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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 10, 1996
AMERICAN GENERAL FINANCE CORPORATION
(Exact Name of Registrant as Specified in Charter)
Indiana 1-6155 35-0416090
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation) No.)
601 N.W. Second Street, Evansville, IN 47708
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (812) 424-8031
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Item 5. Other Events.
On January 10, 1996, American General Finance Corporation (the
"Company") issued a News Release announcing that it will report an increase in
the allowance for losses on finance receivables of $216 million in the fourth
quarter of 1995 and that it had received a capital contribution of $80 million
from its parent corporation in December, 1995. The increase in the allowance
for finance receivable losses will result in a fourth quarter after-tax charge
of approximately $140 million to the Company's earnings.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits. The following Exhibit is filed as part of this Report:
Exhibit
Number Description
99 News Release issued by American General Finance
Corporation on January 10, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
AMERICAN GENERAL FINANCE CORPORATION
Dated: January 11, 1996 By: /S/ GEORGE W. SCHMIDT
George W. Schmidt
Controller and Assistant
Secretary
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EXHIBIT INDEX
Exhibit
Number Description
99 News Release issued by American General Finance
Corporation on January 10, 1996.
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Philip M. Hanley Bryan A. Binyon
Sr. VP & CFO Treasurer
812-468-5420 812-468-5195
AMERICAN GENERAL FINANCE CORPORATION TO
INCREASE ALLOWANCE FOR LOAN LOSSES
Evansville, IN, January 10, 1996 - American General Finance Corporation
today announced that it will report an increase in the allowance for losses on
finance receivables of $216 million in the fourth quarter of 1995. This
action will result in a fourth quarter after-tax charge of approximately $140
million to AGF earnings.
This increase was determined by extensive internal analysis, together
with credit loss development projections supplied by Fair, Isaac and Co.,
Inc., a nationally recognized credit consulting firm, and the supporting
opinion of Ernst & Young LLP, the company s independent auditors. At year-end
1995, the allowance for finance receivable losses will be approximately $482
million, or 5.9% of receivables, compared to $226 million, or 2.9% of
receivables at year-end 1994. The increased allowance represents the
company s best estimate of the net credit losses on outstanding finance
receivables.
The comprehensive analysis of the finance receivable portfolio and the
corresponding increase in the allowance during the fourth quarter was in
response to the unexpected rise in delinquencies beginning in the third
quarter of 1995. At year-end 1995, 60-day+ delinquencies are estimated to be
4.1% of receivables, compared to 3.8% at September 30, 1995, 3.0% at June 30,
1995, and 2.9% at December 31, 1994.
American General Finance recognizes that its strength is in its
traditional branch office network. Non-branch initiatives of the last few
years have generated high receivables growth. These initiatives, however,
were followed by an unacceptable rise in delinquencies. The non-branch
initiatives have been analyzed and the underperforming programs have been
restructured or discontinued. Management believes the increase in the
allowance and the other actions taken address the overall credit quality issue
and position the company to return to the levels of earnings achieved over the
last few years.
To support the increased allowance and reflect its commitment to
American General Finance as one of its core businesses, American General
Corporation contributed $80 million of internally generated capital to
American General Finance in December 1995. This contribution was to enable
American General Finance Corporation to maintain leverage below its target
level of 6.5 to 1 debt to tangible net worth.
The company expects to report fourth quarter and preliminary year-end
1995 results on Monday, January 29, 1996.
American General Finance Corporation and its subsidiaries are engaged in
the consumer finance and related credit insurance business. The company,
headquartered in Evansville, Indiana, has assets of $9.5 billion and operates
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over 1,370 offices in 39 states, Puerto Rico, and the U.S. Virgin Islands.
Products and services are provided to more than 3 million low-to-middle income
American families. The company offers consumer and home equity loans, retail
sales financing, credit cards, and credit related insurance.
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