ITEM 1. BUSINESS
GENERAL
American General Corporation ("American General" or "the company") is the parent company of one of the nation's largest consumer financial services organizations. American General's operating subsidiaries are leading providers of retirement annuities, consumer loans, and life insurance. American General was incorporated as a general business corporation in Texas in 1980 and is the successor to American General Insurance Company, an insurance company incorporated in Texas in 1926.
Much of the information provided in response to this Item 1 is incorporated from selected portions of American General's 1993 Annual Report to Shareholders. Appropriate references to such incorporated information are specified throughout the text of this Item 1. Portions of American General's 1993 Annual Report to Shareholders are provided as Exhibit 13 to this Form 10-K.
NEW ACCOUNTING STANDARDS. During 1993, American General adopted six new Statements of Financial Accounting Standards (SFAS). These accounting standards and their effect on the reported results of the company are described in Note 1.2 incorporated herein by reference from the Notes to Financial Statements in American General's 1993 Annual Report to Shareholders.
BUSINESS SEGMENTS. American General's operations are classified into the following three business segments: Retirement Annuities, Consumer Finance, and Life Insurance. The Life Insurance segment is a combination of the Insurance - Special Markets and Insurance - Home Service segments reported in 1992. American General provides financial services in all 50 states, the District of Columbia, Canada, Puerto Rico, and the Virgin Islands. A description of the operations of each business segment is presented in this Item 1 and is supplemented by the business segment financial information incorporated herein by reference from Note 11 of the Notes to Financial Statements, from pages 18-21 of Management's Discussion and Analysis (MD&A) in American General's 1993 Annual Report to Shareholders, and from Schedule V of Item 14 of this Form 10-K.
On November 29, 1993, the company announced its intent to offer for sale two life insurance subsidiaries, American - Amicable Life Insurance Company of Texas and Financial Life Assurance Company of Canada, due to their relatively small size and unique markets.
EMPLOYEES. As of December 31, 1993, American General and its subsidiaries employed approximately 11,500 full-time salaried employees, of which approximately 200 are employed by the two life insurance companies held for sale.
PRINCIPAL PRODUCTS, METHODS OF DISTRIBUTION, AND PRINCIPAL MARKETS
Information by business segment regarding principal products, methods of distribution, and principal markets is incorporated herein by reference from the Business Segment Overview on pages 10-11 in American General's 1993 Annual Report to Shareholders.
INSURANCE SALES AND IN FORCE. The following table summarizes the face amounts of individual and credit life insurance sales, and individual and credit life insurance in force for the company's insurance subsidiaries for the past three years:
* Includes reinsurance assumed before deductions for reinsurance ceded, and excludes group life insurance in force. In addition, 1993 excludes $13.1 billion related to the two life insurance companies held for sale.
AMERICAN GENERAL CORPORATION
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INSURANCE DEPOSITS AND PREMIUMS. The following table lists deposits and premiums and other considerations of the company's insurance and annuity subsidiaries for the past three years:
* Deposits represent that portion of premiums unrelated to mortality or morbidity risk; more than 68% of the deposits relate to products of the Retirement Annuities segment.
INVESTMENTS
Information regarding investments is incorporated here- in by reference from pages 21-23 of the MD&A, from Notes 1.2, 1.3, and 2 of the Notes to Financial Statements, and from Schedule I of Item 14 of this Form 10-K.
INSURANCE AND ANNUITY RESERVING METHODS
Individual life insurance reserves are based on assumptions similar to those used to establish premium rates. Further information regarding reserving methods is incorporated herein by reference from Note 1.11 of the Notes to Financial Statements.
REINSURANCE
Information regarding reinsurance is incorporated herein by reference from Notes 1.2 and 1.13 of the Notes to Financial Statements and from Schedule VI of Item 14 of this Form 10-K.
FACTORS AFFECTING PRICING OF PRODUCTS
INSURANCE AND ANNUITY PRODUCTS. Premium rates are based on assumptions, which the company's insurance subsidiaries believe to be realistic, as to future mortality, investment yields, expenses, and lapses. In addition, the pricing of retirement annuity products and interest-sensitive insurance products is affected by competition and the anticipated spread between the yield on invested assets and the rate credited to policyholders. Although a profit margin is included in the price of the products, the actual profitability of the products can be significantly affected by the variation between actual and assumed experience.
CONSUMER FINANCE PRODUCTS. Pricing of consumer finance products is influenced by such factors as cost of borrowed funds, competition, and the expense of operations. In addition, pricing is affected by state regulation of interest rates based on contractual terms and amount, charges for individual loans, and insurance premium rates.
