<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM
................................................. TO
.................................................
COMMISSION FILE NUMBER 1-7981
AMERICAN GENERAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS ARTICLES OF INCORPORATION)
<TABLE>
<S> <C>
TEXAS 74-0483432
(State of incorporation) (I.R.S. Employer Identification No.)
2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019-2155
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (713) 522-1111
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- ------------------------------ -----------------------------
<S> <C> <C>
New York Stock Exchange
Common Stock, Par Value $.50 Pacific Stock Exchange
Preferred Share Purchase
Rights New York Stock Exchange
(One Right is attached to Pacific Stock Exchange
each share of Common Stock)
</TABLE>
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, 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. / /
The aggregate market value based on published prices as of March 1, 1994 of
American General's voting stock held by non-affiliates was approximately $5.58
billion. The aggregate market value has been calculated on a basis which
excludes shares of Common Stock that may be acquired through the exercise of
options. As of March 1, 1994, there were 213,537,814 shares of American
General's Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
PART OF THE FORM 10-K
DOCUMENT INTO WHICH INCORPORATED
- ----------------------------------------------------------------------------------- ------------------------
<S> <C>
Portions of American General's 1993 Annual Report to Shareholders Parts I and II
Portions of American General's definitive Proxy Statement dated March 22, 1994, for
the Annual Meeting of Shareholders to be held April 28, 1994 Part III
</TABLE>
1993 FORM 10-K
<PAGE> 2
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PART I
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:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
-----------------------------------------------------------------
<S> <C> <C> <C>
Individual life insurance sales:
Permanent (non-participating)
Interest-sensitive $ 9,941 $ 7,541 $ 6,415
Guaranteed-cost 3,681 4,501 4,285
Term 6,728 5,704 6,195
Permanent (participating) 9 12 6
Credit life insurance sales 2,941 2,371 1,911
- -----------------------------------------------------------------
Total $ 23,300 $ 20,129 $ 18,812
- -----------------------------------------------------------------
Individual life insurance in
force
(at December 31):
Permanent (non-participating)
Interest-sensitive $ 44,660 $ 40,916 $ 39,630
Guaranteed-cost 21,218 27,222 25,269
Term 18,288 23,256 23,307
Permanent (participating) 847 926 979
Credit life insurance in force 2,548 2,222 1,956
- -----------------------------------------------------------------
Total* $ 87,561 $ 94,542 $ 91,141
- -----------------------------------------------------------------
</TABLE>
* 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
2
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(LOGO)
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:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
-----------------------------------------------------------------
<S> <C> <C> <C>
Deposits* $ 3,125 $ 2,739 $ 2,247
- -----------------------------------------------------------------
Direct premiums and other
considerations
Individual life premiums $ 652 $ 643 $ 636
Insurance charges 319 274 247
Individual health premiums 148 144 142
Other 143 166 156
- -----------------------------------------------------------------
Total direct premiums
and other considerations 1,262 1,227 1,181
- -----------------------------------------------------------------
Reinsurance premiums assumed 38 32 29
Reinsurance premiums ceded (48) (46) (42)
- -----------------------------------------------------------------
Premiums and other
considerations $ 1,252 $ 1,213 $ 1,168
- -----------------------------------------------------------------
</TABLE>
* 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
3
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PART I (Continued)
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:
<TABLE>
<S> <C>
Present Principal Position with American General and
Name and Age Other Material Positions Held during Last Five Years
- -----------------------------------------------------------------------------------------------------------------------------
MICHAEL G. ATNIP (45) Senior Vice President - Special Projects (since January 1994), American General
Corporation; with American General during the remainder of last five years in various
other capacities including Senior Vice President - Insurance and Administration (1991-93)
and Senior Vice President (1989-91), American General Finance, Inc., Evansville, Indiana,
a subsidiary of American General Corporation, and Senior Vice President - Corporate
Consulting (1988-89), American General Corporation.
STEPHEN D. BICKEL (54) President (since 1988), The Variable Annuity Life Insurance Company, Houston, Texas, a
subsidiary of American General Corporation.
ROBERT S. CAUTHEN JR. (49) President (since September 1993), American General Life Insurance Company, Houston, Texas,
a subsidiary of American General Corporation; Senior Vice President and Chief Marketing
Officer (1991-September 1993), American General Life Insurance Company. President and
Chief Executive Officer (1990-91), First Financial Resources, Valley Forge, Pennsylvania.
Agency Vice President - Life Division (1989-90), United States Fidelity & Guaranty Group,
Baltimore, Maryland.
JAMES S. D'AGOSTINO JR. (47) President (since August 1993), American General Life and Accident Insurance Company,
Nashville, Tennessee, a subsidiary of American General Corporation; with American General
Corporation during the remainder of last five years in various other capacities including
Executive Vice President - Administration (February 1993-August 1993), Senior Vice
President - Administration (1991-February 1993), Senior Vice President - Investor
Relations (1990-91), and Vice President and Treasurer (1986-90).
DANIEL LEITCH III (60) President (since 1991), American General Finance, Inc., Evansville, Indiana, a subsidiary
of American General Corporation; with American General during the remainder of last five
years in various other capacities including Senior Vice President (1990-91), American
General Life and Accident Insurance Company, Nashville, Tennessee, a subsidiary of
American General Corporation, and Vice Chairman (1986-90), American General Life Insurance
Company, Houston, Texas, a subsidiary of American General Corporation.
JON P. NEWTON (52) Senior Vice President and General Counsel (since March 1993), American General
Corporation. Partner (1985-March 1993), Clark, Thomas, Winters & Newton (attorneys),
Austin, Texas.
NICHOLAS R. RASMUSSEN (47) Senior Vice President (since 1983) and Senior Vice President - Corporate Development
(since October 1993), American General Corporation; with American General Corporation
during the remainder of last five years in various other capacities including Senior Vice
President - Group Executive (1990-October 1993) and Senior Vice President - Financial
Policy (1988-90).
KURT G. SCHREIBER (47) Senior Vice President (since 1984) and Corporate Secretary (since February 1993), American
General Corporation; with American General Corporation during the remainder of last five
years, General Counsel (1983-93).
PETER V. TUTERS (41) Senior Vice President - Investments (since 1992), and Chief Investment Officer (since
December 1993), American General Corporation. Vice President (1986-92), Crown Life
Insurance Company, Toronto, Ontario, Canada.
ROBERT D. WOMACK (51) Senior Vice President - Systems and Consulting (since June 1993), American General
Corporation; Senior Vice President - Administration (1992-June 1993), American General
Life and Accident Insurance Company, Nashville, Tennessee, a subsidiary of American
General Corporation; Senior Vice President - Administration (1991-92) and Vice President
and Tax Director (1990-91), American General Corporation. Tax Partner (1987-90), KPMG Peat
Marwick, San Francisco, California.
AUSTIN P. YOUNG (53) Senior Vice President (since 1987), Chief Financial Officer (since 1988), and Treasurer
(1990-91), American General Corporation.
</TABLE>
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AMERICAN GENERAL CORPORATION
4
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(LOGO)
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. 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. 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
5
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PART II
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. 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.
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------
In millions, except per share data 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 4,829 $ 4,602 $ 4,395 $ 4,434 $ 4,126
Income from continuing operations 250(a) 533 480 562 413
Income from continuing operations per common share 1.15(a) 2.45 2.13 2.35 1.67
Assets 43,982(b) 39,742 36,105 33,808 32,062
Debt
Corporate 1,257 1,371 1,391 1,555 1,806
Real Estate 429 616 590 498 398
Consumer Finance 5,843 5,484 5,243 5,096 4,660
Redeemable equity - - - 296 380
Shareholders' equity 5,137(b) 4,616 4,329 4,138 4,090
Regular cash dividends declared per common share 1.10 1.04 1.00 .79(c) .75
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(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. 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. 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. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
AMERICAN GENERAL CORPORATION
6
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(LOGO)
PART III
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. 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. 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. 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
7
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report.
