $44.3 million in
1997.

     PRETAX  INCOME totaled $54.5 million in 1998 and $67.7 million in 1997. The
19.4% decrease primarily resulted from reduced net realized investment gains and
increased  amortization  of  deferred  acquisition  costs  ("DAC"),  which  were
partially  offset  by  increased  fee  income.

     NET  INVESTMENT  INCOME,  which  is the spread between the income earned on
invested  assets  and  the  interest  paid  on  fixed  annuities  and  other
interest-bearing liabilities, totaled $27.0 million in 1998 and $26.5 million in
1997.  These amounts equal 4.09% on average invested assets (computed on a daily
basis)  of  $2.64  billion in 1998 and 4.22% on average invested assets of $2.51
billion  in  1997.

     Net  investment  spreads  include  the  effect  of  income  earned  on  the




































                                       11
<PAGE>

excess  of  average  invested  assets over average interest-bearing liabilities.
This  excess  amounted  to $196.3 million in 1998 and $72.6 million in 1997. The
difference  between  the Company's yield on average invested assets and the rate
paid on average interest-bearing liabilities (the "Spread Difference") was 3.76%
in  1998  and  4.06%  in  1997.

     Investment  income  (and  the  related  yields  on average invested assets)
totaled  $54.3  million  (8.23%) in 1998, compared with $59.9 million (9.54%) in
1997.  The  declines  in investment income and the related yield in 1998 reflect
primarily  unusually  high  partnership  income  in  1997.

     Partnership  income decreased to $0.5 million (a yield of 43.70% on related
average assets of $4.4 million) in 1998, compared with $15.2 million (a yield of
400.95%  on related average assets of $15.1 million) in 1997. Partnership income
is  based  upon  cash  distributions  received  from  limited  partnerships, the
operations of which the Company does not influence. Consequently, such income is
not  predictable  and  there  can  be no assurance that the Company will realize
comparable  levels  of  such  income  in  the  future.

     Total  interest  expense equaled $27.3 million in 1998 and $33.4 million in
1997.  The  average  rate  paid on all interest-bearing liabilities was 4.48% in
1998,  compared with 5.48% in 1997.  Interest-bearing liabilities averaged $2.44
billion  during  both  1998  and  1997.  The  decrease in the overall rates paid
results  primarily  from  the  DAC deferral of the excess of certain promotional
interest rates offered on the fixed portion of the Company's newer products over
the  ongoing crediting rates.  Without such capitalization of interest, the rate
in  1998  would  have  been  5.63%.

     The  increase in average invested assets in 1998 reflects the net effect of
increased  sales  of  the  Company's  fixed rate products and net exchanges from
fixed  accounts into the separate accounts of variable annuity contracts.  Fixed
annuity premiums totaled $351.6 million in 1998, compared with $262.0 million in
1997,  and  are  largely  premiums for the fixed accounts of variable annuities.
These amounts represent 64% and 50% of the fixed annuity reserve balances at the
beginning  of  the  respective  periods.  The premiums for the fixed accounts of
variable  annuities  have  increased primarily because of increased sales of the
Company's  variable annuity products and greater inflows into the one-year fixed
account  and  the  new six-month fixed account of these products, which are used
for  dollar cost averaging into the variable accounts.  Accordingly, the Company
anticipates  that it will see a large portion of these premiums transferred into
the  variable  funds.

     There  were  no guaranteed investment contract ("GIC") premiums in 1998 and
$5.6  million  in  1997.  GIC  surrenders and maturities totaled $3.8 million in
1998  and  $4.1  million  in  1997.  The  Company does not actively market GICs;
consequently,  premiums  and  surrenders  may  vary substantially from period to
period.  The  GICs  issued  by  the  Company  generally guarantee the payment of
principal  and  interest  at fixed or variable rates for a term of three to five
years.  GICs that are purchased by banks for their long-term portfolios or state
and  local governmental entities either prohibit withdrawals or permit scheduled
book  value  withdrawals  subject  to  the  terms of the underlying indenture or
agreement.  GICs  purchased  by  asset  management  firms  for  their short-term
portfolios either prohibit withdrawals or permit withdrawals with notice ranging
from  90  to  270  days.  In  pricing  GICs,  the  Company  analyzes  cash  flow
information  and  prices  accordingly  so  that  it  is compensated for possible
withdrawals  prior  to  maturity.

