UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

     [ X ] ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000

                                       OR

     [   ] TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
                        For the transition period from to

                         Commission file number 33-28976

                            IDS LIFE INSURANCE COMPANY
             (Exact name of registrant as specified in its charter)

                  MINNESOTA         41-0823832
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)

                 IDS TOWER 10,  MINNEAPOLIS,  MINNESOTA  55440-0534  (Address of
           principal executive offices) (Zip Code)

(Registrant's telephone number, including area code) (612) 671-3131

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

     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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [Not  Applicable]  THE REGISTRANT  MEETS THE CONDITIONS SET FORTH IN
GENERAL  INSTRUCTIONS I(1) (a) and (b) OF FORM 10-K AND IS THEREFORE FILING THIS
FORM WITH THE PERMITTED ABBREVIATED NARRATIVE DISCLOSURE.



<PAGE>

                                     PART I
ITEM 1.  BUSINESS

     IDS Life Insurance  Company (the Company) is a stock life insurance company
organized  under the laws of the State of  Minnesota.  The  Company  is a wholly
owned subsidiary of American Express Financial  Corporation  (AEFC),  which is a
wholly  owned  subsidiary  of  American  Express  Company.  The  Company  serves
residents of all states except New York. The Company is the  fourteenth  largest
life  insurance  company  in the  United  States,  with  consolidated  assets at
December 31, 2000 of $60.4 billion.  IDS Life Insurance  Company of New York and
American  Centurion Life Assurance Company are wholly owned  subsidiaries of the
Company  and serve New York  State  residents.  The  Company  also  wholly  owns
American  Enterprise Life Insurance  Company,  American  Partners Life Insurance
Company and American Express Corporation.

     The Company's  principal products are deferred annuities and universal life
insurance,  which are issued primarily to individuals.  It offers single premium
and flexible  premium  deferred  annuities  on both a fixed and variable  dollar
basis. Immediate annuities are offered as well. The Company's insurance products
include universal life (fixed and variable), whole life, single premium life and
term products  (including waiver of premium and accidental death benefits).  The
Company also markets disability income and long-term care insurance.

     The Company's  fixed annuity  contracts  guarantee a minimum  interest rate
during  the  accumulation  period  (the time  before  annuity  payments  begin),
although  the  Company  has the  option of paying a higher  rate  reflective  of
current market rates. The Company has also adopted a practice whereby the higher
current  rate is  guaranteed  for a specified  period.  The Company  also offers
fixed/variable  annuity  products  offering the  purchaser a choice among mutual
funds with  portfolios of equities,  bonds,  managed  assets  and/or  short-term
securities,  and the Company's  general  account,  as the underlying  investment
vehicles.  With respect to funds applied to the variable portion of the annuity,
the  purchaser,  rather  than the  Company,  assumes  the  investment  risks and
receives the rewards inherent in the ownership of the underlying investments. At
December 31, 2000, the Company had $48.2 billion of fixed and variable annuities
in force, a decrease of 8 percent from the prior year end.

     The  Company's  principal   insurance  product  is  the   flexible-premium,
adjustable-benefit  universal life insurance  policy.  In this type of insurance
policy,  premium  payments  either  accumulate  interest  in a fixed  account or
purchase units in one or more variable accounts.  The policyholder has access to
the cash  surrender  value in whole or in part after the first year. The size of
the  cash  value  of the fund can  also be  controlled  by the  policyholder  by
increasing  or  decreasing  premiums,  subject  only to  maintaining  a required
minimum to keep the policy in force.  Monthly  deductions from the cash value of
the policy are made for the cost of  insurance,  expense  charges and any policy
riders.  At  December  31,  2000,  the  Company  had $79.1  billion of fixed and
variable universal life-type insurance in force, up 11 percent from December 31,
1999.

<PAGE>


     Assets  held in  separate  accounts  which fund the  variable  annuity  and
variable life insurance  products  totaled $32.3 billion at December 31, 2000, a
10 percent decrease from December 31, 1999.

     IDS Life Insurance Company,  American Enterprise Life Insurance Company and
American Partners Life Insurance Company are subject to comprehensive regulation
by the  Minnesota  Department  of  Commerce  (Insurance  Division),  the Indiana
Department of Insurance and the Arizona  Department of Insurance,  respectively.
IDS Life  Insurance  Company of New York and American  Centurion  Life Assurance
Company are both subject to comprehensive  regulation by the New York Department
of  Insurance.  The laws of the other states in which the Company does  business
regulate  such matters as the licensing of sales  personnel  and, in some cases,
the  marketing  and contents of insurance  policies and annuity  contracts.  The
purpose of such regulation and supervision is primarily to protect the interests
of  policyholders.  Recently  there has been an increased  focus on the variable
annuity business by regulators.  In the United States, the McCarran-Ferguson Act
provides that the primary  regulation  of the insurance  industry is left to the
individual states. Typically, states regulate such matters as company licensing,
agent  licensing,   cancellation  or  nonrenewal  of  policies,  minimum  health
insurance  policy  benefits,  life insurance cost  disclosure,  solicitation and
replacement  practices,   unfair  trade  and  claims  practices,  rates,  forms,
advertising, investment type and quality, minimum capital and surplus levels and
changes in control.  Virtually  all states  mandate  participation  in insurance
guaranty associations,  which assess insurance companies in order to fund claims
of policyholders of insolvent  insurance  companies.  In addition to state laws,
the  Company is  affected  by a variety of federal  laws,  and there is periodic
federal interest in various aspects of the insurance industry including taxation
of variable  annuities  and life  insurance  policies,  solvency and  accounting
procedures,  as well as the treatment of persons  differently because of gender,
with respect to terms,  conditions,  rates or benefits of an insurance contract.
New federal  regulation in any of these areas could  potentially have an adverse
effect upon the Company.

     As a  distributor  of variable  contracts,  the Company is  registered as a
broker-dealer and is a member of the National Association of Securities Dealers,
Inc. As the investment manager for various investment companies,  the Company is
registered as an investment advisor under applicable federal requirements.

     The insurance and annuity business is highly  competitive and the Company's
competitors  consist  of both  stock and mutual  insurance  companies  and other
financial  institutions.  Competitive  factors applicable to the business of the
Company  include  the  interest  rates  credited  to its  products,  the charges
deducted from the cash values of such  products,  the financial  strength of the
organization and the services provided to policyholders.

ITEM 2.  PROPERTIES

     The Company  occupies  office  space in  Minneapolis,  Minnesota,  which is
leased by its parent, AEFC. The Company reimburses AEFC for rent based on direct
and indirect  allocation  methods.  IDS Life  Insurance  Company of New York and
American Centurion Life Assurance Company rent office space in Albany, New York.
Facilities  occupied  by the  Company and its  subsidiaries  are  believed to be
adequate for the purposes for which they are used and are well maintained.

<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

     A number of lawsuits  have been filed  against life and health  insurers in
jurisdictions in which IDS Life and AEFC do business  involving  insurers' sales
practices,  alleged agent misconduct,  failure to properly  supervise agents and
other matters. IDS Life and AEFC, like other life and health insurers, from time
to time are  involved  in such  litigation.  On  December  13,  1996,  an action
entitled Lesa Benacquisto and Daniel  Benacquisto v. IDS Life Insurance  Company
and American  Express  Financial  Corporation  was commenced in Minnesota  state
court.  The action is brought by  individuals  who replaced an existing IDS Life
insurance policy with a new IDS Life policy. The plaintiffs purport to represent
a class  consisting of all persons who replaced  existing IDS Life policies with
new IDS Life policies from and after January 1, 1985.

     The  complaint   puts  at  issue  various   alleged  sales   practices  and
misrepresentations,  alleged breaches of fiduciary duties and alleged violations
of consumer fraud statutes. Plaintiffs seek damages in an unspecified amount and
also seek to establish a claims  resolution  facility for the  determination  of
individual  issues.  IDS Life  and AEFC  filed an  answer  to the  complaint  on
February 18, 1997,  denying the  allegations.  A second action,  entitled Arnold
Mork,  Isabella Mork,  Ronald  Melchert and Susan Melchert v. IDS Life Insurance
Company and American  Express  Financial  Corporation  was commenced in the same
court on March  21,  1997.  In  addition  to  claims  that are  included  in the
Benacquisto  lawsuit,  the second  action  includes  an  allegation  of improper
replacement of an existing IDS Life annuity contract. It seeks similar relief to
the initial lawsuit.

     On  October  13,  1998,  an action  entitled  Richard W. and  Elizabeth  J.
Thoresen v. American  Express  Financial  Corporation,  American  Centurion Life
Assurance Company, American Enterprise Life Insurance Company, American Partners
Life  Insurance  Company,  IDS Life  Insurance  Company  and IDS Life  Insurance
Company of New York was also commenced in Minnesota state court.  The action was
brought by individuals who purchased an annuity in a qualified plan. They allege
that the sale of annuities in tax-deferred  contributory  retirement  investment
plans (e.g., IRAs) is never  appropriate.  The plaintiffs purport to represent a
class consisting of all persons who made similar purchases.  The plaintiffs seek
damages in an  unspecified  amount,  including  restitution  of  allegedly  lost
investment earnings and restoration of contract values.

     In January 2000, AEFC reached an agreement in principle to settle the three
class-action  lawsuits  described  above.  It is expected  the  settlement  will
provide $215 million of benefits to more than two million  participants  and for
release by class  members of all  insurance and annuity  market  conduct  claims
dating back to 1985.

<PAGE>


     In August,  2000 an action entitled Lesa Benacquisto,  Daniel  Benacquisto,
Richard  Thoresen,  Elizabeth  Thoresen,  Arnold  Mork,  Isabella  Mork,  Ronald
Melchert and Susan Melchert v. American Express Financial Corporation,  American
Express Financial Advisors,  American Centurion Life Assurance Company, American
Enterprise Life Insurance Company, American Partners Life Insurance Company, IDS
Life Insurance  Company and IDS Life Insurance Company of New York was commenced
in the United States District Court for the District of Minnesota. The complaint
put  at  issue  various  alleged  sales  practices  and  misrepresentations  and
allegations of violations of federal laws.

     In September,  2000 the plaintiffs filed a consolidated  complaint in State
Court alleging the same claims as the previous actions.

     On October 2, 2000 the District  Court,  Fourth  Judicial  District for the
State of Minnesota,  County of Hennepin and the United States District Court for
the District of Minnesota entered an order conditionally  certifying a class for
settlement purposes, preliminarily approving the class settlement, directing the
issuance of a class  notice to the class and  scheduling  a hearing to determine
the fairness of settlement for March, 2001.

     On March 6, 2001 the District Court, Fourth Judicial District for the State
of Minnesota,  County of Hennepin and the United States  District  Court for the
District of  Minnesota  heard oral  arguments on  plaintiffs'  motions for final
approval of the class action  settlement.  Six motions to  intervene  were filed
together  with  objections to the proposed  settlement.  We are awaiting a final
order from the court.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

<PAGE>

                                     PART II


     ITEM 5.  MARKET FOR  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
MATTERS

Not applicable.

ITEM 6.  SELECTED FINANCIAL DATA

Item omitted pursuant to General Instructions I(2) (a) of Form 10-K.

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

2000 Compared to 1999:

     Consolidated  net  income  decreased  8 percent  to $586  million  in 2000,
compared  to $636  million  in 1999.  The  decrease  resulted  primarily  from a
decrease in net investment income.  This reflects decreases in investments owned
and decreased investment yields during 2000.

     Consolidated  income  before  income  taxes  totaled  $807 million in 2000,
compared with $904 million in 1999.

