##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

|           |  |                                                                                          
|---------- |  | -----------------------------------------------------------------------------------------
|(Mark One)
|          
|          
|          
|          
|(XBox)     |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 
|          
|          
|          
|          
|           |  |                                                                                          
|          
|          
|          
|          
|OR        
|          
|          
|          
|          
|           |  |                                                                                          
|          
|          
|          
|          
|(Box)      |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2002

Commission File No. 33-5014

FIRST SUNAMERICA LIFE INSURANCE COMPANY

|                         |  |                                           
|------------------------ |  | ------------------------------------------
|Incorporated in New York |  | 06-0992729
IRS Employer
Identification No.

733 Third Avenue, 4th Floor, New York, New York 10017
Registrants telephone number, including area code: (800) 272-3007

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 (XBox) No (Box)

THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANTS COMMON STOCK ON MAY
15, 2001 WAS AS FOLLOWS:

|                                              |  |                       
|--------------------------------------------- |  | ----------------------
|Common Stock (par value $10,000.00 per share) |  | 300 shares outstanding





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TABLE OF CONTENTS



|                            |                                                                                                             |  |  |  |  |  |  | 
|--------------------------- | ----------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                            | BALANCE SHEET (Unaudited)                                                                                  
|                            | STATEMENT OF INCOME AND COMPREHENSIVE INCOME For the three months ended March 31, 2002 and 2001 (Unaudited)
|                            | STATEMENT OF CASH FLOWS For the three months ended March 31, 2002 and 2001 (Unaudited)                     
|                            | NOTES TO FINANCIAL STATEMENTS                                                                              
|                            | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                      
|                            | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                 
|PART II  OTHER INFORMATION



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##### Table of Contents



FIRST SUNAMERICA LIFE INSURANCE COMPANY

INDEX

|                               |                                                                                                       |  |           |      | 
|------------------------------ | ----------------------------------------------------------------------------------------------------- |  | --------- | ---- | 
|                               |                                                                                                       |  | Page     
|                               |                                                                                                       |  | Number(s)
|                               |                                                                                                       |  |          
|                               |                                                                                                       |  |           |     
|                              
|                              
|                              
|                              
|Part I  Financial Information |                                                                                                       |  |           |     
|                              
|                              
|                              
|                              
|                               |                                                                                                       |  |           |     
|                              
|                              
|                              
|                              
|                               | Balance Sheet (Unaudited) -
March 31, 2002 and December 31, 2001                                      |  |           | 3    | 
|                              
|                              
|                              
|                              
|                               |                                                                                                       |  |           |     
|                              
|                              
|                              
|                              
|                               | Statement of Income and Comprehensive Income (Unaudited) -
Three Months Ended March 31, 2002 and 2001 |  |           | 4    | 
|                              
|                              
|                              
|                              
|                               |                                                                                                       |  |           |     
|                              
|                              
|                              
|                              
|                               | Statement of Cash Flows (Unaudited) -
Three Months Ended March 31, 2002 and 2001                      |  |           | 5-6  | 
|                              
|                              
|                              
|                              
|                               |                                                                                                       |  |           |     
|                              
|                              
|                              
|                              
|                               | Notes to Financial Statements (Unaudited)                                                             |  |           | 7    | 
|                              
|                              
|                              
|                              
|                               |                                                                                                       |  |           |     
|                              
|                              
|                              
|                              
|                               | Managements Discussion and Analysis of Financial
Condition and Results of Operations                 |  |           | 8-22 | 
|                              
|                              
|                              
|                              
|                               |                                                                                                       |  |           |     
|                              
|                              
|                              
|                              
|                               | Quantitative and Qualitative Disclosures About Market Risk                                            |  |           | 23   | 
|                              
|                              
|                              
|                              
|                               |                                                                                                       |  |           |     
|                              
|                              
|                              
|                              
|Part II  Other Information    |                                                                                                       |  | 24-25     |     





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##### Table of Contents






FIRST SUNAMERICA LIFE INSURANCE COMPANY
BALANCE SHEET
(Unaudited)

|                                                          |                                                                                                                                                            |   |           |                |   |              |           |           |  | 
|--------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------- | -------------- | - | ------------ | --------- | --------- |  | 
|                                                          |                                                                                                                                                            |   |           | March 31,      |   | December 31,
|                                                          |                                                                                                                                                            |   |           | 2002           |   | 2001        
|                                                          |                                                                                                                                                            |   |           |                |   |             
|                                                          |                                                                                                                                                            |   |           | (In thousands)
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|ASSETS                                                    |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|Investments and cash:                                     |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Cash and short-term investments                                                                                                                            |   | $         | 53,726         |   |              | $         | 28,982    | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Bonds, notes and redeemable preferred
stocks available for sale, at fair
value (amortized cost: March 31, 2002,
$1,132,748; December 31, 2001, $1,122,577) |   |           | 1,126,019      |   |              |           | 1,128,203 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Common stocks available for sale, at fair
value (cost: March 31, 2002 and
December 31, 2001, $871)                                                         |   |           | 635            |   |              |           | 544       | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Mortgage loans                                                                                                                                             |   |           | 164,304        |   |              |           | 172,626   | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Policy loans                                                                                                                                               |   |           | 36,787         |   |              |           | 37,343    | 
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                          | Total investments and cash                                                                                                                                 |   |           | 1,381,471      |   |              |           | 1,367,698 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|Variable annuity assets held in separate
accounts         |                                                                                                                                                            |   | 514,460   |                |   |              | 514,203   |          
|                                                         
|                                                         
|                                                         
|                                                         
|Accrued investment income                                 |                                                                                                                                                            |   | 10,654    |                |   |              | 12,312    |          
|                                                         
|                                                         
|                                                         
|                                                         
|Deferred acquisition costs                                |                                                                                                                                                            |   | 106,033   |                |   |              | 100,182   |          
|                                                         
|                                                         
|                                                         
|                                                         
|Deferred income taxes                                     |                                                                                                                                                            |   | 2,763     |                |   |              | 1,947     |          
|                                                         
|                                                         
|                                                         
|                                                         
|Other assets                                              |                                                                                                                                                            |   | 1,536     |                |   |              | 2,261     |          
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|TOTAL ASSETS                                              |                                                                                                                                                            | $ | 2,016,917 |                |   | $            | 1,998,603 |          
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|LIABILITIES AND SHAREHOLDERS EQUITY                      |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|Reserves, payables and accrued liabilities:               |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Reserves for fixed annuity contracts                                                                                                                       |   | $         | 1,039,206      |   |              | $         | 1,024,830 | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Reserves for universal life insurance
contracts                                                                                                            |   |           | 245,527        |   |              |           | 248,161   | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Income taxes currently payable to Parent                                                                                                                   |   |           | 3,989          |   |              |           | 3,719     | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Payable to brokers                                                                                                                                         |   |           | 6,978          |   |              |           |          | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Other liabilities                                                                                                                                          |   |           | 14,853         |   |              |           | 14,111    | 
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                          | Total reserves, payables and accrued
liabilities                                                                                                           |   |           | 1,310,553      |   |              |           | 1,290,821 | 
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|Variable annuity liabilities related to
separate accounts |                                                                                                                                                            |   | 514,460   |                |   |              | 514,203   |          
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|Shareholders equity:                                     |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Common Stock                                                                                                                                               |   |           | 3,000          |   |              |           | 3,000     | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Additional paid-in capital                                                                                                                                 |   |           | 144,428        |   |              |           | 144,428   | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Retained earnings                                                                                                                                          |   |           | 47,443         |   |              |           | 44,982    | 
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Accumulated
other comprehensive (loss) income                                                                                                              |   |           | (2,967         | ) |              |           | 1,169     | 
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|                                                          | Total shareholders equity                                                                                                                                 |   |           | 191,904        |   |              |           | 193,579   | 
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                |                                                                                                                                                            | $ | 2,016,917 |                |   | $            | 1,998,603 |          
|                                                          |                                                                                                                                                            |   |           |                |   |              |           |          

See accompanying notes to financial statements.