     NET  REALIZED  INVESTMENT GAINS totaled $0.3 million in 1998, compared with
$20.9  million  in  1997.  Net  realized  investment  gains  in  1998  include




































                                       12
<PAGE>
impairment  writedowns  of  $1.6  million  in  1998.  There  were  no impairment
writedowns  in  1997.  Thus, net gains from sales and redemptions of investments
totaled  $1.9  million  in  1998,  compared  to  net  losses  of  $3.0  in 1997.

     The  Company sold or redeemed invested assets, principally bonds and notes,
aggregating  $307.9  million  and $310.3 million in 1998 and 1997, respectively.
Sales  of  investments  result  from  the  active  management  of  the Company's
investment  portfolio.  Because  redemptions  of  investments  are  generally
involuntary  and  sales  of  investments  are  made  in  both rising and falling
interest  rate  environments, net gains and losses from sales and redemptions of
investments  fluctuate  from  period to period, and represent 0.07% and 0.83% of
average  invested  assets  for  1998  and  1997,  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  $1.6  million  of  provisions  applied  to
partnerships  during  1998.  There  were  no  impairment  writedowns  in  1997.
Impairment  writedowns  represent  0.06% of average invested assets in 1998. For
the  seventeen  fiscal quarters beginning October 1, 1994, impairment writedowns
as  a  percentage  of  average  invested assets have ranged up to 3.06% and have
averaged  0.60%.  Such writedowns are based upon estimates of the net realizable
value  of  the  applicable  assets.  Actual  realization  will be dependent upon
future  events.

     VARIABLE  ANNUITY  FEES are based on the market value of assets in separate
accounts supporting variable annuity contracts.  Such fees totaled $58.8 million
in  1998  and  $44.4  million  in  1997.  These increased fees reflect growth in
average  variable  annuity assets due to increased market values, the receipt of
variable annuity premiums, and net exchanges into the separate accounts from the
fixed  accounts  of  variable annuity contracts, partially offset by surrenders.
On an annualized basis, variable annuity fees represent 1.9% of average variable
annuity  assets  in both 1998 and 1997.  Variable annuity assets averaged $12.31
billion  during  1998 and $9.40 billion during 1997.  Variable annuity premiums,
which  exclude  premiums  allocated  to  the  fixed accounts of variable annuity
products,  aggregated  $1.76  billion since December 31, 1997.  Variable annuity
premiums  totaled  $364.3  million  and  $422.1  million  in  1998  and  1997,
respectively.  These  amounts represent 13% and 18% of variable annuity reserves
at  the  beginning  of  the  respective  periods.

     Sales of variable annuity products (which include premiums allocated to the
fixed  accounts)  ("Variable  Annuity Product Sales") amounted to $715.9 million
and  $684.0  million in 1998 and 1997, respectively, and primarily reflect sales
of  the Company's flagship variable annuity, Polaris.  Polaris is a multimanager
variable  annuity  that  offers  investors  a  choice of 26 variable funds and 7
guaranteed  fixed-rate  funds.  Increases  in Variable Annuity Product Sales are
due,  in  part,  to market share gains through enhanced distribution efforts and
consumer demand for flexible retirement savings products that offer a variety of
equity,  fixed  income  and  guaranteed  fixed  account  investment  choices,
particularly  in  light  of  the  recent  volatile  markets.

     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







































                                       13
<PAGE>
time,  Federal  initiatives  are  proposed  which  could  affect the taxation of
variable  annuities  and  annuities  generally  (See  "Regulation").

     NET  RETAINED  COMMISSIONS  are  primarily  derived from commissions on the
sales  of  nonproprietary  investment  products  by  the Company's broker-dealer
subsidiary,  after deducting the substantial portion of such commissions that is
passed on to registered representatives.  Net retained commissions totaled $11.5
million in 1998 and $10.5 million in 1997.  Broker-dealer sales (mainly sales of
general  securities,  mutual  funds and annuities) totaled $2.81 billion in 1998
and  $3.83 billion in 1997.  This decrease is primarily due to the recent market
volatility.  Fluctuations  in  net retained commissions may not be proportionate
to  fluctuations  in  sales  primarily  due  to  differences  in  sales  mix.