<TABLE>
<CAPTION>
Page Reference
--------------------------------
1993
Form 10-K Annual Report
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
1. Financial Statements
Report of Ernst & Young, Independent Auditors - 45
Consolidated Financial Statements
Statement of Income - 25
Balance Sheet - 27
Statements of Shareholders' Equity and Stock Activity - 29
Statement of Cash Flows - 31
Notes to Financial Statements - 32-44
2. Financial Statement Schedules
Schedule I - Summary of Investments - Other than Investments in
Affiliates 11 -
Schedule III - Condensed Financial Information of Registrant 12-14 -
Schedule V - Supplementary Insurance Information 15 -
Schedule VI - Reinsurance 16 -
Schedule VIII - Valuation and Qualifying Accounts 17 -
Schedule IX - Short-Term Borrowings 18 -
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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
8
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(LOGO)
3. Exhibits
<TABLE>
<CAPTION>
Filed Herewith(*),
Nonapplicable (NA), or
Incorporated by Reference from
------------------------------
American General
Registration No.
Exhibit or
Number Exhibit Report
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
3.1 Restated Articles of Incorporation of American General 4.1 33-33115
Corporation (including Statement of Resolution
Establishing Series of Shares of Series A Junior
Participating Preferred Stock)
3.2 Amended and Restated Bylaws of American General 3.2* NA
Corporation
4 There have not been filed as exhibits to this Form 10-K NA NA
certain long-term debt instruments, none of which
relates to authorized indebtedness that exceeds 10% of
the consolidated assets of the company and its
subsidiaries. American General hereby agrees to furnish
a copy of any such instrument to the Commission upon
request.
10.1 1984 Stock and Incentive Plan for key employees of the 10.5 Form 10-K
company and its subsidiaries for 1984
10.2 1984 Stock and Incentive Plan (Amended and Restated 10.2* NA
Effective as of February 8, 1994) for key employees of
the company and its subsidiaries
10.3 Restoration of Retirement Income Plan for Certain 10.3* NA
Employees Participating in the Restated American
General Retirement Plan (Restoration of Retirement
Income Plan)
10.4 First Amendment to Restoration of Retirement Income 10.4* NA
Plan
10.5 Second Amendment to Restoration of Retirement Income 10.5* NA
Plan
10.6 American General Supplemental Thrift Plan 10.6* NA
10.7 First Amendment to American General Supplemental Thrift 10.7* NA
Plan
10.8 Second Amendment to American General Supplemental 10.8* NA
Thrift Plan
10.9 Third Amendment to American General Supplemental Thrift 10.9* NA
Plan
10.10 Form of Severance Agreements between the company and 10.10* NA
each of the following: Harold S. Hook, James R. Tuerff,
Robert M. Devlin, Michael G. Atnip, Jon P. Newton,
Nicholas R. Rasmussen, Kurt G. Schreiber, Peter V.
Tuters, Robert D. Womack, Austin P. Young, Stephen D.
Bickel, Robert S. Cauthen, Jr., James S. D'Agostino,
Jr., Peter P. Huff, and Daniel Leitch III.
</TABLE>
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(continued on next page)
1993 FORM 10-K
9
<PAGE> 10
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PART IV(Continued)
<TABLE>
<CAPTION>
Filed Herewith(*),
Nonapplicable (NA), or
Incorporated by Reference from
------------------------------
American General
Registration No.
Exhibit or
Number Exhibit Report
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
10.11 Supplemental Retirement Agreement between the company 10.11* NA
and Harold S. Hook
10.12 American General Supplemental Retirement Plan Trust 10.12* NA
(relating to Exhibit 10.11 hereto)
10.13 Amendment to Supplemental Retirement Agreement between 10.13* NA
the company and Harold S. Hook
10.14 Second Amendment to Supplemental Retirement Agreement 10.14* NA
between the company and Harold S. Hook
10.15 Supplemental Retirement Agreement between the company 19.5 Form 10-Q
and Michael J. Poulos for Third
Quarter 1990
10.16 Deferred Compensation Agreement between the company and 10.16* NA
Harold S. Hook
10.17 American General Corporation Retirement Plan for 10.17* NA
Directors (as amended and restated)
11 Computation of Earnings Per Share 11* NA
12 Computation of Ratio of Earnings to Fixed Charges 12* NA
13 Portions of American General's 1993 Annual Report to 13* NA
Shareholders that are expressly incorporated herein by
reference in this Form 10-K. Other sections of the
Annual Report furnished for the information of the
Commission are not deemed "filed" as part of this Form
10-K.
21 Subsidiaries of American General Corporation 21* NA
23 Consent of Ernst & Young, Independent Auditors 23* NA
24 Powers of attorney for the directors signing this Form 24* NA
10-K
</TABLE>
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
10
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(LOGO)
AMERICAN GENERAL CORPORATION
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN AFFILIATES
In millions
<TABLE>
<CAPTION>
At December 31, 1993
-------------------------------------------------
Amount
Cost Shown in
or Consolidated
Amortized Fair Balance
Type of Investment Cost Value Sheet
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Fixed maturity securities:
Bonds and notes
U.S. government obligations $ 882 $ 919 $ 919
States and political subdivisions 180 202 202
Foreign governments 565 601 601
Mortgage-backed securities
Pass-through securities guaranteed by U.S.
government and government agencies 313 361 361
CMOs collateralized by U.S. government and
government agencies 9,720 10,113 10,113
Other 184 204 204
- -----------------------------------------------------------------------------------------------------------------
Total mortgage-backed securities 10,217 10,678 10,678
- -----------------------------------------------------------------------------------------------------------------
Public utilities 3,558 3,861 3,861
Convertibles and bonds with warrants attached 3 3 3
All other corporate 9,353 10,082 10,082
Redeemable preferred stocks 127 133 133
- -----------------------------------------------------------------------------------------------------------------
Total fixed maturity securities 24,885 26,479 26,479
- -----------------------------------------------------------------------------------------------------------------
Equity securities
Common stocks - industrial, miscellaneous, and all
other 78 91 91
Perpetual preferred stocks 104 142 142
- -----------------------------------------------------------------------------------------------------------------
Total equity securities 182 233 233
- -----------------------------------------------------------------------------------------------------------------
Mortgage loans on real estate* 3,032 3,032
Investment real estate*
Investment properties 717 717
Acquired in satisfaction of debt 55 55
Policy loans 1,156 1,156
Other long-term investments* 137 137
Short-term investments 67 67
- -----------------------------------------------------------------------------------------------------------------
Total investments $ 30,231 $ 31,876
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of applicable allowance for losses. See Schedule VIII of this Form 10-K.
