SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549
                               ______________

                                  FORM 10-Q


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

      For the quarterly period ended            December 31, 1995
                                    --------------------------------------
                                     OR

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

      For the transition period from_________________to__________________

                        Commission file number 1-4618


                               SUNAMERICA INC.
                               ---------------
           (Exact Name of Registrant as Specified in Its Charter)

                     Maryland                         86-0176061
                     --------                         ----------
      (State or Other Jurisdiction of     (IRS Employer Identification No.)
        Incorporation or Organization)

           1 SunAmerica Center, Los Angeles, California 90067-6022
           -------------------------------------------------------
           (Address of Principal Executive Offices)     (Zip Code)

      Registrant's telephone number, including area code:  (310) 772-6000


      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days   Yes  X   No   .
                                               ---    ---

      Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date:

      Common Stock, par value $1.00 per share, 44,300,271 shares outstanding

      Nontransferable Class B Stock, par value $1.00 per share, 10,239,656
shares outstanding






                               SUNAMERICA INC.

                                    INDEX


                                                                      Page
                                                                    Number(s)
                                                                    ---------
Part I - Financial Information 

      Consolidated Balance Sheet (Unaudited) -
      December 31, 1995 and September 30, 1995                         3-4


      Consolidated Income Statement (Unaudited) -
      Three Months Ended December 31, 1995 and 1994                    5


      Consolidated Statement of Cash Flows (Unaudited) -
      Three Months Ended December 31, 1995 and 1994                    6-7


      Notes to Consolidated Financial Statements (Unaudited)           8-10


      Management's Discussion and Analysis of Financial
        Condition and Results of Operations                            11-25

      
Part II - Other Information                                            26-27

<PAGE>
                                 SUNAMERICA INC.
                          CONSOLIDATED BALANCE SHEET
                          (In thousands - unaudited)




                                                 December 31,    September 30,
                                                        1995             1995 
                                                 ------------    -------------
ASSETS
Investments:
  Cash and short-term investments                $    657,210    $     855,350
  Bonds, notes and redeemable preferred stocks:
    Available for sale, at fair value 
      (amortized cost: December 31, 1995,
      $8,125,928; September 30, 1995,
      $6,615,620)                                   8,210,874        6,584,488
    Held for investment, at amortized cost
      (fair value: September 30, 1995,
      $736,835)                                            --          718,283
  Mortgage loans                                    1,575,390        1,543,285
  Common stocks, at fair value 
    (cost: December 31, 1995 $19,642;
    September 30, 1995, $21,403)                       36,619           39,906
  Partnerships                                        794,279          774,417
  Real estate                                         103,418          105,637
  Other invested assets                               209,318          187,593
                                                 ------------    -------------
  Total investments                                11,587,108       10,808,959

Variable annuity assets                             5,454,132        5,263,006
Accrued investment income                             116,715           95,038
Deferred acquisition costs                            532,941          526,415
Other assets                                          153,457          150,749
                                                 ------------    -------------
TOTAL ASSETS                                     $ 17,844,353    $  16,844,167
                                                 ============    =============
<PAGE>
                                SUNAMERICA INC.
                    CONSOLIDATED BALANCE SHEET (Continued)
                          (In thousands - unaudited)

                                                 December 31,    September 30,
                                                        1995             1995 
                                                -------------    -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Reserves, payables and accrued liabilities:
  Reserves for fixed annuity contracts          $   5,486,957    $   4,862,250
  Reserves for guaranteed investment contracts      3,683,168        3,607,192
  Trust deposits                                      427,788          426,595
  Payable to brokers for purchases of securities           --          473,728
  Income taxes currently payable                       36,243            2,465
  Other liabilities                                   245,409          271,540
                                                 ------------    -------------
  Total reserves, payables
    and accrued liabilities                         9,879,565        9,643,770
                                                 ------------    -------------
Variable annuity liabilities                        5,454,132        5,263,006
                                                 ------------    -------------
Long-term notes and debentures                        539,835          524,835
                                                 ------------    -------------
Deferred income taxes                                 167,188          146,847
                                                 ------------    -------------
Company-obligated mandatorily redeemable
  preferred securities of subsidiary grantor
  trusts whose sole assets are junior
  subordinated debentures of the Company              237,631           52,631
                                                 ------------    -------------
Shareholders' equity:
  Preferred Stock                                     569,642          321,642
  Nontransferable Class B Stock                        10,240           10,240
  Common Stock                                         44,300           44,175
  Additional paid-in capital                          177,449          185,211
  Retained earnings                                   705,336          656,509
  Net unrealized gains (losses) on debt
    and equity securities available for
    sale                                               59,035           (4,699)
                                                 ------------    -------------
  Total shareholders' equity                        1,566,002        1,213,078
                                                 ------------    -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $ 17,844,353    $  16,844,167
                                                 ============    =============
<PAGE>
                                 SUNAMERICA INC.
                         CONSOLIDATED INCOME STATEMENT
             For the three months ended December 31, 1995 and 1994
             (In thousands, except per-share amounts - unaudited)




                                                      1995             1994   
                                                   ----------       ----------
Investment income                                  $  253,990       $  202,167
                                                   ----------       ----------
Interest expense on:
  Fixed annuity contracts                             (68,096)         (59,878)
  Guaranteed investment contracts                     (61,424)         (47,255)
  Trust deposits                                       (2,571)          (2,670)
  Senior indebtedness                                 (15,052)         (14,255)
                                                   ----------       ----------
  Total interest expense                             (147,143)        (124,058)
                                                   ----------       ----------
Dividends paid on preferred
  securities of grantor trusts                         (4,721)              --
                                                   ----------       ----------
NET INVESTMENT INCOME                                 102,126           78,109
                                                   ----------       ----------
NET REALIZED INVESTMENT GAINS (LOSSES)                  1,404           (7,231)
                                                   ----------       ----------
Fee income:
  Variable annuity fees                                24,416           20,453
  Net retained commissions                              8,865            6,620
  Asset management fees                                 6,503            7,025
  Loan servicing fees                                   5,570            1,978
  Trust fees                                            4,195            3,750
                                                   ----------       ----------
TOTAL FEE INCOME                                       49,549           39,826
                                                   ----------       ----------
Other income and expenses:
  Surrender charges                                     2,588            2,744
  General and administrative expenses                 (44,098)         (33,108)
  Amortization of deferred acquisition costs          (19,002)         (18,674)
  Other, net                                               19            1,868
                                                   ----------       ----------
TOTAL OTHER INCOME AND EXPENSES                       (60,493)         (47,170)
                                                   ----------       ----------
PRETAX INCOME                                          92,586           63,534
Income tax expense                                    (27,800)         (18,400)
                                                   ----------       ----------
NET INCOME                                         $   64,786       $   45,134
                                                   ==========       ==========
EARNINGS PER SHARE                                 $     0.94       $     0.65
                                                   ==========       ==========

NET EARNINGS APPLICABLE TO COMMON STOCK (used 
  in the computation of earnings per share)        $   61,903       $   40,995
                                                   ==========       ==========
AVERAGE SHARES OUTSTANDING                             65,746           62,776
                                                   ==========       ==========