     SURRENDER  CHARGES  on fixed and variable annuities totaled $3.2 million in
1998  and  $1.3  million  in  1997.  Surrender charges generally are assessed on
annuity  withdrawals  at  declining  rates  during  the  first seven years of an
annuity  contract.  Withdrawal  payments,  which include surrenders and lump-sum
annuity  benefits,  totaled $313.4 million in 1998, compared with $268.5 million
in 1997.  These payments represent 8.8% and 9.4%, respectively, of average fixed
and variable annuity reserves.  Withdrawals include variable annuity withdrawals
from  the  separate  accounts  totaling  $272.0 million in 1998 (8.9% of average
variable  annuity reserves) and $219.1 million (9.4% of average variable annuity
reserves)  in  1997.  Management  anticipates  that withdrawal rates will remain
relatively  stable  for  the  foreseeable  future.

     ASSET  MANAGEMENT  FEES,  which  include investment advisory fees and 12b-1
distribution  fees,  are  based  on the market value of assets managed in mutual
funds  by  SunAmerica  Asset Management Corp.  Such fees totaled $8.1 million on
average  assets  managed  of  $3.17  billion in 1998 and $6.9 million on average
assets  managed  of  $2.69  billion  in  1997.  Asset  management  fees  are not
proportionate  to  average assets managed, principally due to changes in product
mix.  Sales  of  mutual  funds,  excluding  sales  of  money  market  accounts,
aggregated  $211.7  million in 1998 and $165.8 million in 1997.  The increase in
sales  principally  resulted from increased sales of the Company's "Style Select
Series"  product  and the introduction in June 1998 of the "Dogs" of Wall Street
fund.  The  "Style  Select  Series"  is  a  group of mutual funds which are each
managed  by  three  industry-recognized fund managers. The "Dogs" of Wall Street
fund  contains 30 large capitalization value stocks which are selected by strict
criteria.  Sales of these products totaled $147.9 million in 1998, compared with
$110.2  million  in  1997,  reflecting  primarily the addition of five new Style
Select  funds, which more than doubled the number of Style Select funds to nine.
Redemptions  of  mutual  funds,  excluding redemptions of money market accounts,
amounted  to  $119.4  million in 1998 and $92.0 million in 1997, which represent
3.74%,  and  3.42%,  respectively,  of  average  mutual  fund  assets.

     GENERAL AND ADMINISTRATIVE EXPENSES totaled $22.4 million in 1998 and $23.0
million  in 1997.  General and administrative expenses remain closely controlled
through  a  company-wide cost containment program and continue to represent less
than  1%  of  average  total  assets.

     AMORTIZATION  OF  DEFERRED ACQUISITION COSTS totaled $27.1 million in 1998,
compared with $17.2 million in 1997.  The increase in amortization was primarily
due  to  $6.4  million  of  amortization  relating to the costs of a reinsurance
transaction  terminated on December 31, 1998, as well as to the additional fixed
and  variable  annuity  and mutual fund sales and the subsequent amortization of
related  deferred  commissions  and  other  direct  selling  costs.

     ANNUAL  COMMISSIONS  represent  renewal  commissions  paid  quarterly  in






































                                       14
<PAGE>
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.  Annual commissions totaled $6.6 million in 1998 and
$3.5  million  in  1997.  The  increase in annual commissions reflects increased
sales  of  annuities that offer this commission option and gradual expiration of
the  initial  fifteen-month  periods  before  such  payments begin.  The Company
estimates that approximately 55% 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.

     INCOME  TAX  EXPENSE  totaled  $20.1  million  in 1998, compared with $23.3
million  in  1997,  representing  effective annualized tax rates of 37% and 34%,
respectively.

FINANCIAL  CONDITION  AND  LIQUIDITY

     SHAREHOLDER'S EQUITY increased 14.5% to $747.0 million at December 31, 1998
from  $652.7  million  at  September  30, 1998, primarily due to a $70.0 million
capital  contribution,  as well as $34.4 million of net income recorded in 1998,
which  was  partially  offset  by  a $10.0 million increase in accumulated other
comprehensive  loss.

     INVESTED  ASSETS  at December 31, 1998 totaled $8.31 billion, compared with
$2.73  billion  at  September  30,  1998.  This significant increase in invested
assets  is  due  to  the coinsurance of a $5.6 billion block of annuity and life
insurance  policies from MBL Life Assurance Corporation ("MBL Life") on December
31,  1998,  as  described  in  Note 2.  The Company manages most of its invested
assets  internally.  The  Company's  general  investment  philosophy  is to hold
fixed-rate  assets  for  long-term investment.  Thus, it does not have a trading
portfolio.  However,  the  Company  has  determined that all of its portfolio of
bonds, notes and redeemable preferred stocks (the "Bond Portfolio") is available
to  be sold in response to changes in market interest rates, changes in relative
value  of  asset  sectors and individual securities, changes in prepayment risk,
changes in the credit quality outlook for certain securities, the Company's need
for  liquidity  and  other  similar  factors.