1993 FORM 10-K
11
<PAGE> 12
- --------------------------------------------------------------------------------
PART IV(Continued)
AMERICAN GENERAL CORPORATION
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF INCOME OF AMERICAN GENERAL CORPORATION (PARENT ONLY)
<TABLE>
<CAPTION>
For the Years Ended December 31,
In millions 1993 1992 1991
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Revenues
Dividends - affiliated $ 679 $ 541 $ 496
Interest income - affiliated 21 21 39
Net realized investment gains 19 17 -
Other income
Affiliated 24 24 26
Other 5 8 19
- ----------------------------------------------------------------------------------------------------------------
Total revenues 748 611 580
- ----------------------------------------------------------------------------------------------------------------
Expenses
Operating costs and expenses
Affiliated 8 9 10
Other 51 53 59
Interest expense
Affiliated 12 12 12
Other 109 114 128
- ----------------------------------------------------------------------------------------------------------------
Total expenses 180 188 209
- ----------------------------------------------------------------------------------------------------------------
Income before income tax benefit, equity in undistributed
net
income of subsidiaries, and cumulative effect of
accounting changes 568 423 371
- ----------------------------------------------------------------------------------------------------------------
Income tax benefit
Excluding tax rate related adjustment 36 40 45
Tax rate related adjustment 1 - -
- ----------------------------------------------------------------------------------------------------------------
Total income tax benefit 37 40 45
- ----------------------------------------------------------------------------------------------------------------
Equity in net income (loss) of subsidiaries (net of
dividends paid
to parent) (355) 70 64
- ----------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting changes 250 533 480
Cumulative effect of accounting changes*
Parent company (12) - -
Subsidiaries (34) - -
- ----------------------------------------------------------------------------------------------------------------
Net income $ 204 $ 533 $ 480
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* 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
12
<PAGE> 13
- --------------------------------------------------------------------------------
(LOGO)
AMERICAN GENERAL CORPORATION
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)
BALANCE SHEET OF AMERICAN GENERAL CORPORATION (PARENT ONLY)
<TABLE>
<CAPTION>
At December 31,
In millions 1993 1992 1991
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Assets
Investments
Subsidiaries, at equity $ 5,661 $ 5,350 $ 5,227
Other 37 65 120
Indebtedness from subsidiaries 780 650 427
Cash - - -
Other 83 71 82
- ------------------------------------------------------------------------------------------------------------------
Total assets $ 6,561 $ 6,136 $ 5,856
- ------------------------------------------------------------------------------------------------------------------
Liabilities
Short-term debt $ 315 $ 383 $ 336
Long-term debt(a) 1,012 1,061 1,127
Indebtedness to subsidiaries 27 29 32
Federal income taxes (7) (23) (49)
Other 77 70 81
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 1,424 1,520 1,527
- ------------------------------------------------------------------------------------------------------------------
Shareholders' equity
Common stock 365 368 1,894
Net unrealized gains on securities
Fixed maturity securities(b) 676 - -
Equity securities 33 88 70
Retained earnings(c) 4,229 4,263 3,959
Cost of treasury stock(d) (166) (103) (1,594)
- ------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 5,137 4,616 4,329
- ------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 6,561 $ 6,136 $ 5,856
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(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
13
<PAGE> 14
- --------------------------------------------------------------------------------
PART IV (Continued)
AMERICAN GENERAL CORPORATION
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)
STATEMENT OF CASH FLOWS OF AMERICAN GENERAL CORPORATION (PARENT ONLY)
<TABLE>
<CAPTION>
For the Years Ended December 31,
In millions 1993 1992 1991
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Operating activities
Income before cumulative effect of accounting changes $ 250 $ 533 $ 480
Reconciling adjustments to net cash provided by operating
activities
Equity in net loss (income) of subsidiaries (net of
dividends paid
to parent) 355 (70) (64)
Other, net (19) 10* 9
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 586 473 425
- ----------------------------------------------------------------------------------------------------------------
Investing activities
Net decrease in other investments 34 72* 115
Net (increase) decrease in indebtedness from subsidiaries (130) (223) 245
Net decrease in indebtedness to subsidiaries (2) (3) (2)
Other, net (68) (36) -
- ----------------------------------------------------------------------------------------------------------------
Net cash (used for) provided by investing activities (166) (190) 358
- ----------------------------------------------------------------------------------------------------------------
Financing activities
Net decrease in short-term debt (216) (18) (150)
Long-term debt issuance 100 - -
Long-term debt redemptions - - (10)
Dividend payments (238) (226) (227)
Common share purchases (78) (47) (378)
Other, net 12 8 (18)
- ----------------------------------------------------------------------------------------------------------------
Net cash (used for) financing activities (420) (283) (783)
- ----------------------------------------------------------------------------------------------------------------
Net decrease in cash - - -
Cash at beginning of year - - -
- ----------------------------------------------------------------------------------------------------------------
Cash at end of year $ - $ - $ -
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Amounts restated to conform with 1993 presentation.
AMERICAN GENERAL CORPORATION
14
<PAGE> 15
- --------------------------------------------------------------------------------
(LOGO)
AMERICAN GENERAL CORPORATION
SCHEDULE V - SUPPLEMENTARY INSURANCE INFORMATION
In millions
<TABLE>
<CAPTION>
At December 31, For the Years Ended December 31,
----------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Amorti-
zation
Premiums of
Deferred Insurance and Insurance Deferred
Policy and Other Net and Policy Other
Acquisition Annuity Consider- Investment Annuity Acquisition Operating
Segment Costs Liabilities(a) ations Income Benefits Costs Expenses
- ----------------------------------------------------------------------------------------------------------------------
1993
Retirement Annuities $ 113 $ 17,029 $ 30 $ 1,434 $ 1,125 $ 10 $ 95
Consumer Finance 8 353 138 56 80 6 486
Life Insurance 1,515 9,857 1,084 942 1,101 187 314
Other(b) 1 - - 5 5 - 35
- ----------------------------------------------------------------------------------------------------------------------
Consolidated $ 1,637(c) $ 27,239 $ 1,252 $ 2,437 $ 2,311 $ 203 $ 930
- ----------------------------------------------------------------------------------------------------------------------
1992
Retirement Annuities $ 474 $ 15,012 $ 23 $ 1,328 $ 1,069 $ 5 $ 96
Consumer Finance 6 364 119 55 76 3 454
Life Insurance 1,603 9,360(d) 1,071 948 1,053 163 366
Other(b) - - - (4) - - 34
- ----------------------------------------------------------------------------------------------------------------------
Consolidated $ 2,083 $ 24,736 $ 1,213 $ 2,327 $ 2,198 $ 171 $ 950
- ----------------------------------------------------------------------------------------------------------------------
1991
Retirement Annuities $ 403 $ 12,974 $ 20 $ 1,185 $ 967 $ 4 $ 82
Consumer Finance 5 347 105 52 63 4 430
Life Insurance 1,511 8,750(d) 1,043 942 1,035 171 359
Other(b) - - - (1) - - 37
- ----------------------------------------------------------------------------------------------------------------------
Consolidated $ 1,919 $ 22,071 $ 1,168 $ 2,178 $ 2,065 $ 179 $ 908