     Total premiums and investment  contract deposits received increased to $6.9
billion in 2000,  compared with $5.0 billion in 1999. This increase is primarily
due to an increase in variable annuity deposits in 2000.

     Total  revenues  decreased  to $3.0  billion  in 2000,  compared  with $3.1
billion in 1999.  Decreases  in net  investment  income and net  realized  gains
(losses)  on  investments  were  partially  offset  by  increases  in  insurance
premiums,  policy and contractholder  charges and management and other fees. Net
investment income, the largest component of revenues,  decreased by $189 million
from the prior year,  reflecting  decreases in investments  owned and investment
yields.

     Policyholder and contractholder charges, which consist primarily of cost of
insurance charges on universal life-type  policies,  increased 6 percent to $438
million in 2000,  compared  with $412 million in 1999.  This  increase  reflects
increased total life insurance in force, which grew 10 percent to $98 billion at
December 31, 2000.

     Net realized loss on investments was $17 million in 2000, compared to a net
realized gain of $27 million in 1999.  The loss was primarily due to the loss on
sales and writedowns of fixed maturity investments.

     Management  and other fees  increased  26 percent to $598  million in 2000,
compared  with $473  million in 1999.  This is  primarily  due to an increase in
separate  account  fees,  which grew 25 percent to $543  million at December 31,
2000, due to market  appreciation  and sales.  The Company  provides  investment
management  services  for mutual funds used as  investment  options for variable
annuities and variable life insurance. The Company also receives a mortality and
expense risk fee from the separate accounts.

     Total benefits and expenses increased slightly to $2.2 billion in 2000. The
largest component of expenses,  interest  credited to policyholder  accounts for
universal  life-type insurance and investment  contracts,  decreased slightly to
$1.2 billion, reflecting a decrease in fixed annuities in force. Amortization of
deferred policy  acquisition  costs increased to $404 million,  compared to $333
million in 1999.  This  increase  was due  primarily  to the impact of  changing
prospective separate account investment performance assumptions.

     Other insurance and operating  expenses  increased slightly to $337 million
in 2000, compared to $335 million in 1999.

<PAGE>

1999 Compared to 1998:

     Consolidated  net income  increased  18  percent  to $636  million in 1999,
compared  to $540  million in 1998.  Earnings  growth  resulted  primarily  from
increases in management fees and policyholder and contractholder  charges. These
increases reflect higher average insurance and annuities in force during 1999.

     Consolidated  income  before  income  taxes  totaled  $904 million in 1999,
compared with $776 million in 1998.

     Total premiums and investment  contract deposits received increased to $5.0
billion in 1999,  compared with $4.4 billion in 1998. This increase is primarily
due to an increase in variable annuity deposits in 1999.

     Total  revenues  increased  to $3.1  billion  in 1999,  compared  with $3.0
billion in 1998.  The increase is primarily  due to increased  policyholder  and
contractholder  charges and management fees. Net investment  income, the largest
component  of  revenues,  decreased  slightly  from the prior  year,  reflecting
decreases in investments owned and investment yields.

     Policyholder and contractholder charges, which consist primarily of cost of
insurance charges on universal life-type  policies,  increased 7 percent to $412
million in 1999,  compared  with $384 million in 1998.  This  increase  reflects
increased total life insurance in force, which grew 10 percent to $89 billion at
December 31, 1999.

     Net realized gain on investments increased to $27 million in 1999, compared
to $7 million in 1998.  The increase was  primarily due to the sale of available
for sale  fixed  maturity  investments  at a gain as well as a  decrease  in the
allowance for mortgage loan losses based on management's  regular  evaluation of
allowance adequacy.

     Management  and other fees  increased  18 percent to $473  million in 1999,
compared  with $401  million in 1998.  This is  primarily  due to an increase in
separate account assets,  which grew 31 percent to $35.9 billion at December 31,
1999, due to market  appreciation  and sales.  The Company  provides  investment
management  services  for mutual funds used as  investment  options for variable
annuities and variable life insurance. The Company also receives a mortality and
expense risk fee from the separate accounts.

     Total benefits and expenses decreased slightly to $2.2 billion in 1999. The
largest component of expenses,  interest  credited to policyholder  accounts for
universal  life-type  insurance  and  investment  contracts,  decreased  to $1.2
billion,  reflecting  a decrease in fixed  annuities in force.  Amortization  of
deferred policy  acquisition  costs decreased to $333 million,  compared to $383
million in 1998.  This  decrease  was due  primarily  to the impact of  changing
prospective separate account investment performance assumptions.

     Other insurance and operating expenses increased 17 percent to $335 million
in 1999,  compared to $287 million in 1998.  This increase is primarily a result
of business growth and technology costs related to growth initiatives.

<PAGE>

Risk Management

     The  sensitivity  analysis of two different  tests of market risk discussed
below estimates the effects of hypothetical  sudden and sustained changes in the
applicable  market  conditions on the ensuing year's  earnings based on year-end
positions.  The market changes, assumed to occur as of year-end, are a 100 basis
point  increase in market  interest  rates and a 10%  decline in equity  prices.
Computations of the prospective effects of hypothetical interest rate and equity
price changes are based on numerous  assumptions,  including  relative levels of
market  interest  rates and equity  prices,  as well as the levels of assets and
liabilities.  The  hypothetical  changes and assumptions  will be different from
what  actually  occurs  in the  future.  Furthermore,  the  computations  do not
anticipate  actions that may be taken by management if the  hypothetical  market
changes actually occurred over time. As a result, actual earnings effects in the
future will differ from those quantified below.

     The Company primarily invests in fixed income securities over a broad range
of  maturities  for the  purpose  of  providing  fixed  annuity  clients  with a
competitive  rate of return on their  investments  while minimizing risk, and to
provide a dependable  and targeted  spread  between the interest  rate earned on
investments  and the interest rate credited to  contractholders'  accounts.  The
Company does not invest in securities to generate trading profits.

     The Company has an  investment  committee  that holds  regularly  scheduled
meetings and, when necessary, special meetings. At these meetings, the committee
reviews models projecting  different interest rate scenarios and their impact on
profitability.  The objective of the  committee is to structure  the  investment
security portfolio based upon the type and behavior of products in the liability
portfolio so as to achieve targeted levels of profitability.

     Rates credited to contractholders'  accounts are generally reset at shorter
intervals than the maturity of underlying investments. Therefore, margins may be
negatively impacted by increases in the general level of interest rates. Part of
the  committee's  strategy  includes the purchase of some types of  derivatives,
such as interest  rate caps,  swaps and  floors,  for  hedging  purposes.  These
derivatives  protect  margins  by  increasing  investment  returns if there is a
sudden and severe rise in interest  rates,  thereby  mitigating the impact of an
increase in rates credited to contractholders' accounts.

     The negative  effect on the Company's  pretax earnings of a 100 basis point
increase in interest rates, which assumes repricings and customer behavior based
on the application of proprietary models to the book of business at December 31,
2000, would be approximately $17 million.

     On a certain annuity product,  the interest is credited to contractholders'
accounts  based upon the relative  change in a major stock market index  between
the beginning and end of the product's term. As a means of hedging the Company's
obligation under the provisions of this product,  the committee's strategy is to
purchase and write options on the major stock market index.

<PAGE>

     The amount of the fee income the  Company  receives is based upon the daily
market value of the separate  account  assets.  As a result,  the  Company's fee
income would be negatively impacted by a decline in the equity markets.  Another
part  of  the  committee's  strategy  is to  enter  into  index  option  collars
(combination of puts and calls) for hedging purposes.  These derivatives protect
fee income by providing option income when there is a significant decline in the
equity markets. The Company finances the cost of this protection through selling
a portion of the upside  potential  from an increasing  market  through  written
options.

     The negative effect on the Company's  pretax earnings of the 10% decline in
equity  prices  would  be  approximately  $45  million  based  on  assets  under
management as of December 31, 2000.

Liquidity and Capital Resources

     The  liquidity  requirements  of the Company  are met by funds  provided by
premiums,  investment  income,  proceeds  from sales of  investments  as well as
maturities and periodic repayments of investment principal.

     The primary uses of funds are policy  benefits,  commissions  and operating
expenses, policy loans, dividends and investment purchases.

     The Company has available lines of credit with its parent  aggregating $200
million  ($100  million  committed  and $100 million  uncommitted).  The line of
credit is used strictly as a short-term source of funds.  Borrowings outstanding
were $50,000 uncommitted at December 31, 2000. At December 31, 2000, outstanding
reverse repurchase agreements totaled $30 million.

     At December 31, 2000,  investments in fixed maturities comprised 79 percent
of the  Company's  total  invested  assets.  Of the  fixed  maturity  portfolio,
approximately  30 percent is  invested in GNMA,  FNMA and FHLMC  mortgage-backed
securities which are considered AAA/Aaa quality.

     At December 31, 2000, approximately 15 percent of the Company's investments
in fixed maturities were below investment grade bonds.  These investments may be
subject to a higher degree of risk than the  investment  grade issues because of
the borrower's  generally  greater  sensitivity to adverse economic  conditions,
such as recession or increasing  interest rates, and in certain  instances,  the
lack of an active secondary  market.  Expected returns on below investment grade
bonds reflect  consideration  of such factors.  The Company has identified those
fixed  maturities  for which a decline in fair value is  determined  to be other
than  temporary,  and has  written  them  down to fair  value  with a charge  to
earnings.    In   recent   months,    the   industry-wide    default   rate   on
below-investment-grade  bonds  has  increased  significantly  and this  trend is
expected  to  continue  over the  next  several  months  and  possibly  beyond.*
Additional  investment  security  losses  throughout  the  remainder of 2000 are
likely but the amount of these  losses is  dependent  on a number of factors and
cannot be estimated at this time.* Management  believes that there will not be a
significant adverse impact on the Company's consolidated financial position.*


     * Statements  in this  discussion  of the  Company's  liquidity and capital
resources  marked  with an asterisk  are  forward-looking  statements  which are
subject to risks and  uncertainties.  Important factors that could cause results
to differ materially from these forward-looking  statements include, among other
things,  changes in the ability of issuers of investment  securities held by the
Company to meet their debt obligations.

<PAGE>


     At December 31, 2000, net unrealized  depreciation on fixed maturities held
to maturity  included  $124 million of gross  unrealized  appreciation  and $116
million of gross unrealized  depreciation.  Net unrealized depreciation on fixed
maturities  available  for  sale  included  $188  million  of  gross  unrealized
appreciation and $719 million of gross unrealized depreciation.

     At December 31, 2000,  the Company had an allowance for losses for mortgage
loans totaling $11 million and for real estate investments totaling $nil.

     The economy and other  factors have caused a number of insurance  companies
to  go  under  regulatory   supervision.   This  circumstance  has  resulted  in
assessments by state guaranty  associations to cover losses to  policyholders of
insolvent  or  rehabilitated  companies.   Some  assessments  can  be  partially
recovered  through a reduction in future  premium taxes in certain  states.  The
Company established an asset for guaranty association  assessments paid to those
states allowing a reduction in future premium taxes over a reasonable  period of
time. The asset is being amortized as premium taxes are reduced. The Company has
also  estimated  the  potential  effect of future  assessments  on the Company's
financial  position and results of operations and has  established a reserve for
such potential  assessments.  The Company has adopted Statement of Position 97-3
providing  guidance  when an insurer  should  recognize a liability for guaranty
fund assessments. The SOP is effective for fiscal years beginning after December
15, 1998.  Adoption did not have a material  impact on the Company's  results of
operations or financial condition.

In 2000, dividends paid to its parent were $410 million.

