SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549

                                  FORM 10-K

(Mark One)
/X/   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 [Fee Required]

For the fiscal year ended September 30, 1996

                                     OR

/ /   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 [No Fee Required]

      For the transition period from               to                

                        Commission File Number 33-85014              

                   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

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

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

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

      Indicate by check mark if disclosure of delinquent filers pursuant to
item 405 of regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this form 10-K or any
amendment to this form 10-K.   X    
                              ---
      The number of shares outstanding of the registrant's common stock on
December 20, 1996 was as follows:

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






<PAGE>
                                   PART I
ITEM 1.  BUSINESS

GENERAL DESCRIPTION

      First SunAmerica Life Insurance Company (the "Company"), an indirect
wholly owned subsidiary of SunAmerica Inc. (the "Parent"), is a stock life
insurance company organized under the laws of New York.  At September 30, 1996,
the Company owned $236.9 million of assets.

      The Company maintains its principal offices at 733 Third Avenue, 4th
Floor, New York, New York 10017, telephone (800) 272-3007.  The Company has no
employees; however, employees of the Parent and its other subsidiaries perform
various services for the Company.  The Parent has approximately 1,600
employees, approximately 600 of whom perform services for the Company as well
as for certain of its affiliates.

      Founded in 1978 and licensed in the states of New York and Nebraska, the
Company issues a portfolio of single premium fixed and flexible premium
variable annuities.  It has an "A+" (Superior) rating from industry analyst
A.M. Best Company.  

      The Company believes that demographic trends have produced strong
consumer demand for long-term, investment-oriented products.  According to U.S.
Census Bureau projections, the number of individuals ages 45 to 64 will grow
from 46 million to 60 million during the 1990s, making this age group the
fastest-growing segment of the U.S. population.  Between 1985 and 1995, annual
industry premiums from annuities increased from $53 billion to $159 billion.

      Focusing its operations on this expanding market, the Company specializes
in the sale of tax-deferred long-term savings products.  The Company markets
fixed annuities and fee-generating variable annuities, which are distributed
through the independent registered representatives of affiliated broker-dealers
and through other broker-dealers, banks and other financial institutions.

      As consumer demand for investment-oriented products has grown, the
Company has broadened the array of fee income producing products it offers and
has in recent years significantly increased its fee income.  Over the last
several years, the Company has enhanced its marketing of variable annuities,
which entail no portfolio credit risk and require significantly less capital
support than its fixed-rate business, which generates net investment income.

      Benefitting from continued strong demographic growth of the retirement
savings market, industry sales of tax-deferred savings products have
represented, for a number of years, a significantly larger source of new
premiums for the U.S. life insurance industry than have traditional life
insurance products.  Recognizing the growth potential of this market, the
Company focuses its life insurance operations on the sale of annuities.

      Because of its focus on annuity products, which generally have more
contractholder transactions than traditional life insurance products, the
Company utilizes computer-driven systems that employ optical disk imaging and 
artificial intelligence, in lieu of paper-intensive life insurance processing
procedures.  During 1995 the Company relocated its service support center from
New York, New York to Los Angeles, California to consolidate operations with
its affiliated life insurance companies.  The Company believes its service 

                                      1

<PAGE>
support center and associated cost structure to be among the most competitive
in the industry.

      The Company markets its fixed and variable annuities through the
following distribution channels: (i) independent registered representatives of
SunAmerica Securities, Inc., Royal Alliance Associates, Inc. and Advantage
Capital Corp., which are indirect wholly owned subsidiaries of the Parent;
(ii) approximately 122 other securities firms and financial institutions; and
(iii) independent general insurance agents who specialize in selling fixed
annuities and other single premium products.  In addition, in June 1994, the
Company entered into an exclusive agreement with The Chase Manhattan Bank, N.A.
("Chase") to develop variable annuity products for sale in the state of New
York whose underlying funds are managed by Chase.  Sales of the first such
product commenced in December, 1995.  The institution has the right to make
these private label variable annuities available through its numerous retail
branch networks and distribution channels within New York.  In addition, this
new variable annuity product is also available through a number of the broker-
dealer and financial planning organizations that currently offer other
investment products managed by Chase.  
 
      The Company offers single premium and flexible premium deferred annuities
that provide one-, three-, five-, seven-, or ten-year fixed interest rate
guarantees.  Although the Company's contracts remain in force an average of
seven to ten years, a majority (approximately 55%  at September 30, 1996)
reprice annually at discretionary rates determined by the Company.  In
repricing, the Company takes into account yield characteristics of its
investment portfolio, annuity surrender assumptions and competitive industry
pricing.  Its fixed-rate annuity products offer many of the same features as
conventional certificates of deposit from financial institutions, giving
investors a choice of interest period and yield as well as additional
advantages particularly applicable to retirement planning, such as tax-deferred
accumulation and flexible payout options(including the option of payout over
the life of the annuitant).  The average new single premium fixed annuity
contract sold by the Company amounted to approximately $39,000 in 1996.

      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 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-rate securities.  The
Company's fixed-rate products incorporate surrender charges or other
limitations on when contracts can be surrendered for cash to encourage
persistency.  Approximately 96% of the Company's fixed annuity reserves had
surrender penalties or other restrictions at September 30, 1996.

      The Company's 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 through
the sale, administration and management of the variable account options of its
variable annuity products.  The Company also earns investment income on monies
allocated to the fixed-rate account options of these products.  Variable
annuities offer retirement planning features and surrender charges similar to
those offered by fixed annuities, but differ in that the annuity holder's rate
of return is generally dependent upon the investment performance of the
particular equity, fixed-income, money market or asset allocation fund selected
by the contractholder.  Because the investment risk is borne by the customer 
                                      2

<PAGE>
in all but the fixed-rate account options, these products require significantly
less capital support than fixed annuities.  The average new variable annuity
contract sold by the Company amounted to approximately $47,000 in 1996.

      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.  The Company manages all of its invested assets
internally.  Its portfolio strategy is designed to achieve adequate
risk-adjusted returns consistent with its investment objectives of effective
asset-liability matching, liquidity and safety.

      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.  

      For the years ended September 30, 1996, 1995 and 1994, the Company's
yields on average invested assets were 7.40%, 7.59% and 6.54%, respectively,
before net realized investment gains and losses, and it realized net investment
spreads of 2.08%, 2.70% and 2.24%, respectively, on average invested assets. 
At September 30, 1996, the weighted average life of the Company's investments
was approximately 4.3 years and the duration was approximately 2.3.  Weighted
average life is 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 option-adjusted measure for the price sensitivity
of a fixed-income portfolio to changes in interest rates.  It is the
calculation of the relative percentage change in market value resulting from
shifts in interest rates, and recognizes the changes in portfolio cashflows
resulting from embedded options such as prepayments and bond calls.

      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 and notes (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 no
longer classifies a portion of its Bond Portfolio as held for investment. 





                                      3

<PAGE>
<TABLE>
      The following table summarizes the Company's investment portfolio at
September 30, 1996:

                           SUMMARY OF INVESTMENTS
<CAPTION>
                                                                     Percent
                                                   Amortized              of
                                                        cost       portfolio
                                                ------------       ---------
<S>                                            <C>                <C>       
                                                        (In thousands)      
Fixed maturities:
 Cash and short-term investments                $      6,707             4.4 %
 U.S. Government securities                            9,631             6.2
 Mortgage-backed securities                           75,846            49.4
 Other bonds and notes                                61,431            40.0
                                                ------------       ---------

Total investments                               $    153,615          100.00 %
                                                ============       =========

      All of the Bond Portfolio at September 30, 1996 was rated by Standard &
Poor's Corporation ("S&P"), Moody's Investors Service ("Moody's"), Duff & Phelps
Credit Rating Co. ("D&P"), Fitch Investor Services, Inc. ("Fitch") 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 September 30, 1996, approximately $137.0 million (at amortized cost)
of the Bond Portfolio was rated investment grade by one or more of these agencies
or by the Company or the NAIC, including $85.5 million of U.S. Government/agency
securities and mortgage-backed securities ("MBSs").

      At September 30, 1996, the Bond Portfolio included $9.9 million (fair
value, $10.4 million) of bonds not rated investment grade by S&P, Moody's, D&P,
Fitch or the NAIC. Based on their September 30, 1996 amortized cost, these non-
investment-grade bonds accounted for 4.2% of the Company's total assets and 6.4%
of its invested assets.  

      At September 30, 1996, the amortized cost of all investments in default as
to the payment of principal or interest totaled $0.2 million (fair value, $0.2
million), which constituted 0.1% of total invested assets at amortized cost.

      For more information concerning the Company's investments, including the
risks inherent in such investments, see Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Financial Condition
and Liquidity."

REGULATION

      The Company is subject to regulation and supervision by the states of New
York and Nebraska and their insurance departments.  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
</TABLE>
                                      4
<PAGE>
adequacy of statutory capital and surplus, regulating the type, valuation 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 and market
conduct violations.  These initiatives include 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 relating to product design and illustrations for annuity products.
Current proposals are still being debated and the Company is monitoring
developments in this area and the effects any changes would have on the
Company.

COMPETITION

      The business conducted by the Company is highly competitive.  The Company
competes with other life insurers, and also competes for customers' funds with
a variety of investment products offered by financial services companies other
than life insurance companies, such as banks, investment advisors, mutual fund
companies and other financial institutions.  Within the U.S. life insurance
industry, the 100 largest writers of individual and group annuities account for
approximately 97% of total net premiums written.  Net annuity premiums written
among the top 100 companies range from less than $200 million to more than $9
billion annually.  The Company itself is not among the largest writers of
annuities; however, the combined SunAmerica life companies rank in the top
quartile of this group.  Certain of these companies and other life insurers
with which the Company competes are significantly larger and have available to
them much greater financial and other resources.  The Company believes the
primary competitive factors among life insurance companies for
investment-oriented insurance products such as annuities include product
flexibility, product pricing, innovation in product design, the claims-paying
ability rating and the name recognition of the issuing company, the
availability of distribution channels and service rendered to the customer
before and after a contract is issued.  Other factors affecting the annuity
business include the benefits (including before-tax and after-tax investment
returns) and guarantees provided to the customer and the commissions paid.