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(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
15
<PAGE> 16
- --------------------------------------------------------------------------------
PART IV (Continued)
AMERICAN GENERAL CORPORATION
SCHEDULE VI - REINSURANCE
In millions
<TABLE>
<CAPTION>
Percentage
of
Assumed Amount
Ceded to from Assumed
Gross Other Other Net to
Description Amount Companies Companies Amount Net
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Life insurance in force at year
end* $ 91,673 $ 6,133 $ 961 $ 86,501 1.1%
Premiums for the year
Life insurance and annuities $ 702 $ 47 $ 13 $ 668 1.9%
Accident and health insurance 194 - 13 207 6.4
Property-liability insurance 47 1 12 58 20.4
- ---------------------------------------------------------------------------------------------------------------
Total premiums $ 943 $ 48 $ 38 $ 933 4.1%
- ---------------------------------------------------------------------------------------------------------------
1992
Life insurance in force at year end $ 99,719 $ 10,807 $ 1,460 $ 90,372 1.6%
Premiums for the year
Life insurance and annuities $ 732 $ 45 $ 16 $ 703 2.3%
Accident and health insurance 176 1 14 189 7.4
Property-liability insurance 45 - 2 47 4.3
- ---------------------------------------------------------------------------------------------------------------
Total premiums $ 953 $ 46 $ 32 $ 939 3.4%
- ---------------------------------------------------------------------------------------------------------------
1991
Life insurance in force at year end $ 95,482 $ 8,995 $ 2,052 $ 88,539 2.3%
Premiums for the year
Life insurance and annuities $ 722 $ 41 $ 17 $ 698 2.4%
Accident and health insurance 171 - 11 182 6.0
Property-liability insurance 41 1 1 41 2.4
- ---------------------------------------------------------------------------------------------------------------
Total premiums $ 934 $ 42 $ 29 $ 921 3.1%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* 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
16
<PAGE> 17
- --------------------------------------------------------------------------------
(LOGO)
AMERICAN GENERAL CORPORATION
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
In millions
<TABLE>
<CAPTION>
Additions
----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance Charged Charged
at to to Charged Balance
Beginning Costs Realized to at
of and Investment Other End of
Description Year Expenses Gains Accounts Deductions(a) Year
- -------------------------------------------------------------------------------------------------------------------
1993
Allowance for losses on:
Finance receivables $ 162 $ 163 $ - $ - $ 141 $ 184
Below investment grade bonds 26 - 10 - 36 -
Mortgage loans on real estate 53 - 84 - 39 98
Investment real estate 129 - 199 - 75 253
Other long-term investments 22 - 33 - 12 43
- -------------------------------------------------------------------------------------------------------------------
Total $ 392 $ 163 $ 326 $ - $ 303 $ 578
- -------------------------------------------------------------------------------------------------------------------
1992
Allowance for losses on:
Finance receivables $ 151 $ 135 $ - $ - $ 124 $ 162
Below investment grade bonds 40 - 8 - 22 26
Mortgage loans on real estate 50 - 34 - 31 53
Investment real estate 62 - 82 - 15 129
Other long-term investments 3 - 19(b) - - 22
- -------------------------------------------------------------------------------------------------------------------
Total $ 306 $ 135 $ 143 $ - $ 192 $ 392
- -------------------------------------------------------------------------------------------------------------------
1991
Allowance for losses on:
Finance receivables $ 149 $ 137 $ - $ - $ 135 $ 151
Below investment grade bonds 43 - 11 - 14 40
Mortgage loans on real estate 31 - 30 - 11 50
Investment real estate 23 - 35 5 1 62
Other long-term investments 7 - 1(b) (5) - 3
- -------------------------------------------------------------------------------------------------------------------
Total $ 253 $ 137 $ 77 $ - $ 161 $ 306
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(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
17
<PAGE> 18
- --------------------------------------------------------------------------------
PART IV (Continued)
AMERICAN GENERAL CORPORATION
SCHEDULE IX - SHORT-TERM BORROWINGS
In millions
<TABLE>
<CAPTION>
Weighted
Average
Weighted Maximum Average Rate
Average Amount Amount on Amount
Interest Outstanding Outstanding Outstanding
Category of Aggregate Balance at Rate at at any during the during the
Short-Term Borrowings(a) December 31, December 31, Month End Period(b) Period(b)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
1993
Corporate(c)
Commercial paper $ 166 3.4% $ 346 $ 207 3.1%
Real Estate(d)
Commercial paper $ 413 3.3% $ 564 $ 485 3.2%
Consumer Finance(e)
Commercial paper $ 1,644 3.3% $ 1,744 $ 1,633 3.2%
Bank borrowings 171 3.5 171 150 3.4
- -----------------------------------------------------------------------------------------------------------------
1992
Corporate(c)
Commercial paper $ 329 3.7% $ 605 $ 328 3.6%
Bank borrowings - - 25 4 3.8
Real Estate(d)
Commercial paper $ 567 3.6% $ 591 $ 578 3.6%
Consumer Finance(e)
Commercial paper $ 1,708 3.5% $ 2,045 $ 1,815 3.8%
Bank borrowings 148 3.8 159 77 4.6
- -----------------------------------------------------------------------------------------------------------------
1991
Corporate(c)
Commercial paper $ 288 4.8% $ 447 $ 153 5.1%
Bank borrowings - - 28 6 5.5
Real Estate
Commercial paper $ 583 4.9% $ 593 $ 496 5.9%
Consumer Finance(e)
Commercial paper $ 1,990 4.8% $ 2,105 $ 1,881 6.2%
Bank borrowings 40 6.6 123 45 7.5
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(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
18
<PAGE> 19
- --------------------------------------------------------------------------------
(LOGO)
SIGNATURES
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
19
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Filed Herewith(*),
Nonapplicable (NA), or
Incorporated by Reference from
------------------------------
American General
Registration No.
Exhibit or
Number Exhibit Report
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
3.1 Restated Articles of Incorporation of American General 4.1 33-33115
Corporation (including Statement of Resolution
Establishing Series of Shares of Series A Junior
Participating Preferred Stock)
3.2 Amended and Restated Bylaws of American General 3.2* NA
Corporation
4 There have not been filed as exhibits to this Form 10-K NA NA
certain long-term debt instruments, none of which
relates to authorized indebtedness that exceeds 10% of
the consolidated assets of the company and its
subsidiaries. American General hereby agrees to furnish
a copy of any such instrument to the Commission upon
request.
10.1 1984 Stock and Incentive Plan for key employees of the 10.5 Form 10-K
company and its subsidiaries for 1984
10.2 1984 Stock and Incentive Plan (Amended and Restated 10.2* NA
Effective as of February 8, 1994) for key employees of
the company and its subsidiaries
10.3 Restoration of Retirement Income Plan for Certain 10.3* NA
Employees Participating in the Restated American
General Retirement Plan (Restoration of Retirement
Income Plan)
10.4 First Amendment to Restoration of Retirement Income 10.4* NA
Plan
10.5 Second Amendment to Restoration of Retirement Income 10.5* NA
Plan
10.6 American General Supplemental Thrift Plan 10.6* NA
10.7 First Amendment to American General Supplemental Thrift 10.7* NA
Plan
10.8 Second Amendment to American General Supplemental 10.8* NA
Thrift Plan
10.9 Third Amendment to American General Supplemental Thrift 10.9* NA
Plan
10.10 Form of Severance Agreements between the company and 10.10* NA
each of the following: Harold S. Hook, James R. Tuerff,
Robert M. Devlin, Michael G. Atnip, Jon P. Newton,
Nicholas R. Rasmussen, Kurt G. Schreiber, Peter V.
Tuters, Robert D. Womack, Austin P. Young, Stephen D.
Bickel, Robert S. Cauthen, Jr., James S. D'Agostino,
Jr., Peter P. Huff, and Daniel Leitch III.
</TABLE>
- --------------------------------------------------------------------------------
(continued on next page)
<PAGE> 21
<TABLE>
<CAPTION>
Filed Herewith(*),
Nonapplicable (NA), or
Incorporated by Reference from
------------------------------
American General
Registration No.