3



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##### Table of Contents






FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF INCOME AND COMPREHENSIVE INCOME
For the three months ended March 31, 2002 and 2001
(Unaudited)

|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |         |  
|---------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------------- | ------- | ---- | - | ------- | ------- | -
|                                               |                                                                                                                                                                                                          |   | 2002           |         | 2001
|                                               |                                                                                                                                                                                                          |   |                |         |     
|                                               |                                                                                                                                                                                                          |   | (In thousands)
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|                                              
|                                              
|                                              
|                                              
|Investment income                              |                                                                                                                                                                                                          | $ | 23,654         |         |      | $ | 26,915  |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|                                              
|                                              
|                                              
|                                              
|Interest expense on:                           |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|                                              
|                                              
|                                              
|                                              
|                                               | Fixed annuity contracts                                                                                                                                                                                  |   |                | (11,245 | )    |   |         | (13,772 | )
|                                              
|                                              
|                                              
|                                              
|                                               | Universal life insurance contracts                                                                                                                                                                       |   |                | (2,874  | )    |   |         | (2,931  | )
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|                                               | Total interest expense                                                                                                                                                                                   |   |                | (14,119 | )    |   |         | (16,703 | )
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|NET INVESTMENT INCOME                          |                                                                                                                                                                                                          |   | 9,535          |         |      |   | 10,212  |        
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|NET REALIZED INVESTMENT LOSSES                 |                                                                                                                                                                                                          |   | (1,231         | )       |      |   | (10,629 | )      
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|Fee income:                                    |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|                                              
|                                              
|                                              
|                                              
|                                               | Variable annuity fees                                                                                                                                                                                    |   |                | 1,929   |      |   |         | 2,093   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Universal life insurance fees, net                                                                                                                                                                       |   |                | 407     |      |   |         | 1,037   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Surrender charges                                                                                                                                                                                        |   |                | 389     |      |   |         | 696     |  
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|TOTAL FEE INCOME                               |                                                                                                                                                                                                          |   | 2,725          |         |      |   | 3,826   |        
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|GENERAL AND ADMINISTRATIVE EXPENSES            |                                                                                                                                                                                                          |   | (2,407         | )       |      |   | (711    | )      
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|AMORTIZATION OF DEFERRED
ACQUISITION COSTS     |                                                                                                                                                                                                          |   | (4,018         | )       |      |   | (4,202  | )      
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|ANNUAL COMMISSIONS                             |                                                                                                                                                                                                          |   | (225           | )       |      |   | (175    | )      
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|GUARANTEED MINIMUM DEATH BENEFITS              |                                                                                                                                                                                                          |   | (236           | )       |      |   | (50     | )      
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|PRETAX INCOME (LOSS)                           |                                                                                                                                                                                                          |   | 4,143          |         |      |   | (1,729  | )      
|                                              
|Income tax (expense) benefit                   |                                                                                                                                                                                                          |   | (1,682         | )       |      |   | 735     |        
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|NET INCOME (LOSS)                              |                                                                                                                                                                                                          | $ | 2,461          |         |      | $ | (994    | )      
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|OTHER COMPREHENSIVE (LOSS) INCOME, NET OF
TAX: |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|                                              
|                                              
|                                              
|                                              
|                                               | Net unrealized gains (losses) on debt and
equity securities available for sale
identified in the current period
(net of income tax benefit of $2,382
for 2002 and income tax expense of
$2,878 for 2001) |   |                | (4,422  | )    |   |         | 5,344   |  
|                                              
|                                              
|                                              
|                                              
|                                               | Less reclassification adjustment for
net realized losses included in net
income (net of income tax benefit of
$154 for 2002 and $1,702 for 2001)                                                         |   |                | 286     |      |   |         | 3,162   |  
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|                                               | OTHER COMPREHENSIVE (LOSS) INCOME                                                                                                                                                                        |   |                | (4,136  | )    |   |         | 8,506   |  
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        
|COMPREHENSIVE (LOSS) INCOME                    |                                                                                                                                                                                                          | $ | (1,675         | )       |      | $ | 7,512   |        
|                                               |                                                                                                                                                                                                          |   |                |         |      |   |         |        

See accompanying notes to financial statements.

4



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##### Table of Contents






FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
For the three months ended March 31, 2002 and 2001
(Unaudited)