COMPETITION
The business of the company's subsidiaries is highly competitive with other financial institutions with respect to pricing, selection of products, and quality of service. No single competitor nor any small group of competitors dominates any of the markets in which the company's subsidiaries operate.
REGULATION
INSURANCE. American General's insurance subsidiaries are subject to state regulation in the jurisdictions in which they do business. Information concerning regulatory compliance is incorporated herein by reference from the paragraph "Regulation" on page 21 of the MD&A. Most states also regulate affiliated groups such as American General and its subsidiaries under insurance holding company laws. Additional information regarding these restrictions is incorporated herein by reference from Note 10.2 of the Notes to Financial Statements. Discussion of state guaranty associations is incorporated herein by reference from the paragraph "Guaranty Associations" on pages 20-21 of the MD&A.
CONSUMER FINANCE. The company's consumer finance subsidiaries are subject to various types of federal regulation, including the Federal Consumer Credit Protection Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, certain Federal Trade Commission rules, and state laws that regulate the consumer loan and retail sales contract businesses. In addition, the company's thrift subsidiary, which engages in the consumer finance business and accepts insured deposits, is subject to regulation by and the reporting requirements of the Federal Deposit Insurance Corporation and is subject to regulatory codes in the states in which it operates.
OTHER. Discussion of certain other regulatory factors is incorporated herein by reference from the paragraphs "Taxation," "Statutory Accounting," and "Environmental" on pages 20-21 of the MD&A.
1993 FORM 10-K
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ITEM 1A.
ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding three executive officers of American General who are standing for election as directors of American General is incorporated herein by reference from the caption "Election of Directors" set forth in American General's definitive Proxy Statement dated March 22, 1994. Information as of March 22, 1994 regarding the eleven other executive officers of American General is as follows:
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AMERICAN GENERAL CORPORATION
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ITEM 2.

ITEM 2. PROPERTIES
American General's corporate headquarters is located in the American General Center, a complex of office buildings on a 45-acre tract near downtown Houston. American General or its subsidiaries either own or lease pursuant to a sale-leaseback arrangement all of the buildings in the complex. In addition, American General or its subsidiaries own all of the underlying land, except for a five-acre parcel that is leased pursuant to a long-term agreement. American General and its subsidiaries occupy approximately 42% of the total office space available in the Center. American General's subsidiaries also own various other properties, including properties held for investment, branch office buildings, and the home office buildings of American-Amicable Life Insurance Company of Texas in Waco and American General Finance, Inc. in Evansville. Portions of certain of these buildings are rented to unaffiliated third parties. The home office building of American General Life and Accident Insurance Company in Nashville was sold to the State of Tennessee for $37.4 million, effective January 3, 1994.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Two real estate subsidiaries of the company were defendants in a lawsuit, Avia Development Group et al. v. American General Realty Investment Corp., et al. (filed in the 61st District Court of Harris County, Texas, September 23, 1991), that alleged damages based on lost profits and related claims arising from certain loans and joint venture contracts. On July 16, 1993, a judgment was entered against the subsidiaries jointly for $47.3 million in compensatory damages and against one of the subsidiaries for $189.2 million in punitive damages. On September 17, 1993, the Texas state district court reduced the previously-awarded punitive damages by $60.0 million, resulting in a reduced judgment in the amount of $176.5 million plus post-judgment interest. An appeal on numerous legal grounds has been filed (Case No. 01-93-1027-CV in the First Court of Appeals, Houston, Texas), and a supersedeas bond required for the appeal was posted with the company acting as surety. The company believes, based on advice of legal counsel, that plaintiffs' claims are without merit, and the company is continuing to contest the matter vigorously through the appeals process. In April 1992, the Internal Revenue Service (IRS) issued Notices of Deficiency in the amount of $12.4 million for the 1977-1981 tax years for three of the company's subsidiaries. The basis of the dispute was the tax treatment of a modified coinsurance (MODCO) agreement that the subsidiaries entered into with Union Central Life Insurance Company. During 1992, the company elected to pay the assessment plus associated interest. On November 6, 1992, one of the company's subsidiaries filed a claim for refund of tax and interest, which the IRS disallowed in January 1993. The subsidiary filed a suit for refund in the Court of Federal Claims on June 30, 1993 (Gulf Life Insurance Co. v. United States, C.A. No. 93-404T). The company believes that the IRS's claims are without merit, and the company is continuing to vigorously pursue refund of the amounts paid.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during fourth quarter 1993.