     THE BOND PORTFOLIO, which constitutes 51% of the Company's total investment
portfolio,  had an aggregate fair value that was less than its amortized cost by
$3.9  million  at December 31, 1998, compared with an excess of $19.9 million at
September 30, 1998.  The decline in the unrealized gain of the Bond Portfolio in
1998  was  due  to  changes  in  the  market  value  of  portions  of  the
non-investment-grade  portfolio.

     At  December  31,  1998,  the  Bond  Portfolio  (excluding  $7.5 million of
redeemable preferred stocks) included $4.17 billion of bonds rated by Standard &
Poor's Corporation ("S&P"), Moody's Investors Service ("Moody's"), Duff & Phelps
Credit  Rating  Co.  ("DCR"),  Fitch  Investors  Service,  L.P. ("Fitch") or the
National  Association  of Insurance Commissioners ("NAIC"), and $78.1 million of
bonds  rated by the Company pursuant to statutory ratings guidelines established
by  the  NAIC.  At  December  31,  1998, approximately $4.00 billion of the Bond
Portfolio  was  investment  grade,  including  $560.2  million  of  U.S.
government/agency  securities  and  mortgage-backed  securities  ("MBSs").

     At  December  31, 1998, the Bond Portfolio included $241.8 million of bonds
that  were not investment grade.  These non-investment-grade bonds accounted for
1.0%  of  the  Company's  total  assets  and  2.9%  of  its  invested  assets.







































                                       15
<PAGE>
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
December  31,  1998.

     The  table  on  the  following page summarizes the Company's rated bonds by
rating  classification  as  of  December  31,  1998.





















































































                                       16

<PAGE>
<TABLE>
<CAPTION>

                                        RATED BONDS BY RATING CLASSIFICATION
                                               (Dollars in thousands)

                                           Issues  not  rated  by  S&P/Moody's/
   Issues  Rated  by  S&P/Moody's/DCR/Fitch      DCR/Fitch,  by  NAIC Category                   Total
-------------------------------------------  ---------------------------------   ----------------------------------
S&P/(Moody's)                     Estimated       NAIC               Estimated               Estimated   Percent of
[DCR] {Fitch}         Amortized        fair   category   Amortized        fair   Amortized        fair     invested
 category (1)              cost       value        (2)        cost       value        cost       value       assets
-------------        ----------  ----------  ---------  ----------  ----------  ----------  ----------  -----------
<S>                  <C>         <C>         <C>        <C>         <C>         <C>         <C>         <C>
AAA+ to A-
  (Aaa to A3)
  [AAA to A-]
  {AAA to A-}        $2,976,284  $2,986,867         1   $  187,151  $  195,090  $3,163,435  $3,182,057       38.31%

BBB+ to BBB-
  (Baal to Baa3)
  [BBB+ to BBB-]
  {BBB+ to BBB-}        689,694     682,035         2      136,502     135,472     826,196     817,507        9.84 

BB+ to BB-
  (Ba1 to Ba3)
  [BB+ to BB-]
  {BB+ to BB-}           57,190      55,063         3       10,173       9,922      67,363      64,985        0.78 

B+ to B-
  (B1 to B3)
  [B+ to B-]
  {B+ to B-}            165,193     157,885         4       21,829      17,502     187,022     175,387        2.11 

CCC+ to C
  (Caa to C)
  [CCC]
  {CCC+ to C-}              ---         ---         5          ---          48         ---          48         --- 

CI to D
  [DD]
  {D}                       ---         ---         6        2,599       1,349       2,599       1,349        0.02 
                     ----------  ----------             ----------  ----------  ----------  ----------  -----------

TOTAL RATED ISSUES   $3,888,361  $3,881,850             $  358,254  $  359,383  $4,246,615  $4,241,333
                     ==========  ==========             ==========  ==========  ==========  ==========             
<FN>

Footnotes  appear  on  the  following  page.









































</TABLE>


                                       17

<PAGE>


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.  DCR  rates  debt  securities  in rating categories ranging from AAA (the
highest)  to  DD  (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.  Issues  are categorized based on the
highest  of  the  S&P,  Moody's,  DCR  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/DCR/Fitch rating groups listed
above, with categories 1 and 2 considered investment grade.  The NAIC categories
include  $78.1  million  of  assets  that  were rated by the Company pursuant to
applicable  NAIC  rating  guidelines.







































