                                      5

<PAGE>

ITEM 2.  PROPERTIES

      The Company's principal office is in leased premises at 733 Third Avenue,
New York, New York 10017.  The Company, through an affiliate, also leases
office space in Los Angeles, California and Torrance, California, which are
utilized for certain policy administration, recordkeeping and data processing
functions.

      The Company believes that such properties, including the equipment
located therein, are suitable and adequate to meet the requirements of its
business.


ITEM 3.  LEGAL PROCEEDINGS

      From time to time, the Company is involved in various kinds of litigation
common to its business.  When the Company becomes involved in litigation, cases
are typically in various stages of development and, based on reports of
counsel, management believes that provisions made for potential losses relating
to such litigation would be adequate and any further liabilities and costs
would not have a material adverse impact upon the Company's financial position
or results of operations.


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

      No matters were submitted during the fiscal year 1996 to a vote of
security holders, through the solicitation of proxies or otherwise.



                                   PART II

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

      Not applicable.














                                      6


<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA

      The following selected financial data of the Company should be read in conjunction with the
financial statements and notes thereto and Management's Discussion and Analysis of Financial
Condition and Results of Operations, both of which are included elsewhere herein.

<CAPTION>
                                                                    Years ended September 30,  
                                                 --------------------------------------------
                                                     1996     1995     1994     1993     1992
                                                  -------  -------  -------  -------  -------
<S>                                              <C>      <C>      <C>      <C>      <C>     
                                                              (In thousands)
RESULTS OF OPERATIONS

Net investment income                             $ 2,798  $ 2,784  $ 1,892  $ 1,161  $ 2,368
Net realized investment gains (losses)               (539)  (1,348)     445    1,932    3,489
Variable annuity fee income                           690      412      382      240       40
General and administrative expenses                (1,404)  (1,088)  (1,040)  (1,066)  (1,224)
Amortization of deferred 
  acquisition costs                                  (500)    (300)     ---     (220)  (2,356)
Other income and expenses, net                        126      245       58     (342)     561
                                                  -------  -------  -------  -------  -------

Pretax income                                       1,171      705    1,737    1,705    2,878
Income tax expense                                   (448)    (182)    (655)    (829)  (1,210) 
                                                  -------  -------  -------  -------  -------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE 
  IN ACCOUNTING FOR INCOME TAXES                      723      523    1,082      876    1,668

Cumulative effect of change in accounting 
  for income taxes                                    ---      ---     (725)     ---      ---  
                                                  -------  -------  -------  -------  -------
NET INCOME                                        $   723  $   523  $   357  $   876  $ 1,668 
                                                  =======  =======  =======  =======  =======














                                               7




<PAGE>
ITEM 6.   SELECTED FINANCIAL DATA (continued)
<CAPTION>
                                                                              At September 30,
                                           ---------------------------------------------------
                                                1996       1995      1994       1993      1992 
                                           ---------  --------- ---------  --------- ---------
<S>                                       <C>        <C>       <C>        <C>       <C>       
                                                            (In thousands)
FINANCIAL POSITION

Investments                                $ 153,237  $ 121,218 $  78,928  $  85,130 $ 111,353
Variable annuity assets                       68,901     32,760    26,390     24,695     8,836
Deferred acquisition costs                    12,127      6,491     5,651      2,540     1,297
Deferred income taxes                            ---        ---       886      1,031       835 
Other assets                                   2,603      2,688     2,282      3,876     1,527 
                                           ---------  --------- ---------  --------- ---------

TOTAL ASSETS                               $ 236,868  $ 163,157 $ 114,137  $ 117,272 $ 123,848
                                           =========  ========= =========  ========= =========


Reserves for fixed annuity contracts       $ 140,613  $ 106,332 $  66,881  $  68,228 $  59,400
Variable annuity liabilities                  68,901     32,760    26,390     24,695     8,836
Other reserves, payables and accrued 
  liabilities                                  2,784      2,003     1,051      1,220    34,690
Deferred income taxes                          1,350        244       ---        ---       ---
Shareholder's equity                          23,220     21,818    19,815     23,129    20,922
                                           ---------  --------- ---------  --------- ---------

TOTAL LIABILITIES AND SHAREHOLDER'S 
  EQUITY                                   $ 236,868  $ 163,157 $ 114,137  $ 117,272 $ 123,848
                                           =========  ========= =========  ========= =========
</TABLE>
















                                               8





<PAGE>
ITEM 7.   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 years in the period ended September 30, 1996 follows.  In connection
with, and because it desires to take advantage of, the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995, the Company cautions
readers regarding certain forward-looking statements contained in the following
discussion and elsewhere 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 ("SEC").  Forward-looking statements are
statements not based on historical information and which relate to future
operations, strategies, financial results, or other developments.  In
particular, 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
contained in this report which represent the Company's beliefs concerning
future or projected levels of sales of the Company's products, investment
spreads or yields, or the earnings or profitability of the Company's
activities.

      Forward-looking statements are necessarily based upon estimates and
assumptions that are inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are beyond the
Company's control and many of which, with respect to future business decisions,
are subject to change.  These uncertainties and contingencies can affect actual
results and 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 events or
developments, some of which may be national in scope, such as general economic
conditions and interest rates, some of which may be related to the insurance
industry generally, such as pricing competition, regulatory developments and
industry consolidation, and others of which may relate to the Company
specifically, such as credit, volatility and other risks associated with the
Company's investment portfolio, and other factors.  Investors are also directed
to consider other risks and uncertainties discussed in documents filed by the
Company with the SEC.  The Company disclaims any obligation to update forward-
looking information.

RESULTS OF OPERATIONS 

      INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES
totaled $0.7 million in 1996, compared with $0.5 million in 1995 and $1.1
million in 1994.  The cumulative effect of the change in accounting for income
taxes resulting from the 1994 implementation of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," amounted to a
nonrecurring non-cash charge of $0.7 million.  Accordingly, net income amounted
to $0.4 million in 1994.

      PRETAX INCOME totaled $1.2 million in 1996, $0.7 million in 1995 and $1.7
million in 1994.  The $0.5 million increase in 1996 over 1995 primarily
resulted from a decline in net realized investment losses, partially offset by 
                                      9
<PAGE>
increased general and administrative expenses.  The $1.0 million decline in
1995 over 1994 primarily resulted from net realized investment losses incurred,
partially offset by an increase in net investment income.


      NET INVESTMENT INCOME, which is the spread between the income earned on
invested assets and the interest paid on fixed annuities and other interest-
bearing liabilities, totaled $2.8 million in each of 1996 and 1995, compared
with $1.9 million in 1994.  These amounts represent 2.08% on average invested
assets (computed on a daily basis) of $134.5 million in 1996, 2.70% on average
invested assets of $103.2 million in 1995 and 2.24% on average invested assets
of $84.5 million in 1994.

      Net investment income also includes the effect of income earned on the
excess of average invested assets over average interest-bearing liabilities. 
This excess amounted to $13.8 million in 1996, $17.6 million in 1995 and $17.4
million in 1994.  The difference between the Company's yield on average
invested assets and the rate paid on average interest-bearing liabilities was
1.47% in 1996, 1.69% in 1995 and 1.13% in 1994.  

      Investment income and the related yield on average invested assets
totaled $10.0 million and 7.40% in 1996, compared with $7.8 million and 7.59%
in 1995 and $5.5 million and 6.54% in 1994.  Investment income increased
primarily as a result of higher levels of average invested assets, offset in
1996 by a slight decline in portfolio yields.  The higher yield in 1995
reflected the effects of both higher short-term interest rates and extension
fee income earned on certain bonds.

      Total interest expense aggregated $7.2 million in 1996, $5.0 million in
1995 and $3.6 million in 1994.  The average rate paid on fixed annuity
contracts was 5.93% in 1996, 5.90% in 1995 and 5.41% in 1994.  Fixed annuity
contracts averaged $120.6 million in 1996, $85.5 million in 1995 and $67.2
million in 1994.  The increase in the average rate paid on fixed annuities
during 1996 and 1995 from that paid during 1994 primarily resulted from
increased average crediting rates on the Company's new fixed annuity contracts
relative to those issued in 1994 to maintain a generally competitive market
rate in a higher interest rate environment.

      The growth in average invested assets since 1994 reflects sales of the
Company's fixed-rate products (including the fixed accounts of variable annuity
products).  Fixed annuity premiums totaled $45.4 million in 1996, $51.7 million
in 1995 and $7.8 million in 1994.  These premiums include premiums for the
fixed accounts of variable annuities totaling $41.2 million, $2.9 million and
$0.5 million,  respectively.  The increased premiums for the fixed accounts of
variable annuities in 1996 resulted primarily from greater inflows into the
one-year fixed account of the Company's Polaris variable annuity product.

      NET REALIZED INVESTMENT LOSSES totaled $0.5 million in 1996 and $1.3
million in 1995, compared to net realized investment gains of $0.4 million in
1994, and represent 0.40%, 1.31% and 0.53%, respectively, of average invested
assets.  Net realized investment losses include impairment writedowns of $0.1
million in 1996, which were applied to defaulted bonds.  Therefore, net losses
from sales of investments totaled $0.4 million in 1996.   There were no
impairment writedowns for 1995 and 1994.
                                     10
<PAGE>      
      Net losses from sales of investments in 1996 include $0.3 million of net
losses realized on $80.0 million of sales of bonds.  Net losses on sales of
investments in 1995 include $1.2 million of net losses realized on $46.3
million of sales of mortgage-backed securities ("MBSs").  Net gains on sales
of investments in 1994 were also related to sales of MBSs.  Sales of
investments are generally made to maximize total return.