<PAGE>
                                 SUNAMERICA INC.
                     CONSOLIDATED STATEMENT OF CASH FLOWS
             For the three months ended December 31, 1995 and 1994
                          (In thousands - unaudited)

                                                     1995             1994    
                                                 ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                     $     64,786     $     45,134
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Interest credited to:
        Fixed annuity contracts                        68,096           59,878
        Guaranteed investment contracts                61,424           47,255
        Trust deposits                                  2,571            2,670
      Net realized investment losses (gains)           (1,404)           7,066
      Accretion of net discounts on investments        (4,318)          (5,726)
      Provision for deferred income taxes             (10,525)           4,177
      Change in:
        Deferred acquisition costs                     (5,529)          (1,580)
        Other assets                                   (2,582)         (17,517)
        Income taxes currently payable                 32,566           14,485
        Other liabilities                             (15,205)           1,887
      Other, net                                       (3,301)           7,420
                                                 ------------     ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES             186,579          165,149
                                                 ------------     ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of:
    Bonds, notes and redeemable preferred
      stocks available for sale                    (1,920,072)        (871,311)
    Bonds, notes and redeemable preferred
      stocks held for investment                       (7,172)         (38,395)
    Mortgage loans                                    (65,905)        (115,868)
    Partnerships                                     (209,987)        (136,054)
    Other investments, excluding short-term
      investments                                     (39,276)         (38,507)
    Net assets of Imperial Premium Finance, Inc.           --         (442,804)
    Net assets of CalFarm Life Insurance Company      (52,102)              --
  Sales of:
    Bonds, notes and redeemable preferred
      stocks available for sale                     1,264,089        1,080,553
    Partnerships                                       60,425           26,795
    Other investments, excluding short-term
      investments                                      33,160           16,898
    Traditional life insurance business of
      CalFarm Life Insurance Company                 (117,719)              --
  Redemptions and maturities of:
    Bonds, notes and redeemable preferred
      stocks available for sale                       516,230          268,118
    Bonds, notes and redeemable preferred
      stocks held for investment                       23,817          117,716
    Mortgage loans                                     36,827           15,464
    Partnerships                                       70,621           41,916
    Other investments, excluding short-term
      investments                                      20,174            1,792
                                                 ------------     ------------
NET CASH USED BY INVESTING ACTIVITIES                (386,890)         (73,687)
                                                 ------------     ------------


<PAGE>
                                SUNAMERICA INC.
               CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
             For the three months ended December 31, 1995 and 1994
                          (In thousands - unaudited)


                                                     1995             1994    
                                                 ------------     ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments of cash dividends to shareholders     $    (15,959)    $    (12,685)
  Premium receipts on:
    Fixed annuity contracts                           147,340          142,276
    Guaranteed investment contracts                   231,505          564,320
  Net exchanges to (from) the fixed accounts
    of variable annuity contracts                     (37,432)          39,671
  Receipts of trust deposits                          103,984          167,706
  Withdrawal payments on:
    Fixed annuity contracts                          (131,418)        (172,459)
    Guaranteed investment contracts                  (216,232)        (376,862)
    Trust deposits                                   (105,302)        (147,828)
  Claims and annuity payments on fixed
    annuity contracts                                 (41,787)         (43,696)
  Net proceeds from issuances of long-term notes       14,475               --
  Net proceeds from issuance of preferred
    securities of a grantor trust                     179,172               --
  Net proceeds from issuance of Series E
    Preferred Stock                                   241,180               --
  Repayments of collateralized mortgage
    obligations                                            --          (28,662)
  Net borrowings (repayments) of other
    short-term financings                            (367,355)          69,202
                                                 ------------     ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES               2,171          200,983
                                                 ------------     ------------
NET INCREASE (DECREASE) IN CASH AND
  SHORT-TERM INVESTMENTS                             (198,140)         292,445

CASH AND SHORT-TERM                                          
  INVESTMENTS AT BEGINNING OF PERIOD                  855,350          569,382
                                                 ------------     ------------
CASH AND SHORT-TERM
  INVESTMENTS AT END OF PERIOD                   $    657,210     $    861,827
                                                 ============     ============

SUPPLEMENTAL CASH FLOW INFORMATION:

  Interest paid on indebtedness                  $     13,629     $     12,981
                                                 ============     ============

  Income taxes paid, net of refunds received     $      5,759     $        262
                                                 ============     ============
<PAGE>
                               SUNAMERICA INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)


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

      In the opinion of the Company, the accompanying unaudited consolidated
      financial statements contain all adjustments (consisting of only normal
      recurring accruals) necessary to present fairly the Company's
      consolidated financial position as of December 31, 1995 and September 30,
      1995, the results of its consolidated operations and its consolidated
      cash flows for the three months ended December 31, 1995 and 1994. The
      results of operations for the three months ended December 31, 1995 are
      not necessarily indicative of the results to be expected for the full
      year. The accompanying unaudited consolidated financial statements should
      be read in conjunction with the audited consolidated financial statements
      for the fiscal year ended September 30, 1995, contained in the Company's
      1995 Annual Report to Shareholders.  

2.    Reclassification of Securities Held for Investment
      --------------------------------------------------

      On December 1, 1995, the Company reassessed the appropriateness of
      classifying a portion of its portfolio of bonds, notes and redeemable
      preferred stock as held for investment  (the "Held for Investment
      Portfolio").  This reassessment was made pursuant to the provisions of
      "Special Report: A Guide to Implementation of Statement 115 on Accounting
      for Certain Investments in Debt and Equity Securities," issued by the
      Financial Accounting Standards Board in November 1995.  As a result of
      its reassessment, the Company reclassified all of its Held for Investment
      Portfolio as available for sale.  At December 1, 1995, the amortized cost
      of the Held for Investment Portfolio aggregated $701,512,000 and its fair
      value was $723,423,000.  Upon reclassification, the resulting net
      unrealized gain of $21,911,000 was credited to Net Unrealized Gains
      (Losses) on Debt and Equity Securities Available for Sale in the
      shareholders' equity section of the balance sheet.

3.    Preferred Securities of Grantor Trusts
      --------------------------------------

      Preferred securities of grantor trusts comprise $52,630,875 liquidation
      amount of 9.95% Trust Originated Preferred Securities of SunAmerica
      Capital Trust I and $185,000,000 liquidation amount of 8.35% Trust
      Originated Preferred Securities of SunAmerica Capital Trust II. Both
      grantor trusts are wholly owned subsidiaries of the Company.<PAGE>
  

<PAGE>
                               SUNAMERICA INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)
                                 (Continued)



3.    Preferred Securities of Grantor Trusts  (continued)
      --------------------------------------

      In connection with the issuance of the 9.95% Trust Originated Preferred
      Securities and the related purchase by the Company of the grantor trust's
      common securities, the Company issued to the grantor trust $54,258,650
      principal amount of 9.95% junior subordinated debentures, due 2044. 
      These debentures constitute the sole asset of the grantor trust.  The
      debentures are redeemable at the option of the Company on or after June
      15, 1997 at a redemption price of $25 per debenture plus accrued and
      unpaid interest.  The preferred and common securities will be redeemed
      on a pro rata basis, to the same extent as the debentures are repaid, at
      $25 per security plus accumulated and unpaid distributions.