                                       18
<PAGE>
     Senior  secured  loans ("Secured Loans") are included in the Bond Portfolio
and aggregated $449.7 million at December 31, 1998.  Secured Loans are senior to
subordinated  debt  and  equity,  and  are  secured by assets of the issuer.  At
December  31, 1998, Secured Loans consisted of $317.2 million of publicly traded
securities  and  $132.5  million  of privately traded securities.  These Secured
Loans  are composed of loans to 85 borrowers spanning 20 industries, with 25% of
these  assets  concentrated in utilities and 15% of these assets concentrated in
financial  institutions.  No  other industry concentration constituted more than
5%  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,  DCR,  Fitch,  the NAIC or by the Company,
pursuant  to  comparable  statutory  rating  guidelines established by the NAIC.

     MORTGAGE LOANS aggregated $388.8 million at December 31, 1998 and consisted
of  131  commercial  first  mortgage  loans  with  an  average  loan  balance of
approximately  $3.0  million, collateralized by properties located in 29 states.
Approximately 22% of this portfolio was multifamily residential, 16% was office,
14%  was  manufactured  housing,  13% was industrial, 12% was hotels and 23% was
other  types.  At December 31, 1998, approximately 20% and 14% 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  December  31,  1998,  there  were  three mortgage loans with
outstanding balances of $10 million or more, which loans collectively aggregated
approximately 11% of this portfolio.  At December 31, 1998, approximately 24% of
the  mortgage loan portfolio consisted of loans with balloon payments due before
January  1,  2002.  During 1998 and 1997, loans delinquent by more than 90 days,
foreclosed loans and restructured loans have not been significant in relation to
the  total  mortgage  loan  portfolio.

     At December 31, 1998, approximately 29% of the mortgage loans were seasoned
loans  underwritten to the Company's standards and purchased at or near par from
other financial institutions.  Such loans generally have higher average interest
rates  than  loans  that  could be originated today. The balance of the mortgage
loan  portfolio  has  been  originated  by the Company under strict underwriting
standards.  Commercial  mortgage loans on properties such as offices, hotels and
shopping  centers  generally  represent  a higher level of risk than do mortgage
loans  secured  by  multifamily residences.  This greater risk is due to several
factors,  including the larger size of such loans and the more immediate effects
of general economic conditions on these commercial property types.  However, due
to the seasoned nature of the Company's mortgage loan portfolio, its emphasis on
multi  family  loans and its strict underwriting standards, the Company believes
that  it  has  prudently  managed  the  risk  attributable  to its mortgage loan
portfolio  while  maintaining  attractive  yields.

     POLICY  LOANS  aggregated  $320.7 million at December 31, 1998, compared to
$11.2  million at September 30, 1998.  This increase was due to loans assumed on
the  business  coinsured  from  MBL  Life.

     OTHER  INVESTED  ASSETS  aggregated  $19.8  million  at  December 31, 1998,
including   $15.2   million   of   collateralized   bond   obligations   and





































                                       19

<PAGE>
collateralized  mortgage obligation residuals and $4.6 million of investments in
limited  partnerships.  The  Company's  limited partnership interests, accounted
for  by  using  the  cost  method  of  accounting,  are  invested primarily in a
combination  of  debt  and  equity  securities.

     ASSET-LIABILITY  MATCHING  is utilized by the Company to minimize the risks
of  interest rate fluctuations and disintermediation.  The Company believes that
its  fixed-rate liabilities should be backed by a portfolio principally composed
of  fixed-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, 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 76% of the
Company's  fixed  annuity  and  GIC  reserves  had  surrender penalties or other
restrictions  at  December  31,  1998.

     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;  and  investments  in  limited
partnerships  that  invest  primarily in fixed-rate securities and are accounted
for  by  using  the  cost  method.  At  December  31,  1998, these assets had an
aggregate  fair  value  of  $8.32 billion with a duration of 1.7.  The Company's
fixed-rate  liabilities  include  fixed  annuities,  universal  life  reserves,
subordinated  notes  other than the surplus note and GICs.  At December 31,1998,
these  liabilities had an aggregate fair value (determined by discounting future
contractual  cash  flows  by  related market rates of interest) of $8.13 billion
with  a duration of 2.0.  The Company's potential exposure due to a relative 10%
decrease  in  prevailing interest rates from their December 31, 1998 levels is a
loss of approximately $12.6 million, representing the increase in the fair value
of  its  fixed-rate  liabilities  that  is not offset by an increase in the fair
value of its fixed-rate assets.  Because the Company actively manages its assets
and  liabilities and has strategies in place to minimize its exposure to loss as
interest  rate  changes  occur, it expects that actual losses would be less than
the  estimated  potential  loss.