     The  National  Association  of  Insurance   Commissioners  has  established
risk-based  capital  standards to determine the capital  requirements  of a life
insurance  company  based  upon the  risks  inherent  in its  operations.  These
standards  require the computation of a risk-based  capital amount which is then
compared to a company's actual total adjusted capital.  The computation involves
applying  factors to various  statutory  financial  data to address four primary
risks:  asset  default,  adverse  insurance  experience,  interest rate risk and
external  events.  These  standards  provide for  regulatory  attention when the
percentage  of total  adjusted  capital to authorized  control level  risk-based
capital is below certain  levels.  As of December 31, 2000, the Company's  total
adjusted  capital  was  well  in  excess  of  the  levels  requiring  regulatory
attention.

<PAGE>


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Items  required  under  this  section  are  included  in  the   Mangement's
Discussion and Analysis of financial  condition and results of operations  under
the section titled risk management.

ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

1.  Financial Statements and Schedules Required under Regulation S-X.

     Index to financial statements

 The following  consolidated  financial statements of IDS Life Insurance Company
 are included in Item 8:

    Report of Independent Auditors                                          18

    Consolidated Balance Sheets at December 31, 2000 and 1999            19-20

    Consolidated Statements of Income for the years ended
                 December 31, 2000, 1999 and 1998                           21

    Consolidated Statements of Stockholder's Equity for the years ended
        December 31, 2000, 1999 and 1998                                 22-23

    Consolidated Statements of Cash Flows for the years ended
                 December 31, 2000, 1999 and 1998                        24-25

         Notes to Consolidated Financial Statements                      26-43

     All  information  on schedules  to the  consolidated  financial  statements
required  by  Article  7 of  Regulation  S-X is  included  in  the  consolidated
financial  statements or is not  required.  Therefore,  all schedules  have been
omitted.

     ITEM 9. CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

<PAGE>


                                    PART III


ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Item omitted pursuant to General Instructions I(2) (c) of Form 10-K.

ITEM 11.      EXECUTIVE COMPENSATION

Item omitted pursuant to General Instructions I(2) (c) of Form 10-K.

ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Item omitted pursuant to General Instructions I(2) (c) of Form 10-K.

ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Item omitted pursuant to General Instructions I(2) (c) of Form 10-K.

<PAGE>

                                    PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)   (1)  Financial Statements

 See Index to Financial Statements and Financial Statement Schedules on page 11.

           (2)  Financial Statement Schedules

     See index to Financial  Statements and Financial Statement  Schedules.  All
information on schedules to the consolidated  financial  statements  required by
Article 7 of Regulation S-X is included in the consolidated financial statements
or is not required. Therefore, all schedules have been omitted.

          (3)  Exhibits

     3.1 Copy of Certificate  of  Incorporation  of IDS Life  Insurance  Company
filed  electronically  as  Exhibit  3.1 to  Post-Effective  Amendment  No.  5 to
Registration Statement No. 33-28976 is incorporated herein by reference.

     3.2  Copy of the  Amended  By-laws  of IDS  Life  Insurance  Company  filed
electronically as Exhibit 3.2 to Post-Effective  Amendment No. 5 to Registration
Statement No. 33-28976 is incorporated herein by reference.

     3.3 Copy of  Resolution  of the Board of  Directors  of IDS Life  Insurance
Company,   dated  May  5,  1989,   establishing   IDS  Life  Account  MGA  filed
electronically as Exhibit 3.3 to Post-Effective  Amendment No. 5 to Registration
Statement No. 33-28976 is incorporated herein by reference.

     4.1 Copy of Non-tax  qualified Group Annuity Contract,  Form 30363C,  filed
electronically as Exhibit 4.1 to Post-Effective  Amendment No. 5 to Registration
Statement No. 33-28976 is incorporated herein by reference.
     4.2 Copy of Non-tax qualified Group Annuity Certificate, Form 30360C, filed
electronically as Exhibit 4.2 to Post-Effective  Amendment No. 5 to Registration
Statement No. 33-28976 is incorporated herein by reference.

     4.3 Copy of Endorsement No.  30340C-GP to the Group Annuity  Contract filed
electronically as Exhibit 4.3 to Post-Effective  Amendment No. 5 to Registration
Statement No. 33-28976 is incorporated herein by reference.

     4.4 Copy of Endorsement No. 30340C to the Group Annuity  Certificate  filed
electronically as Exhibit 4.4 to Post-Effective  Amendment No. 5 to Registration
Statement No. 33-28976 is incorporated herein by reference.

     4.5 Copy of Tax  qualified  Group  Annuity  Contract,  Form  30369C,  filed
electronically as Exhibit 4.5 to Post-Effective Amendment No. 10 to Registration
Statement No. 33-28976 is incorporated herein by reference.

<PAGE>

     4.6 Copy of Tax qualified  Group Annuity  Certificate,  Form 30368C,  filed
electronically as Exhibit 4.6 to Post-Effective Amendment No. 10 to Registration
Statement No. 33-28976 is incorporated herein by reference.

     4.7 Copy of Group IRA Annuity Contract,  Form 30372C,  filed electronically
as Exhibit 4.7 to Post-Effective Amendment No. 10 to Registration Statement No.
33-28976 is incorporated herein by reference.

     4.8  Copy  of  Group  IRA   Annuity   Certificate,   Form   30371C,   filed
electronically as Exhibit 4.8 to Post-Effective Amendment No. 10 to Registration
Statement No. 33-28976 is incorporated herein by reference.

     4.9 Copy of Non-tax qualified  Individual  Annuity  Contract,  Form 30365D,
filed  electronically  as  Exhibit  4.9 to  Post-Effective  Amendment  No. 10 to
Registration Statement No. 33-28976 is incorporated herein by reference.

     4.10 Copy of  Endorsement  No. 30379 to the  Individual  Annuity  Contract,
filed  electronically  as Exhibit  4.10 to Post  Effective  Amendment  No. 10 to
Registration Statement No. 33-28976 is incorporated herein by reference.

     4.11 Copy of Tax qualified Individual Annuity Contract,  Form 30370C, filed
electronically   as  Exhibit  4.11  to   Post-Effective   Amendment  No.  10  to
Registration Statement No. 33-28976 is incorporated herein by reference.

     4.12  Copy  of  Individual  IRA  Annuity  Contract,   Form  30373C,   filed
electronically   as  Exhibit  4.12  to   Post-Effective   Amendment  No.  10  to
Registration Statement No. 33-28976 is incorporated herein by reference.

     4.13 Copy of Endorsement No. 33007 filed  electronically as Exhibit 4.13 to
Post-Effective  Amendment  No. 12 to  Registration  Statement  No.  33-28976  is
incorporated herein by reference.

     4.14 Copy of Group Annuity Contract,  Form 30363D,  filed electronically as
Exhibit 4.1 to  Post-Effective  Amendment  No. 2 to  Registration  Statement No.
33-50968 is incorporated herein by reference.

     4.15 Copy of Group Annuity  Certificate,  Form 30360D, filed electronically
as Exhibit 4.2 to Post-Effective  Amendment No. 2 to Registration  Statement No.
33-50968 is incorporated herein by reference.

     4.16 Form of Deferred Annuity Contract,  Form 30365E,  filed electronically
as Exhibit 4.3 to Post-Effective  Amendment No. 2 to Registration  Statement No.
33-50968 is incorporated herein by reference.

     4.17 Copy of Group Deferred  Variable Annuity Contract,  Form 34660,  filed
electronically as Exhibit 4.1 to Post-Effective  Amendment No. 2 to Registration
Statement No. 33-48701 is incorporated herein by reference.

     4.18 Copy of Non-tax  qualified Group Annuity Contract,  Form 33111,  filed
electronically  as  Exhibit  4.1 to  Registration  Statement  No.  333-42793  is
incorporated herein by reference.

<PAGE>

     4.19 Copy of Non-tax qualified Group Annuity Certificate, Form 33114, filed
electronically  as  Exhibit  4.2 to  Registration  Statement  No.  333-42793  is
incorporated herein by reference.

     4.20 Copy of Tax  qualified  Group  Annuity  Contract,  Form  33112,  filed
electronically  as  Exhibit  4.3 to  Registration  Statement  No.  333-42793  is
incorporated herein by reference.

     4.21 Copy of Tax qualified  Group Annuity  Certificate,  Form 33115,  filed
electronically  as  Exhibit  4.4 to  Registration  Statement  No.  333-42793  is
incorporated herein by reference.

     4.22 Copy of Group IRA Annuity Contract,  Form 33113, filed  electronically
as Exhibit 4.5 to Registration Statement No. 333-42793 is incorporated herein by
reference.

     4.23  Copy  of  Group  IRA   Annuity   Certificate,   Form   33116,   filed
electronically  as  Exhibit  4.6 to  Registration  Statement  No.  333-42793  is
incorporated herein by reference.

     4.24 Copy of Non-tax qualified  Individual  Annuity  Contract,  Form 30484,
filed  electronically  as  Exhibit  4.7 to  Post-Effective  Amendment  No.  1 to
Registration Statement No. 333-42793 is incorporated herein by reference.

     4.25 Copy of Tax qualified  Individual Annuity Contract,  Form 30485, filed
electronically as Exhibit 4.8 to Post-Effective  Amendment No. 1 to Registration
Statement No. 333-42793 is incorporated herein by reference.

     4.26 Copy of Individual IRA Contract,  Form 30486, filed  electronically as
Exhibit 4.9 to Post-Effective Amendment No. 1 to Registration Statement No.
333-42793 is incorporated herein by reference.

     21.  Copy of List of  Subsidiaries  filed  electronically  as Exhibit 21 to
Post-Effective  Amendment No. 7 to Registration Statement No. 33-28976 is herein
incorporated by reference.

           27. Financial data schedule is filed electronically herewith.

     (b) Reports on Form 8-K filed in the fourth quarter of 2000

     No reports on Form 8-K were  required  to be filed by the  Company  for the
quarter ended December 31, 2000.

<PAGE>


SIGNATURES

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

                                             IDS LIFE INSURANCE COMPANY
                                   Registrant


3/12/2001                 By    /s/Richard W. Kling
Date                               Richard W. Kling, President
                                   and Chief Executive Officer

3/12/2001                 By    /s/Philip C. Wentzel
Date                               Philip C. Wentzel, Vice President and
                                   Controller

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

3/12/2001                 By    /s/Stuart A. Sedlacek
Date                               Stuart A. Sedlacek, Executive Vice President

3/12/2001                 By    /s/Richard W. Kling
Date                               Richard W. Kling, President
                                   and Chief Executive Officer

3/12/2001                 By    /s/Paul F. Kolkman
Date                               Paul F. Kolkman, Executive Vice
President

3/12/2001                 By    /s/Pamela J. Moret
Date                               Pamela J. Moret, Chairman of the
                                   Board

3/12/2001                 By    /s/Paula R. Meyer
Date                               Paula R. Meyer, Executive Vice
                                   President, Assured Assets

3/12/2001                 By    /s/Barry J. Murphy
Date                               Barry J. Murphy, Executive Vice
President, Client Service

<PAGE>


Report of Independent Auditors

The Board of Directors
IDS Life Insurance Company

     We have audited the  accompanying  consolidated  balance sheets of IDS Life
Insurance  Company (a  wholly-owned  subsidiary  of American  Express  Financial
Corporation)  as of  December  31, 2000 and 1999,  and the related  consolidated
statements of income,  stockholder's equity and cash flows for each of the three
years in the period ended December 31, 2000. These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all  material  respects,  the  consolidated  financial  position  of IDS Life
Insurance Company at December 31, 2000 and 1999, and the consolidated results of
its  operations  and its cash  flows for each of the three  years in the  period
ended  December 31, 2000, in conformity  with  accounting  principles  generally
accepted in the United States.