|                                                                                         |                                                     |                                           |                                    |         |                |        |        |         |        |        | 
|---------------------------------------------------------------------------------------- | --------------------------------------------------- | ----------------------------------------- | ---------------------------------- | ------- | -------------- | ------ | ------ | ------- | ------ | ------ | 
|                                                                                         |                                                     |                                           |                                    |         | 2002           |        | 2001  
|                                                                                         |                                                     |                                           |                                    |         |                |        |       
|                                                                                         |                                                     |                                           |                                    |         | (In thousands)
|                                                                                         |                                                     |                                           |                                    |         |                |        |        |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |                                                     |                                           |                                    |         |                |        |        |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Net income (loss)                                                                        |                                                     | $                                         | 2,461                              |         |                | $      | (994   | )      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Adjustments
to reconcile net income (loss) to net
cash provided by operating activities: |                                                     |                                           |                                    |         |                |        |        |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                     | Interest credited to:                     |                                    |         |                |        |        |         |        |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                     |                                           | Fixed annuity contracts            |         |                | 11,245 |        |         |        | 13,772 | 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                     |                                           | Universal life insurance contracts |         |                | 2,874  |        |         |        | 2,931  | 
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                     | Net realized investment losses            |                                    |         | 1,231          |        |        |         | 10,629 |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                     | Accretion of net discounts on investments |                                    |         | (857           | )      |        |         | (816   | )     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                     | Provision for deferred income taxes       |                                    |         | 1,412          |        |        |         | (4,341 | )     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Change in:                                                                               |                                                     |                                           |                                    |         |                |        |        |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Accrued investment income                           |                                           |                                    | 1,658   |                |        |        | 2,863   |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Deferred acquisition costs                          |                                           |                                    | 49      |                |        |        | 1,904   |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Income taxes currently payable
from Parent          |                                           |                                    | 270     |                |        |        | 3,606   |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Other liabilities                                   |                                           |                                    | 4,763   |                |        |        | (165    | )     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Other, net                                          |                                           |                                    | (60     | )              |        |        | 3,743   |       
|                                                                                         |                                                     |                                           |                                    |         |                |        |        |        
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                |                                                     |                                           | 25,046                             |         |                |        | 33,132 |        
|                                                                                         |                                                     |                                           |                                    |         |                |        |        |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |                                                     |                                           |                                    |         |                |        |        |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Purchases of:                                                                            |                                                     |                                           |                                    |         |                |        |        |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Bonds, notes and redeemable preferred stocks        |                                           |                                    | (69,265 | )              |        |        | (42,864 | )     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Mortgage loans                                      |                                           |                                    | (281    | )              |        |        | (3,591  | )     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Other investments, excluding short-term investments |                                           |                                    | (17     | )              |        |        | (28     | )     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Sales of:                                                                                |                                                     |                                           |                                    |         |                |        |        |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Bonds, notes and redeemable preferred stocks        |                                           |                                    | 47,620  |                |        |        | 49,809  |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Other investments, excluding short-term investments |                                           |                                    | (71     | )              |        |        |        |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Redemptions and maturities of:                                                           |                                                     |                                           |                                    |         |                |        |        |        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Bonds, notes and redeemable preferred stocks        |                                           |                                    | 17,984  |                |        |        | 22,125  |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Mortgage loans                                      |                                           |                                    | 8,769   |                |        |        | 5,979   |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Other investments, excluding short-term investments |                                           |                                    | 574     |                |        |        | 488     |       
|                                                                                         |                                                     |                                           |                                    |         |                |        |        |        
|NET CASH PROVIDED BY INVESTING ACTIVITIES                                                |                                                     | $                                         | 5,313                              |         |                | $      | 31,918 |        
|                                                                                         |                                                     |                                           |                                    |         |                |        |        |        

See accompanying notes to financial statements.

5



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##### Table of Contents



FIRST SUNAMERICA LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS (Continued)
For the three months ended March 31, 2002 and 2001
(Unaudited)

|                                                                                |                                    |   |                |         |      |   |         |         |  
|------------------------------------------------------------------------------- | ---------------------------------- | - | -------------- | ------- | ---- | - | ------- | ------- | -
|                                                                                |                                    |   | 2002           |         | 2001
|                                                                                |                                    |   |                |         |     
|                                                                                |                                    |   | (In thousands)
|                                                                                |                                    |   |                |         |      |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|CASH FLOWS FROM FINANCING ACTIVITIES:                                           |                                    |   |                |         |      |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Premium receipts on:                                                            |                                    |   |                |         |      |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Fixed annuity contracts            |   | $              | 43,126  |      |   | $       | 15,609  |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Universal life insurance contracts |   |                | 2,095   |      |   |         | 2,344   |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Net exchanges to (from) the fixed accounts
from (of) variable annuity contracts |                                    |   | 907            |         |      |   | (7,782  | )      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Withdrawal payments on:                                                         |                                    |   |                |         |      |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Fixed annuity contracts            |   |                | (33,607 | )    |   |         | (53,474 | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Universal life insurance contracts |   |                | (2,743  | )    |   |         | (8,388  | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Claims and annuity payments on:                                                 |                                    |   |                |         |      |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Fixed annuity contracts            |   |                | (6,558  | )    |   |         | (7,690  | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Universal life insurance contracts |   |                | (4,813  | )    |   |         | (5,220  | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Net repayments of other
short term financings                                   |                                    |   | (4,022         | )       |      |   | (4,154  | )      
|                                                                                |                                    |   |                |         |      |   |         |        
|                                                                                |                                    |   |                |         |      |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|NET CASH USED IN FINANCING ACTIVITIES                                           |                                    |   | (5,615         | )       |      |   | (68,755 | )      
|                                                                                |                                    |   |                |         |      |   |         |        
|                                                                                |                                    |   |                |         |      |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|NET INCREASE (DECREASE) IN CASH AND
SHORT-TERM INVESTMENTS                      |                                    |   | 24,744         |         |      |   | (3,705  | )      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                                    |   |                |         |      |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF PERIOD                          |                                    |   | 28,982         |         |      |   | 40,704  |        
|                                                                                |                                    |   |                |         |      |   |         |        
|                                                                                |                                    |   |                |         |      |   |         |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|CASH AND SHORT-TERM INVESTMENTS AT
END OF PERIOD                                |                                    | $ | 53,726         |         |      | $ | 36,999  |        
|                                                                                |                                    |   |                |         |      |   |         |        
|                                                                                |                                    |   |                |         |      |   |         |        

See accompanying notes to financial statements.

6



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##### Table of Contents






FIRST SUNAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)



|1. |  | BASIS OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | First SunAmerica Life Insurance Company (the Company) is an indirect
wholly owned subsidiary of SunAmerica Inc. (SunAmerica), which is a
wholly owned subsidiary of American International Group, Inc. (AIG), a
holding company which through its subsidiaries is engaged in a broad
range of insurance and insurance-related activities, financial services
and asset management. The Company is a New York-domiciled life insurance
company engaged primarily in the sale and administration of deposit type
insurance contracts, including fixed and variable annuities and universal
life contracts in the State of New York.                                                                                                                                                                                                 
|  
|   |  | In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments necessary, consisting of normal
recurring items, to present fairly the Companys financial position as of
March 31, 2002 and December 31, 2001, the results of its operations and
its cash flows for the three months ended March 31, 2002 and 2001. The
results of operations for the three months ended March 31, 2002 are not
necessarily indicative of the results to be expected for the full year.
The accompanying unaudited financial statements should be read in
conjunction with the audited financial statements for the year ended
December 31, 2001, contained in the Companys 2001 Annual Report on Form
10-K. Certain prior period items have been reclassified to conform to the
current periods presentation.



|2. |  | CONTINGENT LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Various lawsuits against the
Company have arisen in the ordinary course of business. Contingent
liabilities arising from litigation, income taxes and other matters
are not considered material in relation to the financial position of
the Company with the potential exception of McMurdie et al. v.
SunAmerica Inc. et al., Case No. BC 194082, filed on July 10, 1998 in
the Superior Court for the County of Los Angeles. The lawsuit is a
representative action wherein the plaintiffs allege violations of
California's Business and Professions Code Section 17200 et seq. The
Company is vigorously defending the lawsuit. The probability of any
particular outcome is not reasonably estimable at this time.

7



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##### Table of Contents






FIRST SUNAMERICA LIFE INSURANCE COMPANY
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Managements discussion and analysis of financial condition and results of
operations of First SunAmerica Life Insurance Company (the Company) for the
three months ended March 31, 2002 (2002) and March 31, 2001 (2001) follows.
Certain prior period amounts have been reclassified to conform to the current
periods presentation.