Exhibit or
Number Exhibit Report
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
10.11 Supplemental Retirement Agreement between the company 10.11* NA
and Harold S. Hook
10.12 American General Supplemental Retirement Plan Trust 10.12* NA
(relating to Exhibit 10.11 hereto)
10.13 Amendment to Supplemental Retirement Agreement between 10.13* NA
the company and Harold S. Hook
10.14 Second Amendment to Supplemental Retirement Agreement 10.14* NA
between the company and Harold S. Hook
10.15 Supplemental Retirement Agreement between the company 19.5 Form 10-Q
and Michael J. Poulos for Third
Quarter 1990
10.16 Deferred Compensation Agreement between the company and 10.16* NA
Harold S. Hook
10.17 American General Corporation Retirement Plan for 10.17* NA
Directors (as amended and restated)
11 Computation of Earnings Per Share 11* NA
12 Computation of Ratio of Earnings to Fixed Charges 12* NA
13 Portions of American General's 1993 Annual Report to 13* NA
Shareholders that are expressly incorporated herein by
reference in this Form 10-K. Other sections of the
Annual Report furnished for the information of the
Commission are not deemed "filed" as part of this Form
10-K.
21 Subsidiaries of American General Corporation 21* NA
23 Consent of Ernst & Young, Independent Auditors 23* NA
24 Powers of attorney for the directors signing this Form 24* NA
10-K
</TABLE>
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.
- --------------------------------------------------------------------------------
<PAGE> 1
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
(AS AMENDED OCTOBER 28, 1993)
OF
AMERICAN GENERAL CORPORATION
HOUSTON, TEXAS
{AMERICAN GENERAL LOGO}
<PAGE> 2
AMENDED AND RESTATED BYLAWS
OF
AMERICAN GENERAL CORPORATION
ARTICLE I.
CAPITAL STOCK
SECTION 1. Certificates for Shares. The certificates for shares of the
capital stock of the company shall be in such form as shall be approved by the
board of directors. The certificates shall be signed by the chairman of the
board or president, and also by the secretary, and may be sealed with the seal
of the company or a facsimile thereof. Where any such certificate is
countersigned by a transfer agent, or registered by a registrar, either of
which is other than the company itself or an employee of the company, the
signatures of the chairman of the board or president and of the secretary may
be facsimiles. The certificates shall be consecutively numbered and shall be
entered on the stock records of the company as they are issued, and each shall
exhibit the holder's name and the number of shares.
SECTION 2. Transfer of Shares. The shares of stock of the company shall
be transferable only on the stock records of the company by the registered
holders thereof in person or by their duly authorized attorneys or legal
representatives, upon surrender of certificates representing such shares duly
endorsed or in proper form for transfer, with appropriate evidence of authority
to transfer, and cancellation thereof.
SECTION 3. Fixing of Record Date; Closing of Transfer Books. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders, or any adjournment thereof, or entitled to receive
payment of any dividend, or for any other proper purpose, the board of
directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than fifty
(50) days and, in case of a meeting of shareholders, not less than ten (10)
days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. In lieu of fixing a record date,
the board of directors may provide that the stock transfer books of the company
shall be closed for a stated period not to exceed, in any case, fifty (50)
days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten (10) days immediately
preceding such meeting. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders entitled to notice
of or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the date on which the notice of the meeting is mailed or
the date on which the resolution of the board of directors declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided herein, such determination shall apply
to any adjournment of the
Page 1 of 18
<PAGE> 3
meeting except where the determination has been made through the closing of
stock transfer books and the stated period of closing has expired.
SECTION 4. Registered Shareholders. The company shall be entitled to
treat the holder of record of any share or shares of stock as the holder in
fact thereof, and accordingly shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person or entity, whether or not it shall have express or other notice thereof,
except as expressly provided by the laws of the State of Texas.
SECTION 5. Lost, Destroyed, or Stolen Stock Certificates. No certificate
for shares of stock in the company shall be issued in place of any certificate
alleged to have been lost, destroyed, or stolen except on production of
evidence satisfactory to the board of directors, or such person or persons as
it may designate, of such loss, destruction, or theft, and, if the board of
directors so requires, upon the furnishing of an indemnity bond in such amount
(but not to exceed twice the then-market value of the shares represented by the
certificate) and with such terms and such surety or sureties as the board of
directors may, in its discretion, require.
SECTION 6. Regulations. The board of directors shall have the power and
authority to make all such rules and regulations to the extent permitted by
law, the articles of incorporation, and these bylaws, as it may deem expedient
concerning the issue, transfer, registration, or replacement of certificates
for shares of the capital stock of the company.
ARTICLE II.
SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of the shareholders shall
be held at such hour as shall be designated by the board of directors either
(i) on the last business day of April of each year, or (ii) on such other date,
not more than thirteen (13) months after the last preceding annual meeting, as
the board of directors shall designate, for the purpose of electing directors
and for the transaction of such other business as may properly be brought
before the meeting.
SECTION 2. Special Meetings. A special meeting of shareholders for any
purpose or purposes may be called at any time by the chairman of the board, the
president, or a majority of the board of directors, and shall be called by the
chairman of the board, the president, or the secretary upon the written request
therefor, stating the purpose or purposes of the meeting, delivered to such
officer, signed by the holders of at least ten percent (10%) of the issued and
outstanding shares entitled to vote at such meeting. Only such business as
shall be stated or indicated in the notice of the meeting shall be transacted
at any such special meeting of shareholders.
SECTION 3. Place. The annual meeting of shareholders may be held at any
place as may be designated in the call of the meeting. Meetings of shareholders
shall be held at the principal office of the company unless another place is
designated for a meeting in the manner provided herein.
Page 2 of 18
<PAGE> 4
SECTION 4. Notice. Written or printed notice stating the place, day, and
hour of each meeting of shareholders, and in case of a special meeting the
purpose or purposes for which the meeting is called, shall be delivered not
less than ten (10) nor more than fifty (50) days before the date of the
meeting, either personally or by mail, by or at the direction of the officer
calling the meeting, to each shareholder of record entitled to vote at such
meeting.
SECTION 5. Quorum. Except as may be otherwise provided by law or the
articles of incorporation, no meeting of shareholders shall elect directors, or
transact other business of the company, unless there shall be present, in
person or by proxy, a quorum, which is defined as the holders of a majority of
the issued and outstanding shares of capital stock of the company entitled to
vote at the meeting, and the act of a majority of the shares represented at any
meeting at which a quorum is present shall be the act of the meeting. The
shareholders present at any meeting, though less than a quorum, may adjourn the
meeting, and any business may be transacted at the adjourned meeting that could
have been transacted at the original meeting. No notice of adjournment, other
than the announcement at the meeting, need be given.
SECTION 6. Proxies. At any meeting of shareholders, a shareholder may
vote either in person or by proxy executed in writing by the shareholder or by
his duly authorized attorney-in-fact. Such proxies shall be filed with the
secretary of the company before or at the time of the meeting. No proxy shall
be valid after eleven (11) months from the date of its execution unless
otherwise provided in the proxy. Each proxy shall be revocable unless it is
expressly provided therein that the proxy shall be irrevocable or unless it is
otherwise made irrevocable by law.
SECTION 7. Voting of Shares. Each outstanding share of a class of stock
entitled to vote upon a matter submitted to a vote at a meeting of shareholders
shall be entitled to one vote on such matter. Votes for directors, and upon
demand of any shareholder votes upon any question before a meeting, shall be by
ballot.
SECTION 8. Presiding Officer and Secretary. The chairman of the board, or
in his absence the president, shall preside at each meeting of shareholders,
and in the absence of both such officers, a vice chairman of the board shall
preside. Should none be present, the meeting shall appoint one of the vice
presidents, or in the absence of all vice presidents, one of the shareholders,
to preside at the meeting. The records of each meeting shall be kept by the
secretary, or in his absence an assistant secretary, or in the absence of both,
a person appointed by the chairman of the meeting.