/s/ Ernst & Young
February 8, 2001
Minneapolis, Minnesota

<PAGE>


                           IDS LIFE INSURANCE COMPANY
                           CONSOLIDATED BALANCE SHEETS
                                  December 31,
                                  ($ thousands)

<TABLE>
<CAPTION>
<S>                                                                                  <C>             <C>

ASSETS                                                                                    2000            1999


Investments:
  Fixed maturities:
      Held to maturity, at amortized cost (fair value:
          2000, $6,471,798; 1999, $7,105,743)                                         $  6,463,613     $  7,156,292
      Available for sale, at fair value (amortized cost:
          2000, $12,929,870; 1999, $13,703,137)                                         12,399,990       13,049,549
                                                                                        18,863,603       20,205,841

  Mortgage loans on real estate                                                          3,738,091        3,606,377
  Policy loans                                                                             618,973          561,834
  Other investments                                                                        635,880          506,797

          Total investments                                                             23,856,547       24,880,849

Cash and cash equivalents                                                                  316,974           32,333

Amounts recoverable from reinsurers                                                        416,480          327,168

Amounts due from brokers                                                                    15,302              145

Other accounts receivable                                                                   42,324           48,578

Accrued investment income                                                                  334,928          343,449

Deferred policy acquisition costs                                                        2,951,655        2,665,175

Deferred income taxes, net                                                                 136,588          216,020

Other assets                                                                                25,919           33,089

Separate account assets                                                                 32,349,347       35,894,732

          Total assets                                                                 $60,446,064      $64,441,538

</TABLE>

<PAGE>

                           IDS LIFE INSURANCE COMPANY
                     CONSOLIDATED BALANCE SHEETS (continued)
                                  December 31,
                       ($ thousands, except share amounts)
<TABLE>
<CAPTION>
<S>                                                                                   <C>              <C>

LIABILITIES AND STOCKHOLDER'S EQUITY                                                      2000             1999

Liabilities:
  Future policy benefits:
    Fixed annuities                                                                    $19,417,446      $20,552,159
    Universal life-type insurance                                                        3,410,871        3,391,203
    Traditional life insurance                                                             232,913          226,842
    Disability income and long-term care insurance                                       1,012,247          811,941
  Policy claims and other policyholders' funds                                              52,067           24,600
  Amounts due to brokers                                                                   446,347          148,112
  Other liabilities                                                                        459,422          579,678
  Separate account liabilities                                                          32,349,347       35,894,732

          Total liabilities                                                             57,380,660       61,629,267

Commitments and contingencies

Stockholder's equity:
  Capital stock, $30 par value per share;
    100,000 shares authorized, issued and outstanding                                        3,000            3,000
  Additional paid-in capital                                                               288,327          288,327
  Accumulated other comprehensive loss, net of tax:
    Net unrealized securities losses                                                      (333,734)        (411,230)
  Retained earnings                                                                      3,107,811        2,932,174

          Total stockholder's equity                                                     3,065,404        2,812,271

Total liabilities and stockholder's equity                                             $60,446,064      $64,441,538


</TABLE>












                                                        See accompanying notes.



<PAGE>

                           IDS LIFE INSURANCE COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME
                            Years ended December 31,
                                  ($ thousands)
<TABLE>
<CAPTION>
<S>                                                               <C>               <C>               <C>

                                                                       2000              1999              1998
Revenues:
  Premiums:
    Traditional life insurance                                      $    56,187       $    53,790      $    53,132
    Disability income and long-term care insurance                      231,311           201,637          176,298

           Total premiums                                               287,498           255,427          229,430

  Policyholder and contractholder charges                               438,127           411,994          383,965
  Management and other fees                                             598,168           473,108          401,057
  Net investment income                                               1,730,605         1,919,573        1,986,485
  Net realized (loss) gain on investments                               (16,975)           26,608             6,902

           Total revenues                                             3,037,423         3,086,710        3,007,839
</TABLE>

<TABLE>
<CAPTION>
<S>                                                                  <C>               <C>              <C>

Benefits and expenses:
  Death and other benefits:
    Traditional life insurance                                           29,042            29,819           29,835
    Universal life-type insurance
      and investment contracts                                          131,467           118,561          108,349
    Disability income and long-term care insurance                       40,246            30,622           27,414
  Increase in liabilities for future policy benefits:
      Traditional life insurance                                          5,765             7,311            6,052
      Disability income and long-term care insurance                    113,239            87,620           73,305
  Interest credited on universal life-type
    insurance and investment contracts                                1,169,641         1,240,575        1,317,124
  Amortization of deferred policy
    acquisition costs                                                   403,968           332,705          382,642
  Other insurance and operating expenses                                336,791           335,180          287,326

           Total benefits and expenses                                2,230,159         2,182,393        2,232,047


Income before income taxes                                              807,264           904,317          775,792

Income taxes                                                            221,627           267,864          235,681

Net income                                                           $  585,637        $  636,453       $  540,111

</TABLE>




                                                        See accompanying notes.
<PAGE>

                           IDS LIFE INSURANCE COMPANY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                       Three years ended December 31, 2000
                                  ($ thousands)

<TABLE>
<CAPTION>
<S>                                                    <C>               <C>        <C>          <C>                  <C>

                                                                                                 Accumulated Other
                                                           Total                    Additional     Comprehensive
                                                       Stockholder's     Capital      Paid-In      (Loss) Income,      Retained
                                                          Equity          Stock       Capital       Net of Tax        Earnings

Balance, January 1, 1998                                   $2,865,816      $3,000     $290,847        $226,359        $2,345,610
Comprehensive income:
   Net income                                                 540,111          --           --              --           540,111
   Unrealized holding losses arising during
      the year, net of deferred policy acquisition
     costs of $6,333 and taxes of $32,826                     (60,964)         --           --         (60,964)               --
   Reclassification adjustment for losses
      included in net income, net of tax
of                                                              4,189          --           --           4,189
      ($2,254)                                                                                                                --
                                                      -----------------
   Other comprehensive loss                                   (56,775)         --           --         (56,775)               --
                                                      -----------------                            -----------------
   Comprehensive income                                       483,336          --           --              --                --
Other changes                                                  (2,520)         --       (2,520)             --                --
Cash dividends to parent                                     (240,000)         --           --              --          (240,000)
                                                      ----------------------------------------------------------------------------

Balance, December 31, 1998                                  3,106,632       3,000      288,327         169,584         2,645,721
Comprehensive income:
   Net income                                                 636,453          --           --              --           636,453
   Unrealized holding losses arising during
      the year, net of deferred policy acquisition
     costs of $28,444 and taxes of $304,936                  (566,311)         --           --        (566,311)               --
   Reclassification adjustment for gains
      included in net income, net of tax
      of $7,810                                               (14,503)         --           --         (14,503)               --
                                                      -----------------                         --------------------

   Other comprehensive loss                                  (580,814)         --           --        (580,814)               --
                                                      -----------------
   Comprehensive income                                        55,639          --           --              --                --
Cash dividends to parent                                     (350,000)         --           --              --          (350,000)
                                                      ----------------------------------------------------------------------------

Balance, December 31,                                      $2,812,271      $3,000     $288,327       $(411,230)       $2,932,174
1999
</TABLE>

<PAGE>


                           IDS LIFE INSURANCE COMPANY
           CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (continued)
                       Three years ended December 31, 2000
                                  ($ thousands)

<TABLE>
<CAPTION>
<S>                                                    <C>                <C>      <C>          <C>                  <C>

                                                                                                   Accumulated
                                                                                                      Other
                                                           Total                    Additional    Comprehensive
                                                        Stockholder's     Capital      Paid-In  (Loss) Income,         Retained
                                                           Equity         Stock       Capital       Net of Tax        Earnings

Balance, December 31, 1999                                 $2,812,271      $3,000     $288,327       $(411,230)      $2,932,174
Comprehensive income:
   Net income                                                 585,637          --           --              --           585,637
   Unrealized holding gains arising during
      the year, net of deferred policy acquisition
     costs of $(5,154) and taxes of $(46,921)                  87,138          --           --          87,138               --
   Reclassification adjustment for gains
      included in net income, net of tax
      of $5,192                                                (9,642)         --           --          (9,642)              --
                                                      -----------------
                                                      -----------------                         -------------------
   Other comprehensive income                                  77,496          --           --          77,496               --
                                                      -----------------
   Comprehensive income                                       663,133          --           --              --               --
Cash dividends to parent                                     (410,000)         --           --              --          (410,000)
                                                      -----------------------------------------------------------------------------

Balance, December 31, 2000                                 $3,065,404      $3,000     $288,327       $(333,734)       $3,107,811
                                                      =============================================================================
                                                      =============================================================================
</TABLE>













                                                        See accompanying notes.

<PAGE>

                           IDS LIFE INSURANCE COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            Years ended December 31,
                                  ($ thousands)
<TABLE>
<CAPTION>
<S>                                                               <C>               <C>               <C>




                                                                        2000             1999              1998
Cash flows from operating activities:
  Net income                                                          $ 585,637         $ 636,453        $ 540,111
  Adjustments to reconcile net income to net cash
    provided by operating activities:
       Policy loans, excluding universal
        life-type insurance:
          Issuance                                                      (61,313)          (56,153)         (53,883)
          Repayment                                                      56,088            54,105           57,902
      Change in amounts recoverable from reinsurers                     (89,312)          (64,908)         (56,544)
      Change in other accounts receivable                                 6,254              (615)         (10,068)
      Change in accrued investment income                                 8,521            23,125           (9,184)
      Change in deferred policy acquisition costs, net                 (291,634)         (140,379)         (10,443)
      Change in liabilities for future policy benefits for
        traditional life, disability income and long-term
        care insurance                                                  206,377           153,157          138,826
      Change in policy claims and other
        policyholders' funds                                             27,467           (45,709)           1,964
      Deferred income tax provision (benefit)                            37,704            79,796          (19,122)
      Change in other liabilities                                      (120,256)          169,395           64,902
      Amortization of premium,
         (accretion of discount), net                                    37,909           (17,907)           9,170
      Net realized loss (gain) on investments                            16,975           (26,608)          (6,902)
      Policyholder and contractholder charges, non-cash                (151,745)         (175,059)        (172,396)
      Other, net                                                         (9,279)           (5,324)          10,786

          Net cash provided by operating
            activities                                                $ 259,393         $ 583,369        $ 485,119

</TABLE>

<PAGE>


                           IDS LIFE INSURANCE COMPANY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                            Years ended December 31,
                                  ($ thousands)
<TABLE>
<CAPTION>
<S>                                                               <C>              <C>              <C>

                                                                        2000              1999             1998
Cash flows from investing activities: Fixed maturities held to maturity:
        Purchases                                                 $      (4,487)    $      (3,030)   $      (1,020)
        Maturities, sinking fund payments and calls                     589,742           741,949        1,162,731
        Sales                                                            50,067            66,547          236,963
    Fixed maturities available for sale:
        Purchases                                                    (1,454,010)       (3,433,128)      (4,100,238)
        Maturities, sinking fund payments and calls                   1,019,403         1,442,507        2,967,311
        Sales                                                         1,237,116         1,691,389          278,955
    Other investments, excluding policy loans:
        Purchases                                                      (706,082)         (657,383)        (555,647)
        Sales                                                           435,633           406,684          579,038
  Change in amounts due from brokers                                    (15,157)              182            8,073
  Change in amounts due to brokers                                      298,236           (47,294)        (186,052)
           Net cash provided by investing activities                  1,450,461           208,423          390,114