     Duration is a common option-adjusted measure for the price sensitivity of a
fixed-maturity  portfolio  to  changes  in  interest  rates.  It  measures  the
approximate  percentage  change  in  the market value of a portfolio if interest
rates  change  by  100  basis  points,  recognizing  the  changes  in cash flows
resulting  from  embedded  options  such  as  policy  surrenders,  investment
prepayments  and  bond  calls.  It  also  incorporates  the  assumption that the
Company  will  continue  to utilize its existing strategies of pricing its fixed
annuity 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





































                                       20

<PAGE>
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  December  31,  1998,  the  Company  had  one  outstanding Swap
Agreement  with  a  notional  principal amount of $21.5 million.  This agreement
matures  in  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 prepayments of
the  underlying  mortgage  loans.

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

     INVESTED  ASSETS  EVALUATION  is  routinely  conducted  by  the  Company.
Management  identifies  monthly  those  investments  that  require  additional
monitoring and carefully reviews the carrying value of such investments at least
quarterly  to  determine  whether  specific  investments  should  be placed on a
nonaccrual  basis  and  to  determine  declines  in value that may be other than
temporary.  In  making these reviews for bonds, management principally considers
the  adequacy  of  any  collateral,  compliance  with contractual covenants, the
borrower's  recent  financial  performance,  news  reports  and other externally
generated  information  concerning  the  creditor's  affairs.  In



































                                       21

<PAGE>

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 bonds 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 $0.7 million of mortgage loans at
December  31, 1998, and constituted less than 0.1% of total invested assets.  At
September  30,  1998,  defaulted  investments  totaled  $0.9 million of mortgage
loans,  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  December 31, 1998, approximately $3.51 billion of the Company's Bond
Portfolio had an aggregate unrealized gain of $36.2 million, while approximately
$738.0  million  of the Bond Portfolio had an aggregate unrealized loss of $40.1
million.  In  addition,  the  Company's  investment portfolio currently provides
approximately  $52.1  million  of monthly cash flow from scheduled principal and
interest payments. Historically, cash flows from operations and from the sale of
the  Company's annuity and GIC products have been more than sufficient in amount
to  satisfy  the  Company's  liquidity  needs.

     Management  is  aware  that  prevailing  market  interest  rates  may shift
significantly  and  has  strategies  in  place  to  manage either an increase or
decrease  in  prevailing  rates.  In  a  rising  interest  rate environment, the
Company's  average  cost  of funds would increase over time as it prices its new
and renewing annuities and GICs to maintain a generally competitive market rate.
Management  would  seek  to  place new funds in investments that were matched in
duration  to,  and  higher  yielding than, the liabilities assumed.  The Company
believes  that liquidity to fund withdrawals would be available through incoming
cash  flow, the sale of short-term or floating-rate instruments or Reverse Repos
on the Company's substantial MBS segment of the Bond Portfolio, thereby avoiding
the  sale  of  fixed-rate  assets  in  an  unfavorable  bond  market.

     In a declining rate environment, the Company's cost of funds would decrease
over  time, reflecting lower interest crediting rates on its fixed annuities and
GICs.  Should  increased  liquidity  be  required  for  withdrawals, the Company
believes  that  a  significant  portion of its investments could be sold without
adverse  consequences  in  light  of  the  general  strengthening  that would be
expected  in  the  bond  market.

YEAR  2000

     The  Company  relies  significantly on computer systems and applications in
its  daily  operations.  Many  of  these  systems  are  not  presently year 2000





































                                       22

<PAGE>
compliant,  which means that because they have historically used only two digits
to  identify  the  year  in  a  date, they will fail to distinguish dates in the
"2000s"  from dates in the "1900s."  The Company's business, financial condition
and  results  of  operations  could  be materially and adversely affected by the
failure  of  the Company's systems and applications (and those operated by third
parties  interfacing  with  the  Company's systems and applications) to properly
operate  or  manage  these  dates.