      VARIABLE ANNUITY FEES are based on the market value of assets supporting
variable annuity contracts in separate accounts.  Such fees totaled $0.7
million in 1996 and $0.4 million in both 1995 and 1994.  The increase in
variable annuity fees in 1996 reflects the growth in average variable annuity
assets, principally due to the receipt of variable annuity premiums and
increased market values, partially offset by surrenders. Variable annuity
assets averaged $46.2 million during 1996, $27.8 million during 1995 and $26.1
million during 1994.  Variable annuity premiums, which exclude premiums
allocated to the fixed accounts of variable annuity products, totaled $28.6
million in 1996, $5.9 million in 1995 and $5.7 million in 1994.  The increase
in premiums in 1996 was due to the introduction of two new products during
March and December 1995.  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.

      SURRENDER CHARGES on fixed and variable annuities totaled $221,000 in
1996, $194,000 in 1995 and $367,000 in 1994.  Surrender charges generally are
assessed on annuity withdrawals at declining rates during the first five to
seven years of the contract.  Withdrawal payments, which include surrenders and
lump-sum annuity benefits, totaled $12.7 million in 1996, $17.7 million in 1995
and $12.9 million in 1994.  These payments represent 8.1%, 16.9% and 15.0%,
respectively, of average fixed and variable annuity reserves.  Withdrawals
include variable annuity payments from the separate accounts totaling $2.8
million in 1996, $3.6 million in 1995 and $2.4 million in 1994, and represent
6.2%, 12.9% and 9.3%, respectively, of average variable annuity liabilities. 
Variable annuity withdrawal rates declined in 1996 principally as a result of
significant growth in the variable annuity separate accounts, while the
increase in 1995 was primarily due to the maturing of an older block of
business.  Fixed annuity surrenders totaled $9.9 million in 1996, $14.1 million
in 1995 and $10.5 million in 1994.  Fixed annuity surrenders decreased in 1996
primarily due to unusually high surrenders in 1995, which resulted from a block
of policies coming off surrender charge restrictions.  Management anticipates
that withdrawal rates will stabilize for the foreseeable future at moderately
higher levels than the current rates.

      GENERAL AND ADMINISTRATIVE EXPENSES totaled $1.4 million in 1996,
compared with $1.1 million in 1995 and $1.0 million in 1994.  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 increased to $0.5 million in
1996 from $0.3 million in 1995. There was no amortization in 1994.  These
increases in amortization were primarily due to additional fixed and variable
annuity sales and the subsequent amortization of related deferred commissions
and other acquisition costs.

      ANNUAL COMMISSIONS represent renewal commissions paid quarterly in
arrears to maintain the persistency of certain of the Company's annuity
contracts.  Annual commissions totaled $19,000 in 1996, $33,000 in 1995 and 

                                     11
<PAGE>
$30,000 in 1994.  Based on current sales, the Company estimates that such
annual commissions will increase in future periods.  

      INCOME TAX EXPENSE totaled $0.4 million in 1996, $0.2 million in 1995 and
$0.7 million in 1994, representing effective tax rates of 38% in 1996, 26% in
1995 and 38% in 1994.  The lower tax rate in 1995 reflects a prior period state
income tax benefit. 

FINANCIAL CONDITION AND LIQUIDITY

      SHAREHOLDER'S EQUITY increased by $1.4 million to $23.2 million at
September 30, 1996 from $21.8 million at September 30, 1995, primarily as a
result of the $0.7 million of net income recorded and a $0.7 million reduction
of net unrealized losses on debt and equity securities available for sale
charged directly to shareholder's equity.

      TOTAL ASSETS increased by $73.7 million to $236.9 million at September
30, 1996 from $163.2 million at September 30, 1995, principally due to a $36.1
million increase in the separate accounts for variable annuities and a $32.0
million increase in invested assets.

      INVESTED ASSETS at year end totaled $153.2 million in 1996, compared with
$121.2 million in 1995.  This $32.0 million increase primarily resulted from
sales of the fixed accounts of variable annuities. 

      The Company manages all 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 and notes (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 no longer classifies a
portion of its Bond Portfolio as held for investment. 
      
      THE BOND PORTFOLIO had an aggregate amortized cost that exceeded its fair
value by $0.5 million at September 30, 1996, compared with $1.5 million at
September 30, 1995 (including net unrealized losses of $1.4 million on the
portion of the portfolio that was designated as available for sale at September
30, 1995).  The net decrease in unrealized losses on the Bond Portfolio since
September 30, 1995 principally reflects improvement in the fair value of
certain segments of the Bond Portfolio since September 30, 1995 despite the
higher relative prevailing interest rates at September 30, 1996. 

      All of the Bond Portfolio at September 30, 1996 was rated by Standard &
Poor's Corporation ("S&P"), Moody's Investors Service ("Moody's"), Duff and
Phelps Credit Rating Co. ("D&P"), Fitch Investor Service, Inc. ("Fitch") 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 September 30, 1996, approximately $137.0 million of
the Bond Portfolio (at amortized cost) was rated investment grade by one or
more of these agencies or by the Company or the NAIC, pursuant to applicable
NAIC guidelines, including $85.5 million of U.S. government/agency securities
and MBSs.
                                     12

<PAGE>
      At September 30, 1996, the Bond Portfolio included $9.9 million (fair
value, $10.4 million) of bonds not rated investment grade by S&P, Moody's, D&P,
Fitch or the NAIC.  Based on their September 30, 1996 amortized cost, these
non-investment-grade bonds accounted for 4.2% of the Company's total assets and
6.4% of invested assets.

      Non-investment-grade securities generally provide higher yields and
involve greater risks than investment-grade securities because their issuers
typically are more highly leveraged and more vulnerable to adverse economic
conditions than investment-grade issuers.  In addition, the trading market for
these securities is usually more limited than for investment-grade securities. 
The Company intends that the proportion of its portfolio in 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 September 30, 1996.

      The table on the following page summarizes the Company's rated bonds by
rating classification as of September 30, 1996.




























                                     13




<PAGE>
<TABLE>
                                          RATED BONDS BY RATING CLASSIFICATION
                                                 (dollars in thousands)

<CAPTION>
                                                   Issues not rated by S&P/Moody's/
         Issues Rated by S&P/Moody's/D&P/Fitch          D&P/Fitch, By NAIC Category                                Total
----------------------------------------------  -----------------------------------  -----------------------------------
  S&P/(Moody's)/                      Estimated        NAIC                 Estimated               Percent of   Estimated
  [D&P]/{Fitch}         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)
  [AAA to A-]
  {AAA to A-}          $  113,246   $  112,839       1     $    3,404   $    3,404   $  116,650     75.94%   $  116,243
BBB+ to BBB-
  (Baa1 to Baa3)
  [BBB+ to BBB-]
  {BBB+ to BBB-}           17,176       16,572       2          3,187        3,178       20,363     13.26        19,750
BB+ to BB-
  (Ba1 to Ba3)
  [BB+ to BB-]
  {BB+ to BB-}              1,810        1,974       3              0            0        1,810      1.18         1,974
B+ to B- 
  (B1 to B3)
  [B+ to B-]
  {B+ to B-}                6,817        7,108       4          1,088        1,176        7,905      5.15         8,284
CCC+ to C
  (Caa to C)
  [CCC]
  {CCC+ to C-}                180          150       5              0            0          180      0.12           150
C1 to D
  [DD]
  {D}                           0            0       6              0            0            0      0.00             0
                       ----------   ----------             ----------   ----------   ----------              ----------
Total rated issues     $  139,229   $  138,643             $    7,679   $    7,758   $  146,908              $  146,401
                       ==========   ==========             ==========   ==========   ==========              ==========


Footnotes appear on the following page.
</TABLE>
                                                           14










<PAGE>
      Footnotes to the table of Rated Bonds by Rating Classification
      --------------------------------------------------------------

(1)   S&P and Fitch rate debt securities in rating categories ranging from AAA
      (the highest) to D (in payment default).  A plus (+) or minus (-)
      indicates the debt's relative standing within the rating category.  A
      security rated BBB- or higher is considered investment grade.  Moody's
      rates debt securities in rating categories ranging from Aaa (the highest)
      to C (extremely poor prospects of ever attaining any real investment
      standing).  The number 1, 2 or 3 (with 1 the highest and 3 the lowest)
      indicates the debt's relative standing within the rating category.  A
      security rated Baa3 or higher is considered investment grade.  D&P rates
      debt securities in rating categories ranging from AAA (the highest) to
      DD (in payment default).  A plus (+) or minus (-) indicates the debt's
      relative standing within the rating category.  A security rated BBB- or
      higher is considered investment grade.  Issues are categorized based on
      the highest of the S&P, Moody's, D&P 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/D&P/Fitch 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 pursuant to applicable NAIC
      rating guidelines.

(3)   At amortized cost.







                                     15



<PAGE>
      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 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-rate securities.  The
Company's fixed-rate products incorporate surrender charges or other
limitations on when contracts can be surrendered for cash to encourage
persistency.   Approximately 96% of the Company's fixed annuity reserves had
surrender penalties or other restrictions at September 30, 1996.

      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 September 30, 1996, the weighted
average life of the Company's investments was approximately 4.3 years and the
duration was approximately 2.3.  
      