      In connection with the issuance of the 8.35% Trust Originated Preferred
      Securities and the related purchase by the Company of the grantor trust's
      common securities, the Company issued to the grantor trust $191,224,250
      principal amount of 8.35% junior subordinated debentures, due 2044. 
      These debentures constitute the sole asset of the grantor trust.  The
      debentures are redeemable at the option of the Company on or after
      September 30, 2000 at a redemption price of $25 per debenture plus
      accrued and unpaid interest.  The preferred and common securities will
      be redeemed on a pro rata basis, to the same extent as the debentures are
      repaid, at $25 per security plus accumulated and unpaid distributions.

4.    Earnings per Share
      ------------------

      The calculation of earnings per share is made by dividing applicable
      earnings by the weighted average number of shares of Common Stock and
      Nontransferable Class B Stock (collectively referred to as "Common
      Stock") outstanding during each period, adjusted for the incremental
      shares attributed to common stock equivalents.  Common stock equivalents
      include outstanding employee stock options and convertible preferred
      stock, which includes the Series D and E Depositary Shares issued in
      March 1993 and November 1995, respectively.  Common stock equivalents are
      included in the computation only if their effect is dilutive. Net
      Earnings Applicable To Common Stock are reduced by preferred stock
      dividend requirements, which amounted to $2,883,000 and $4,139,000 for
      the three months ended December 31, 1995 and 1994, respectively.  These
      preferred stock dividend requirements do not include dividends paid on
      the convertible issues, which amounted to $4,992,000 and $3,477,000 in
      the three months ended December 31, 1995 and 1994, respectively.   
 
<PAGE>
                               SUNAMERICA INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)
                                 (Continued)



5.  Ratios of Earnings to Fixed Charges
    -----------------------------------

    The ratios of earnings to fixed charges follow:
                                                         Three months ended
                                                             December 31,  
                                                         -------------------
                                                           1995       1994 
                                                         -------     -------
    Ratio of earnings to fixed charges (excluding
    interest incurred on fixed annuities, guaranteed
    investment contracts and trust deposits)                 5.7x       5.5x
                                                         =======    =======
    Ratio of earnings to fixed charges (including
    interest incurred on fixed annuities, guaranteed
    investment contracts and trust deposits)                 1.6x       1.5x
                                                         =======    =======
    Ratio of earnings to combined fixed charges and
    preferred stock dividends (excluding interest
    incurred on fixed annuities, guaranteed 
    investment contracts and trust deposits)                 3.6x       3.1x
                                                         =======    =======
    Ratio of earnings to combined fixed charges and
    preferred stock dividends (including interest
    incurred on fixed annuities, guaranteed
    investment contracts and trust deposits                  1.5x       1.4x
                                                         =======    =======
<PAGE> 
                                SUNAMERICA INC.
       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                            RESULTS OF OPERATIONS


      The following is management's discussion and analysis of financial
condition and results of operations of SunAmerica Inc. (the "Company") for the
three months ended December 31, 1995 ("Fiscal 1996") and December 31, 1994
("Fiscal 1995"). 

RESULTS OF OPERATIONS

      NET INCOME totaled $64.8 million or $0.94 per share in Fiscal 1996,
compared with $45.1 million or $0.65 per share in Fiscal 1995.  

      PRETAX INCOME totaled $92.6 million in Fiscal 1996, up from $63.5 million
in Fiscal 1995. This $29.1 million improvement primarily resulted from
increased net investment income, fee income and net realized investment gains,
partially offset by increased general and administrative expenses.

      NET INVESTMENT INCOME, which is the spread between the income earned on
invested assets and the interest or dividends paid on fixed annuities and other
interest-bearing liabilities, increased to $102.1 million in Fiscal 1996 from
$78.1 million in Fiscal 1995. These amounts represent net investment spreads
of 3.71% on average invested assets (computed on a daily basis) of $11.01
billion in Fiscal 1996 and 3.33% on average invested assets of $9.39 billion
in Fiscal 1995.  Net investment spreads include the effect of income earned on
the excess of average invested assets over average interest-bearing
liabilities, which excess amounted to $1.00 billion in Fiscal 1996 and $699.5
million in Fiscal 1995.  The difference between the Company's yield on average
invested assets and the rate paid on average interest-bearing liabilities was
3.16% in Fiscal 1996 and 2.90% in Fiscal 1995.

      Investment income totaled $254.0 million in Fiscal 1996, compared with
$202.2 million in Fiscal 1995. Investment income increased in Fiscal 1996 as
a result of an increase in investment yield on a higher level of average
invested assets. The yield on average invested assets increased to 9.23% in
Fiscal 1996 from 8.61% in Fiscal 1995.  Over the last nine fiscal quarters, the
Company's quarterly investment yields on average invested assets have ranged
from 8.32% to 9.54%; however, there can be no assurance that the Company will
achieve similar yields in future periods.

      The increased investment yield in Fiscal 1996 primarily resulted from
increased partnership income, which amounted to $36.3 million in Fiscal 1996,
compared with $23.6 million in Fiscal 1995.  This partnership income represents
a yield of 18.03% on related average assets of $804.3 million in Fiscal 1996,
compared with 14.47% on related average assets of $652.8 million in Fiscal
1995. 

      The Company has also historically enhanced investment yield through its
use of both dollar roll transactions ("Dollar Rolls") and total return
corporate bond swap agreements ("Total Return Agreements").  The Company
recorded income of $4.9 million on the Total Return Agreements during Fiscal
1996, compared with losses of $1.5 million in Fiscal 1995.  The improved
results in Fiscal 1996 reflect increases in the fair value of the underlying
assets, resulting primarily from lower prevailing interest rates at December
31, 1995 and improved overall performance of non-investment-grade bonds in
Fiscal 1996 relative to Fiscal 1995.  Although the Company continues to use
Dollar Rolls, they did not have a significant impact on investment income in
Fiscal 1996 or Fiscal 1995.  (See "Asset-Liability Matching" for additional
discussion of Total Return Agreements and Dollar Rolls).
      
      Total interest and dividend expense aggregated $151.9 million in Fiscal
1996 and $124.1 million in Fiscal 1995. The average rate paid on all
interest-bearing liabilities was 6.07% (5.61% on fixed annuity contracts) in
Fiscal 1996, compared with 5.71% (5.31% on fixed annuity contracts) in Fiscal
1995.  Interest-bearing liabilities averaged $10.01 billion during Fiscal 1996,
compared with $8.69 billion during Fiscal 1995.  