     The  Company has a coordinated plan to repair or replace these noncompliant
systems and to obtain similar assurances from third parties interfacing with the
Company's  systems  and  applications.  In  fiscal  1997,  the  Company's parent
recorded  a  $15.0  million  provision  for  estimated programming costs to make
necessary  repairs  of  certain  specific  noncompliant  systems,  of which $6.2
million  was  allocated to the Company.  Management is making expenditures which
it  expects will ultimately total $5.0 million to replace certain other specific
noncompliant  systems,  which expenditures will be capitalized as software costs
and  amortized  over  future  periods.  Both phases of the project are currently
proceeding  in  accordance with the plan and were substantially completed by the
end  of  calendar 1998.  Testing of both the repaired and replacement systems is
being  conducted  during  calendar  1999.

     In  addition,  the  Company  has  distributed  a year 2000 questionnaire to
certain  of  its  significant  suppliers,  distributors, financial institutions,
lessors  and  others  with  which  it  does business to evaluate their year 2000
compliance plans and state of readiness and to determine the extent to which the
Company's  systems  and applications may be affected by the failure of others to
remediate  their  own  year  2000  issues.  To  date,  however,  the Company has
received  only  preliminary feedback from such parties and has not independently
confirmed  any  information received from other parties with respect to the year
2000  issues.  Therefore, there can be no assurance that such other parties will
complete  their  year  2000 conversions in a timely fashion or will not suffer a
year  2000 business disruption that may adversely affect the Company's financial
condition  and  results  of  operations.

     Because  the  Company's  year  2000  conversion is expected to be completed
prior to any potential disruption to the Company's business, the Company has not
developed  a  comprehensive  year  2000  contingency  plan.  The Company closely
monitors  the  progression  of  its plan for compliance, and if necessary, would
devote  additional  resources  to  assure the timely completion of its year 2000
plan.  If  the  Company  determines  that  its  business  is at material risk of
disruption  due  to  the  year  2000  issue  or  anticipates  that its year 2000
conversion  will  not be completed in a timely fashion, the Company will work to
enhance  its  contingency  plans.

     The  discussion  above  contains  certain  forward-looking statements.  The
costs  of  the  year 2000 conversion, date which the Company has set to complete
such conversion and possible risks associated with the year 2000 issue are based
on the Company's current estimates and are subject to various uncertainties that
could  cause  the  actual  results  to  differ  materially  from  the  Company's
expectations.  Such  uncertainties  include,  among  others,  the success of the
Company  in  identifying  systems  and  applications  that  are  not  year  2000
compliant,  the  nature and amount of programming required to upgrade or replace
each  of  the  affected  systems and applications, the availability of qualified
personnel,  consultants  and  other  resources, and the success of the year 2000
conversion  efforts  of  others.









































                                       23
<PAGE>
REGULATION

     The  Company  is  subject  to  regulation  and supervision by the insurance
regulatory  agencies  of  the  states  in  which  it  is  authorized to transact
business.  State  insurance  laws  establish  supervisory  agencies  with  broad
administrative  and  supervisory  powers.  Principal  among  these  powers  are
granting  and  revoking  licenses to transact business, regulating marketing and
other  trade  practices,  operating  guaranty  associations,  licensing  agents,
approving  policy  forms, regulating certain premium rates, regulating insurance
holding  company  systems,  establishing  reserve  and  valuation  requirements,
prescribing  the  form and content of required financial statements and reports,
performing  financial,  market  conduct  and other examinations, determining the
reasonableness  and  adequacy  of  statutory  capital  and  surplus,  defining
acceptable  accounting  principles,  regulating the type, valuation and mount of
investments permitted, and limiting the amount of dividends that can be paid and
the  size  of  transactions  that  can  be  consummated  without first obtaining
regulatory  approval.

     During  the last decade, the insurance regulatory framework has been placed
under increased scrutiny by various states, the federal government and the NAIC.
Various  states have considered or enacted legislation that changes, and in many
cases  increases,  the  states'  authority  to  regulate  insurance  companies.
Legislation  has been introduced from time to time in Congress that could result
in  the  federal  government  assuming  some role in the regulation of insurance
companies  or allowing combinations between insurance companies, banks and other
entities.  In  recent  years,  the  NAIC  has  developed  several model laws and
regulations  designed  to  reduce the risk of insurance company insolvencies and
market  conduct  violations.  These  initiatives  include  investment  reserve
requirements,  risk-based  capital  ("RBC") standards, codification of insurance
accounting principles, new investment standards and restrictions on an insurance
company's  ability  to  pay  dividends  to  its  stockholders.  The NAIC is also
currently  developing  model  laws  or  regulations  relating to product design,
product  reserving  standards  and  illustrations for annuity products.  Current
proposals  are still being debated and the Company is monitoring developments in
this  area  and  the  effects  any  changes  would  have  on  the  Company.