      The Company also seeks to provide liquidity by using reverse repurchase
agreements ("Reverse Repos"), and by investing in MBSs.  It also seeks to
enhance its spread income by using Reverse Repos.  Reverse Repos involve a sale
of securities and an agreement to repurchase the same securities at a later
date at an agreed upon price and are generally over-collateralized.  MBSs are
generally investment-grade securities collateralized by large pools of mortgage
loans.  MBSs generally pay principal and interest monthly.  The amount of
principal and interest payments may fluctuate as a result of prepayments of the
underlying mortgage loans.

      There are risks associated with some of the techniques the Company uses
to provide liquidity, enhance its spread income and match its assets and
liabilities.  The primary risk associated with Reverse Repos is counterparty
risk.  The Company believes, however, that the counterparties to its Reverse
Repos are financially responsible and that the counterparty risk associated
with those transactions is minimal.  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 

                                     16
<PAGE>
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.  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. 

      DEFAULTED INVESTMENTS, comprising all investments (at amortized cost)
that are in default as to the payment of principal or interest, totaled $0.2
million (fair value, $0.2 million) of bonds and notes at September 30, 1996 and
constituted 0.1% of total invested assets at amortized cost.  At September 30,
1995, the defaulted investments totaled $0.7 million (fair value, $0.5
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
the Company's existing portfolio of cash and short-term investments, Reverse
Repo capacity on invested assets and, if required, proceeds from invested asset
sales.  At September 30, 1996, approximately $81.0 million of the Company's
Bond Portfolio had an aggregate unrealized gain of $1.3 million, while
approximately $65.9 million of the Bond Portfolio had an aggregate unrealized
loss of $1.8 million.  In addition, the Company's investment portfolio
currently provides approximately $1.7 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 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.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The Company's financial statements begin on page F-3.  Reference is made
to the Index to Financial Statements on page F-1 herein.

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

      None.













                                     17







































<PAGE>
<TABLE>
                                  PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS

      The directors and principal officers of First SunAmerica Life Insurance
Company (the "Company") as of December 20, 1996 are listed below, together with
information as to their ages, dates of election and principal business
occupation during the last five years (if other than their present business
occupation).
<CAPTION>

                                                            Other Positions and
                                                Year          Other Business
                           Present              Assumed     Experience Within
    Name              Age  Position(s)          Position(s)    Last Five Years**    From-To
-------------         ---  -----------          ----------- -----------------       -------
<S>                   <C>  <C>                  <C>         <C>                     <C>
Eli Broad*            63   Chairman, Chief      1994        Cofounded SunAmerica
                           Executive Officer                Inc. ("SAI") in 1957
                           and President of 
                           the Company 
                           Chairman, Chief      1986
                           Executive Officer    
                           and President of 
                           SAI

Joseph M. Tumbler*    48   Executive Vice       1996        President and Chief     1989-1995
                           President of the                 Executive Officer,            
                           Company                          Providian Capital
                           Vice Chairman of                 Management
                           SAI                              
                                                            

Jay S. Wintrob*       39   Executive Vice       1991        (Joined SAI in 1987)
                           President of the                 
                           Company 
                           Vice Chairman of     1995
                           SAI

James R. Belardi*     39   Senior Vice          1992        Vice President and      1989-1992
                           President of the                 Treasurer (Joined SAI
                           Company                          in 1986)
                           Executive Vice       1995
                           President of SAI

Jana Waring Greer*    44   Senior Vice          1991        (Joined SAI in 1974)
                           President of the                 
                           Company and SAI

Peter McMillan, III*  39   Executive Vice       1994        Senior Vice President,  1989-1994
                           President and                    SunAmerica Investments,
                           Chief Investment                 Inc.
                           Officer of 
                           SunAmerica
                           Investments, Inc. 
                           
--------------------------------------
*   Also serves as a director
**  Unless otherwise indicated, officers and positions are with SunAmerica Inc.           

                                              18
<PAGE>
<CAPTION>
                           
                                                           Other Positions and
                                               Year        Other Business
                           Present             Assumed     Experience Within
    Name              Age  Position(s)         Position(s) Last Five Years**        From-To
-------------         ---  -----------         ----------- -----------------        -------
<S>                   <C>  <C>                 <C>         <C>                      <C>
Scott L. Robinson*    50   Senior Vice         1991        (Joined SAI in 1978)
                           President and                   
                           Treasurer of                       
                           the Company 
                           Senior Vice
                           President and
                           Controller of SAI 

James W. Rowan*       34   Senior Vice         1996        Vice President           1993-1995
                           President                       Assistant to the              1992
                           of the Company                  Chairman                 
                           and SAI                         Senior Vice President,   1986-1992
                                                           Security Pacific Corp.
                                                           
Lorin M. Fife*        43   Senior Vice         1994        Vice President and       1994-1995
                           President,                      General Counsel-
                           General Counsel                 Regulatory Affairs 
                           and Assistant                   of SAI
                           Secretary of the                Vice President and       1989-1994
                           Company                         Associate General
                           Senior Vice         1995        Counsel of SAI
                           President and                   (Joined SAI in 1989)
                           General Counsel-                
                           Regulatory Affairs
                           of SAI

Susan L. Harris*      39   Senior Vice         1994        Vice President,          1994-1995
                           President and                   General Counsel-
                           Secretary of the                Corporate Affairs 
                           Company                         and Secretary of SAI
                           Senior Vice         1995        Vice President,          1989-1994
                           President and                   Associate General
                           General Counsel-                Counsel and Secretary
                           Corporate Affairs               of SAI (Joined SAI in 
                           and Secretary of                1985)
                           SAI                             

N. Scott Gillis       43   Senior Vice         1994        Vice President and       1989-1994
                           President and                   Controller, SunAmerica
                           Controller of the               Life Companies
                           Company                         (Joined SAI in 1985)     
                                                                                            
Edwin R. Reoliquio    39   Senior Vice         1995        Vice President and       1990-1995
                           President and                   Actuary, SunAmerica 
                           Chief Actuary                   Life Companies
                           of the Company

--------------------------------------
*   Also serves as a director
**  Unless otherwise indicated, officers and positions are with SunAmerica Inc.     

                                              19


















































<PAGE>
<CAPTION>
                                                           Other Positions and
                                             Year            Other Business
                           Present           Assumed       Experience Within
    Name              Age  Position(s)       Position(s)   Last Five Years**        From-To
-------------         ---  -----------       -----------   -----------------        -------
<S>                   <C>  <C>               <C>           <C>                      <C>
Victor E. Akin        32   Senior Vice       1996          Vice President,          1995-1996
                           President of                    SunAmerica Life
                           the Company                     Companies (SLC) 
                                                           Director, SLC            1994-1995
                                                           Manager, SLC             1993-1994
                                                           Actuary, Milliman        1992-1993
                                                           and Robertson
                                                           Consultant, Chalke       1991-1992
                                                           Inc.
                                                           


David W. Ferguson     43   Director          1987          Partner, Davis Polk      1980 to
                                                           & Wardwell               present

Thomas A. Harnett     72   Director          1987          Partner, Lane &          1989 to
                                                           Mitterdorf, LLP          present

Margery K. Neale      37   Director          1996          Partner, Shereff,        1990 to
                                                           Friedman,    Hoffman     present
                                                           & Goodman, LLP

Lester Pollack        63   Director          1987          Chief Executive          1986 to
                                                           Officer, Centre          present
                                                           Partners, L.P.
                                                           General Partner,         1986 to
                                                           Lazard Freres & Co.      present
                                                           Senior Managing          1988 to
                                                           Director, Corporate      present
                                                           Partners, L.P.

Richard D. Rohr       70   Director          1987          Partner, Bodman,         1958 to
                                                           Longley & Dahling        present



--------------------------------------
*   Also serves as a director
**  Unless otherwise indicated, officers and positions are with SunAmerica Inc.     
</TABLE>
                                              20










<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

      All of the executive officers of the Company also serve as employees of
SunAmerica Inc. or its affiliates and receive no compensation directly from the
Company.  Some of the officers also serve as officers of other companies
affiliated with the Company.  Allocations have been made as to each
individual's time devoted to his or her duties as an executive officer of the
Company.

      The following table shows the cash compensation paid or earned, based on
these allocations, to the chief executive officer and top four executive
officers of the Company whose allocated compensation exceeds $100,000 and to
all executive officers of the Company as a group for services rendered in all
capacities in the Company during 1996:

      Name of Individual or             Capacities In Which      Allocated Cash
            Number in Group                          Served        Compensation
      ---------------------       -------------------------      --------------
      Eli Broad                   Chairman, Chief Executive             $10,380
                                   Officer and President        
      Joseph M. Tumbler           Executive Vice President                6,488
      Jay S. Wintrob              Executive Vice President                6,488
      James R. Belardi            Senior Vice President                   2,955
      Jana Waring Greer           Senior Vice President                   7,342

      All Executive Officers as
        a Group (12)                                                    $49,731
                                                                      =========

      Directors of the Company who are also employees of SunAmerica Inc. or its
affiliates receive no compensation in addition to their compensation as
employees of SunAmerica Inc. or its affiliates.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      No shares of the Company are owned by any executive officer or director. 
The Company is an indirect wholly-owned subsidiary of SunAmerica Inc.  Except
for Mr. Broad, the percentage of shares of SunAmerica Inc. beneficially owned
by any director does not exceed one percent of the class outstanding.  At
November 30, 1996, Mr. Broad was the beneficial owner of 5,930,156 shares of
Common Stock (approximately 5.3% of the class outstanding) and 9,160,294 shares
of Class B Common Stock (approximately 84.4% of the class outstanding).  Of the
Common Stock, 715,872 shares represent restricted shares granted under the
Company's employee stock plans as to which Mr. Broad has no investment power;
and 3,605,700 shares represent employee stock options held by Mr. Broad which
are or will become exercisable on or before February 28, 1997 and as to which
he has no voting or investment power.  Of the Class B Stock, 8,456,140 shares
are held directly by Mr. Broad and 704,154 shares are registered in the name
of a corporation as to which Mr. Broad exercises sole voting and dispositive
powers.  At November 30, 1996, all directors and officers as a group
beneficially owned 9,197,722 shares of Common Stock (approximately 8.1% of the
class outstanding) and 9,160,294 shares of Class B Common Stock (approximately
84.4% of the class outstanding).