In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the Company cautions readers regarding certain
forward-looking statements contained in this report and in any other statements
made by, or on behalf of, the Company, whether or not in future filings with
the Securities and Exchange Commission (the SEC). Forward-looking statements
are statements not based on historical information and which relate to future
operations, strategies, financial results, or other developments. Statements
using verbs such as expect, anticipate, believe or words of similar
import generally involve forward-looking statements. Without limiting the
foregoing, forward-looking statements include statements which represent the
Companys beliefs concerning future levels of sales and redemptions of the
Companys products, investment spreads and yields, or the earnings or
profitability of the Companys activities.

Forward-looking statements are necessarily based on estimates and
assumptions that are inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are beyond the
Companys control and many of which are subject to change. These uncertainties
and contingencies could cause actual results to differ materially from those
expressed in any forward-looking statements made by, or on behalf of, the
Company. Whether or not actual results differ materially from forward-looking
statements may depend on numerous foreseeable and unforeseeable developments.
Some may be national in scope, such as general economic conditions, changes in
tax law and changes in interest rates. Some may be related to the insurance
industry generally, such as pricing competition, regulatory developments and
industry consolidation. Others may relate to the Company specifically, such as
credit, volatility and other risks associated with the Companys investment
portfolio. Investors are also directed to consider other risks and
uncertainties discussed in documents filed by the Company with the SEC. The
Company disclaims any obligation to update forward-looking information.

The
Company has one business segment, annuity operations, which consists
of the sale and administration of deposit-type insurance contracts,
such as fixed and variable annuities and universal life insurance
contracts. The Company focuses primarily on the marketing of variable
annuity products and the administration of a closed block of
universal life business. The variable annuity products offer
investors a broad spectrum of fund alternatives, with a choice of
investment managers, as well as guaranteed fixed-rate account
options. The Company earns fee income on investments in the
variable account options and net investment income on the fixed-rate
account options.

The Company considers among its most critical accounting policies those
policies with respect to valuation of certain financial instruments and
amortization of deferred acquisition costs. In the implementation of each of
the aforementioned policies, management is required to exercise its judgment on
both a quantitative and qualitative basis. Further explanation of how
management exercises that judgment is disclosed in the Companys
2001 Annual Report on Form 10-K.

8



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##### Table of Contents



RESULTS OF OPERATIONS

NET INCOME totaled $2.5 million in 2002, compared with net loss of $1.0
million in 2001.

PRETAX INCOME totaled $4.1 million in 2002, compared with pretax loss of
$1.7 million in 2001.

9



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##### Table of Contents



The improvement in 2002 over 2001 primarily resulted from decreased net
realized losses, partially offset by increased general and administrative
expenses, lower net investment income and lower fee income.

NET INVESTMENT INCOME, which is the spread between the income earned on
invested assets and the interest paid on fixed annuities and universal life
contracts, totaled $9.5 million in 2002 and $10.2 million in 2001. These
amounts equal 2.79% on average invested assets (computed on a daily basis) of
$1.37 billion in 2002 and 2.72% on average invested assets of $1.50 billion in
2001.

Net investment spreads include the effect of income earned or interest
paid on the difference between average invested assets and average
interest-bearing liabilities. Average invested assets exceeded average
interest-bearing liabilities by $96.2 million in 2002, compared with $91.4
million in 2001. The difference between the Companys yield on average
invested assets and the rate paid on average interest-bearing liabilities (the
Spread Difference) was 2.47% in 2002 and 2.44% in 2001.

Investment income (and the related yields on average invested assets)
totaled $23.7 million (6.91%) in 2002, compared with $26.9 million (7.18%) in
2001. The decrease in the investment yield in 2002 compared to 2001 primarily
reflects a lower interest rate environment in 2002.

Expenses incurred to manage the investment portfolio amounted to $0.1
million in 2002 and $0.7 million in 2001. 60% of these expenses are included as
a reduction to investment income and 40% as a charge against net realized
investment losses in the statement of income and comprehensive income.

Interest expense totaled $14.1 million in 2002 and $16.7 million in 2001.
The average rate paid on all interest-bearing liabilities was 4.44% in 2002,
compared with 4.74% in 2001. Interest-bearing liabilities averaged $1.27
billion during 2002 and $1.41 billion during 2001. The decline in average
interest rates paid in 2002 resulted primarily from the impact of a declining
interest rate environment since 2001 and the continued reduction of crediting
rates on certain closed blocks of business.

CHANGE IN AVERAGE INVESTED ASSETS largely resulted from the surrenders of
certain closed blocks of fixed annuity policies. Changes in average invested
assets also reflect net exchanges from fixed accounts into the separate
accounts of variable annuity contracts partially offset by sales of fixed
annuities and the fixed account options of the Companys variable annuity
products (Fixed Annuity Deposits), and renewal deposits on its universal
life product (UL Deposits). Fixed Annuity Deposits and UL Deposits
totaled $45.7 million in 2002 and $19.6 million in 2001. The increase in Fixed
Annuity Deposits and UL Deposits in 2002 is due primarily to a promotional
offer in March 2002 through a certain distributor for one of the Companys
fixed annuity products, Sterling Select. On an annualized basis, these
deposits represent 14% and 5%, respectively, of the related reserve balances at
the beginning of the respective periods.

NET REALIZED INVESTMENT LOSSES totaled $1.2 million in 2002, compared with
$10.6 million in 2001 and include impairment writedowns of $11.1 million in
2001. Thus, net realized losses from sales and redemptions of investments
totaled $1.2 million in 2002, compared with $0.5 million of gains in 2001.

10



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##### Table of Contents



The Company sold or redeemed invested assets, principally bonds and notes,
aggregating $76.1 million in 2002 and $81.9 million in 2001. Sales of
investments result from the active management of the Companys investment
portfolio. Because redemptions of investments are generally involuntary and
sales of investments are made in both rising and falling interest rate
environments, net gains and losses from sales and redemptions of investments
fluctuate from period to period, and represent 0.36% and 0.14% of average
invested assets in 2002 and 2001, on an annualized basis, respectively. Active
portfolio management involves the ongoing evaluation of asset sectors,
individual securities within the investment portfolio and the reallocation of
investments from sectors that are perceived to be relatively overvalued to
sectors that are perceived to be relatively undervalued. The intent of the
Companys active portfolio management is to maximize total returns on the
investment portfolio, taking into account credit, option, liquidity and
interest-rate risk.

Impairment writedowns include $11.1 million of provisions applied to bonds
in 2001 and represent 2.97% of average invested assets for 2001. For the
twenty quarters ended March 31, 2002, impairment writedowns as an annualized
percentage of average invested assets have ranged up to 3.99% and averaged
0.66%. Such writedowns are based upon estimates of the net realizable value of
invested assets and recorded when declines in the value of such assets are
considered to be other than temporary. Actual realization will be dependent
upon future events.