1993 FORM 10-K
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ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
On February 4, 1993, the board of directors declared a two-for-one stock split effected in the form of a 100% common stock dividend, paid March 1, 1993, to shareholders of record on February 16, 1993. The stock distribution, which was reflected as of December 31, 1992, had no impact on total consolidated shareholders' equity or results of operations. The quarterly high and low market prices of American General's common stock, the cash dividends paid on common stock, and restrictions on retained earnings for the payment of dividends are incorporated herein by reference from Notes 12, 7.1, and 10.2, respectively, of the Notes to Financial Statements. The number of record holders of common stock is incorporated herein by reference from Note 7.1 of the Notes to Financial Statements. The common stock of American General is traded in the United States on the New York Stock Exchange and the Pacific Stock Exchange. The common stock is also traded on the London Stock Exchange and the Swiss Stock Exchanges of Basel, Geneva, and Zurich.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data is derived from the consolidated financial statements of the company. The data should be read in conjunction with the consolidated financial statements, related notes, and other financial information included or incorporated by reference herein.
(a) Includes $300 million write-down of goodwill ($1.39 per share) and $30 million charge ($.14 per share) due to 1993 tax law change. Additional information is incorporated herein by reference from Notes 1.7 and 6.2, respectively, of the Notes to Financial Statements. (b) Includes $1.0 billion and $676 million increase in assets and shareholders' equity, respectively, due to adoption of SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities," at December 31, 1993. Additional information is incorporated herein by reference from Note 1.2 of the Notes to Financial Statements. (c) Excludes special dividends paid in three quarters of 1990 totaling $.61.
ITEM 7.
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 is incorporated herein by reference from "Management's Discussion and Analysis" on pages 18-24, 26, 28, and 30 in American General's 1993 Annual Report to Shareholders and from Note 10.2 of the Notes to Financial Statements.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data are incorporated herein by reference from pages 25, 27, 29, and 31-44 in American General's 1993 Annual Report to Shareholders. The ratios of earnings to fixed charges are incorporated herein by reference from Exhibit 12 of this Form 10-K.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
AMERICAN GENERAL CORPORATION
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ITEM 10.


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing under the captions "Election of Directors" and "Securities Reporting" in American General's definitive Proxy Statement dated March 22, 1994, is incorporated herein by reference. Information regarding the eleven executive officers of American General who are not standing for election to the board of directors of American General is included in Part I, Item 1A of this Form 10-K.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information appearing under the captions "Governance of the Company" and "Compensation of Executive Officers" in American General's definitive Proxy Statement dated March 22, 1994, is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information appearing under the captions "Security Ownership of Certain Beneficial Owners" and "Security Ownership of Management" in American General's definitive Proxy Statement dated March 22, 1994, is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing under the caption "Certain Relationships and Transactions" in American General's definitive Proxy Statement dated March 22, 1994, is incorporated herein by reference.
1993 FORM 10-K
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ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Documents filed as part of this report.
All other financial statement schedules have been omitted because they are inapplicable or the information required therein is included elsewhere in the financial statements or notes thereto or in another schedule filed herewith.
AMERICAN GENERAL CORPORATION
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3. Exhibits
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(continued on next page)
1993 FORM 10-K
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Any Exhibit not included with this Form 10-K will be furnished to any shareholder of record on written request and payment of up to $.25 per page plus postage. Such requests should be directed to American General Corporation, Investor Relations, P.O. Box 3247, Houston, Texas 77253-3247. - --------------------------------------------------------------------------------
(b) Reports on Form 8-K.
1. Current Report on Form 8-K dated November 29, 1993, with respect to the issuance of a news release announcing that the company was electing to retain its principal ordinary life insurance subsidiaries, offering for sale two other ordinary life insurance subsidiaries, and taking a $300 million write-down of acquisition-related goodwill.
AMERICAN GENERAL CORPORATION
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AMERICAN GENERAL CORPORATION
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN AFFILIATES
In millions
* Net of applicable allowance for losses. See Schedule VIII of this Form 10-K.
1993 FORM 10-K
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PART IV(Continued)
AMERICAN GENERAL CORPORATION
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF INCOME OF AMERICAN GENERAL CORPORATION (PARENT ONLY)
* Reflects adoption of SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," SFAS 109, "Accounting for Income Taxes," and SFAS 112, "Employers' Accounting for Postemployment Benefits," at January 1, 1993. Additional information is incorporated herein by reference from Note 1.2 of the Notes to Financial Statements.
AMERICAN GENERAL CORPORATION
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SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)
BALANCE SHEET OF AMERICAN GENERAL CORPORATION (PARENT ONLY)
(a) The principal amount of American General debentures and notes held by subsidiaries was $66 million at December 31, 1993, $69 million at December 31, 1992, and $72 million at December 31, 1991. The five-year schedule of maturities of debt is as follows: 1994, $209 million; 1995, $103 million; 1996, $3 million; 1997, $136 million; and 1998, $71 million.
(b) Reflects adoption of SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities," at December 31, 1993. Additional information is incorporated herein by reference from Note 1.2 of the Notes to Financial Statements.