SECTION 9. List of Shareholders. A complete list of shareholders entitled
to vote at each shareholders' meeting, arranged in alphabetical order, with the
address of each and number of shares of each class and series of stock held by
each, shall be prepared by the secretary and filed at the registered office of
the company, and shall be subject to inspection by any shareholder during usual
business hours for a period of ten (10) days prior to such meeting. It shall be
produced at such meeting and shall at all times during such meeting be subject
to inspection by any shareholder.
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SECTION 10. Inspectors of Election. The chairman of each meeting of
shareholders shall appoint a committee to act as inspectors of election. Such
committee shall report to the meeting the number of shares of each class and
series of stock, and of all classes, represented by proxy and shall prepare a
list showing the total number of shares of each class and series of stock, and
of all classes, represented either in person or by proxy. The inspectors of
election shall oversee the vote of the shareholders for the election of
directors and for any other matters that are put to a vote of shareholders at
the meeting; receive a ballot evidencing votes cast by the proxy committee;
judge the qualifications of shareholders voting; collect, count, and report the
results of ballots cast by any shareholders voting in person; and perform such
other duties as may be required by the chairman of the meeting or the
shareholders.
ARTICLE III.
BOARD OF DIRECTORS
SECTION 1. Number, Term of Office, Nomination, Vacancy and Removal. The
business affairs and property of the company shall be managed and controlled by
the board of directors, and, subject to the restrictions imposed by law, by the
articles of incorporation, or by these bylaws, the board of directors may
exercise all of the powers of the company.
(a) Number. Subject to the rights of holders of any class or series of
stock having a preference over the Common Stock of the company as to
dividends or upon liquidation to elect additional directors under
specified circumstances, the number of the directors of the company
shall be fixed from time to time by the board of directors but
shall not be fewer than three (3) nor more than twenty-five (25).
Within these limits, the number of directors may be increased or
decreased (provided that any decrease does not shorten the term of
any incumbent director) from time to time by resolution of the
board of directors. Directors must be shareholders, but they need
not be residents of the State of Texas.
(b) Election and Terms. Subject to the rights of holders of any class
or series of stock having a preference over the Common Stock of the
company as to dividends or upon liquidation to elect additional
directors under specified circumstances, directors shall be elected
at the annual meeting of the shareholders. Each director shall
serve until the next annual meeting and until his successor shall
have been elected and qualified, or until his earlier death,
resignation, or removal; provided, however, that the term of any
director who is also an officer of the company or of any subsidiary
of the company shall simultaneously terminate when that director
ceases, for whatever reason, to be an officer of the company or of
any subsidiary of the company, unless the board of directors, in
its discretion and upon resolution adopted by a majority of the
remaining directors then in office, waives the applicability
hereof.
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(c) Nominations. Subject to the rights of holders of any class or
series of stock having a preference over the Common Stock of the
company as to dividends or upon liquidation to elect directors
under specified circumstances, nominations of persons for election
to the board of directors may be made by the board of directors or
a committee appointed by the board of directors or by any
shareholder entitled to vote for the election of directors
generally. However, any shareholder entitled to vote in the
election of directors generally may nominate one or more persons
for election as directors only if written notice of such
shareholder's intent to make such nomination or nominations has
been given by notice in writing, either by personal delivery or by
first class United States mail, postage prepaid, to the Secretary
of the company at the principal office of the company not later
than sixty (60) days nor more than ninety (90) days prior to any
meeting of the shareholders called for the election of directors;
provided, however, that in the event that less than seventy (70)
days' notice of the date of the meeting is given to shareholders,
such written notice shall be delivered or mailed, as prescribed,
not later than the close of business on the tenth (10th) day
following the day on which notice of the meeting was mailed to
shareholders. Each such notice shall set forth: (i) the name and
address of the shareholder proposing to make such nomination or
nominations; (ii) a representation of the shareholder as to the
class and number of shares of the capital stock of the company
which are beneficially owned by the shareholder, and the
shareholder's intent to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice; (iii) a
description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (iv) the name, age,
business address and residence address, business experience or
other qualifications of the person or persons to be nominated; (v)
the principal occupation or employment of such person or persons;
(vi) the class and number of shares of the capital stock of the
company which are beneficially owned by such person or persons;
(vii) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission, had the nominee been nominated, or intended to
be nominated, by the board of directors; and (viii) the consent of
each nominee to serve as a director of the company if so elected.
No shareholder nomination shall be effective unless made in
accordance with the procedures set forth herein. The person
presiding at the meeting shall, if the facts warrant, determine and
declare to the meeting that a shareholder nomination was not made
in accordance with the bylaws, and if he should so determine, he
shall so declare to the meeting and the defective nomination shall
be disregarded.
(d) Vacancies. Subject to the rights of the holders of any class or
series of stock having a preference over the Common Stock of the
company as to dividends or upon liquidation to elect directors
under specified circumstances, any vacancies on the board of
directors resulting from death, resignation,
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retirement, disqualification, removal from office or other cause
shall be filled by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum
of the board of directors. Any director so elected by the board of
directors to fill a vacancy shall hold office for the remainder of
the full term of the director whose departure from the board
created the vacancy. A directorship to be filled by reason of an
increase in the number of directors by action of the board of
directors (within the limits set forth in paragraph (a) of Section
1 of this article) may be filled by the board of directors for a
term of office continuing only until the next election at an annual
meeting or at a special meeting of shareholders called for that
purpose; provided, however, that the board of directors shall not
fill more than two such directorships during the period between two
successive annual meetings of shareholders.
(e) Removal. Subject to the rights of any class or series of stock
having a preference over the Common Stock of the company as to
dividends or upon liquidation to elect directors under specified
circumstances, any director may be removed from office, with or
without cause, only by the affirmative vote of the holders of at
least seventy-five percent (75%) of the combined voting power of
the then outstanding shares of all classes of stock of the company
entitled to vote generally in the election of directors, voting
together as a single class.
SECTION 2. Annual Meeting. Each newly elected board of directors shall
hold its first meeting immediately following the annual meeting of shareholders
each year, for the purposes of organization, the election of officers of the
company, and the transaction of such other business as may properly come before
such meeting, and no notice of such meeting shall be necessary.
SECTION 3. Regular Meetings. In addition to the annual meeting of the
board of directors, four (4) regular meetings shall be held in each year at the
time and place designated by the chairman of the board, for the purpose of
transacting any business within the powers of the board. Notice of such
regular meetings shall be given as provided herein.
SECTION 4. Special Meetings. A special meeting of the board of directors
shall be held whenever called by the chief executive officer or by the
secretary on the written request of any five (5) of the directors, and at such
time and place as may be specified in the notice thereof. Such notice, or any
waiver pursuant to Article VII, Section 6 hereof, need not state the purpose or
purposes of such meeting.
SECTION 5. Notice. The secretary shall give notice to each director of
each regular and special meeting in person or by mail or by any form of
telecommunication, at least twenty-four (24) hours before the meeting. The
attendance of a director at any meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business on the grounds that the meeting
has not been lawfully called or convened.
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SECTION 6. Quorum. A majority of the directors in office shall constitute
a quorum for the transaction of business, but if at any meeting of the board of
directors there is less than a quorum present, a majority of those present or
any director solely present may adjourn the meeting from time to time without
further notice. The act of a majority of the directors present at a meeting at
which a quorum is in attendance shall be the act of the board of directors,
unless the act of a greater number is required by law, the articles of
incorporation, or these bylaws.