      The increase in the average rate paid on all interest-bearing liabilities
during Fiscal 1996 primarily resulted from a higher crediting rate on a greater
level of average reserves for guaranteed investment contracts ("GICs").  The
average GIC crediting rate was 6.70% on related average liabilities of $3.67
billion in Fiscal 1996, compared with 6.53% on related average liabilities of
$2.89 billion in Fiscal 1995.  The higher average crediting rate on GICs in
Fiscal 1996 reflects the crediting rates on contracts issued and repriced
during the 1995 calendar year.  In response to prevailing interest rates, these
new and repriced crediting rates were generally greater than those on GICs
outstanding in Fiscal 1995.  During Fiscal 1996 and Fiscal 1995, approximately
32% and 27%, respectively, of the Company's average GIC portfolio were
variable-rate obligations that reprice periodically based upon certain defined
indexes. At December 31, 1995, approximately 28% of the Company's GIC portfolio
was composed of such obligations.  The average rate paid on all interest-
bearing liabilities also increased as a result of the dividends paid in Fiscal
1996 on the preferred securities of grantor trusts. In Fiscal 1996, the average
dividend rate on preferred securities of grantor trusts was 8.74% on related
average liabilities of $216.1 million.  The preferred securities of grantor
trusts were issued in June 1995 and October 1995, and, therefore, there were
no such dividends paid in Fiscal 1995.

      GROWTH IN AVERAGE INVESTED ASSETS to $11.01 billion in Fiscal 1996 from
$9.39 billion in Fiscal 1995 primarily reflects sales of the Company's
fixed-rate products, consisting of both fixed annuities (including the fixed
accounts of variable annuity products) and GICs, and $486.5 million of
aggregate net proceeds from the issuances of preferred securities of grantor
trusts and long-term notes. Since December 31, 1994, fixed annuity premiums
have aggregated $948.8 million and GIC premiums have totaled $1.43 billion. 
Fixed annuity premiums totaled $147.3 million in Fiscal 1996, up slightly from
$143.2 million in Fiscal 1995.  These premiums include premiums for the fixed
accounts of variable annuities totaling $64.1 million and $59.9 million,
respectively.  GIC premiums decreased significantly to $231.5 million in Fiscal
1996 from $564.3 million in Fiscal 1995.  This $332.8 million reduction
primarily resulted from the cyclical demand for GICs by municipalities, due
principally to the interdependency of demand for GICs and the funding of new
municipal bond offerings. 

      The GICs issued by the Company and its life insurance subsidiaries
generally guarantee the payment of principal and interest at a fixed rate for
a fixed term of three to five years.  In the case of GICs sold to pension
plans, certain withdrawals may be made at book value in the event of
circumstances specified in the plan document, such as employee retirement,
death, disability, hardship withdrawal or employee termination. The life
insurance subsidiaries impose surrender penalties in the event of other
withdrawals prior to maturity. Contracts purchased by banks or state and local
governmental authorities may also permit scheduled book value withdrawals
subject to the terms of the underlying indenture or agreement. Contracts
purchased by asset management firms either prohibit withdrawals or permit
withdrawals with notice ranging from seven to 270 days. In pricing GICs, the
Company analyzes cash flow information and prices accordingly so that it is
compensated for possible withdrawals prior to maturity (see "Financial
Condition and Liquidity"). 

      NET REALIZED INVESTMENT GAINS totaled $1.4 million in Fiscal 1996,
compared with net realized investment losses of $7.2 million in Fiscal 1995. 
These amounts represent 0.05% and 0.31%, respectively, of average invested
assets.  Net realized investment gains are net of impairment writedowns of $6.8
million in Fiscal 1996 and $4.7 million in Fiscal 1995. Therefore, net gains
from sales of investments totaled $8.2 million in Fiscal 1996, compared with
$2.5 million of  net losses in Fiscal 1995. 

      Net gains in Fiscal 1996 include $6.5 million of net gains realized on
$17.1 million of sales of other invested assets, principally leveraged leases,
and $1.3 million of net gains realized on $5.2 million of sales of common
stocks.  These sales were made primarily to maximize total return. 

      Net losses in Fiscal 1995 include $3.1 million of net gains realized on
$5.7 million of sales of common stocks made primarily to maximize total return
and $8.3 million of net losses on $1.09 billion of sales of bonds.  These bonds
sales include approximately $215.4 million of sales of MBSs, $177.8 million of
sales on high-yield investments and $106.7 million of sales of certain
collateralized mortgage obligations and asset-backed securities that also were
made primarily to maximize total return.  The Company also sold $439.5 million
of premium finance loans at no gain or loss (see "Loan Servicing Fees").

      Impairment writedowns include additional provisions applied to defaulted
bonds amounting to $5.7 million in Fiscal 1996 and $4.3 million in Fiscal 1995.
      
      VARIABLE ANNUITY FEES are based on the market value of assets supporting
variable annuity contracts in separate accounts. Such fees increased to $24.4
million in Fiscal 1996 from $20.5 million in Fiscal 1995.  This increase
reflects growth in average variable annuity assets, principally due to
increased market values and the receipt of variable annuity premiums, partially
offset by surrenders.  Variable annuity assets averaged $5.33 billion during
Fiscal 1996 and $4.43 billion during Fiscal 1995.  Variable annuity premiums,
which exclude premiums allocated to the fixed accounts of variable annuity
products, totaled $210.0 million in Fiscal 1996 and $99.3 million in Fiscal
1995.  This increase in premiums can be attributed, in part, to a heightened
demand for equity and bond investments, principally as a result of generally
improved market performance in the 1995 calendar year.  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.  

      NET RETAINED COMMISSIONS are primarily derived from commissions on the
sales of nonproprietary investment products by the Company's broker-dealer
subsidiaries, after deducting the substantial portion of such commissions that
is passed on to registered representatives. Net retained commissions totaled
$8.9 million in Fiscal 1996 and $6.6 million in Fiscal 1995. Broker-dealer
sales (mainly general securities, mutual funds and annuities) totaled $2.26
billion in Fiscal 1996 and $1.37 billion in Fiscal 1995. Net retained
commissions are not proportionate to sales primarily due to differences in
sales mix. 

      ASSET MANAGEMENT FEES, which include investment advisory fees and 12b-1
distribution fees, are based on the market value of assets managed in mutual
funds and private accounts by SunAmerica Asset Management Corp. ("SunAmerica
Asset Management").  Such fees totaled $6.5 million on average assets managed
of $2.15 billion in Fiscal 1996 and $7.0 million on average assets managed of
$2.10 billion in Fiscal 1995.  Asset management fees are not proportionate to
average assets managed primarily due to changes in product mix.  Sales of
mutual funds, excluding sales of money market accounts, amounted to $36.3
million in Fiscal 1996, compared with $29.5 million in Fiscal 1995. 
Redemptions of mutual funds, excluding redemptions of money market accounts,
amounted to $97.6 million in Fiscal 1996, compared with $140.5 million in
Fiscal 1995.  
  