</TABLE>

<TABLE>
<CAPTION>
<S>                                                                  <C>              <C>               <C>

Cash flows from financing activities:
  Activity related to universal life-type insurance
     and investment contracts:
       Considerations received                                        1,842,026         2,031,630        1,873,624
       Surrenders and other benefits                                 (3,974,966)       (3,669,759)      (3,792,612)
       Interest credited to account balances                          1,169,641         1,240,575        1,317,124
  Universal life-type insurance policy loans:
    Issuance                                                           (134,107)         (102,239)         (97,602)
    Repayment                                                            82,193            67,881           67,000
  Dividends paid                                                       (410,000)         (350,000)        (240,000)
          Net cash used in financing activities                      (1,425,213)         (781,912)        (872,466)

Net increase in cash and cash equivalents                               284,641             9,880            2,767

Cash and cash equivalents at beginning of year                           32,333            22,453           19,686

Cash and cash equivalents at end of year                            $   316,974      $     32,333     $     22,453

</TABLE>








                              See accompanying notes
<PAGE>

                           IDS LIFE INSURANCE COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  ($ thousands)

1.   Summary of significant accounting policies

     Nature of business

     IDS Life Insurance  Company (the Company) is a stock life insurance company
organized  under  the  laws  of  the  State  of  Minnesota.  The  Company  is  a
wholly-owned  subsidiary of American Express Financial Corporation (AEFC), which
is a wholly owned  subsidiary of American  Express  Company.  The Company serves
residents of all states except New York. IDS Life Insurance  Company of New York
is a wholly owned subsidiary of the Company and serves New York State residents.
The  Company  also wholly  owns  American  Enterprise  Life  Insurance  Company,
American  Centurion Life  Assurance  Company,  American  Partners Life Insurance
Company and American Express Corporation.

     The Company's  principal products are deferred annuities and universal life
insurance,  which are issued primarily to individuals.  It offers single premium
and flexible  premium  deferred  annuities  on both a fixed and variable  dollar
basis. Immediate annuities are offered as well. The Company's insurance products
include universal life (fixed and variable), whole life, single premium life and
term products  (including waiver of premium and accidental death benefits).  The
Company also markets disability income and long-term care insurance.

 Basis of presentation

     The accompanying  consolidated financial statements include the accounts of
the Company and its wholly  owned  subsidiaries.  All  significant  intercompany
accounts and transactions have been eliminated in consolidation.

     The accompanying  consolidated  financial  statements have been prepared in
conformity with accounting  principles  generally  accepted in the United States
which vary in certain respects from reporting practices  prescribed or permitted
by state insurance regulatory authorities (see Note 4).

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

Investments

     Fixed  maturities  that the  Company has both the  positive  intent and the
ability to hold to maturity  are  classified  as held to maturity and carried at
amortized cost. All other fixed maturities and all marketable  equity securities
are classified as available for sale and carried at fair value. Unrealized gains
and losses on  securities  classified  as  available  for sale are reported as a
separate component of accumulated other comprehensive  income (loss), net of the
related deferred policy acquisition costs effect and deferred taxes.

     The  retrospective  interest  method  is used  for  income  recognition  on
investments in structured notes and residual beneficial interests in securitized
financial assets.

Realized investment gain or loss is determined on an identified cost basis.

<PAGE>


1.    Summary of significant accounting policies (continued)

     Prepayments  are  anticipated  on certain  investments  in  mortgage-backed
securities  in  determining  the  constant  effective  yield  used to  recognize
interest  income.  Prepayment  estimates are based on information  received from
brokers who deal in mortgage-backed securities.

     When evidence  indicates a decline,  which is other than temporary,  in the
underlying  value or earning power of individual  investments,  such investments
are written down to the fair value by a charge to income.

     Mortgage  loans on real estate are carried at amortized  cost less reserves
for mortgage  loan losses.  The  estimated  fair value of the mortgage  loans is
determined by a discounted  cash flow analysis  using  mortgage  interest  rates
currently offered for mortgages of similar maturities.

     Impairment of mortgage loans is measured as the excess of a loan's recorded
investment  over its present value of expected  principal and interest  payments
discounted  at the  loan's  effective  interest  rate,  or  the  fair  value  of
collateral.  The amount of the  impairment is recorded in a reserve for mortgage
loan losses.  The reserve for mortgage loan losses is maintained at a level that
management believes is adequate to absorb estimated losses in the portfolio. The
level of the reserve account is determined based on several  factors,  including
historical   experience,   expected  future  principal  and  interest  payments,
estimated  collateral  values,  and current  economic and political  conditions.
Management  regularly  evaluates  the adequacy of the reserve for mortgage  loan
losses.

     The Company  generally stops accruing  interest on mortgage loans for which
interest  payments are delinquent more than three months.  Based on management's
judgment as to the  ultimate  collectibility  of  principal,  interest  payments
received are either  recognized as income or applied to the recorded  investment
in the loan.

     The cost of interest rate caps and floors is amortized to investment income
over  the life of the  contracts  and  payments  received  as a result  of these
agreements are recorded as investment  income when realized.  The amortized cost
of interest rate caps and floors is included in other investments.  Amounts paid
or received under interest rate swap  agreements are recognized as an adjustment
to investment income.

     The Company may  purchase  and write index  options to hedge the fee income
earned on the  management  of equity  securities  in separate  accounts  and the
underlying mutual funds. These index options are carried at market value and are
included in other  investments or other  liabilities,  as appropriate.  Gains or
losses on index  options that qualify as hedges are deferred and  recognized  in
management and other fees in the same period as the hedged fee income.

     The  Company  also uses  index  options  to manage  the risks  related to a
certain  annuity  product that pays interest based upon the relative change in a
major stock market index between the  beginning  and end of the product's  term.
Purchased  options used in  conjunction  with this product are reported in other
investments  and  written  options  are  included  in  other  liabilities.   The
amortization of the cost of purchased  options,  the proceeds of written options
and the  changes  in  intrinsic  value  of the  contracts  are  included  in net
investment income.

     Policy loans are carried at the aggregate of the unpaid loan balances which
do not exceed the cash surrender values of the related policies.

<PAGE>

1.   Summary of significant accounting policies (continued)

     Statements of cash flows

     The  Company  considers  investments  with a maturity  at the date of their
acquisition of three months or less to be cash equivalents. These securities are
carried principally at amortized cost, which approximates fair value.

     Supplementary  information to the consolidated statements of cash flows for
the years ended December 31 is summarized as follows:

<TABLE>
<CAPTION>
<S>                                                                <C>             <C>              <C>

                                                                      2000             1999             1998
    Cash paid during the year for:
    Income taxes                                                     $225,704         $214,940          $215,003
    Interest on borrowings                                              3,299            4,521            14,529

</TABLE>

     Recognition of profits on annuity contracts and insurance policies

     Profits on fixed and variable  deferred  annuities  are  recognized  by the
Company over the lives of the contracts,  using  primarily the interest  method.
Profits on fixed annuities represent the excess of investment income earned from
investment of contract  considerations over interest credited to contract owners
and other  expenses.  Profits  on  variable  annuities  represent  the excess of
contractholder charges over the costs of benefits provided and other expenses.

     The  retrospective  deposit  method  is used in  accounting  for  fixed and
variable  universal  life-type  insurance.   Under  this  method,   profits  are
recognized  over the lives of the policies in proportion to the estimated  gross
profits expected to be realized.

     Premiums  on  traditional  life,   disability  income  and  long-term  care
insurance  policies are recognized as revenue when due, and related benefits and
expenses  are  associated  with  premium  revenue  in a manner  that  results in
recognition  of  profits  over  the  lives  of  the  insurance  policies.   This
association is accomplished by means of the provision for future policy benefits
and the deferral and subsequent amortization of policy acquisition costs.

     Policyholder  and  contractholder  charges  include  the  monthly  cost  of
insurance charges,  issue and administrative  fees and surrender charges.  These
charges also include the minimum death benefit  guarantee fees received from the
variable life  insurance  separate  accounts.  Management and other fees include
investment  management  fees  from  underlying   proprietary  mutual  funds  and
mortality and expense risk fees received from the variable  annuity and variable
life insurance separate accounts.


<PAGE>

1.   Summary of significant accounting policies (continued)

     Deferred policy acquisition costs

     The costs of acquiring new business, principally sales compensation, policy
issue costs,  underwriting  and certain  sales  expenses,  have been deferred on
insurance and annuity contracts.  The deferred acquisition costs for most single
premium  deferred  annuities  and  installment  annuities  are  amortized  using
primarily the interest method. The costs for universal  life-type  insurance and
certain  installment  annuities  are  amortized as a percentage of the estimated
gross profits  expected to be realized on the policies.  For  traditional  life,
disability income and long-term care insurance policies, the costs are amortized
over an appropriate period in proportion to premium revenue.

     Amortization  of deferred  policy  acquisition  costs  requires  the use of
assumptions  including interest margins,  mortality margins,  persistency rates,
maintenance  expense  levels  and,  for  variable  products,   separate  account
performance.  For universal life-type  insurance and deferred annuities,  actual
experience is reflected in the Company's  amortization models monthly. As actual
experience differs from the current  assumptions,  management considers the need
to change key assumptions underlying the amortization models prospectively.  The
impact of changing prospective  assumptions is reflected in the period that such
changes are made and is generally referred to as an unlocking adjustment. During
2000 and 1999, unlocking  adjustments resulted in a net decrease in amortization
of $12,300 and $56,800, respectively. Net unlocking adjustments in 1998 were not
significant.

     Liabilities for future policy benefits

     Liabilities  for  universal-life  type  insurance  and fixed  and  variable
deferred annuities are accumulation values.

     Liabilities  for equity  indexed  deferred  annuities are determined as the
present value of  guaranteed  benefits and the  intrinsic  value of  index-based
benefits.

     Liabilities   for  fixed  annuities  in  a  benefit  status  are  based  on
established  industry  mortality  tables and interest  rates  ranging from 5% to
9.5%, depending on year of issue.

     Liabilities for future benefits on traditional  life insurance are based on
the net level premium method,  using anticipated  mortality,  policy persistency
and interest earning rates. Anticipated mortality rates are based on established
industry  mortality tables.  Anticipated policy persistency rates vary by policy
form,  issue age and  policy  duration  with  persistency  on cash  value  plans
generally  anticipated to be better than  persistency  on term insurance  plans.
Anticipated interest rates range from 4% to 10%, depending on policy form, issue
year and policy duration.

     Liabilities for future disability income and long-term care policy benefits
include both policy  reserves and claim  reserves.  Policy reserves are based on
the net level premium method,  using anticipated  morbidity,  mortality,  policy
persistency  and interest  earning  rates.  Anticipated  morbidity and mortality
rates  are  based  on  established  industry  morbidity  and  mortality  tables.
Anticipated  policy  persistency  rates vary by policy form,  issue age,  policy
duration and, for disability  income  policies,  occupation  class.  Anticipated
interest rates for disability  income and long-term care policy  reserves are 3%
to 9.5% at policy  issue and  grade to  ultimate  rates of 5% to 7% over 5 to 10
years.


<PAGE>

1.   Summary of significant accounting policies (continued)

     Claim  reserves  are  calculated  based on  claim  continuance  tables  and
anticipated interest earnings.  Anticipated claim continuance rates are based on
established  industry tables.  Anticipated interest rates for claim reserves for
both disability income and long-term care range from 5% to 8%.