(c)Amounts include undistributed earnings of subsidiaries of $2.4 billion in 1993 and $2.8 billion in 1992 and 1991.
(d)Amounts for 1993, 1992, and 1991 include 699,614 shares at a cost of $8 million held by subsidiaries.
1993 FORM 10-K
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PART IV (Continued) AMERICAN GENERAL CORPORATION
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)
STATEMENT OF CASH FLOWS OF AMERICAN GENERAL CORPORATION (PARENT ONLY)
* Amounts restated to conform with 1993 presentation.
AMERICAN GENERAL CORPORATION
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SCHEDULE V - SUPPLEMENTARY INSURANCE INFORMATION
In millions
(a) Includes unearned premiums, other policy claims and benefits payable, and other policyholder funds, which are not significant relative to insurance and annuity reserves.
(b) Represents primarily Corporate operations and intersegment eliminations.
(c) Reflects adoption of SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities," at December 31, 1993. Additional information is incorporated herein by reference from Note 1.2 of the Notes to Financial Statements.
(d) Amounts restated to conform with 1993 presentation.
1993 FORM 10-K
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PART IV (Continued) AMERICAN GENERAL CORPORATION
SCHEDULE VI - REINSURANCE
In millions
* Amounts exclude $14.9 billion, $6.8 billion, $1 million, and $8.1 billion for Gross Amount, Ceded to Other Companies, Assumed from Other Companies, and Net Amount, respectively, related to the two life insurance companies held for sale.
AMERICAN GENERAL CORPORATION
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SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
In millions
(a) Deductions generally result from write-offs of uncollectible receivables and bonds, sales of bonds and real estate, mortgage loan payoffs, and foreclosures of real estate.
(b) Amounts restated to conform with 1993 presentation.
1993 FORM 10-K
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PART IV (Continued) AMERICAN GENERAL CORPORATION
SCHEDULE IX - SHORT-TERM BORROWINGS
In millions
(a) Commercial paper borrowings are unsecured promissory notes issued with maturities ranging from one day to 270 days. Bank borrowings are typically overnight loans under uncommitted credit lines made available to the company and certain subsidiaries.
(b) Method of computation: daily weighted average based on respective time outstanding and the amount of borrowings.
(c) Excludes current maturities of long-term debt of $146 million in 1993, $50 million in 1992, and $48 million in 1991.
(d) Excludes current maturities of long-term debt of $1 million in 1993 and $2 million in 1992.
(e) Excludes investment certificates of thrift subsidiaries.
AMERICAN GENERAL CORPORATION
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 23, 1994.
AMERICAN GENERAL CORPORATION
By: /s/ Pamela J. Penny - -----------------------------------------------------------------
Pamela J. Penny (Vice President and Controller)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 23, 1994.
/s/ Harold S. Hook - -----------------------------------------------------------------
Harold S. Hook (Chairman of the Board, Chief Executive Officer, and Director - Principal Executive Officer)
/s/ Austin P. Young - -----------------------------------------------------------------
Austin P. Young (Senior Vice President and Chief Financial Officer - Principal Financial Officer)
/s/ Pamela J. Penny - -----------------------------------------------------------------
Pamela J. Penny (Vice President and Controller - Principal Accounting Officer)
J. Evans Attwell* - -----------------------------------------------------------------
J. Evans Attwell (Director)
Thomas D. Barrow* - -----------------------------------------------------------------
Thomas D. Barrow (Director)
Brady F. Carruth* - -----------------------------------------------------------------
Brady F. Carruth (Director)
W. Lipscomb Davis, Jr.* - -----------------------------------------------------------------
W. Lipscomb Davis, Jr. (Director)
Robert M. Devlin* - -----------------------------------------------------------------
Robert M. Devlin (Director)
Larry D. Horner* - -----------------------------------------------------------------
Larry D. Horner (Director)
Richard J.V. Johnson* - -----------------------------------------------------------------
Richard J.V. Johnson (Director)
Robert E. Smittcamp* - -----------------------------------------------------------------
Robert E. Smittcamp (Director)
James R. Tuerff* - -----------------------------------------------------------------
James R. Tuerff (Director)
*By: /s/ Kurt G. Schreiber - -----------------------------------------------------------------
Kurt G. Schreiber (Attorney-in-fact)
1993 FORM 10-K
INDEX TO EXHIBITS
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(continued on next page)
Any Exhibit not included with this Form 10-K will be furnished to any shareholder of record on written request and payment of up to $.25 per page plus postage. Such requests should be directed to American General Corporation, Investor Relations, P.O. Box 3247, Houston, Texas 77253-3247. - --------------------------------------------------------------------------------