      LOAN SERVICING FEES are earned by the Company's subsidiary, Imperial
Premium Finance, Inc. ("Imperial").  Imperial provides short-term installment
loans for businesses to fund their commercial property and casualty insurance
premiums.  These loans are secured by the unearned premium associated with the
underlying insurance policies.  Currently, Imperial sells most of the short-
term loans it originates and earns fee income by servicing these sold loans.
Such fee income totaled $5.6 million on average loans serviced of $440.7
million in  Fiscal 1996, compared with $2.0 million on average loans serviced
of $143.6 million in Fiscal 1995.  Imperial's net assets were acquired on
November 30, 1994, and, therefore, Fiscal 1995 includes only one month of loan
servicing fee income.  

      TRUST FEES are earned by Resources Trust Company for providing
administrative and custodial services primarily for individual retirement
accounts, as well as for other qualified pension plans. Trust fees increased
to $4.2 million in Fiscal 1996 (on an average of 198,000 trust accounts) from
$3.8 million in Fiscal 1995 (on an average of 189,000 trust accounts). 

      SURRENDER CHARGES on fixed and variable annuities totaled $2.6 million
in Fiscal 1996 and $2.7 million in Fiscal 1995. Surrender charges generally are
assessed on annuity withdrawals at declining rates during the first seven years
of the contract. Withdrawal payments, which include surrenders and lump-sum
annuity benefits, totaled $284.5 million in Fiscal 1996 and $312.9 million in
Fiscal 1995.  These payments represent 11.8% and 14.8%, respectively, of
average fixed and variable annuity reserves. Withdrawals include variable
annuity payments from the separate accounts totaling $155.4 million in Fiscal
1996 and $144.4 million in Fiscal 1995.  Although variable annuity surrenders
have increased, principally as a result of growth in the variable annuity
separate accounts, variable annuity withdrawal rates have declined. Variable
annuity surrenders represent 11.7% and 13.0%, respectively, of average variable
annuity liabilities in Fiscal 1996 and Fiscal 1995.  The decrease in fixed
annuity surrenders to $129.1 million in Fiscal 1996 from $168.5 million in
Fiscal 1995 results primarily from unusually high surrenders in Fiscal 1995,
principally due to policies coming off surrender charge restrictions and a
greater volume of surrenders on a closed block of business in Fiscal 1995.  In
addition, fixed annuity surrenders in Fiscal 1996 reflect the success of the
Company's conservation efforts.  Management anticipates that withdrawal rates
will remain relatively stable for the foreseeable future and the Company's
investment portfolio has been structured to provide sufficient liquidity for
anticipated withdrawals. 

      GENERAL AND ADMINISTRATIVE EXPENSES totaled $44.1 million in Fiscal 1996,
compared with $33.1 million in Fiscal 1995.  General and administrative
expenses in Fiscal 1996 include the expenses of recently acquired Imperial for
a full quarter, compared with only one month of such expenses in Fiscal 1995. 
In addition, Fiscal 1996 includes expenses related to a national advertising
campaign to further increase the Company's brand name awareness.  General and
administrative expenses remain closely controlled through a company-wide cost
containment program and represent approximately 1% of average total assets.

      AMORTIZATION OF DEFERRED ACQUISITION COSTS totaled $19.0 million in
Fiscal 1996 and $18.7 million in Fiscal 1995.  This increase was primarily due
to additional fixed and variable annuity and mutual fund sales and the
subsequent amortization of related deferred commissions and other acquisition
costs. 

      INCOME TAX EXPENSE totaled $27.8 million in Fiscal 1996 and $18.4 million
in Fiscal 1995, representing effective tax rates of 30% and 29%, respectively.
These tax rates reflect the favorable impact of certain affordable housing tax
credits.

FINANCIAL CONDITION AND LIQUIDITY

      SHAREHOLDERS' EQUITY increased by $352.9 million to $1.57 billion at
December 31, 1995 from $1.21 billion at September 30, 1995, primarily as a
result of the issuance of $248.0 million of the Company's Series E Preferred
Stock and the $64.8 million of net income recorded in Fiscal 1996. 
Shareholders' equity at December 31, 1995 was also favorably impacted by the
recording of a $59.0 million net unrealized gain on debt and equity securities
available for sale, a $63.7 million improvement over the $4.7 million net
unrealized loss recorded at September 30, 1995. These favorable factors were
partially offset by $16.0 million of dividends paid to shareholders.

      BOOK VALUE PER SHARE amounted to $21.76 at December 31, 1995, compared
with $17.78 at September 30, 1995.  Excluding net unrealized gains and losses
on debt and equity securities available for sale, book value per share amounted
to $20.86 at December 31, 1995 and $17.86 at September 30, 1995. 

      TOTAL ASSETS increased by $1.00 billion to $17.84 billion at December 31,
1995 from $16.84 billion at September 30, 1995, principally due to a $778.1
million increase in invested assets and a $191.1 million increase in the
separate accounts for variable annuities.  

      INVESTED ASSETS at December 31, 1995 totaled $11.59 billion, compared
with $10.81 billion at September 30, 1995. This $778.1 million increase
primarily resulted from the acquisition of CalFarm Life Insurance Company,
whose invested assets totaled $719.2 million at December 31, 1995, for a cash
purchase price of $120 million. In addition, the increase in invested assets
reflects the issuance of $248.0 million of Series E Preferred Stock, the
October 1995 issuance of $185.0 million of preferred securities of a grantor
trust and a $116.0 million improvement in net unrealized gains on debt and
equity securities available for sale.  These favorable factors were partially
offset by a $473.7 million reduction in amounts payable to brokers.

      The Company manages most of its invested assets internally.  The
Company's general investment philosophy is to hold fixed maturity assets for
long-term investment.  Thus, it does not have a trading portfolio.  Effective
December 1, 1995,  pursuant to guidelines issued by the Financial Accounting
Standards Board, the Company 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 prepayment
risk, the Company's need for liquidity and other similar factors.  Accordingly,
the Company does not presently classify a portion of its Bond Portfolio as held
for investment.

      THE BOND PORTFOLIO had an aggregate fair value that exceeded its
amortized cost by $84.9 million at December 31, 1995.  At September 30, 1995,
the amortized cost of the Bond Portfolio was $12.6 million above its fair value
(including $31.1 million of net unrealized losses on the portion of the
portfolio that was designated as available for sale).  The net unrealized gains
on the Bond Portfolio since September 30, 1995 principally reflect the lower
relative prevailing interest rates at December 31, 1995 and their corresponding
effect on the fair value of the Bond Portfolio.
 
      Approximately $8.09 billion or 99.5% of the Bond Portfolio (at amortized
cost) at December 31, 1995 was rated by Standard & Poor's Corporation ("S&P"),
Moody's Investors Service ("Moody's") or under comparable statutory rating
guidelines established by the National Association of Insurance Commissioners
("NAIC") and implemented by either the NAIC or the Company. At December 31,
1995, approximately $7.16 billion (at amortized cost) was rated investment
grade by one or both of these agencies or under the NAIC guidelines, including
$5.01 billion of U.S. government/agency securities and MBSs. 