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
      None.
                                     21
<PAGE>


                                   PART IV
Item 14.    EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND
            REPORTS ON FORM 8-K

Financial Statements and Financial Statement Schedules

      Reference is made to the index set forth on page F-1 of this report.


Exhibits

Exhibit
      No                                   Description
-------
  3(a)      Declaration of Intent and Charter, dated November, 1978, is
            incorporated herein by reference to Exhibit 3(a) of the Company's
            annual report on Form 10-K, dated December 8, 1995.
  3(b)      Certificate of Amendment of Charter, dated February 1, 1988, is
            incorporated herein by reference to Exhibit 3(a) of the Company's
            annual report on Form 10-K, dated December 8, 1995.
  3(c)      Certificate of Amendment of Charter, dated January 26, 1989, is
            incorporated herein by reference to Exhibit 3(a) of the Company's
            annual report on Form 10-K, dated December 8, 1995.
  3(d)      Certificate of Amendment of Charter, dated March 1, 1989, is
            incorporated herein by reference to Exhibit 3(a) of the Company's
            annual report on Form 10-K, dated December 8, 1995.
  3(e)      Certificate of Amendment of Charter, dated January 1, 1996, is
            incorporated herein by reference to Exhibit 3(a) of the Company's
            quarterly report on Form 10-Q for the quarter ended March 31, 1996,
            dated May 14, 1996.
  3(f)      Bylaws, dated December 20, 1978, are incorporated herein by
            reference to Exhibit 3(e) of the Company's annual report on Form
            10-K, dated December 8, 1995.
  3(g)      Bylaws, as amended January 1, 1996, are incorporated herein by
            reference to Exhibit 3(b) of the Company's quarterly report on Form
            10-Q for the quarter ended March 31, 1996, dated May 14, 1996.
 27         Financial Data Schedule
      

Reports on Form 8-K

No current report on Form 8-K was filed during the three months ended September
30, 1996.











                                     22


<PAGE>
<TABLE>
                                 SIGNATURES

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

                              FIRST SUNAMERICA LIFE INSURANCE COMPANY

                              By/s/  SCOTT L. ROBINSON
                              --------------------------------------    
                              Scott L. Robinson
                              Senior Vice President, Treasurer and Director
December 20, 1996

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

            Signature               Title                             Date
            ---------               -----                             ----
<S>         <C>                     <C>                               <C>
/s/   ELI BROAD                     Chairman, Chief Executive         December 20, 1996
------------------------------      Officer and President             -----------------
      Eli Broad                     (Principal Executive Officer)

/s/   SCOTT L. ROBINSON             Senior Vice President,            December 20 , 1996
------------------------------      Treasurer and Director            -----------------
      Scott L. Robinson             (Principal Financial Officer)

/s/   N. SCOTT GILLIS               Senior Vice President and         December 20, 1996
------------------------------      Controller (Principal             -----------------
      N. Scott Gillis               Accounting Officer)

/s/   JOSEPH M. TUMBLER             Executive Vice President          December 20, 1996
------------------------------      and Director                      -----------------
      Joseph M. Tumbler

/s/   JAY S. WINTROB                Executive Vice President          December 20, 1996
------------------------------      and Director                      -----------------
      Jay S. Wintrob

/s/   JAMES R. BELARDI              Senior Vice President             December 20, 1996
------------------------------      and Director                      -----------------
      James R. Belardi

/s/   LORIN M. FIFE                 Senior Vice President,            December 20, 1996
------------------------------      General Counsel, Assistant        -----------------
      Lorin M. Fife                 Secretary and Director

/s/   JANA W. GREER                 Senior Vice President             December 20, 1996
------------------------------      and Director                      -----------------
      Jana W. Greer

/s/   SUSAN L. HARRIS               Senior Vice President,            December 20, 1996
------------------------------      Secretary and Director            -----------------
      Susan L. Harris

/s/   JAMES W. ROWAN                Senior Vice President             December 20, 1996
------------------------------      and director                      -----------------
      James W. Rowan



























































<PAGE>
<CAPTION>
            Signature               Title                          Date
            ---------               -----                          ----
<S>         <C>                     <C>                            <C>
/s/   EDWIN R. REOLIQUIO            Senior Vice President          December 20, 1996
------------------------------      and Chief Actuary              -----------------
      Edwin R. Reoliquio

/s/   PETER McMILLAN                Director                       December 20, 1996
------------------------------                                     -----------------
      Peter McMillan
</TABLE>

















































<PAGE>
                   FIRST SUNAMERICA LIFE INSURANCE COMPANY

                        INDEX TO FINANCIAL STATEMENTS


                                                                Page(s)
                                                                -------

Report of Independent Accountants                                 F-2   

Balance Sheet as of September 30, 1996 and 1995                   F-3 

Income Statement for the years ended
      September 30, 1996, 1995 and 1994                           F-4    

Statement of Cash Flows for the years ended
      September 30, 1996, 1995 and 1994                           F-5 through
                                                                  F-6

Notes to Financial Statements                                     F-7 through
                                                                  F-22





































                                     F-1


<PAGE>







REPORT OF INDEPENDENT ACCOUNTANTS




To the Board of Directors and Shareholder of
First SunAmerica Life Insurance Company


In our opinion, the accompanying balance sheet and the related income statement
and statement of cash flows present fairly, in all material respects, the
financial position of First SunAmerica Life Insurance Company at September 30,
1996 and 1995, and the results of its operations and its cash flows for each of
the three years in the period ended September 30, 1996, in conformity with
generally accepted accounting principles.  These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits.  We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for the opinion expressed above.

As discussed in Note 2, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," in fiscal 1994.


Price Waterhouse LLP
Los Angeles, California
November 8, 1996















                                      F-2



<PAGE>
<TABLE>
                          FIRST SUNAMERICA LIFE INSURANCE COMPANY

                                       BALANCE SHEET
<CAPTION>
                                                                          September 30,
                                                         ------------------------------
                                                                  1996             1995
                                                        --------------   --------------
<S>                                                    <C>              <C>     
ASSETS

Investments:
  Cash and short-term investments                        $   6,707,000    $   6,382,000
  Bonds and notes:
   Available for sale, at fair value 
      (amortized cost:  1996, $146,908,000;
      1995, $109,217,000)                                  146,401,000      107,771,000
   Held for investment, at amortized cost
      (fair value:  1995, $2,289,000)                              ---        2,297,000
  Mortgage loans                                                   ---        4,733,000
  Common stocks, at fair value 
   (cost:  1996, $0; 1995, $112,000)                           129,000           35,000
                                                         -------------    -------------
  Total investments                                        153,237,000      121,218,000
                                                                      
Variable annuity assets                                     68,901,000       32,760,000
Receivable from brokers for sales of securities                    ---          815,000
Accrued investment income                                    1,462,000          928,000
Deferred acquisition costs                                  12,127,000        6,491,000
Income taxes currently receivable                              299,000              ---
Other assets                                                   842,000          945,000
                                                         -------------    -------------
TOTAL ASSETS                                             $ 236,868,000    $ 163,157,000
                                                         =============    =============

LIABILITIES AND SHAREHOLDER'S EQUITY

Reserves, payables and accrued liabilities:
  Reserves for fixed annuity contracts                   $ 140,613,000    $ 106,332,000
  Payable to brokers for purchases of securities             1,939,000              ---
  Income taxes currently payable                                   ---           23,000
  Other liabilities                                            845,000        1,980,000
                                                         -------------    -------------
  Total reserves, payables and
    accrued liabilities                                    143,397,000      108,335,000
                                                         -------------    -------------
Variable annuity liabilities                                68,901,000       32,760,000
                                                         -------------    -------------
Deferred income taxes                                        1,350,000          244,000
                                                         -------------    -------------
Shareholder's equity:
  Common Stock                                               3,000,000        3,000,000
  Additional paid-in capital                                14,428,000       14,428,000
  Retained earnings                                          5,973,000        5,250,000   
  Net unrealized losses on debt and
    equity securities available for sale                      (181,000)        (860,000)
                                                         -------------    -------------
  Total shareholder's equity                                23,220,000       21,818,000
                                                         -------------    -------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY               $ 236,868,000    $ 163,157,000
                                                         =============    =============
</TABLE>
                                  See accompanying notes