     Reinsurance

     The maximum  amount of life  insurance risk retained by the Company is $750
on any  policy  insuring  a single  life and  $1,500 on any  policy  insuring  a
joint-life  combination.  The Company  retains only 20% of the mortality risk on
new variable universal life insurance  policies.  Risk not retained is reinsured
with other life insurance companies, primarily on a yearly renewable term basis.
Long-term  care policies are primarily  reinsured on a  coinsurance  basis.  The
Company retains all accidental  death benefit,  disability  income and waiver of
premium risk.

     Federal income taxes

     The Company's taxable income is included in the consolidated federal income
tax return of American Express Company. The Company provides for income taxes on
a separate  return  basis,  except  that,  under an  agreement  between AEFC and
American  Express  Company,  tax benefit is recognized  for losses to the extent
they can be used on the  consolidated  tax return.  It is the policy of AEFC and
its subsidiaries that AEFC will reimburse subsidiaries for all tax benefits.

     Included in other liabilities at December 31, 2000 and 1999 are $41,059 and
$852 receivable from, respectively, AEFC for federal income taxes.

     Separate account business

     The separate  account assets and  liabilities  represent funds held for the
exclusive  benefit of the variable annuity and variable life insurance  contract
owners.  The Company  receives  investment  management fees from the proprietary
mutual funds used as investment options for variable annuities and variable life
insurance.  The  Company  receives  mortality  and  expense  risk  fees from the
separate accounts.

     The Company makes contractual  mortality assurances to the variable annuity
contract  owners  that  the net  assets  of the  separate  accounts  will not be
affected by future  variations in the actual life  expectancy  experience of the
annuitants  and  beneficiaries  from the mortality  assumptions  implicit in the
annuity contracts.  The Company makes periodic fund transfers to, or withdrawals
from, the separate  account assets for such actuarial  adjustments  for variable
annuities that are in the benefit  payment  period.  The Company also guarantees
that the rates at which  administrative  fees are deducted from  contract  funds
will not exceed contractual maximums.

     For variable life insurance, the Company guarantees that the rates at which
insurance charges and administrative  fees are deducted from contract funds will
not exceed  contractual  maximums.  The Company also  guarantees  that the death
benefit will  continue  payable at the initial  level  regardless  of investment
performance so long as minimum premium payments are made.

<PAGE>

1.   Summary of significant accounting policies (continued)

     Accounting changes

     In June 1998, the Financial  Accounting  Standards Board (FASB) issued, and
subsequently  amended,  Statement of Financial  Accounting  Standards (SFAS) No.
133,  "Accounting for Derivative  Instruments and Hedging Activities," which the
company  adopted on January 1, 2001. This Statement  establishes  accounting and
reporting standards for derivative instruments, including some embedded in other
contracts,  and hedging  activities.  It requires  that an entity  recognize all
derivatives  as either  assets or  liabilities  on the balance sheet and measure
those instruments at fair value.  Changes in the fair value of a derivative will
be  recorded  in income or directly  to equity,  depending  on the  instrument's
designated use.

     A  one-time  opportunity  to  reclassify  held-to-maturity  investments  to
available-for-sale  is allowed without tainting the remaining  securities in the
held-to-maturity  portfolio. The Company has elected to take this opportunity to
reclass its held-to-maturity investments to available-for-sales.

     As of January 1, 2001,  the cumulative  impact of applying the  Statement's
accounting  requirements  will  not  have a  material  impact  on the  Company's
financial position or results of operations.

     In September 2000, the FASB issued SFAS No. 140,  "Accounting for Transfers
and  Servicing  of  Financial  Assets  and   Extinguishments   of  Liabilities,"
superceding SFAS Statement No. 125. The Statement is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001. The Statement is effective for recognition and  reclassification
of collateral and for disclosures  relating to  securitization  transactions and
collateral for fiscal years ending after December 15, 2000. The company does not
expect  SFAS  No.  140 to have a  material  impact  on the  company's  financial
position or results of operations.

     In July 2000,  the  FASB's  Emerging  Issues  Task  Force  (EITF)  issued a
consensus on Issue 99-20,  "Recognition  of Interest  Income and  Impairment  on
Purchased Beneficial  Interests in Securitized  Financial Assets." The consensus
must be adopted for fiscal quarters beginning after March 15, 2001, with earlier
adoption permitted. Issue 99-20 prescribes new procedures for recording interest
income and measuring impairment on retained and purchased beneficial  interests.
The rule primarily  affects  certain AEFA  high-yield  investments  contained in
off-balance  sheet  trusts  whose cash flows have been  negatively  effected  by
credit experience.  As of January 1, 2001, the rule would require AEFA to adjust
the carrying amount of these investments  downward by approximately $30 milllion
through recognition of an impairment charge.

Reclassifications

Certain  1999 and 1998  amounts  have been  reclassified  to conform to the 2000
presentations.

<PAGE>

2.   Investments

     Fair values of  investments  in fixed  maturities  represent  quoted market
prices and  estimated  values when quoted  prices are not  available.  Estimated
values are determined by established  procedures involving,  among other things,
review of market  indices,  price  levels of  current  offerings  of  comparable
issues,  price estimates and market data from independent  brokers and financial
files.

     The amortized cost,  gross  unrealized  gains and losses and fair values of
investments in fixed  maturities and equity  securities at December 31, 2000 are
as follows:

<TABLE>
<CAPTION>
<S>                                                 <C>             <C>              <C>               <C>

                                                                       Gross            Gross
                                                    Amortized       Unrealized       Unrealized          Fair
    Held to maturity                                   Cost            Gains           Losses           Value

    U.S. Government agency obligations             $      38,302     $    3,455    $          80      $     41,677
    State and municipal obligations                        7,678             16              --              7,694
    Corporate bonds and obligations                    5,248,517        111,466         114,330          5,245,653
    Mortgage-backed securities                         1,169,116          9,130           1,472          1,176,774
                                                     $ 6,463,613      $ 124,067       $ 115,882         $6,471,798


                                                                       Gross            Gross
                                                    Amortized       Unrealized       Unrealized           Fair
    Available for sale                                 Cost            Gains           Losses            Value

    U.S. Government agency obligations            $       96,408   $     6,134     $        268       $     102,274
    State and municipal obligations                       12,848           247               --              13,095
    Corporate bonds and obligations                    7,586,423       123,691          693,303           7,016,811
    Mortgage-backed securities                         5,234,191        57,697           24,078           5,267,810
    Total fixed maturities                            12,929,870       187,769          717,649          12,399,990
    Equity securities                                                          --         1,496              10,333
                                                          11,829
                                                     $12,941,699     $ 187,769        $ 719,145         $12,410,323




</TABLE>

<PAGE>

2.       Investments (continued)

     The amortized cost,  gross  unrealized  gains and losses and fair values of
investments in fixed  maturities and equity  securities at December 31, 1999 are
as follows:

<TABLE>
<CAPTION>
<S>                                                 <C>             <C>             <C>                <C>

                                                                       Gross            Gross
                                                    Amortized       Unrealized       Unrealized          Fair
    Held to maturity                                   Cost            Gains           Losses           Value

    U.S. Government agency obligations            $      37,613     $       236     $     2,158       $      35,691
    State and municipal obligations                       9,681             150              --               9,831
    Corporate bonds and obligations                   5,713,475          91,571         113,350           5,691,696
    Mortgage-backed securities                        1,395,523           4,953          31,951           1,368,525
                                                    $ 7,156,292        $ 96,910        $147,459          $7,105,743

                                                                       Gross            Gross
                                                    Amortized       Unrealized       Unrealized          Fair
    Available for sale                                 Cost            Gains           Losses           Value

    U.S. Government agency obligations            $      46,325      $      612      $    2,231      $       44,706
    State and municipal obligations                      13,226             519             191              13,554
    Corporate bonds and obligations                   7,960,352          60,120         560,450           7,460,022
    Mortgage-backed securities                        5,683,234           9,692         161,659           5,531,267
    Total fixed maturities                           13,703,137          70,943         724,531          13,049,549
    Equity securities                                                        16                --
                                                          3,000                                               3,016
                                                    $13,706,137        $ 70,959        $724,531         $13,052,565

</TABLE>


     The amortized  cost and fair value of  investments  in fixed  maturities at
December 31, 2000 by contractual  maturity are shown below.  Expected maturities
will differ from contractual  maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
<S>                                                                                 <C>                 <C>
                                                                                    Amortized           Fair
    Held to maturity                                                                   Cost             Value

    Due from one to five years                                                     $   2,930,737      $  2,935,736
    Due from five to ten years                                                         1,807,979         1,800,940
    Due in more than ten years                                                           555,781           558,348
    Mortgage-backed securities                                                         1,169,116         1,176,774
                                                                                   $   6,463,613      $  6,471,798

                                                                                    Amortized           Fair
    Available for sale                                                                 Cost             Value

    Due from one to five years                                                     $     420,233     $     464,106
    Due from five to ten years                                                         4,675,249         4,266,932
    Due in more than ten years                                                         2,600,197         2,401,142
    Mortgage-backed securities                                                         5,234,191         5,267,810
                                                                                     $12,929,870       $12,399,990
</TABLE>

<PAGE>


2.       Investments (continued)

     During the years ended December 31, 2000, 1999 and 1998,  fixed  maturities
classified as held to maturity were sold with amortized cost of $53,169, $68,470
and  $230,036,  respectively.  Net gains  and  losses  on these  sales  were not
significant.  The  sale  of  these  fixed  maturities  was  due  to  significant
deterioration in the issuers' credit worthiness.

     Fixed maturities  available for sale were sold during 2000 with proceeds of
$1,237,116  and  gross  realized  gains  and  losses  of  $25,101  and  $10,267,
respectively.  Fixed  maturities  available  for sale were sold during 1999 with
proceeds  of  $1,691,389  and gross  realized  gains and losses of  $36,568  and
$14,255, respectively. Fixed maturities available for sale were sold during 1998
with  proceeds of $278,955  and gross  realized  gains and losses of $15,658 and
$22,102, respectively.

     At December 31, 2000, bonds carried at $14,472 were on deposit with various
states as required by law.

     At December 31, 2000,  investments in fixed maturities comprised 79 percent
of the Company's total invested  assets.  These  securities are rated by Moody's
and Standard & Poor's (S&P), except for securities carried at approximately $3.5
billion which are rated by AEFC's  internal  analysts using criteria  similar to
Moody's and S&P. A summary of  investments  in fixed  maturities,  at  amortized
cost, by rating on December 31 is as follows:

<TABLE>
<CAPTION>
<S>                                                                                 <C>              <C>

         Rating                                                                         2000            1999
    Aaa/AAA                                                                         $  6,559,188      $  7,144,280
    Aaa/AA                                                                                32,001             1,920
    Aa/AA                                                                                220,446           301,728
    Aa/A                                                                                 327,147           314,168
    A/A                                                                                2,494,621         2,598,300
    A/BBB                                                                                747,636         1,014,566
    Baa/BBB                                                                            5,828,847         6,319,549
    Baa/BB                                                                               287,583           348,849
    Below investment grade                                                             2,896,014         2,816,069
                                                                                     $19,393,483       $20,859,429
</TABLE>



     At December 31, 2000, 88 percent of the securities  rated Aaa/AAA are GNMA,
FNMA and FHLMC mortgage-backed  securities.  No holdings of any other issuer are
greater than one percent of the Company's total investments in fixed maturities.