      At December 31, 1995, the Bond Portfolio included $925.0 million (fair
value, $915.5 million) of bonds not rated investment grade by S&P, Moody's or
the NAIC. Based on their December 31, 1995 amortized cost, these non-
investment-grade bonds accounted for 5.2% of the Company's total assets and
8.1% of invested assets. In addition to its direct investment in
non-investment-grade bonds, the Company has entered into Total Return
Agreements with an aggregate notional principal amount of $316.4 million at
December 31, 1995 (see "Asset-Liability Matching"). 

      Non-investment-grade securities generally provide higher yields and
involve greater risks than investment-grade securities because their issuers
typically are more highly leveraged and more vulnerable to adverse economic
conditions than investment-grade issuers. In addition, the trading market for
these securities is usually more limited than for investment-grade securities.
The Company intends that its holdings of such securities not exceed current
levels, but its policies may change from time to time, including in connection
with any possible acquisition. The Company had no material concentrations of
non-investment-grade securities at December 31, 1995. 
<PAGE>
<TABLE>
      The following table summarizes the Company's rated bonds by rating classification as of December 31, 1995 (dollars
in thousands):
<CAPTION>
                                                   Issues not rated by S&P/Moody's
          Issues Rated by S&P/Moody's                    By NAIC Category                            Total             
----------------------------------------------  -----------------------------------  ----------------------------------
                                     Estimated    NAIC                   Estimated               Percent of  Estimated
 S&P (Moody's)         Amortized        fair    category   Amortized        fair     Amortized    invested      fair
  category(1)             cost         value       (2)        cost         value        cost       assets(3)   value
---------------        ----------   ----------  --------   ----------   -----------  ----------   ---------  ----------  
<S>                    <C>          <C>         <C>        <C>          <C>          <C>          <C>        <C>
AAA+ to A-
  (Aaa to A3)          $4,546,061   $4,589,332       1     $1,393,098   $1,415,402   $5,939,159     51.71%   $6,004,734
BBB+ to BBB-
  (Baa1 to Baa3)          497,335      503,423       2        727,736      742,755    1,225,071     10.67     1,246,178
BB+ to BB-
  (Ba1 to Ba3)             90,305       91,594       3        143,474      143,664      233,779      2.04       235,258
B+ to B- (B1 to B3)       375,991      375,780       4        240,925      236,434      616,916      5.37       612,214
CCC+ to C-
  (Caa to C)               30,385       26,030       5         18,556       18,222       48,941      0.43        44,252
D                              --           --       6         25,353       23,741       25,353      0.22        23,741
                       ----------   ----------             ----------   ----------   ----------              ----------
TOTAL RATED ISSUES     $5,540,077   $5,586,159             $2,549,142   $2,580,218   $8,089,219              $8,166,377
                       ==========   ==========             ==========   ==========   ==========              ==========
                                                                                                                       
(1)   S&P rates debt securities in eleven rating categories, 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 nine rating categories, from Aaa (the highest) to C
      (extremely poor prospects of attaining 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 higher of the S&P or Moody's rating if rated by both
      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 rating groups listed above, with categories 1 and 2 considered investment
      grade.  A substantial portion of the assets in the NAIC categories were rated by the Company based on its
      implementation of NAIC rating guidelines.

(3)   At amortized cost.
</TABLE>

<PAGE>
      SENIOR SECURED LOANS ("Secured Loans") are included in the Bond Portfolio
and their amortized cost aggregated $833.0 million at December 31, 1995.
Secured Loans are senior to subordinated debt and equity, and are secured by
assets of the issuer. At December 31, 1995, Secured Loans consisted of loans
to 194 borrowers spanning 32 industries, with 17% of these assets (at amortized
cost) concentrated in the leisure industry and with no other industry
concentration constituting more than 15% of these assets.

      While the trading market for Secured Loans is more limited than for
publicly traded corporate debt issues, management believes that participation
in these transactions has enabled the Company to improve its investment yield. 
Although, as a result of restrictive financial covenants, Secured Loans involve
greater risk of technical default than do publicly traded investment-grade
securities, management believes that the risk of loss upon default for its
Secured Loans is mitigated by their financial covenants and senior secured
positions. The majority of the Company's Secured Loans are not rated by S&P or
Moody's. 

      MORTGAGE LOANS aggregated $1.58 billion at December 31, 1995 and
consisted of 659 first mortgage loans with an average loan balance of
approximately $2.4 million, collateralized by properties located in 27 states.
Approximately 47% of the portfolio was multifamily residential, 23% was retail,
6% was industrial, 5% was office and 19% was other types. At December 31, 1995,
approximately 28% of the portfolio was secured by properties located in
California and no more than 12% of the portfolio was secured by properties in
any other single state.  At December 31, 1995, there were 31 loans with
outstanding balances of $10 million or more, which loans collectively
aggregated approximately 28% of the portfolio. At the time of their origination
or purchase by the Company, virtually all mortgage loans had loan-to-value
ratios of 75% or less. At December 31, 1995, approximately 23% of the mortgage
loan portfolio consisted of loans with balloon payments due before January 1,
1999. At December 31, 1995, loans delinquent by more than 90 days totaled $28.2
million (1.8% of total mortgages).  Loans foreclosed upon and carried in real
estate in the balance sheet totaled $17.0 million (1.1% of total mortgages) at
December 31, 1995.  All of these loans were transferred to real estate during
fiscal 1995.

      Approximately 35% of the mortgage loans in the portfolio at December 31,
1995 were seasoned loans underwritten to the Company's standards and purchased
at or near par from the Resolution Trust Corporation or other financial
institutions, many of which were downsizing their portfolios. 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 effects of general economic conditions
on these commercial properties. However, due to the seasoned nature of the
Company's mortgage loans, its emphasis on multifamily loans and its strict
underwriting standards, the Company believes that it has reduced the risk
attributable to its mortgage loan portfolio while maintaining attractive
yields. 

      At December 31, 1995, mortgage loans having an aggregate carrying value
of $60.3 million had been restructured. Of this amount, $1.8 million was
restructured during Fiscal 1996, $27.7 million was restructured during Fiscal
1995 and $30.2 million was restructured during fiscal 1992.

      PARTNERSHIP investments totaled $794.3 million at December 31, 1995,
comprising investments in approximately 370 separate partnerships with an
average size of approximately $2.1 million.  This portfolio includes: (i)
$317.1 million of partnerships managed by independent money managers that
invest in a broad selection of equity and fixed-income securities, currently
including approximately 600 separate issuers; (ii) $360.6 million of
partnerships that make tax-advantaged investments in affordable housing,
currently involving approximately 325 multifamily projects in 38 states; and
(iii) $116.6 million of partnerships that invest in mortgage loans and income-
producing real estate.  At December 31, 1995, $551.9 million of the Company's
partnerships was accounted for by using the cost method and $242.4 million by
using the equity method. The risks generally associated with partnerships
include those related to their underlying investments (i.e. equity securities,
debt securities and real estate), plus a level of illiquidity, which is
mitigated for the affordable housing partnerships by the marketability of the
tax credits they generate.  The Company believes that these risks are
acceptable in light of anticipated partnership returns and the contractual
termination provisions contained in the partnership agreements.