                                            F-3



















































<PAGE>
<TABLE>
                        FIRST SUNAMERICA LIFE INSURANCE COMPANY

                                   INCOME STATEMENT

<CAPTION>
                                                          Years ended September 30,
                                  -------------------------------------------------
                                           1996              1995              1994
                                  -------------      ------------      ------------
<S>                              <C>                <C>               <C>          
Investment income                 $   9,957,000      $  7,834,000      $  5,527,000
                                  -------------      ------------      ------------
Interest expense on:
  Fixed annuity contracts            (7,155,000)       (5,042,000)       (3,635,000)
  Senior indebtedness                    (4,000)           (8,000)              ---
                                  -------------      ------------      ------------
Total interest expense               (7,159,000)       (5,050,000)       (3,635,000)
                                  -------------      ------------      ------------
NET INVESTMENT INCOME                 2,798,000         2,784,000         1,892,000
                                  -------------      ------------      ------------
NET REALIZED INVESTMENT
  GAINS (LOSSES)                       (539,000)       (1,348,000)          445,000
                                  -------------      ------------      ------------
VARIABLE ANNUITY FEE INCOME             690,000           412,000           382,000
                                  -------------      ------------      ------------
Other income and expenses:
  Surrender charges                     221,000           194,000           367,000 
  General and administrative
    expenses                         (1,404,000)       (1,088,000)       (1,040,000)
  Amortization of deferred                     
    acquisition costs                  (500,000)         (300,000)              ---
  Annual commissions                    (19,000)          (33,000)          (30,000)
    Other, net                          (76,000)           84,000          (279,000)
                                   ------------       -----------      ------------
TOTAL OTHER INCOME AND EXPENSES      (1,778,000)       (1,143,000)         (982,000)
                                   ------------       -----------      ------------
PRETAX INCOME                         1,171,000           705,000         1,737,000
Income tax expense                     (448,000)         (182,000)         (655,000)
                                   ------------       -----------      ------------
INCOME BEFORE CUMULATIVE EFFECT
  OF CHANGE IN ACCOUNTING FOR
  INCOME TAXES                          723,000           523,000         1,082,000

Cumulative effect of change in
  accounting for income taxes               ---               ---          (725,000)
                                   ------------      ------------      ------------
NET INCOME                         $    723,000      $    523,000      $    357,000
                                   ============      ============      ============

</TABLE>



                                See accompanying notes

                                          F-4


<PAGE>
<TABLE>
                        FIRST SUNAMERICA LIFE INSURANCE COMPANY

                                STATEMENT OF CASH FLOWS
<CAPTION>
                                                          Years ended September 30,
                                           ----------------------------------------
                                                   1996          1995          1994
                                           ------------  ------------  ------------
<S>                                       <C>           <C>           <C>          
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                 $    723,000  $    523,000  $    357,000
Adjustments to reconcile net income 
  to net cash provided by operating 
  activities:
    Interest credited to fixed annuity 
      contracts                               7,155,000     5,042,000     3,635,000
    Net realized investment (gains) 
      losses                                    539,000     1,348,000      (445,000)
    Accretion of net discounts on 
      investments                              (343,000)     (394,000)      (24,000)
    Amortization of goodwill                     58,000        58,000        58,000
    Provision for deferred income taxes         740,000       333,000     1,388,000
    Cumulative effect of change in 
      accounting for income taxes                   ---           ---       725,000
Change in:
  Deferred acquisition costs                 (5,736,000)   (2,740,000)   (1,011,000)
  Income taxes receivable/payable              (322,000)     (418,000)     (555,000)
Other, net                                     (254,000)     (323,000)     (115,000)
                                           ------------  ------------  ------------
NET CASH PROVIDED BY OPERATING 
ACTIVITIES                                    2,560,000     3,429,000     4,013,000  
                                           ------------  ------------  ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of: 
    Bonds and notes                        (124,681,000) (125,130,000)  (68,582,000)
    Common stock                                    ---      (112,000)          ---
  Sales of bonds and notes                   80,440,000    55,553,000    50,708,000
  Redemptions and maturities of: 
    Bonds and notes                          11,514,000    21,369,000     5,791,000
    Mortgage loans                            4,736,000        35,000        31,000
                                           ------------  ------------  ------------
Net cash used by investing activities       (27,991,000)  (48,285,000)  (12,052,000) 
                                           ------------  ------------  ------------
</TABLE>

                                          F-5












<PAGE>
<TABLE>
                        FIRST SUNAMERICA LIFE INSURANCE COMPANY

                          STATEMENT OF CASH FLOWS (Continued)
<CAPTION>
                                                           Years ended September 30,
                                              --------------------------------------
                                                      1996        1995          1994
                                              ------------ -----------  ------------
<S>                                          <C>          <C>          <C>          
CASH FLOWS FROM FINANCING ACTIVITIES:
  Premium receipts on fixed annuity 
    contracts                                 $ 45,417,000 $51,681,000  $  7,840,000
  Net exchanges to (from) the fixed
    accounts of variable annuity contracts      (4,719,000)    (87,000)      572,000
  Withdrawal payments on fixed annuity 
    contracts                                   (9,850,000)(14,131,000)  (10,504,000)
  Claims and annuity payments on fixed 
    annuity contracts                           (3,752,000) (2,974,000)   (3,194,000)
  Net receipts from (repayments of)
    other short-term financings                 (1,340,000)  1,964,000      (145,000)
                                              ------------ -----------  ------------
NET CASH PROVIDED (USED) BY FINANCING 
  ACTIVITIES                                    25,756,000  36,453,000    (5,431,000) 
                                              ------------ -----------  ------------
NET INCREASE (DECREASE) IN CASH AND
  SHORT-TERM INVESTMENTS                           325,000  (8,403,000)  (13,470,000)

CASH AND SHORT-TERM INVESTMENTS AT 
  BEGINNING OF PERIOD                            6,382,000  14,785,000    28,255,000  
                                              ------------ -----------  ------------
CASH AND SHORT-TERM INVESTMENTS AT 
  END OF PERIOD                               $  6,707,000 $ 6,382,000  $ 14,785,000
                                              ============ ===========  ============

Supplemental cash flow information:

  Interest paid on indebtedness                $     4,000 $     8,000  $        ---
                                              ============ ===========  ============
  Net income taxes paid (recovered)            $    30,000 $   254,000  $   (178,000)
                                              ============ ===========  ============
</TABLE>





                                See accompanying notes


                                          F-6




<PAGE>
                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                         NOTES TO FINANCIAL STATEMENTS

1.    NATURE OF OPERATIONS

      First SunAmerica Life Insurance Company (The "Company") is a New York -
      domiciled life insurance company engaged primarily in the business of
      writing fixed and variable annuity contracts in the state of New York.

      The operations of the Company are influenced by many factors, including
      general economic conditions, monetary and fiscal policies of the federal
      government, and policies of state and other regulatory authorities.  The
      level of sales of the Company's financial products is influenced by many
      factors, including general market rates of interest; strengths, weaknesses
      and volatility of equity markets; and terms and conditions of competing
      financial products.  The Company is exposed to the typical risks normally
      associated with a portfolio of fixed-income securities, namely interest
      rate, option, liquidity and credit risks.  The Company controls its
      exposure to these risks by, among other things, closely monitoring and
      matching the duration of its assets and liabilities, monitoring and
      limiting prepayment and extension risk in its portfolio, maintaining a
      large percentage of its portfolio in highly liquid securities, and
      engaging in a disciplined process of underwriting, reviewing and
      monitoring credit risk.  The Company also is exposed to market risk, as
      market volatility may result in reduced fee income in the case of assets
      held in separate accounts.  

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      BASIS OF PRESENTATION:  The accompanying financial statements have been
      prepared in accordance with generally accepted accounting principles and
      include the accounts of the Company, an indirect wholly owned subsidiary
      of SunAmerica Inc. (the "Parent").  Certain 1995 and 1994 amounts have
      been reclassified to conform with the 1996 presentation.

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires the use of estimates and
      assumptions that affect the amounts reported in the financial statements
      and the accompanying notes.  Actual results could differ from those
      estimates.

      RECENTLY ISSUED ACCOUNTING STANDARDS:  Effective October 1, 1993, the
      Company adopted the provisions of Statement of Financial Accounting
      Standards No. 109, "Accounting for Income Taxes."  Accordingly, the
      cumulative effect of this change in accounting for income taxes was
      recorded on October 1, 1993 to increase the liability for Deferred Income
      Taxes by $725,000.



                                      F-7













<PAGE>
                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      INVESTMENTS:  Cash and short-term investments primarily include cash,
      commercial paper, money market investments, repurchase agreements and
      short-term bank participations.  All such investments are carried at cost
      plus accrued interest, which approximates fair value, have maturities of
      three months or less and are considered cash equivalents for purposes of
      reporting cash flows.  

      Bonds and notes available for sale and common stocks are carried at
      aggregate fair value and changes in unrealized gains or losses, net of
      tax, are credited or charged directly to shareholder's equity.  Bonds and
      notes held for investment (the "Held for Investment Portfolio") are
      carried at amortized cost.  On December 1, 1995, the Company reassessed
      the appropriateness of classifying a portion of its portfolio of bonds and
      notes as held for investment.  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 $2,296,000
      and its fair value was $2,352,000.  Upon reclassification, the resulting
      net unrealized gain of $56,000 was credited to Net Unrealized Losses on
      Debt and Equity Securities Available for Sale in the shareholder's equity
      section of the balance sheet.

      Bonds and notes are reduced to estimated net realizable value when
      necessary for declines in value considered to be other than temporary. 
      Estimates of net realizable value are subjective and actual realization
      will be dependent upon future events.

      Mortgage loans are carried at amortized unpaid balances, net of provisions
      for estimated losses.  

      Realized gains and losses on the sale of investments are recognized in
      operations at the date of sale and are determined using the specific cost
      identification method.  Premiums and discounts on investments are
      amortized to investment income using the interest method over the
      contractual lives of the investments.

                                      F-8



<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      DEFERRED ACQUISITION COSTS:  Policy acquisition costs are deferred and
      amortized, with interest, over the estimated lives of the contracts in
      relation to the present value of estimated gross profits, which are
      composed of net interest income, net realized investment gains and losses,
      variable annuity fees, surrender charges and direct administrative
      expenses.  Deferred acquisition costs consist of commissions and other
      costs that vary with, and are primarily related to, the production or
      acquisition of new business.

      As debt and equity securities available for sale are carried at aggregate
      fair value, an adjustment is made to deferred acquisition costs equal to
      the change in amortization that would have been recorded if such
      securities had been sold at their stated aggregate fair value and the
      proceeds reinvested at current yields.  The change in this adjustment, net
      of tax, is included with the change in net unrealized gains or losses on
      debt and equity securities available for sale that is credited or charged
      directly to shareholder's equity.  Deferred Acquisition Costs have been
      increased by $100,000 at September 30, 1996, and by $200,000 at September
      30, 1995 for this adjustment.