VARIABLE ANNUITY FEES are based on the market value of assets in separate
accounts supporting variable annuity contracts. Such fees totaled $1.9 million
in 2002 and $2.1 million in 2001. On an annualized basis, variable annuity fees
represent 1.5% of average variable annuity assets in both periods presented.
Variable annuity assets averaged $503.6 million and $546.7 million during the
respective periods. Variable annuity deposits, which exclude deposits
allocated to the fixed accounts of variable annuity products, totaled $16.6
million in 2002 and $5.5 million in 2001. These amounts represent 13% and 4%
of variable annuity reserves at the beginning of the respective periods. The
increase in variable annuity deposits in 2002 reflected increased demand for
the new product, Advisor, which was initially marketed in January 2001. Transfers
from the fixed accounts of the Companys variable annuity products to the
separate accounts (see Change in Average Invested Assets) are not classified
as variable annuity deposits. Accordingly, changes in variable annuity deposits
are not necessarily indicative of the ultimate allocation by customers among
fixed and variable account options of the Companys variable annuity products.

Sales of variable annuity products (which include deposits allocated to
the fixed accounts) (Variable Annuity Product Sales) amounted to $25.7
million and $20.0 million in 2002 and 2001, respectively. Such sales
primarily reflect those of Advisor as well as the Companys flagship variable
annuity line, Polaris. Polaris is a multimanager variable annuity that offers
investors a choice of 31 variable funds and a number of guaranteed fixed-rate
funds. Variable Annuity Product Sales have increased in 2002, primarily due to
both new and enhanced relationships with New York based investment firms.

11



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##### Table of Contents



The Company has encountered increased competition in the variable annuity
marketplace during recent years and anticipates that the market will remain
highly competitive for the foreseeable future. Also, from time to time,
Federal initiatives are proposed that could affect the taxation of variable
annuities and annuities generally.

UNIVERSAL LIFE INSURANCE FEES, NET amounted to $0.4 million and $1.0
million in 2002 and 2001, respectively. Universal life insurance fees consist
of mortality charges, up-front fees earned on deposits received and
administrative fees, net of excess mortality expense on these contracts. The
administrative fees are assessed based on the number of policies in force as of
the end of each month. The Company does not actively market such contracts.
Such fees annualized represent 0.67% and 1.67% of average reserves for
universal life insurance contracts in the respective periods. The decrease in
such fees during 2002 resulted principally from higher mortality experience.

SURRENDER CHARGES on fixed and variable annuity contracts and universal
life contracts totaled $0.4 million in 2002 and $0.7 million in 2001. Surrender
charges generally are assessed on withdrawals at declining rates during the
first seven years of a contract. Withdrawal payments, which exclude claims and
lump-sum annuity benefits, totaled $44.7 million in 2002, compared with $70.6
million in 2001. Annualized, these payments, when expressed as a percentage of
average fixed and variable annuity and universal life reserves, represent 10.3%
and 14.8% for 2002 and 2001, respectively. Withdrawal rates were lower in 2002
principally due to the lower level of surrenders on certain closed blocks of
fixed annuity business during 2002. Withdrawals include variable annuity
payments from the separate accounts totaling $8.3 million (6.6% of average
variable annuity reserves) and $8.7 million (6.4% of average variable annuity
reserves) in 2002 and 2001, respectively. Management anticipates gradual
increases in levels of withdrawal payments relative to fixed and variable
annuity and universal life reserves over the foreseeable future.

GENERAL AND ADMINISTRATIVE EXPENSES totaled $2.4 million in 2002 and $0.8
million in 2001. The increase in general and administrative expenses are
consistent with the increased costs to service the growing fixed annuity
business and remain closely controlled through a company-wide cost containment
program and continue to represent less than 1% of average total assets.

AMORTIZATION OF DEFERRED ACQUISITION COSTS totaled $4.0 million in 2002,
compared with $4.2 million in 2001.

ANNUAL COMMISSIONS totaled $0.2 million in 2002 and 2001. Annual
commissions represent renewal commissions paid quarterly in arrears to maintain
the persistency of certain of the Companys variable annuity contracts.
Substantially all of the Companys currently available variable annuity
products allow for an annual commission payment option in return for a lower
immediate commission. The Company estimates that approximately 10% of the
average balances of its variable annuity products is currently subject to such
annual commissions. Based on current sales, this percentage is expected to
increase in future periods.

12



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##### Table of Contents



GUARANTEED MINIMUM DEATH BENEFITS totaled $0.2 million in 2002 compared
with $0.1 million in 2001. The increase in guaranteed minimum death benefits
reflects the downturn in the equity markets over the past year. Further
downturns in the equity markets could increase these payments.

INCOME TAX EXPENSE totaled $1.7 million in 2002, compared to a benefit of
$0.7 million in 2001, representing effective tax rates of 41% and 43%,
respectively.

CAPITAL RESOURCES AND LIQUIDITY

SHAREHOLDERS EQUITY decreased to $191.9 million at March 31, 2002 from
$193.6 million at December 31, 2001, due principally to a $4.1 million decrease
in accumulated other comprehensive income partially offset by $2.5 million of
net income recorded in 2002.

INVESTED ASSETS at December 31, 2002 totaled $1.38 billion, compared with
$1.37 billion at December 31, 2001. The Company manages most of its invested
assets internally. The Companys general investment philosophy is to hold
fixed-rate assets for long-term investment. Thus, it does not have a trading
portfolio. However, the Company has determined that all of its portfolio of
bonds, notes and redeemable preferred stocks (the Bond Portfolio) is
available to be sold in response to changes in market interest rates,
changes in relative value of asset sectors and individual securities, changes
in prepayment risk, changes in the credit quality outlook for certain
securities, the Companys need for liquidity and other similar factors.

THE BOND PORTFOLIO, which constituted 82% of the Companys total
investment portfolio at March 31, 2002, had an amortized cost that was $6.7
million greater than its aggregate fair value compared to an aggregate fair
value that was $5.6 million greater than its amortized cost at December 31,
2001. The increase in net unrealized losses on the Bond Portfolio during 2002
principally reflects the recent increase in prevailing interest rates and the
corresponding effect on the fair value of the Bond Portfolio at March 31, 2002.

At March 31, 2002, the Bond Portfolio included $1.11 billion of bonds
rated by Standard & Poors (S&P), Moodys Investors Service (Moodys),
Fitch (Fitch) or the Securities Valuation Office of the National Association
of Insurance Commissioners (NAIC), and $17.9 million of bonds rated by the
Company pursuant to statutory ratings guidelines established by the NAIC. At
March 31, 2002, approximately $1.06 billion of the Bond Portfolio was
investment grade, including $523.3 million of U.S. government/agency
securities and mortgage-backed securities (MBSs).

At March 31, 2002, the Bond Portfolio included $61.0 million of bonds that
were not investment grade. These non-investment-grade bonds accounted for
approximately 3.0% of the Companys total assets and approximately 4.4% of its
invested assets.

13



---



##### Table of Contents



Non-investment-grade securities generally provide higher yields and
involve greater risks than investment-grade securities because their issuers
typically are more highly leveraged and more vulnerable to adverse economic
conditions than investment-grade issuers. In addition, the trading market for
these securities is usually more limited than for investment-grade
securities. These non-investment-grade securities are comprised of bonds
spanning 23 industries with 24% of these assets concentrated in
telecommunications, 14% concentrated in media cable, 9% concentrated in
transportation services, 7% concentrated in leisure and gaming and 6%
concentrated in environmental industry. No other industry concentration
constituted more than 5% of these assets.