SECTION 7. Order of Business and Officers at Meetings. At meetings of the
board of directors, business shall be transacted in such order as the board may
determine from time to time. At all meetings of the board of directors, the
chairman of the board shall preside, and in the absence of the chairman of the
board the president shall preside, and in the absence of both, a vice chairman
shall preside. Should all three be absent, a chairman shall be chosen by the
board of directors from among the directors present. The secretary of the
company shall act as secretary of all meetings of the board of directors, or in
the absence of the secretary an assistant secretary shall so act; or in the
absence of both, the presiding officer shall appoint any person to act as
secretary of the meeting.
SECTION 8. Compensation. Directors shall not receive any stated salary
for their service as directors, but by resolution of the board of directors an
annual retainer may be paid and a fixed sum and expenses of attendance, if any,
may be allowed for attendance at any meeting of the board of directors;
provided that nothing contained herein shall be construed to preclude any
director from serving the company in any other capacity and receiving
compensation therefor.
SECTION 9. Presumption of Assent. A director of the company who is
present at a meeting of the board of directors at which action on any company
matter is taken shall be presumed to have assented to the action unless his
dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the company immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
SECTION 10. Retirement. No director of the company shall stand for
reelection as a director following his seventieth birthday with the exception
of any person who shall serve, or has served, as chief executive officer of the
company at any time, who shall not be prevented by this provision from standing
for reelection as a director for five years after retirement from the position
of chief executive officer, or until the annual meeting following the
attainment of age seventy-five, whichever shall first occur. Any director who
is also an officer, other than the chief executive officer, of the company or
an officer of any subsidiary of the company shall retire as provided in Section
1 of this article.
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ARTICLE IV.
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. Executive Committee. The board of directors, acting by
resolution adopted by a majority of the full board of directors, may elect from
among its members an executive committee of not fewer than three (3) nor more
than ten (10) members, which committee shall have and may exercise all of the
authority of the board of directors in the business and affairs of the company
except where action of the full board of directors is specified by law. The
chief executive officer shall be a member of the executive committee and shall
be chairman of such committee. The executive committee shall meet at such times
and places as may be fixed by the committee, or on the call of the chief
executive officer, at such times and places as may be designated in the call of
such meetings. The executive committee shall maintain a record of its
proceedings and shall report to each regular meeting of the board of directors
a summary of the actions taken by such committee since the last regular meeting
of the board of directors.
The executive committee shall function as the company's nominating
committee. In its capacity as nominating committee, it has the power and duty
to recommend candidates for election to the board of directors, to the
committees of the board, and for the chairmanship of each committee except the
executive committee.
SECTION 2. Audit Committee. The board of directors, acting by resolution
adopted by a majority of the full board of directors, may elect from among its
members an audit committee of not fewer than three (3) nor more than ten (10)
members, none of whom shall be an officer of the company or of any of its
subsidiaries during the time of service on such committee. The chairman of the
committee shall be elected by a majority of the full board of directors at the
time the committee is elected or at such time as it becomes necessary to elect
a new chairman because of the chairman's death or resignation. The audit
committee shall meet at such times and places as may be fixed by the committee,
or on the call of its chairman, at such times and places as may be designated
in the call of such meetings. The committee shall also meet promptly upon the
request of the company's principal independent auditors. The audit committee
shall maintain a record of its proceedings and shall report to the board of
directors a summary of its activities not less frequently than twice each
fiscal year.
The audit committee shall have the following powers and duties:
(a) to recommend to the board of directors each year the engagement of a
firm of certified public accountants to act as principal independent
auditors for the company and its subsidiaries;
(b) to review at regular intervals audit arrangements for the company and
its subsidiaries and the reports to be rendered;
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(c) to review in advance the plan and scope of the audit of the company
and its subsidiaries to be performed for the following year by the
principal independent auditors and the related detailed estimate of
fees;
(d) to review and approve non-audit services and fees of the company's
principal independent auditors, giving appropriate consideration to
the possible effect on the auditors' independence of each non-audit
service provided;
(e) to review periodically with the company's principal independent
auditors the accounting principles and policies of the company and
such matters relating to the internal auditing systems and procedures
and the internal accounting controls of the company and its
subsidiaries as the committee or the board of directors may determine
to be necessary or desirable;
(f) to review periodically the coordination between the company's
principal independent auditors and the company's internal audit
staff, and to review with the company's principal independent
auditors, upon completion of their audit, their findings and
recommendations and the responses of the company's management to such
findings and recommendations;
(g) to review the annual financial statements issued by the company to
its security holders;
(h) to conduct from time to time, or cause to be conducted, such
investigations or inquiries relating to accounting or audit matters
as the facts presented to the committee warrant and as the committee
may deem necessary or appropriate in the interest of the company and
its shareholders;
(i) to confer with and direct the officers of the company to the extent
necessary to exercise the committee's powers and to carry out its
duties;
(j) to meet with representatives of any independent auditors of the
company and/or its internal audit staff in the absence of management,
whenever the committee deems such to be appropriate; and
(k) to perform such additional duties as may be assigned to the committee
by the board of directors.
SECTION 3. Personnel Committee. The board of directors, acting by
resolution adopted by a majority of the full board of directors, may elect from
among its members a personnel committee of not fewer than three (3) nor more
than ten (10) members, none of whom shall be an officer of the company or of
any of its subsidiaries during the time of service on this committee. The
chairman of the committee shall be elected by a majority of the full board of
directors at the time the committee is elected or at such time as it becomes
necessary to elect a new chairman because of the chairman's death or
resignation. The committee shall meet at such times and places as may be fixed
by the committee, or on the call of its chairman, at such times and places as
may be designated in the call of such
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meetings. The committee shall maintain a record of its proceedings and shall
report to each regular meeting of the board of directors a summary of the
actions taken by the committee since the last regular meeting of the board of
directors.
The personnel committee shall have the following powers and duties:
(a) to review the relationship of the contribution of key officers and
employees to the company's performance and prospects;
(b) to review and approve and recommend to the board of directors for
approval or ratification the annual salary of any officer of the
company or of a subsidiary of the company whose annual salary is or
will be of an amount which will place him or her among the
twenty-five most highly salaried officers in the group;
(c) to review and approve or ratify the annual salary of any officer or
employee of the company or of a subsidiary of the company whose
annual salary is or will be of an amount which will place him or her
among the second twenty-five most highly salaried officers in the
group;
(d) to review and approve incentive compensation and other employee
benefit programs;
(e) to review key personnel issues; and
(f) to perform such additional duties as may be assigned to the committee
by the board of directors.
SECTION 4. Other Committees. In addition to the executive, audit, and
personnel committees, the board of directors may, by resolution adopted by a
majority of the full board of directors, elect from among its own members such
other committees as it shall deem to be appropriate, each of which shall have
and may exercise that authority of the board of directors which shall have been
delegated to it in the resolution creating such committee, except as may be
prohibited by law.
SECTION 5. Term of Office and Committee Size. The term of office of each
member of any committee shall be the period designated by the board of
directors, but shall not be longer than one year and until his successor shall
be elected, unless such member shall be removed by the board of directors, as
provided in this section, or the committee is dissolved by the board of
directors. A member of any committee may be removed during the period between
annual meetings by action of the majority of the full board of directors at any
regular or special meeting. The membership of any committee elected by the
board of directors may be increased or decreased during the period between
annual meetings, subject to any limitations of this article, by action of the
majority of the full board of directors at any regular or special meeting.