      VARIABLE ANNUITY ASSETS AND LIABILITIES:  The assets and liabilities 
      resulting from the receipt of variable annuity premiums are segregated in
      separate accounts.  The Company receives administrative fees for managing
      the funds and other fees for assuming mortality and certain expense
      risks.  Such fees are included in Variable Annuity Fee Income in the
      income statement.

      GOODWILL:  Goodwill, amounting to $821,000 at September 30, 1996, is
      amortized by using the straight-line method over a period of 25 years and
      is included in Other Assets in the balance sheet.

      CONTRACTHOLDER RESERVES:  Contractholder reserves for fixed annuity
      contracts are accounted for as investment-type contracts in accordance
      with Statement of Financial Accounting Standards No. 97, "Accounting and
      Reporting by Insurance Enterprises for Certain Long-Duration Contracts and
      for Realized Gains and Losses from the Sale of Investments," and are
      recorded at accumulated value (premiums received, plus accrued interest,
      less withdrawals and assessed fees).

      VARIABLE ANNUITY FEE INCOME:  Variable annuity fees are recorded in income
      as earned. 
      
                                      F-9

<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      INCOME TAXES:  The Company is included in the consolidated federal income
      tax return of the Parent and files as a "life insurance company" under the
      provisions of the Internal Revenue Code of 1986.  Income taxes have been
      calculated as if the Company filed a separate return.  Deferred income tax
      assets and liabilities are recognized based on the difference between
      financial statement carrying amounts and income tax bases of assets and
      liabilities using enacted income tax rates and laws.

















                                     F-10



<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


3.    INVESTMENTS

      The amortized cost and estimated fair value of bonds and notes available
      for sale and held for investment by major category follow:

                                                                   Estimated
                                                  Amortized             fair
                                                       cost            value
                                              -------------    -------------

      AT SEPTEMBER 30, 1996:

      AVAILABLE FOR SALE:
        Securities of the United States
            Government                        $   9,631,000    $   9,562,000
        Mortgage-backed securities               75,846,000       75,607,000
        Securities of public utilities            1,032,000          971,000
        Corporate bonds and notes                41,545,000       41,722,000
        Other debt securities                    18,854,000       18,539,000
                                              -------------    -------------
        Total available for sale              $ 146,908,000    $ 146,401,000
                                              =============    =============

      AT SEPTEMBER 30, 1995:

      AVAILABLE FOR SALE:
        Securities of the United States
            Government                        $  37,693,000    $  37,759,000
        Mortgage-backed securities               60,558,000       60,367,000
        Corporate bonds and notes                10,966,000        9,645,000
                                              -------------    -------------
        Total available for sale              $ 109,217,000    $ 107,771,000
                                              =============    =============
      HELD FOR INVESTMENT:
        Securities of the United States
            Government                        $   2,297,000    $   2,289,000
                                              =============    =============

                                     F-11

<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


3.    INVESTMENTS (continued)

      The amortized cost and estimated fair value of bonds and notes available
      for sale by contractual maturity, as of September 30, 1996, follow:

                                                                   Estimated
                                                   Amortized            fair
                                                        cost           value
                                               -------------   -------------
      AVAILABLE FOR SALE:
        Due in one year or less                $         ---   $         ---
        Due after one year through five years      5,660,000       5,687,000
        Due after five years through ten years    35,833,000      35,841,000
        Due after ten years                       29,569,000      29,266,000
        Mortgage-backed securities                75,846,000      75,607,000
                                               -------------   -------------
        Total available for sale               $ 146,908,000   $ 146,401,000
                                               =============   =============


      
      Actual maturities of bonds and notes will differ from those shown above
      due to prepayments and redemptions.














                                     F-12


<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


3.    INVESTMENTS (continued)

      Gross unrealized gains and losses on bonds and notes available for sale
      and held for investment by major category follow:

                                                       Gross           Gross
                                                  unrealized      unrealized
                                                       gains          losses
                                                 -----------    ------------
      AT SEPTEMBER 30, 1996:

      AVAILABLE FOR SALE:
        Securities of the United States 
          Government                             $    55,000    $   (124,000)
        Mortgage-backed securities                   515,000        (754,000)
        Securities of public utilities                   ---         (61,000)
        Corporate bonds and notes                    749,000        (572,000)
        Other debt securities                          3,000        (318,000)
                                                 -----------    ------------
        Total available for sale                 $ 1,322,000    $ (1,829,000)
                                                 ===========    ============

      AT SEPTEMBER 30, 1995:

      AVAILABLE FOR SALE:
        Securities of the United States 
          Government                             $   263,000    $   (197,000)
        Mortgage-backed securities                   257,000        (448,000)
        Corporate bonds and notes                    102,000      (1,423,000)
                                                 -----------    ------------
        Total available for sale                 $   622,000    $ (2,068,000)
                                                 ===========    ============
      HELD FOR INVESTMENT:
        Securities of the United States 
          Government                             $    22,000    $    (30,000)
                                                 ===========    ============
      
      At September 30, 1996, gross unrealized gains on equity securities
      aggregated $129,000 and there were no unrealized losses.  At September 30,
      1995, gross unrealized gains aggregated $35,000 and gross unrealized
      losses on equity securities aggregated $112,000.


                                     F-13


<PAGE>
<TABLE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)
3.    INVESTMENTS (continued)

      Gross realized investment gains and losses on sales of all types of
      investments are as follows:
<CAPTION>
                                                   Years ended September 30,
                                      --------------------------------------
                                              1996         1995         1994
                                       -----------  -----------  -----------
<S>                                   <C>          <C>          <C>         
      BONDS AND NOTES AVAILABLE
       FOR SALE:
        Realized gains                 $ 1,039,000  $   423,000  $   644,000
        Realized losses                 (1,295,000)  (1,771,000)    (199,000)

      EQUITIES:
        Realized losses                   (112,000)         ---          ---

      IMPAIRMENT WRITEDOWNS               (171,000)         ---          ---
                                       -----------  -----------  -----------
        Total net realized
          investment gains/losses      $  (539,000) $(1,348,000) $   445,000
                                       ===========  ===========  ===========


      The sources and related amounts of investment income are as follows:

                                                   Years ended September 30,
                                      --------------------------------------
                                              1996         1995         1994
                                       ----------- ------------  -----------
      Short-term investments           $   390,000 $  1,045,000  $   685,000
      Bonds and notes                    9,186,000    6,291,000    4,341,000
      Mortgage loans                       381,000      498,000      501,000
                                       ----------- ------------  -----------

         Total investment income       $ 9,957,000 $  7,834,000  $ 5,527,000
                                       =========== ============  ===========

      Expenses incurred to manage the investment portfolio amounted to $121,000
      for the year ended September 30, 1996, $125,000 for the year ended
      September 30, 1995, and $102,000 for the year ended September 30, 1994 and
      are included in General and Administrative Expenses in the income
      statement.
</TABLE>
                                     F-14
<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


3.    INVESTMENTS (continued)

      The carrying values of investments in any one entity or its affiliates
      exceeding 10% of the Company's shareholder's equity at September 30, 1996
      are as follows:


      Bonds and notes:
        Lockheed Martin Corp.                                    $ 4,063,000
        Nabisco Inc.                                               3,901,000
        PacificCorp                                                3,021,000
                                                                 ===========

      At September 30, 1996, bonds and notes included $9,895,000 (fair value,
      $10,408,000) of bonds and notes not rated investment grade either Standard
      & Poor's Corporation, Moody's Investors Service, Duff and Phelps Credit
      Rating Co., Fitch Investor Service, Inc. or under National Association of
      Insurance Commissioners' guidelines.  The Company had no material
      concentrations of non-investment-grade assets at September 30, 1996.

      At September 30, 1996, the amortized cost of investments in default as to
      the payment of principal or interest was $180,000 and the fair value was
      $150,000, all of which are unsecured non-investment-grade bonds.

      At September 30, 1996, $408,000 of bonds, at amortized cost, were on
      deposit with regulatory authorities in accordance with statutory
      requirements.

4.    FAIR VALUE OF FINANCIAL INSTRUMENTS

      The following estimated fair value disclosures are limited to reasonable
      estimates of the fair value of only the Company's financial instruments. 
      The disclosures do not address the value of the Company's recognized and
      unrecognized nonfinancial assets (including equity investments) and
      liabilities or the value of anticipated future business.  The Company does
      not plan to sell most of its assets or settle most of its liabilities at
      these estimated fair values.

      The fair value of a financial instrument is the amount at which the
      instrument could be exchanged in a current transaction between willing
      parties, other than in a forced or liquidation sale.  Selling expenses and
      potential taxes are not included.  The estimated fair value amounts were
      determined using available market information, current pricing information
      and  various  valuation  methodologies.  If quoted  market prices were not
                                     F-15
<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


4.    FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

      readily available for a financial instrument, management determined an
      estimated fair value.  Accordingly, the estimates may not be indicative of
      the amounts the financial instruments could be exchanged for in a current
      or future market transaction.
      
      The following methods and assumptions were used to estimate the fair value
      of each class of financial instruments for which it is practicable to
      estimate that value:

      CASH AND SHORT-TERM INVESTMENTS:  Carrying value is considered to be a
      reasonable estimate of fair value.

      BONDS AND NOTES:  Fair value is based principally on independent pricing
      services, broker quotes and other independent information.

      MORTGAGE LOANS:  Fair values are primarily determined by discounting
      future cash flows to the present at current market rates, using expected
      prepayment rates.