The table on the following page summarizes the Companys rated bonds by
rating classification as of March 31, 2002.







14



---



##### Table of Contents



RATED BONDS BY RATING CLASSIFICATION
(Dollars in thousands)

|                                                          |  |                         |           |       |  |           |           |           |  |                                  |   |           |  |           |        |          |  |   |        |           |  |            |           |  |  |   |           |  |  |  |       |  
|--------------------------------------------------------- |  | ----------------------- | --------- | ----- |  | --------- | --------- | --------- |  | -------------------------------- | - | --------- |  | --------- | ------ | -------- |  | - | ------ | --------- |  | ---------- | --------- |  |  | - | --------- |  |  |  | ----- | -
|                                                          |  |                         |           |       |  |           |           |           |  | Issues
not rated by S&P/Moody's/ |   |           |  |           |        |          |  |   |        |           |  |           
|Issues Rated by S&P/Moody's/Fitch                         |  | Fitch, by NAIC Category |           | Total
|                                                          |  |                         |           |      
|                                                          |  |                         |           |       |  | Estimated |           | NAIC      |  |                                  |   |           |  | Estimated |        |          |  |   |        | Estimated |  | Percent of
|S&P                                                       |  | Amortized               |           | fair  |  | category  |           | Amortized |  | fair                             |   | Amortized |  | fair      |        | invested
|category (1)                                              |  | cost                    |           | value |  | (2)       |           | cost      |  | value                            |   | cost      |  | value     |        | assets  
|                                                          |  |                         |           |       |  |           |           |           |  |                                  |   |           |  |           |        |         
|AAA+ to A-
(Aaa to A3)
[AAA to A-]
{AAA to A-}            |  | $                       | 866,330   |       |  | $         | 874,106   |           |  |                                  | 1 |           |  | $         | 19,149 |          |  | $ | 16,827 |           |  | $          | 885,479   |  |  | $ | 890,933   |  |  |  | 64.49 | %
|                                                         
|                                                         
|                                                         
|                                                         
|BBB+ to BBB-
(Baa1 to Baa3)
[BBB+ to BBB-]
{BBB+ to BBB-} |  |                         | 167,361   |       |  |           | 161,228   |           |  |                                  | 2 |           |  |           | 12,883 |          |  |   | 12,835 |           |  |            | 180,244   |  |  |   | 174,063   |  |  |  | 12.60 |  
|                                                         
|                                                         
|                                                         
|                                                         
|BB+ to BB-
(Ba1 to Ba3)
[BB+ to BB-]
{BB+ to BB-}         |  |                         | 23,315    |       |  |           | 23,094    |           |  |                                  | 3 |           |  |           | 164    |          |  |   | 166    |           |  |            | 23,479    |  |  |   | 23,260    |  |  |  | 1.68  |  
|                                                         
|                                                         
|                                                         
|                                                         
|B+ to B-
(B1 to B3)
[B+ to B-]
{B+ to B-}                 |  |                         | 25,031    |       |  |           | 22,209    |           |  |                                  | 4 |           |  |           | 5,403  |          |  |   | 5,352  |           |  |            | 30,434    |  |  |   | 27,561    |  |  |  | 2.00  |  
|                                                         
|                                                         
|                                                         
|                                                         
|CCC+ to C
(Caa to C)
[CCC]
{CCC+ to C-}                   |  |                         | 12,613    |       |  |           | 9,897     |           |  |                                  | 5 |           |  |           |       |          |  |   |       |           |  |            | 12,613    |  |  |   | 9,897     |  |  |  | 0.72  |  
|                                                         
|                                                         
|                                                         
|                                                         
|CI to D
[DD]
{D}                                          |  |                         | 232       |       |  |           | 277       |           |  |                                  | 6 |           |  |           | 267    |          |  |   | 28     |           |  |            | 499       |  |  |   | 305       |  |  |  | 0.02  |  
|                                                          |  |                         |           |       |  |           |           |           |  |                                  |   |           |  |           |        |          |  |   |        |           |  |            |           |  |  |   |           |  |  |  |       |  
|                                                          |  |                         |           |       |  |           |           |           |  |                                  |   |           |  |           |        |          |  |   |        |           |  |            |           |  |  |   |           |  |  |  |       |  
|                                                         
|                                                         
|                                                         
|                                                         
|TOTAL RATED ISSUES                                        |  | $                       | 1,094,882 |       |  | $         | 1,090,811 |           |  |                                  |   |           |  | $         | 37,866 |          |  | $ | 35,208 |           |  | $          | 1,132,748 |  |  | $ | 1,126,019 |  |  |  |       |  
|                                                          |  |                         |           |       |  |           |           |           |  |                                  |   |           |  |           |        |          |  |   |        |           |  |            |           |  |  |   |           |  |  |  |       |  

Footnotes appear on the following page.

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| |  | Footnotes to the table of Rated Bonds by Rating Classification
| |  | --------------------------------------------------------------



---

|(1) |  | S&P and Fitch rate debt securities in rating categories ranging from AAA
(the highest) to D (in payment default). A plus (+) or minus (-)
indicates the debts relative standing within the rating category. A
security rated BBB- or higher is considered investment grade. Moodys
rates debt securities in rating categories ranging from Aaa (the highest)
to C (extremely poor prospects of ever attaining any real investment
standing). The number 1, 2 or 3 (with 1 the highest and 3 the lowest)
indicates the debts relative standing within the rating category. A
security rated Baa3 or higher is considered investment grade. Issues are
categorized based on the highest of the S&P, Moodys, and Fitch ratings if
rated by multiple agencies.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Bonds and short-term promissory instruments are divided into six quality
categories for NAIC rating purposes, ranging from 1 (highest) to 5
(lowest) for nondefaulted bonds plus one category, 6, for bonds in or near
default. These six categories correspond with the S&P/Moodys/Fitch
rating groups listed above, with categories 1 and 2 considered investment
grade. The NAIC categories include $17.9 million of assets that were
rated by the Company pursuant to applicable NAIC rating guidelines.                                                                                                                                                                                                                                                 







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Senior secured loans (Secured Loans) are included in the Bond Portfolio
and aggregated $55.4 million at March 31, 2002. Secured Loans are senior to
subordinated debt and equity and are secured by assets of the issuer. At March
31, 2002, Secured Loans consisted of $12.7 million of publicly traded
securities and $42.7 million of privately traded securities. These Secured
Loans are composed of loans to borrowers spanning 9 industries, with 29% of
these assets concentrated in energy, 22% concentrated in utilities, 10%
concentrated in telecommunications, 9% concentrated in paper and 8%
concentrated in leisure and gaming. No other industry concentration constituted
more than 7% of these assets.

While the trading market for the Companys privately traded Secured Loans
is more limited than for publicly traded issues, management believes that
participation in these transactions has enabled the Company to improve its
investment yield. As a result of restrictive financial covenants, these
Secured Loans involve greater risk of technical default than do publicly traded
investment-grade securities. However, management believes that the risk of
loss upon default for these Secured Loans is mitigated by such financial
covenants and the collateral values underlying the Secured Loans. The Companys
Secured Loans are rated by S&P, Moodys, Fitch, the NAIC or by the Company,
pursuant to comparable statutory ratings guidelines established by the NAIC.