<PAGE>

2.   Investments (continued)

     At December 31, 2000,  approximately  16 percent of the Company's  invested
assets were mortgage loans on real estate. Summaries of mortgage loans by region
of the United States and by type of real estate are as follows:

<TABLE>
<CAPTION>
<S>                                           <C>             <C>                 <C>              <C>
                                                     December 31, 2000                 December 31, 1999
                                              On Balance       Commitments        On Balance        Commitments
         Region                                  Sheet          to Purchase          Sheet           to Purchase
    East North Central                         $   691,694      $    18,868        $   715,998          $  10,380
    West North Central                             564,576            7,621            555,635             42,961
    South Atlantic                                 884,723            7,667            867,838             23,317
    Middle Atlantic                                378,702           13,813            428,051              1,806
    New England                                    279,147            4,604            259,243              4,415
    Pacific                                        318,727              921            238,299              3,466
    West South Central                             173,158           28,548            144,607              4,516
    East South Central                              49,176            2,763             43,841                 --
    Mountain                                       409,677           10,209            381,148              9,380
                                                 3,749,580           95,014          3,634,660            100,241
    Less allowance for losses                       11,489                 --           28,283                 --
                                                $3,738,091      $    95,014         $3,606,377           $100,241
</TABLE>

<TABLE>
<CAPTION>
<S>                                           <C>              <C>                <C>             <C>
                                                    December 31, 2000                   December 31, 1999
                                              On Balance       Commitments        On Balance        Commitments
                Property type                    Sheet          to Purchase          Sheet           to Purchase
    Department/retail stores                    $1,174,763       $   11,130        $1,158,712         $  33,829
    Apartments                                     780,228               --           887,538            11,343
    Office buildings                             1,085,948           59,941           931,234            26,062
    Industrial buildings                           323,766           23,943           309,845             5,525
    Hotels/motels                                  100,680               --           103,625                --
    Medical buildings                              128,101               --           114,045                --
    Nursing/retirement homes                        49,822               --            45,935                --
    Mixed use                                       87,537               --            66,893                --
    Other                                           18,735               --            16,833            23,482
                                                 3,749,580           95,014         3,634,660           100,241
    Less allowance for losses                       11,489               --            28,283                 --
                                                $3,738,091        $  95,014        $3,606,377          $100,241

</TABLE>

     Mortgage  loan  fundings  are  restricted  by  state  insurance  regulatory
authorities  to 80 percent or less of the market value of the real estate at the
time of origination of the loan. The Company holds the mortgage document,  which
gives it the right to take  possession of the property if the borrower  fails to
perform  according  to the  terms  of the  agreement.  Commitments  to  purchase
mortgages  are made in the ordinary  course of  business.  The fair value of the
mortgage commitments is $nil.


<PAGE>


2.   Investments (continued)

     At  December  31,  2000 and 1999,  the  Company's  recorded  investment  in
impaired loans was $24,999 and $21,375, respectively,  with allowances of $4,350
and $5,750, respectively.  During 2000 and 1999, the average recorded investment
in impaired loans was $27,063 and $23,815, respectively.

     The Company recognized $1,033, $1,190 and $1,809 of interest income related
to  impaired  loans  for the  years  ended  December  31,  2000,  1999  and 1998
respectively.

     The following table presents changes in the allowance for losses related to
all loans:

<TABLE>
<CAPTION>
<S>                                                              <C>               <C>              <C>
                                                                     2000              1999             1998
    Balance, January 1                                                $28,283          $39,795           $38,645
    Provision (reduction) for investment losses                       (14,894)          (9,512)            7,582
    Loan payoffs                                                       (1,200)            (500)             (800)
    Foreclosures and writeoffs                                           (700)          (1,500)           (5,632)

    Balance, December 31                                              $11,489          $28,283           $39,795
</TABLE>


     At  December  31,  2000,   the  Company  had  no  commitments  to  purchase
investments other than mortgage loans.


     Net  investment  income for the years ended  December 31 is  summarized  as
follows:

<TABLE>
<CAPTION>
<S>                                                              <C>              <C>               <C>
                                                                      2000             1999              1998
    Interest on fixed maturities                                    $1,473,560       $1,598,059        $1,676,984
    Interest on mortgage loans                                         286,611          285,921           301,253
    Other investment income                                              1,750           70,892            43,518
    Interest on cash equivalents                                         8,084            5,871             5,486
                                                                     1,770,005        1,960,743         2,027,241
    Less investment expenses                                            39,400           41,170            40,756
                                                                    $1,730,605       $1,919,573        $1,986,485
</TABLE>


     Net realized  (loss) gain on investments for the years ended December 31 is
summarized as follows:

<TABLE>
<CAPTION>
<S>                                                               <C>               <C>             <C>
                                                                      2000              1999            1998
    Fixed maturities                                              $   (34,857)      $    8,802         $   9,946
    Mortgage loans                                                     15,845           10,211            (5,933)
    Other investments                                                   2,037            7,596             2,889
                                                                  $   (16,975)       $  26,608         $   6,902
</TABLE>


     Changes in net unrealized  appreciation  (depreciation)  of investments for
the years ended December 31 are summarized as follows:

<TABLE>
<CAPTION>
<S>                                                              <C>                <C>             <C>
                                                                      2000             1999             1998

    Fixed maturities available for sale                               $99,706        $(921,778)         $(93,474)
    Equity securities                                                  (1,428)            (142)             (203)

</TABLE>

<PAGE>

3.   Income taxes

     The Company  qualifies as a life  insurance  company for federal income tax
purposes.  As  such,  the  Company  is  subject  to the  Internal  Revenue  Code
provisions applicable to life insurance companies.

     The income tax expense  (benefit) for the years ended  December 31 consists
of the following:

<TABLE>
<CAPTION>
<S>                                                               <C>               <C>              <C>
                                                                     2000              1999             1998
    Federal income taxes:
    Current                                                          $176,397         $178,444          $244,946
    Deferred                                                           37,704           79,796           (16,602)
                                                                      214,101          258,240           228,344
    State income taxes-current                                          7,526            9,624             7,337
    Income tax expense                                               $221,627         $267,864          $235,681

</TABLE>

     Increases  (decreases)  to the income tax  provision  applicable  to pretax
income based on the statutory rate are attributable to:

<TABLE>
<CAPTION>
<S>                                  <C>              <C>       <C>             <C>       <C>             <C>
                                               2000                       1999                      1998
                                     -------------------------- ------------------------- -------------------------
                                      Provision       Rate       Provision       Rate      Provision       Rate
    Federal income taxes based on
    the statutory rate                  $282,542      35.0%         $316,511     35.0%        $271,527     35.0%

    Tax-excluded interest and
       dividend income                    (3,788)     (0.5)           (9,626)    (1.1)         (12,289)    (1.6)

    State taxes, net of federal
       benefit                             4,892       0.6             6,256      0.7            4,769      0.6

    Affordable housing credits           (54,569)     (6.8)          (31,000)    (3.4)         (19,688)    (2.5)

    Other, net                            (7,450)     (0.8)          (14,277)    (1.6)          (8,638)    (1.1)

    Total income taxes                  $221,627      27.5%         $267,864     29.6%        $235,681     30.4%

</TABLE>

     A portion of life  insurance  company  income  earned prior to 1984 was not
subject  to  current  taxation  but  was  accumulated,  for tax  purposes,  in a
policyholders'  surplus  account.  At  December  31,  2000,  the  Company  had a
policyholders'  surplus account balance of $20,114.  The policyholders'  surplus
account is only taxable if dividends to the stockholder exceed the stockholder's
surplus account or if the Company is liquidated. Deferred income taxes of $7,040
have  not  been  established  because  no  distributions  of  such  amounts  are
contemplated.


<PAGE>

3.   Income taxes (continued)


     Significant components of the Company's deferred tax assets and liabilities
as of December 31 are as follows:

<TABLE>
<CAPTION>
<S>                                                                                 <C>                <C>
                                                                                       2000             1999
    Deferred tax assets:
    Policy reserves                                                                  $ 730,239         $ 733,647
    Unrealized loss on available for sale investments                                  179,702           221,431
    Investments, other                                                                  34,600             1,873
    Life insurance guaranty fund assessment reserve                                      1,365             4,789
    Total deferred tax assets                                                          945,906           961,740

    Deferred tax liabilities:
    Deferred policy acquisition costs                                                  796,292           740,837
    Other                                                                               13,026             4,883
    Total deferred tax liabilities                                                     809,318           745,720
    Net deferred tax assets                                                          $ 136,588         $ 216,020

</TABLE>

     The Company is required to establish a valuation  allowance for any portion
of the deferred tax assets that management believes will not be realized. In the
opinion of management,  it is more likely than not that the Company will realize
the  benefit  of the  deferred  tax assets  and,  therefore,  no such  valuation
allowance has been established.

4.   Stockholder's equity

     Retained earnings available for distribution as dividends to the parent are
limited to the Company's  surplus as determined  in accordance  with  accounting
practices  prescribed  by  state  insurance  regulatory  authorities.  Statutory
unassigned surplus aggregated  $1,527,543 as of December 31, 2000 and $1,693,356
as of  December  31,  1999 (see Note 3 with  respect to the income tax effect of
certain  distributions).  In  addition,  any dividend  distributions  in 2001 in
excess of  approximately  $344,973  would require  approval of the Department of
Commerce of the State of Minnesota.

     Statutory  net income  for the years  ended  December  31 and  capital  and
surplus as of December 31 are summarized as follows:

<TABLE>
<CAPTION>
<S>                                                              <C>               <C>              <C>
                                                                     2000              1999             1998
    Statutory net income                                            $  344,973       $  478,173        $  429,903
    Statutory capital and surplus                                    1,778,306        1,978,406         1,883,405

</TABLE>

     The National  Association  of Insurance  Commissioners  (NAIC)  revised the
Accounting  Practices  and  Procedures  Manual  in  a  process  referred  to  as
Codification.  The  revised  manual  will be  effective  January  1,  2001.  The
domiciliary  states of the Company and its insurance  subsidiaries  have adopted
the provisions of the revised  manual.  The revised manual has changed,  to some
extent,  prescribed statutory accounting practices and will result in changes to
the accounting practices that the Company and its insurance  subsidiaries use to
prepare their  statutory-basis  financial  statements.  Management  believes the
impact of these changes to the Company's and its  subsidiaries'  statutory-basis
capital and surplus as of January 1, 2001 will not be significant.

<PAGE>

5.   Related party transactions

     The Company  loans funds to AEFC under a  collateral  loan  agreement.  The
balance of the loan was $nil at  December  31,  2000 and 1999.  This loan can be
increased  to a maximum  of  $75,000  and pays  interest  at a rate equal to the
preceding  month's  effective  new  money  rate  for  the  Company's   permanent
investments.  Interest  income on related party loans totaled $nil in 2000, 1999
and 1998.

     The Company  participates in the American  Express Company  Retirement Plan
which  covers  all  permanent  employees  age 21 and over  who have met  certain
employment  requirements.  Employer  contributions  to the  plan  are  based  on
participants' age, years of service and total compensation for the year. Funding
of retirement  costs for this plan complies with the applicable  minimum funding
requirements  specified by ERISA.  The Company's share of the total net periodic
pension cost was $250, $223 and $211 in 2000, 1999 and 1998, respectively.

     The Company also  participates  in defined  contribution  pension  plans of
American  Express  Company  which  cover  all  employees  who have  met  certain
employment  requirements.  Company  contributions  to the plans are a percent of
either each employee's eligible  compensation or basic  contributions.  Costs of
these plans charged to operations in 2000, 1999 and 1998 were $1,707, $1,906 and
$1,503, respectively.