      VARIABLE ANNUITY ASSETS:  Variable annuity assets are carried at the
      market value of the underlying securities.
      
      RECEIVABLE FROM (PAYABLE TO) BROKERS FOR SALES (PURCHASES) OF SECURITIES:
      Such obligations represent net transactions of a short-term nature for
      which the carrying value is considered a reasonable estimate of fair
      value.

      RESERVES FOR FIXED ANNUITY CONTRACTS:  Deferred annuity contracts are
      assigned a fair value equal to current net surrender value.  Annuitized
      contracts are valued based on the present value of future cash flows at
      current pricing rates.

      VARIABLE ANNUITY LIABILITIES:  Fair values of contracts in the
      accumulation phase are based on net surrender values.  Fair values of
      contracts in the payout phase are based on the present value of future
      cash flows at assumed investment rates.

                                     F-16






<PAGE>
<TABLE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


 4.   FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

      The estimated fair values of the Company's financial instruments at
      September 30, 1996 and 1995, compared with their respective carrying
      values, are as follows:
<CAPTION>
                                                   Carrying               Fair
                                                      value              value
                                               ------------      -------------
<S>                                           <C>               <C>           
      1996:
             
      ASSETS:
            Cash and short-term investments    $  6,707,000      $   6,707,000
            Bonds and notes                     146,401,000        146,401,000
            Variable annuity assets              68,901,000         68,901,000
            
      LIABILITIES:
            Reserves for fixed annuity
             contracts                          140,613,000        134,479,000
            Payable to brokers for purchases
             of securities                        1,939,000          1,939,000
            Variable annuity liabilities         68,901,000         65,546,000
                                               ============      =============
      1995:

      ASSETS:
            Cash and short-term investments    $  6,382,000      $   6,382,000
            Bonds and notes                     110,068,000        110,060,000
            Mortgage loans                        4,733,000          4,733,000
            Receivable from brokers for 
             sales of securities                    815,000            815,000
            Variable annuity assets              32,760,000         32,760,000

      LIABILITIES:
            Reserves for fixed annuity
             contracts                          106,332,000        102,782,000
            Variable annuity liabilities         32,760,000         31,740,000
                                               ============      =============

5.    CONTINGENT LIABILITIES

      From time to time, the Company is involved in various kinds of litigation
      common to its business.  When the Company becomes involved in litigation,
      cases are typically in various stages of development and, based on reports
      of counsel, management believes that provisions made for potential losses
      relating to such litigation would be adequate and any further liabilities
      and costs would not have a material adverse impact upon the Company's
      financial position or results of operations.












                                     F-17




<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


6.    SHAREHOLDER'S EQUITY

      The Company is authorized to issue 300 shares of its $10,000 par value
      Common Stock.  At September 30, 1996, 1995 and 1994, 300 shares are
      outstanding.  

      Changes in shareholder's equity are as follows:
<CAPTION>
                                                     Years ended September 30,
                                      ----------------------------------------
                                              1996         1995           1994
                                      ------------ ------------   ------------
<S>                                  <C>          <C>            <C>          
      RETAINED EARNINGS:
        Beginning balance             $  5,250,000 $  4,727,000   $  4,370,000
        Net income                         723,000      523,000        357,000
                                      ------------ ------------   ------------
        Ending balance                $  5,973,000 $  5,250,000   $  4,727,000
                                      ============ ============   ============
      NET UNREALIZED LOSSES
       ON DEBT AND EQUITY SECURITIES
       AVAILABLE FOR SALE:
        Beginning balance             $   (860,000)$ (2,340,000)  $  1,331,000
        Change in net unrealized 
          gains/losses on debt 
          securities available
          for sale                         939,000    4,254,000     (7,621,000)
        Change in net unrealized
         gains/losses on equity
         securities available
         for sale                          206,000      (77,000)      (118,000)
        Change in adjustment to 
          deferred acquisition costs      (100,000)  (1,900,000)     2,100,000
        Tax effect of net changes         (366,000)    (797,000)     1,968,000
                                      ------------ ------------   ------------
        Ending balance                $   (181,000)$   (860,000)  $ (2,340,000)
                                      ============ ============   ============

      For a life insurance company domiciled in the State of New York, no
      dividend may be distributed to any shareholder unless notice of the
      domestic insurer's intention to declare such dividend and the amount have
      been filed with the Superintendent of Insurance not less than 30 days in
      advance of such proposed declaration, or if the Superintendent disapproves
      the distribution of the dividend within the 30-day period. No dividends
      were paid in fiscal years 1996, 1995 or 1994.
                                     F-18









































<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


6.    SHAREHOLDER'S EQUITY (continued)

      Under statutory accounting principles utilized in filings with insurance
      regulatory authorities, the Company's net income for the nine months ended
      September 30, 1996 was $191,000.  The statutory net loss for the year
      ended December 31, 1995 was $2,083,000 and the statutory net gain for the
      year ended December 31, 1994 was $726,000.  The Company's statutory
      capital and surplus was $13,975,000 at September 30, 1996, $13,862,000 at
      December 31, 1995 and $16,122,000 at December 31, 1994.


7.    INCOME TAXES

      The components of the provisions for income taxes on pretax income consist
      of the following:
<CAPTION>
                                   Net realized
                                     investment
                                  gains (losses)   Operations          Total
                                 --------------  ------------  -------------
<S>                             <C>             <C>           <C>           
      1996:

      Currently payable          $     (121,000) $   (171,000) $    (292,000) 
      Deferred                         (105,000)      845,000        740,000
                                 --------------  ------------  -------------
      Total income tax expense   $     (226,000) $    674,000  $     448,000
                                 ==============  ============  =============
      1995:

      Currently payable          $     (592,000) $    441,000  $    (151,000)
      Deferred                          (28,000)      361,000        333,000
                                 --------------  ------------  -------------
      Total income tax expense   $     (620,000) $    802,000  $     182,000
                                 ==============  ============  =============
      1994:

      Currently payable          $      121,000  $   (854,000) $    (733,000)
      Deferred                           65,000     1,323,000      1,388,000
                                 --------------  ------------  -------------
      Total income tax expense   $      186,000  $    469,000  $     655,000
                                 ==============  ============  =============
      
                                     F-19













































<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


7.    INCOME TAXES (continued)

      Income taxes computed at the United States federal income tax rate of 35%
      and income taxes provided differ as follows:
<CAPTION>
                                                                            
                                                   Years ended September 30,
                                            --------------------------------
                                                 1996       1995        1994
                                            ---------  ---------   ---------
<S>                                        <C>        <C>         <C>       
      Amount computed at statutory rate     $ 410,000  $ 247,000   $ 608,000
      Increases (decreases) resulting from:
           Amortization of differences
             between book and tax bases of
             net assets acquired               20,000     20,000      10,000
           State income taxes, net
             of federal tax benefit            25,000    (86,000)     36,000
           Other, net                          (7,000)     1,000       1,000
                                            ---------  ---------   ---------
      Total income tax expense              $ 448,000  $ 182,000   $ 655,000
                                            =========  =========   =========
















                                     F-20



<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


7.    INCOME TAXES (continued)

      Deferred income taxes reflect the net tax effects of temporary differences
      between the carrying amounts of assets and liabilities for financial
      reporting purposes and the amounts used for income tax reporting purposes. 
      The significant components of the liability for Deferred Income Taxes are
      as follows:
<CAPTION>
 
                                                               September 30,
                                               -----------------------------
                                                        1996            1995
                                               -------------   -------------

<S>                                           <C>             <C>           
      Deferred tax liabilities:
      Investments                              $     225,000   $     142,000
      Deferred acquisition costs                   3,902,000       1,703,000
      Other liabilities                               84,000          66,000 
                                               -------------   -------------
      Total deferred tax liabilities               4,211,000       1,911,000
                                               -------------   -------------

      Deferred tax assets:
      Contractholder reserves                     (2,582,000)      (1,125,000)
      State income taxes                             (79,000)        (79,000)
      Net unrealized losses on certain
          debt and equity securities                 (97,000)       (463,000) 
      Other assets                                  (103,000)            ---
                                               -------------   -------------
      Total deferred tax assets                   (2,861,000)     (1,667,000)
                                               -------------   -------------
               
      Deferred income taxes                    $   1,350,000   $     244,000
                                               =============   =============
</TABLE>




                                     F-21

<PAGE>

                    FIRST SUNAMERICA LIFE INSURANCE COMPANY

                   NOTES TO FINANCIAL STATEMENTS (continued)


8.    RELATED PARTY MATTERS

      The Company pays commissions to three affiliated companies, SunAmerica
      Securities, Inc., Advantage Capital Corp. and Royal Alliance Associates,
      Inc.  These broker-dealers represent a significant portion of the
      Company's business, amounting to approximately 44.1%, 14.8% and 26.5% of
      premiums in 1996, 1995 and 1994, respectively.  Commissions paid to these
      broker-dealers totaled $2,646,000 in 1996, $761,000 in 1995, and $326,000
      in 1994.

      The Company paid occupancy and office services expenses to Royal Alliance
      Associates, Inc. totaling $15,000 for the year ended September 30, 1996,
      $113,000 for the year ended September 30, 1995 and $122,000 for the year
      ended September 30, 1994.

      The Company purchases administrative, investment management, accounting,
      marketing and data processing services from SunAmerica Financial, Inc.,
      whose purpose is to provide services to the SunAmerica companies.  Amounts
      paid for such services totaled $2,097,000 for the year ended September 30,
      1996, $722,000 for the year ended September 30, 1995 and $706,000 for the
      year ended September 30, 1994.













                                   F-22
        












<PAGE>
                    FIRST SUNAMERICA LIFE INSURANCE COMPANY
                            LIST OF EXHIBITS FILED




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


27      Financial Data Schedule.