MORTGAGE LOANS aggregated $164.3 million at March 31, 2002 and consisted
of 95 commercial first mortgage loans with an average loan balance of
approximately $1.7 million, collateralized by properties located in 32 states.
Approximately 25% of this portfolio was office, 24% was retail, 19% was
multifamily residential, 15% was industrial, and 17% was other types. At March
31, 2002, approximately 27% of this portfolio was secured by properties located
in California, approximately 14% by properties located in Michigan,
approximately 8% by properties located in New York, approximately 7% by
properties located in Wisconsin, and no more than 5% of this portfolio was
secured by properties located in any other single state. At March 31, 2002,
two mortgage loans have an outstanding balance of $10.0 million or more, which
represented approximately 13% of this portfolio. At March 31, 2002,
approximately 22% of the mortgage loan portfolio consisted of loans with
balloon payments due before April 1, 2005. During 2002 and 2001, loans
delinquent by more than 90 days, foreclosed loans and restructured loans have
not been significant in relation to the total mortgage loan portfolio.

At March 31, 2002, approximately 40% of the mortgage loans were seasoned
loans underwritten to the Companys standards and purchased at or near par from
other financial institutions. Such loans generally have higher average
interest rates than loans that could be originated today. The balance of the
mortgage loan portfolio has been originated by the Company under strict
underwriting standards. Commercial mortgage loans on properties such as
offices, hotels and shopping centers generally represent a higher level of risk
than do mortgage loans secured by multifamily residences. This greater risk is
due to several factors, including the larger size of such loans and the more
immediate effects of general economic conditions on these commercial property
types. However, due to the seasoned nature of the Companys mortgage loan
portfolio and its strict underwriting standards, the Company believes that it
has prudently managed the risk attributable to its mortgage loan portfolio
while maintaining attractive yields.

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POLICY LOANS are included in other invested assets and totaled $36.8
million at March 31, 2002, compared to $37.3 million at December 31, 2001 and
primarily represent loans taken against universal life policies.

ASSET-LIABILITY MATCHING is utilized by the Company to minimize the risks
of interest rate fluctuations and disintermediation (i.e. the risk of
being forced to sell investments during unfavorable market conditions). The Company believes that
its fixed-rate liabilities should be backed by a portfolio principally composed
of fixed-rate investments that generate predictable rates of return. The
Company does not have a specific target rate of return. Instead, its rates of
return vary over time depending on the current interest rate environment, the
slope of the yield curve, the spread at which fixed-rate investments are priced
over the yield curve, default rates, and general economic conditions. Its
portfolio strategy is constructed with a view to achieve adequate risk-adjusted
returns consistent with its investment objectives of effective asset-liability
matching, liquidity and safety. The Companys fixed-rate products incorporate
surrender charges or other restrictions in order to encourage persistency.
Approximately 64% of the Companys fixed annuity and universal life reserves
had surrender penalties or other restrictions at March 31, 2002.

As part of its asset-liability matching discipline, the Company conducts
detailed computer simulations that model its fixed-rate assets and liabilities
under commonly used stress-test interest rate scenarios. With the results of
these computer simulations, the Company can measure the potential gain or loss
in fair value of its interest-rate sensitive instruments and seek to protect
its economic value and achieve a predictable spread between what it earns on
its invested assets and what it pays on its liabilities by designing its
fixed-rate products and conducting its investment operations to closely match
the duration of the fixed-rate assets to that of its fixed-rate liabilities.
The Companys fixed-rate assets include: cash and short-term investments;
bonds, notes and redeemable preferred stocks; mortgage loans; and policy loans.
At March 31, 2002, these assets had an aggregate fair value of $1.38 billion
with a duration of 4.0. The Companys fixed-rate liabilities include fixed
annuity and universal life insurance contracts. At March 31, 2002, these
liabilities had an aggregate fair value (determined by discounting future
contractual cash flows by related market rates of interest) of $1.27 billion
with a duration of 3.0. The Companys potential exposure due to a relative 10%
increase in prevailing interest rates from their March 31, 2002 levels is a
loss of approximately $8.6 million, representing the decrease in fair value of
its fixed rate assets that is not offset by a decrease in fair value of its
fixed rate liabilities. Because the Company actively manages its assets and
liabilities and has strategies in place to minimize its exposure to loss as
interest rate changes occur, it expects that actual losses would be less than
the estimated potential loss.

Duration is a common option-adjusted measure for the price sensitivity of
a fixed-maturity portfolio to changes in interest rates. It measures the
approximate percentage change in the market value of a portfolio if interest
rates change by 100 basis points (i.e. 1%), recognizing the changes in cash
flows resulting from embedded options such as policy surrenders, investment
prepayments and bond calls. It also incorporates the assumption that the
Company will continue to utilize its existing strategies of pricing its
fixed annuity and universal life products, allocating its available cash

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flow amongst its various investment portfolio sectors and maintaining
sufficient levels of liquidity. Because the calculation of duration involves
estimation and incorporates assumptions, potential changes in portfolio value
indicated by the portfolios duration will likely be different from the actual
changes experienced under given interest rate scenarios, and the differences
may be material.

The Company also seeks to provide liquidity by investing in MBSs. MBSs
are generally investment-grade securities collateralized by large pools of
mortgage loans. MBSs generally pay principal and interest monthly. The amount
of principal and interest payments may fluctuate as a result of prepayments of
the underlying mortgage loans.

There are risks associated with some of the techniques the Company uses to
provide liquidity, enhance its spread income and match its assets and
liabilities. The primary risk associated with MBSs is that a changing interest
rate environment might cause prepayment of the underlying obligations at speeds
slower or faster than anticipated at the time of their purchase. As part of
its decision to purchase an MBS, the Company assesses the risk of prepayment by
analyzing the securitys projected performance over an array of interest-rate
scenarios. Once an MBS is purchased, the Company monitors its actual
prepayment experience monthly to reassess the relative attractiveness of the
security with the intent to maximize total return.

INVESTED ASSETS EVALUATION is routinely conducted by the Company.
Management identifies monthly those investments that require additional
monitoring and carefully reviews the carrying values of such investments at
least quarterly to determine whether specific investments should be placed on a
nonaccrual basis and to determine declines in value that may be other than
temporary. In making these reviews for bonds, management principally considers
the adequacy of any collateral, compliance with contractual covenants, the
borrowers recent financial performance, news reports and other externally
generated information concerning the creditors affairs. In the case of
publicly traded bonds, management also considers market value quotations, if
available. For mortgage loans, management generally considers information
concerning the mortgaged property and, among other things, factors impacting
the current and expected payment status of the loan and,if available, the
current fair value of the underlying collateral.

The carrying values of investments that are determined to have declines in
value that are other than temporary are reduced to net realizable value and, in
the case of bonds, no further accruals of interest are made. The provisions
for impairment on mortgage loans are based on losses expected by management to
be realized on transfers of mortgage loans to real estate, on the disposition
and settlement of mortgage loans and on mortgage loans that management believes
may not be collectible in full. Accrual of interest is suspended when principal
and interest payments on mortgage loans are past due more than 90 days.