     The Company  participates in defined benefit health care plans of AEFC that
provide health care and life insurance benefits to retired employees and retired
financial  advisors.  The plans include  participant  contributions  and service
related eligibility requirements. Upon retirement, such employees are considered
to have been  employees of AEFC.  AEFC expenses these benefits and allocates the
expenses to its subsidiaries.  The Company's share of postretirement benefits in
2000, 1999 and 1998 was $1,136, $1,147 and $1,352, respectively.

     Charges by AEFC for use of joint facilities,  technology support, marketing
services and other services aggregated $582,836, $485,177 and $411,337 for 2000,
1999 and 1998,  respectively.  Certain of these  costs are  included in deferred
policy acquisition costs.

6.   Commitments and contingencies

     At  December  31,  2000,  1999 and 1998,  traditional  life  insurance  and
universal life-type insurance in force aggregated  $98,060,472,  $89,271,957 and
$81,074,928 respectively,  of which $17,429,851,  $8,281,576 and $4,912,313 were
reinsured at the  respective  year ends. The Company also reinsures a portion of
the risks assumed under disability income and long-term care policies. Under all
reinsurance  agreements,  premiums  ceded to  reinsurers  amounted  to  $89,506,
$76,970  and $66,378  and  reinsurance  recovered  from  reinsurers  amounted to
$32,500,  $27,816,  and $20,982 for the years ended December 31, 2000,  1999 and
1998,  respectively.  Reinsurance  contracts do not relieve the Company from its
primary obligation to policyholders.

<PAGE>

6.       Commitments and contingencies (continued)

     In January  2000,  AEFC  reached an  agreement in principle to settle three
class-action  lawsuits  related to the sales of insurance and annuity  products,
anticipated to provide for approximately  $215 million of benefits.  The Company
had been named as a co-defendant  in all three of these  lawsuits.  In September
2000, the court gave  preliminary  approval to the proposed  settlement and AEFC
has mailed  notices to all of the over two  million  class  members.  A fairness
hearing is scheduled  for March 2001,  with final  approval  anticipated  in the
second quarter,  pending any legal appeals.  The anticipated costs of settlement
remain  unchanged  from 1999.  The portion of the  settlement  allocated  to the
Company did not have a material  impact on the Company's  financial  position or
results of operations.  The agreement also provides for release by class members
of all insurance and annuity  market  conduct  claims dating back to 1985 and is
subject to a number of contingencies, including final court approval.

     The Company is named as a defendant in various other lawsuits.  The outcome
of any  litigation  cannot  be  predicted  with  certainty.  In the  opinion  of
management,  however,  the  ultimate  resolution  of  these  lawsuits,  taken in
aggregate   should  not  have  a  material   adverse  effect  on  the  Company's
consolidated financial position.

     The IRS routinely  examines the Company's federal income tax returns and is
currently  conducting  an audit for the 1993 through 1996 tax years.  Management
does not  believe  there  will be a  material  adverse  effect on the  Company's
consolidated financial position as a result of these audits.


7.   Lines of credit

     The  Company  has  available  lines of credit  with its parent  aggregating
$200,000 ($100,000  committed and $100,000  uncommitted).  The interest rate for
any  borrowings  is  established  by reference to various  indices plus 20 to 45
basis points, depending on the term. Borrowings outstanding under this agreement
were $50,000 uncommitted at December 31, 2000 and 1999, respectively.

8.   Derivative financial instruments

     The  Company  enters  into  transactions   involving  derivative  financial
instruments to manage its exposure to interest rate risk and equity market risk,
including  hedging specific  transactions.  The Company does not hold derivative
instruments  for trading  purposes.  The Company  manages risks  associated with
these instruments as described below.

     Market risk is the possibility  that the value of the derivative  financial
instruments  will  change  due  to  fluctuations  in a  factor  from  which  the
instrument derives its value, primarily an interest rate or equity market index.
The  Company is not  impacted  by market risk  related to  derivatives  held for
non-trading   purposes  beyond  that  inherent  in  cash  market   transactions.
Derivatives held for purposes other than trading are largely used to manage risk
and, therefore,  the cash flow and income effects of the derivatives are inverse
to the effects of the underlying transactions.

<PAGE>

8.   Derivative financial instruments (continued)

     Credit risk is the possibility that the  counterparty  will not fulfill the
terms of the contract.  The Company  monitors  credit risk related to derivative
financial instruments through established approval procedures, including setting
concentration   limits  by  counterparty,   and  requiring   collateral,   where
appropriate.  A vast  majority of the  Company's  counterparties  are rated A or
better by Moody's and Standard & Poor's.

     Credit risk related to interest  rate caps and floors and index  options is
measured  by  the  replacement  cost  of the  contracts.  The  replacement  cost
represents the fair value of the instruments.

     The notional or contract  amount of a derivative  financial  instrument  is
generally  used to  calculate  the cash flows that are received or paid over the
life of the agreement. Notional amounts are not recorded on the balance sheet.
Notional amounts far exceed the related credit risk.

     The Company's holdings of derivative financial instruments are as follows:

<TABLE>
<CAPTION>
<S>                                             <C>               <C>               <C>            <C>
                                                Notional or
                                                   Contract        Carrying           Fair          Total Credit
    December 31, 2000                               Amount            Amount          Value           Exposure
    Assets:
      Interest rate caps                         $ 1,500,000         $  6,127        $   1,174          $  1,174
      Interest rate floors                         1,000,000              121              531               531
      Options purchased                              265,848           44,139           51,701            51,701
      Financial futures purchased                          5               --            7,209                --
    Liabilities:
      Options written                                104,324           (3,098)          (4,138)               --
      Financial futures sold                               7               --            9,011                --
    Off balance sheet:
      Interest rate swaps                          1,000,000               --          (10,942)                --
                                                                     $ 47,289        $  54,546         $  53,406
</TABLE>

<TABLE>
<CAPTION>
<S>                                              <C>               <C>              <C>             <C>
                                                 Notional or
                                                  Contract         Carrying            Fair         Total Credit
    December 31, 1999                              Amount           Amount             Value          Exposure
    Assets:
      Interest rate caps                         $ 2,500,000          $ 9,685       $   12,773         $  12,773
      Interest rate floors                         1,000,000              602              319               319
      Options purchased                              180,897           49,789           61,745            61,745
    Liabilities:
      Options purchased/written                       43,262           (1,677)          (2,402)               --
    Off balance sheet:
      Interest rate swaps                          1,267,000               --          (17,582)               --
                                                                     $ 58,399         $ 54,853           $74,837

</TABLE>

     The fair values of  derivative  financial  instruments  are based on market
values,  dealer quotes or pricing  models.  The interest  rate caps,  floors and
swaps  expire on various  dates from 2001 to 2003.  The  purchased  and  written
options expire on various dates from 2001 to 2006.

<PAGE>

8.   Derivative financial instruments (continued)

     Interest  rate caps,  swaps and floors are used  principally  to manage the
Company's  interest rate risk. These  instruments are used to protect the margin
between  interest rates earned on investments and the interest rates credited to
related annuity contract holders.

     The Company  also uses  interest  rate swaps to manage  interest  rate risk
related  to the level of fee income  earned on the  management  of fixed  income
securities in separate  accounts and the underlying  mutual funds. The amount of
fee income received is based upon the daily market value of the separate account
and mutual fund assets.  As a result,  changing  interest rate conditions  could
impact the Company's fee income significantly. The Company entered into interest
rate swaps to hedge anticipated fee income for 2000 related to separate accounts
and mutual funds which invest in fixed income securities.  Interest was reported
in management and other fees.

     The Company  offers an annuity  product that pays  interest  based upon the
relative  change in a major stock market index  between the beginning and end of
the product's term. As a means of hedging its obligation under the provisions of
this product, the Company purchases and writes options on the major stock market
index.

     The Company also writes financial  futures and purchases and writes options
to manage the equity  market risk related to seed money the Company has invested
in certain separate accounts and the underlying mutual funds.

     Index  options are used to manage the equity market risk related to the fee
income that the Company  receives from its separate  accounts and the underlying
mutual  funds.  The  amount of the fee income  received  is based upon the daily
market value of the separate  account and mutual fund assets.  As a result,  the
Company's  fee income could be impacted  significantly  by  fluctuations  in the
equity market.  The Company  entered into index option collars  (combination  of
puts and calls) to hedge  anticipated  fee  income for 2000 and 1999  related to
separate  accounts and mutual funds which invest in equity  securities.  Testing
demonstrated  the impact of these  instruments on the income  statement  closely
correlates with the amount of fee income the Company  realizes.  At December 31,
2000 , deferred  gains on  purchased  put and written  call index  options  were
$1,005 and $449,  respectively.  At December  31,  1999,  there were no deferred
gains or losses on purchased put or written call index options.

9.   Fair values of financial instruments

     The Company  discloses fair value  information for most on- and off-balance
sheet financial  instruments for which it is practicable to estimate that value.
Fair values of life insurance  obligations  and all  non-financial  instruments,
such as deferred acquisition costs are excluded.

     Off-balance sheet intangible assets,  such as the value of the field force,
are also  excluded.  Management  believes  the  value  of  excluded  assets  and
liabilities is significant.  The fair value of the Company, therefore, cannot be
estimated by aggregating the amounts presented.


<PAGE>

9.   Fair values of financial instruments (continued)

<TABLE>
<CAPTION>
<S>                                            <C>               <C>               <C>              <C>
                                                                    2000                               1999

                                                  Carrying           Fair            Carrying           Fair
    Financial Assets                               Value             Value            Value             Value
    Investments:
      Fixed maturities (Note 2):
        Held to maturity                        $   6,463,613     $   6,471,798    $   7,156,292      $  7,105,743
        Available for sale                         12,399,990        12,399,990       13,049,549        13,049,549
      Mortgage loans on
        real estate (Note 2)                        3,738,091         3,821,825        3,606,377         3,541,958
      Other:
        Equity securities (Note 2)                     10,333            10,333            3,016             3,016
        Derivative financial
          Instruments (Note 8)                         50,387            60,615           60,076            74,837
        Other                                           1,130             1,130            2,258             2,258
    Cash and cash
      equivalents (Note 1)                            316,974           316,974           32,333            32,333
    Separate account assets (Note 1)               32,349,347        32,349,347       35,894,732        35,894,732

</TABLE>

<TABLE>
<CAPTION>
<S>                                             <C>              <C>              <C>               <C>
                                                                    2000                               1999

                                                  Carrying           Fair            Carrying           Fair
    Financial Liabilities                          Value             Value            Value             Value
    Future policy benefits for
      fixed annuities                             $18,020,824       $17,479,187      $19,189,170       $18,591,859
      Derivative financial
        instruments (Note 8)                            3,098             6,069            1,677            19,984
    Separate account liabilities                 28,791,949          27,822,667       31,869,184        31,016,081

</TABLE>

     At December 31, 2000 and 1999, the carrying amount and fair value of future
policy benefits for fixed  annuities  exclude life  insurance-related  contracts
carried at $1,300,018 and $1,270,094,  respectively, and policy loans of $96,603
and  $92,895,  respectively.  The fair value of these  benefits  is based on the
status  of the  annuities  at  December  31,  2000 and 1999.  The fair  value of
deferred  annuities  is estimated  as the  carrying  amount less any  applicable
surrender  charges and related  loans.  The fair value for annuities in non-life
contingent  payout status is estimated as the present value of projected benefit
payments at rates appropriate for contracts issued in 2000 and 1999.

     At December  31, 2000 and 1999,  the fair value of  liabilities  related to
separate  accounts is  estimated  as the  carrying  amount  less any  applicable
surrender  charges and less variable  insurance  contracts carried at $3,557,398
and $4,025,548, respectively.