      ASSET-LIABILITY MATCHING is utilized by the Company to minimize the risks
of interest rate fluctuations and disintermediation. The Company believes that
its fixed-rate liabilities should be backed by a portfolio principally composed
of fixed maturities 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 maturities are priced over the yield
curve and general competitive conditions within the industry. Its portfolio
strategy is designed to achieve adequate risk-adjusted returns consistent with
its investment objectives of effective asset-liability matching, liquidity and
safety. 

      The Company designs its fixed-rate products and conducts its investment
operations in order to closely match the duration of the assets in its
investment portfolio to its annuity and GIC obligations. The Company seeks to
achieve a predictable spread between what it earns on its assets and what it
pays on its liabilities by investing principally in fixed maturities. The
Company's fixed-rate products incorporate surrender charges, two-tiered
interest rate structures or other limitations on when contracts can be
surrendered for cash to encourage persistency. Approximately 78% of the
Company's fixed annuity and GIC reserves had surrender penalties or other
restrictions at December 31, 1995. 

      As part of its asset-liability matching discipline, the Company conducts
detailed computer simulations that model its fixed-maturity assets and
liabilities under commonly used stress-test interest rate scenarios. Based on
the results of these computer simulations, the investment portfolio has been
constructed with a view to maintaining a desired investment spread between the
yield on portfolio assets and the rate paid on its reserves under a variety of
possible future interest rate scenarios.  At December 31, 1995 the weighted
average life of the Company's investments was approximately four years and the
duration was approximately three-and-one-fourth years.  Weighted average life
is defined as the average time to receipt of all principal, incorporating the
effects of scheduled amortization and expected prepayments, weighted by book
value.  Duration is a common measure for the price sensitivity of a fixed-
income security or portfolio to changes in interest rates.  It is the weighted
average time to receipt of all expected cash flows, both principal and
interest, including the effects of scheduled amortization and expected
prepayments, in which the weight attached to each year of receipt is the
proportion of the present value of cash to be received during that year to the
total present value of the portfolio.  
      
      As a component of its investment strategy, the Company utilizes interest
rate swap agreements ("Swap Agreements") to match assets more closely to
liabilities.  Swap Agreements are agreements to exchange with a counterparty
interest rate payments of differing character (for example, variable-rate
payments exchanged for fixed-rate payments) based on an underlying principal
balance (notional principal) to hedge against interest rate changes. The
Company utilizes Swap Agreements to create a hedge that effectively converts
floating-rate assets and liabilities into fixed-rate instruments.  At December
31, 1995, the Company had 27 outstanding Swap Agreements with an aggregate
notional principal amount of $1.10 billion. These agreements mature in various
years through 2001 and have an average remaining maturity of 26 months.  

      The Company also seeks to provide liquidity by using reverse repurchase
agreements ("Reverse Repos"), Dollar Rolls and by investing in MBSs.  It also
seeks to enhance its spread income by using Reverse Repos, Dollar Rolls and
Total Return Agreements.  Reverse Repos involve a sale of securities and an
agreement to repurchase the same securities at a later date at an agreed upon
price and are generally over-collateralized. Dollar Rolls are similar to
Reverse Repos except that the repurchase involves securities that are only
substantially the same as the securities sold and the arrangement is not
collateralized, nor is it governed by a repurchase agreement.  Total Return
Agreements effectively exchange a fixed rate of interest on the notional amount
for the coupon income plus or minus the increase or decrease in the fair value
of specified non-investment-grade corporate bonds. 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 risks associated with Total Return Agreements are the
credit risk on the underlying non-investment grade bonds; the risk of increases
in prevailing interest rates, particularly short-term interest rates; and the
risk associated with counterparty nonperformance.  The primary risk associated
with Dollar Rolls, Reverse Repos and Swap Agreements is counterparty risk. The
Company believes, however, that the counterparties to its Total Return
Agreements, Dollar Rolls, Reverse Repos and Swap Agreements are financially
responsible and that the counterparty risk associated with those transactions
is minimal. Counterparty risk associated with Dollar Rolls is further mitigated
by the Company's participation in an MBS trading clearinghouse.  The sell and
buy transactions that are submitted to this clearinghouse are marked to market
on a daily basis and each participant is required to over-collateralize its net
loss position by 30% with either cash, letters of credit or government
securities.  In addition to counterparty risk, Swap Agreements also have
interest rate risk.  However, the Company's Swap Agreements hedge variable-rate
assets or liabilities, and interest rate fluctuations that adversely affect the
net cash received or paid under the terms of the Swap Agreement would be offset
by increased interest income earned on the variable-rate assets or reduced
interest expense paid on the variable-rate liabilities.  The primary risk
associated with MBSs is that a changing interest rate environment might cause
prepayment of the underlying obligations at speeds slower or faster than
anticipated at the time of their purchase.  

      INVESTED ASSETS EVALUATION routinely includes a review by the Company of
its portfolio of debt securities. Management identifies monthly those
investments that require additional monitoring and carefully reviews the
carrying value of such investments at least quarterly to determine whether
specific investments should be placed on a nonaccrual basis and to determine
declines in value that may be other than temporary. In making these reviews for
bonds, management principally considers the adequacy of collateral (if any),
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 bonds that are determined to have declines in
value that are other than temporary are reduced to net realizable value and no
further accruals of interest are made. The valuation allowances 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 (at amortized cost)
that are in default as to the payment of principal or interest, totaled $56.9
million at December 31, 1995, including $28.7 million (fair value, $22.2
million) of bonds and notes and $28.2 million of mortgage loans whose fair
value was equal to their amortized cost.  At December 31, 1995, defaulted
investments constituted 0.5% of total invested assets at amortized cost.  At
September 30, 1995, defaulted investments totaled $61.8 million, which
constituted 0.6% of total invested assets at amortized cost.

      SOURCES OF LIQUIDITY are readily available to the Company in the form of
existing cash and short-term investments, Reverse Repo capacity on invested
assets and, if required, proceeds from invested asset sales. At December 31,
1995, approximately $6.43 billion of the Company's Bond Portfolio had an
aggregate unrealized gain of $197.1 million, while approximately $1.69 billion
of the Bond Portfolio had an aggregate unrealized loss of $112.2 million. In
addition, the Company's investment portfolio also currently provides
approximately $109.8 million of monthly cash flow from scheduled principal and
interest payments. 

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

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

      On a parent company stand-alone basis, SunAmerica Inc. (the "Parent"),
at December 31, 1995, had invested assets with a carrying value of $888.3
million and outstanding senior indebtedness of $539.8 million, comprising all
of the Company's consolidated senior indebtedness. Additionally, as of December
31, 1995, the Parent had three GICs purchased by local government authorities
that aggregated $255.4 million.

      During August and October 1995, the Parent purchased common securities
of SunAmerica Capital Trust I and SunAmerica Capital Trust II (the "Grantor
Trusts") and issued an aggregate of $245.5 million of junior subordinated
debentures (the "Debentures") to the Grantor Trusts in connection with the
public issuance of preferred securities of the Grantor Trusts (see Note 3 of
Notes to Consolidated Financial Statements).