     The  RBC standards consist of formulas which establish capital requirements
relating  to insurance, business, assets and interest rate risks, and which help
to  identify  companies  which  are  under-capitalized  and  require  specific
regulatory  actions  in the event an insurer's RBC falls below specified levels.
The  Company  has  more  than  enough  statutory  capital to meet the NAIC's RBC
requirements  as  of the most recent calendar year-end. The state of Arizona has
adopted  these  RBC  standards, and the Company is in compliance with such laws.
Further,  for  statutory reporting purposes, the annuity reserves of the Company
are  calculated in accordance with statutory requirements and are adequate under
current  cash-flow  testing  models.

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

     The Company's broker-dealer subsidiary, Royal Alliance Associates, Inc., is
subject  to  regulation  and  supervision  by  the  states in which it transacts
business,  as  well  as  by the SEC and the National Association of Securities -
Dealers  ("NASD").   The   SEC   and   the   NASD   have  broad




































                                       24
<PAGE>
administrative  and  supervisory  powers relative to all aspects of business and
may  examine  the  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.

     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  the  proposals, if implemented, could have an adverse effect on the
Company's  sales  of  affected  products,  and,  consequently, on its results of
operations,  the  Company  believes  these  proposals have a small likelihood of
being  enacted,  because  they  would discourage retirement savings and there is
strong  public  and  industry  opposition  to  them.
















































































                                       25
<PAGE>
           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The  quantitative  and  qualitative  disclosures  about  market  risk  are
contained in the Asset-Liability Matching section of Management's Discussion and
Analysis  of  Financial  Condition  and Results of Operations on pages 20 and 21
herein.


























































































                                       26
<PAGE>
                     ANCHOR NATIONAL LIFE INSURANCE COMPANY
                                OTHER INFORMATION


Item  1.  Legal  Proceedings
          ------------------

  Not  applicable.

Item  2.  Changes  in  Securities
          -----------------------

  Not  applicable.

Item  3.  Defaults  Upon  Senior  Securities
          ----------------------------------

  Not  applicable.

Item  4.  Submissions  of  Matters  to  a  Vote  of  Security  Holders
          ------------------------------------------------------------

  Not  applicable.

Item  5.  Other  Information
          ------------------

  Not  applicable.

Item  6.  Exhibits  and  Reports  on  Form  8-K
          -------------------------------------


EXHIBITS

Exhibit
   No.                             Description
------                             -----------

   27                          Financial  Data  Schedule.

REPORTS  ON  FORM  8-K

No  current  report on Form 8-K was filed during the three months ended December
31,  1998.  However,  on January 14, 1999, the Company filed a current report on
Form  8-K  concerning  its  acquisition  of  a  block  of business from MBL Life
Assurance  Corporation,  and  on  January  15, 1999, the Company filed a current
report  on  Form  8-K  concerning  the merger of its ultimate Parent, SunAmerica
Inc.,  with  American  International  Group,  Inc.














































                                       27

<PAGE>
                                   SIGNATURES

     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange  Act  of  1934, the Company has duly caused this report to be signed on
its  behalf  by  the  undersigned,  thereunto  duly  authorized.

                               ANCHOR  NATIONAL  LIFE  INSURANCE  COMPANY

Date:  February  16,  1998     By:/s/SCOTT  L.  ROBINSON
--------------------------        ----------------------
                               Scott  L.  Robinson
                               Senior  Vice  President  and  Director

     Pursuant  to  the  requirements of the Securities and Exchange Act of 1934,
this  report  has  been  signed  below by the following persons on behalf of the
registrant  in  the  capacities  and  on  the  dates  indicated:

Signature                     Title                                 Date
---------                     -----                                 ----


/s/   SCOTT  L.  ROBINSON     Senior  Vice  President  and     February 16, 1999
-------------------------                                      -----------------
      Scott  L.  Robinson       Director  (Principal
                                Financial  Officer)


/s/   N.  SCOTT  GILLIS       Senior  Vice  President  and    February  16, 1999
-----------------------                                       ------------------
      N.  Scott  Gillis         Controller  (Principal
                                Accounting  Officer)

































































                                       28
<PAGE>
                     ANCHOR NATIONAL LIFE INSURANCE COMPANY
                             LIST OF EXHIBITS FILED

Exhibit
   No.               Description
------               -----------

  27               Financial  Data  Schedule
























































































                                       29