DEFAULTED INVESTMENTS, comprising all investments that are in default as
to the payment of principal or interest, totaled $7.1 million of bonds at March
31, 2002, and constituted 0.5% of total invested assets. At December
31, 2001, defaulted investments totaled $3.4 million of bonds and constituted
less than 0.3% of total invested assets.

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SOURCES OF LIQUIDITY are readily available to the Company in the form of
the Companys existing portfolio of cash and short-term investments, and if
required, proceeds from invested asset sales. The Companys liquidity is
primarily derived from operating cash flows. At March 31, 2002, approximately
$452.6 million of the Companys Bond Portfolio had an aggregate unrealized loss
of $27.7 million while approximately $673.4 million of the Bond Portfolio had
an aggregate unrealized gain of $21.0 million. In addition, the Companys
investment portfolio currently provides approximately $13.0 million of monthly
cash flow from scheduled principal and interest payments. Historically, cash
flows from operations and from the sale of the Companys annuity products have
been more than sufficient in amount to satisfy the Companys liquidity needs.

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

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

If a substantial portion of the Companys bond portfolio diminished
significantly in value and/or defaulted, the Company would need to liquidate
other portions of its investment portfolio and/or arrange financing. Such
events that may cause such a liquidity strain could be the result of economic
collapse or terrorist acts.

REGULATION

The Company, in common with other insurers, is subject to regulation and
supervision by the states and other jurisdictions in which it does business.
Within the United States, the method of such regulation varies but generally
has its source in statutes that delegate regulatory and supervisory powers
to a state insurance official. The regulation and supervision relate primarily
to approval of policy forms and rates, the standards of solvency that must be
met and maintained, including risk based capital measurements, the licensing of
insurers and their agents, the nature of and limitations on investments,
restrictions on the size of risks which may be insured under a single policy,
deposits of securities for the benefit of policyholders, methods of accounting,
periodic examinations of the affairs of insurance companies, the form and
content of reports of financial condition required to be filed, and reserves
for unearned premiums, losses

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and other purposes. In general, such regulation is for the protection of
policyholders rather than security holders.

Risk based capital (RBC) standards are designed to measure the adequacy
of an insurers statutory capital and surplus in relation to the risks inherent
in its business. The standards are intended to help identify inadequately
capitalized companies and require specific regulatory actions in the event an
insurers RBC is deficient. The RBC formula develops a risk adjusted target
level of adjusted statutory capital and surplus by applying certain factors to
various asset, premium and reserve items. Higher factors are applied to more
risky items and lower factors are applied to less risky items. Thus, the
target level of statutory surplus varies not only as a result of the insurers
size, but also on the risk profile of the insurers operations. The RBC Model
Law provides four incremental levels of regulatory attention for insurers whose
surplus is below the calculated RBC target. These levels of attention range
in severity from requiring the insurer to submit a plan for corrective action
to actually placing the insurer under regulatory control. The statutory
capital and surplus of the Company exceeded its RBC requirements by a
considerable margin as of March 31, 2002.

In 1998, the NAIC adopted the codification of statutory accounting
principles (Codification) which replaced the NAICs previous primary guidance
on statutory accounting, which became effective January 1, 2001. Codification
changes prescribed statutory accounting practices and has resulted in changes
to the accounting practices that the Company uses to prepare its statutory
basis financial statements. Codification has been adopted by all fifty states
as the prescribed basis of accounting. New York, however, has made certain
modifications (e.g., no deferred taxes will be recorded for companies domiciled
in the State of New York). The adoption of Codification resulted in a decrease
to the Companys statutory surplus of approximately $14.2 million and was
recorded as a cumulative effect of changes in accounting principles in 2001.

Privacy provisions of the Gramm-Leach-Bliley Act became fully effective in
2001 and establish new consumer protections regarding the security,
confidentiality, and uses of nonpublic personal information of individuals. The
law also requires financial institutions to fully disclose their privacy
policies to their customers. Additional privacy legislation pending in the
United States Congress and several states is designed to provide further
privacy protections to consumers of financial products and services. These
statutes and regulations may result in additional regulatory compliance costs,
may limit the Companys ability to market its products, and may otherwise
constrain the nature or scope of the Companys insurance and financial services
operations. The Gramm-Leach-Bliley Act also allows combinations between
insurance companies, banks, and other entities. In addition, from time to
time, Federal initiatives are proposed that could affect the Companys
businesses. Such initiatives include employee benefit plan regulations and tax
law changes affecting the taxation of insurance companies and the tax treatment
of insurance and other investment products. Proposals made in recent years to
limit the tax deferral of annuities or otherwise modify the tax rules related
to the treatment of annuities have not been enacted. While certain of such
proposals, if implemented, could have an adverse effect on the Companys sales
of affected products, and, consequently, on its results of operations,
the Company believes these

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proposals have a small likelihood of being enacted, because they would
discourage retirement savings and there is strong public and industry
opposition to them.









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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The quantitative and qualitative disclosures about market risk are
contained in the Asset-Liability Matching section of Managements Discussion
and Analysis of Financial Condition and Results of Operations on pages 18 and
19 herein.









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PART II  OTHER INFORMATION

Item 1.     Legal Proceedings

Various lawsuits against the Company have arisen in the ordinary course
of business. Contingent liabilities arising from litigation, income taxes and
other matters are not considered material in relation to the financial
position of the Company with the potential exception of McMurdie et al. v.
SunAmerica Inc. et al., Case No. BC 194082, filed on July 10, 1998 in the
Superior Court for the County of Los Angeles. The lawsuit is a representative
action wherein the plaintiffs allege violations of Californias Business and
Professions Code Sections 17200 et seq. The Company is vigorously defending
the lawsuit. The probability of any particular outcome is not reasonably
estimable at this time.

Item 2.     Changes in Securities and Use of Proceeds

Not applicable.

Item 3.     Defaults Upon Senior Securities

Not applicable.

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

Not applicable.

Item 5.     Other Information

Not applicable.

Item 6.     Exhibits and Reports on Form 8-K

EXHIBITS

There were no exhibits filed during the three months ended March 31, 2002.

REPORTS ON FORM 8-K

No Current Reports on Form 8-K were filed by the Company during the three
months ended March 31, 2002.

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SIGNATURES

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

|      |  |              |  |                                                                                                     |  | 
|----- |  | ------------ |  | --------------------------------------------------------------------------------------------------- |  | 
|      |  |              |  | FIRST SUNAMERICA LIFE INSURANCE COMPANYRegistrant                                                  
|     
|      |  |              |  |                                                                                                    
|     
|Date: |  | May 15, 2002 |  | /s/ N. SCOTT GILLISN. Scott Gillis
Senior Vice President
(Principal Financial Officer)             
|     
|      |  |              |  |                                                                                                    
|     
|Date: |  | May 15, 2002 |  | /s/ MAURICE S. HEBERTMaurice S. Hebert
Vice President and Controller
(Principal Accounting Officer)





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