      The Parent's annual debt service with respect to its senior indebtedness,
GIC obligations and Debentures totals $80.0 million for fiscal 1996, $96.5
million for fiscal 1997, $116.6 million for fiscal 1998, $225.1 million for
fiscal 1999, $89.9 million for fiscal 2000 and $2.14 billion, in the aggregate,
thereafter.
<PAGE>
      The Parent received dividends from its regulated life insurance
subsidiaries of $69.2 million in March 1995. The Parent also received dividends
of $5.0 million in Fiscal 1996 from its other directly owned subsidiaries. 

      The Company has transferred to third-party investors certain of its
interests in various partnerships that make tax-advantaged affordable housing
investments. As part of the transactions, the Parent has agreed to advance
monies to support the operations of the underlying housing projects, if
required, and has guaranteed that the transferred partnerships will provide,
as of the transfer date and under then current tax laws, a specified level of
associated tax credits and deductions to the third-party investors. A portion
of the income received upon transfer of the partnership interests has been
deferred to absorb any required payments with respect to these agreements.
Based on an evaluation of the underlying housing projects, it is management's
belief that such deferrals are ample for this purpose. Accordingly, management
does not anticipate any material future cash outlays with respect to these
agreements. 

      The Parent has guaranteed that its life insurance subsidiaries will
receive the statutory carrying value of certain invested assets, primarily
bonds and real estate, aggregating $144.8 million.  

REGULATION

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

      During the last decade, the insurance regulatory framework has been
placed under increased scrutiny by various states, the federal government and
the NAIC.  Various states have considered or enacted legislation that changes,
and in many cases increases, the states' authority to regulate insurance
companies.  Legislation has been introduced from time to time in Congress that
could result in the federal government assuming some role in the regulation of
insurance companies.  In recent years, the NAIC has approved and recommended
to the states for adoption and implementation several regulatory initiatives
designed to reduce the risk of insurance company insolvencies.  These
initiatives include new investment reserve requirements, risk-based capital
standards and restrictions on an insurance company's ability to pay dividends
to its stockholders.  The NAIC is also currently developing model laws to
govern insurance company investments. Current proposals are still being debated
and the Company is monitoring developments in this area and the effects any
changes would have on the Company.

      SunAmerica Asset Management is registered with the Securities and
Exchange Commission (the "Commission") as a registered investment adviser under
the Investment Advisers Act of 1940. The mutual funds that it markets are
subject to regulation under the Investment Company Act of 1940. SunAmerica
Asset Management and the mutual funds are subject to regulation and examination
by the Commission. In addition, variable annuities and the related separate
accounts of the Company's life insurance subsidiaries are subject to regulation
by the Commission under the Securities Act of 1933 and the Investment Company
Act of 1940. 

      Resources Trust is subject to regulation by the Colorado State Banking
Board and the Federal Deposit Insurance Corporation. 

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

      The Company's premium finance subsidiaries are subject to regulation and
supervision by substantially all of the states in which they are authorized to
transact business.  State premium finance laws establish supervisory agencies
with broad administrative and supervisory powers related to granting and
revoking licenses to transact business, approving finance agreement forms,
regulating certain finance charge rates, regulating marketing and other trade
practices (including the procedures to cancel financed insurance policies for
non-payment), prescribing the form and content of required financial statements
and reports, performing financial and other examinations and other related
matters.


<PAGE>

                                SUNAMERICA INC.
                         PART II - OTHER INFORMATION


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

      On October 30, 1995 the Company held a Special Meeting of Shareholders. 
      The shareholders voted upon a proposal to amend the Charter to increase
      the Company's authorized capital from (i) 50,000,000 to 175,000,000
      shares of Common Stock (par value, $1.00 per share) and (ii) 15,000,000
      to 25,000,000 shares of Nontransferable Class B Stock (par value, $1.00
      per share).

      The matter was approved.  The votes cast for, against or withheld, as
      well as the number of abstentions and broker non-votes were as follows:

      Votes For       Votes Against        Abstentions       Broker Non-Votes
      ----------      -------------        -----------       ----------------
   
      89,982,628          3,412,807             27,125                      0


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

EXHIBITS

10    $250,000,000 Credit Agreement, dated as of October 27, 1995, among the
      Company and SunAmerica Financial, Inc., as Borrowers, and Citibank, N.A.,
      as Agent for the bank named therein.

11    Statement re computation of per-share earnings.

23    The consent of Price Waterhouse LLP, independent accountants, filed as
      an exhibit to the Company's 1995 Annual Report on Form 10-K, is
      incorporated by reference herein.

27    Financial Data Schedule.


REPORTS ON FORM 8-K

      On October 6, 1995, the Company filed a current report on Form 8-K to
      file exhibits in connection with the issuance by SunAmerica Capital Trust
      II (the "Trust") of its 8.35% Trust Originated Preferred Securities
      pursuant to Registration Statement Nos. 33-62405 and 33-62405-01 filed
      by the Company and the Trust.


<PAGE>


                               SUNAMERICA INC.
                         PART II - OTHER INFORMATION


REPORTS ON FORM 8-K (continued)

      On October 19, 1995, the Company filed a current report on Form 8-K to
      file exhibits in connection with the Registration Statement on Form S-3
      (File No. 33-62405) filed by the Company relating to the Company's Debt
      Securities, Common Stock, Preferred Stock and Warrants to Purchase Debt
      Securities, Common Stock and Preferred Stock.

      On October 31, 1995, the Company filed a current report on Form 8-K to
      file exhibits in connection with the issuance of its $3.10 Depositary
      Shares, each representing one-fiftieth of a share of Series E Mandatory
      Conversion Premium Dividend Preferred Stock, pursuant to the Company's
      Registration Statement on Form S-3 (File No. 33-62405).

      On November 9, 1995, the Company filed a current report on Form 8-K
      announcing its fourth quarter 1995 earnings.

      On December 12, 1995, the Company filed a current report on Form 8-K, as
      amended on December 14, 1995, concerning its proposed acquisition of Ford
      Life Insurance Company.

      On January 29, 1996, the Company filed a current report on Form 8-K
      announcing its first quarter 1996 earnings.


                                 SIGNATURES
                                 ----------

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


                                          SUNAMERICA INC.
                                          -----------------------------------
                                          Registrant


Dated      February 13, 1996              /s/ JAY S. WINTROB
     ----------------------------         -----------------------------------
                                          Jay S. Wintrob
                                          Vice Chairman


Dated      February 13, 1996               /s/ SCOTT L. ROBINSON
     ----------------------------         -----------------------------------
                                          Scott L. Robinson
                                          Senior Vice President and Controller

<PAGE>
                               SUNAMERICA INC.
                                      


LISTS OF EXHIBITS FILED
-----------------------

10    $250,000,000 Credit Agreement, dated as of October 27, 1995, among the
      Company and SunAmerica Financial, Inc., as Borrowers, and Citibank, N.A.,
      as Agent for the bank named therein.

11    Statement re computation of per-share earnings.

27    Financial Data Schedule.