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SECTION 6. Quorum. A majority of the members of any committee shall
constitute a quorum for the transaction of business. The act of the majority of
the members present at a meeting at which a quorum is present shall be the act
of the committee.
SECTION 7. Responsibility. The designation of any committee and the
delegation thereto of authority shall not operate to relieve the board of
directors, or any member thereof, of any responsibility imposed upon it or him
by law.
SECTION 8. Vacancies. The board of directors may fill all vacancies in
any committee.
ARTICLE V.
OFFICERS
SECTION 1. Titles and Term of Office. The board of directors at its
annual meeting shall elect officers of the company as follows: a chairman of
the board, a president and a secretary. The board of directors may also elect
one or more vice chairmen. The board of directors or the executive committee
may elect other officers, including one or more executive vice presidents,
senior vice presidents, vice presidents, a general counsel, a controller, a
general auditor, and other officers and assistant officers as the board of
directors or the executive committee deems necessary. Each officer shall hold
office for the term for which he is elected and until his successor shall have
been duly elected and qualified, or until his death, resignation, or removal in
the manner hereinafter provided. One person may hold more than one office
except that the president shall not also hold the office of secretary. The
chairman of the board, each vice chairman of the board, if any, and the
president shall be directors of the company, but no other officer need be a
director.
SECTION 2. Removal. Any officer who may be elected only by the board of
directors may be removed only by the board of directors. Any officer who may be
elected by either the board of directors or the executive committee may be
removed by either the board of directors or the executive committee. Removal of
any officer may occur whenever in the judgment of the board of directors or the
executive committee, as the case may be, the best interests of the company will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election of an officer shall not of
itself create contract rights.
SECTION 3. Vacancies. A vacancy in the office of any officer may be
filled for the unexpired portion of the term by the board of directors.
SECTION 4. Chief Executive Officer. The board of directors shall
designate either the chairman of the board or the president to be the chief
executive officer of the company. All other officers of the company shall be
subordinate to the chief executive officer and shall report to him as he may
direct. The chief executive officer shall have responsibility for the general
management and direction of the business of the company and for the execution
of all orders and resolutions of the board of directors. In addition to the
powers prescribed in
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these bylaws, he shall have all of the powers usually vested in the chief
executive officer of a corporation and such other powers as may be prescribed
from time to time by the board of directors. He may delegate any of his powers
and duties to any other officer with such limitations as he may deem proper.
SECTION 5. Chairman of the Board. The chairman of the board shall preside
at all meetings of the shareholders and of the board of directors; shall have
authority to execute all legal instruments necessary for the transaction of the
company's business; may sign certificates for shares of capital stock of the
company; and may be designated as chief executive officer, as provided in these
bylaws. He shall be a member of all standing committees of the board of
directors except those the membership of which is restricted to non-officer
directors, and shall have such other responsibilities and powers as may be
prescribed in these bylaws or from time to time by the board of directors. If
he is not designated as chief executive officer, the chairman of the board
shall have such powers and perform such duties as may be delegated to him by the
chief executive officer, and shall be vested with all the powers and authorized
to perform all the duties of the chief executive officer in his absence or
inability to act.
SECTION 6. Vice Chairman of the Board. In the absence of the chairman of
the board and the president, a vice chairman of the board shall preside at all
meetings of the shareholders and the board of directors; shall have authority
to execute all legal instruments necessary for the transaction of the company's
business; and shall have such other powers and duties as may be delegated to
him by the board of directors or the chief executive officer.
SECTION 7. President. In the absence of the chairman of the board, the
president shall preside at all meetings of the shareholders and of the board of
directors; shall have authority to execute all legal instruments necessary for
the transaction of the company's business; may sign certificates for shares of
capital stock of the company; and may be designated as chief executive officer,
as provided in these bylaws. He may delegate such of his powers and duties to
other officers with such limitations as he may deem proper. The president shall
have such other powers and duties as may be prescribed in these bylaws or from
time to time by the board of directors. If he is not designated as chief
executive officer, the president shall have such powers and perform such duties
as may be delegated to him by the chief executive officer, and shall be vested
with all the powers and authorized to perform all the duties of the chief
executive officer in his absence or inability to act.
SECTION 8. Vice President. Each vice president shall have such powers and
duties as may be delegated to him by the board of directors or the chief
executive officer, or any authorized officers senior to the vice president, and
may exercise the powers of the president during his absence or inability to
act. Any action taken by a vice president in the performance of the duties of
the president shall be conclusive evidence of the absence or inability to act
of the president at the time such action was taken.
SECTION 9. Secretary. The secretary shall keep the minutes of all
meetings of the board of directors, of the shareholders, and of the executive
committee; shall issue all notices; may sign with the chairman of the board, a
vice chairman of the board, or the president in the name of the company all
legal instruments necessary for the transaction of the company's
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business and affix the seal of the company thereto; shall sign with the
chairman of the board or president all certificates for shares of the capital
stock of the company; and shall have such other powers and duties as may be
prescribed by the board of directors or the chief executive officer.
SECTION 10. Treasurer. The treasurer shall have responsibility for the
safekeeping and custody of all the funds and securities of the company; shall
establish and execute programs for the provision of the capital required by the
company, including negotiating the procurement of capital and maintaining the
required financial arrangements; shall establish and maintain adequate sources
for the company's short-term borrowings; shall establish and maintain liaison
with investment bankers and financial analysts; shall establish and maintain
banking arrangements; and shall have such other powers and duties as may be
prescribed by the board of directors or the chief executive officer.
SECTION 11. Powers and Duties of Assistant Secretaries. Each assistant
secretary shall have the usual powers and duties pertaining to his office,
together with such other powers and duties as may be assigned to him by the
secretary, and may exercise the powers of the secretary during that officer's
absence or inability to act. Any action taken by an assistant secretary in the
performance of the duties of the secretary shall be conclusive evidence of the
absence or inability to act of the secretary at the time such action was taken.
SECTION 12. Powers and Duties of Assistant Treasurers. Each assistant
treasurer shall have the usual powers and duties pertaining to his office,
together with such other powers and duties as may be assigned to him by the
treasurer, and may exercise the powers of the treasurer during that officer's
absence or inability to act. Any action taken by an assistant treasurer in the
performance of the duties of the treasurer shall be conclusive evidence of the
absence or inability to act of the treasurer at the time such action was taken.
ARTICLE VI.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. Actions. The company shall indemnify any person who was or
is a named defendant or respondent or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, arbitrative, or investigative (including any action
by or in the right of the company), or any appeal of such action, suit or
proceeding and any inquiry or investigation that could lead to such an action,
suit or proceeding, by reason of the fact that he is or was a director, officer
or employee of the company, or is or was serving at the request of the company
as a director, officer, partner, venturer, proprietor, trustee, employee, or
similar functionary of another foreign or domestic corporation or non-profit
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise (any such person acting in any such capacity
being hereinafter referred to as "potential indemnitee"), against judgments,
penalties (including excise and similar taxes), fines, amounts paid in
settlement, and reasonable expenses (including court costs and attorneys' fees)
actually incurred by him in connection with such action, suit or proceeding, if
he acted in good faith and in a manner he
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reasonably believed, (i) in the case of conduct in his official capacity as a
director of the company, to be in the best interests of the company and (ii) in
all other cases, to be not opposed to the best interests of the company; and,
with respect to any criminal action or proceeding, if he had no reasonable
cause to believe his conduct was unlawful; provided, however, that in
connection with any action, suit or proceeding in which the person shall have
been adjudged to be liable to the company or liable on the basis that personal
benefit was improperly received by him, whether or not the benefit resulted
from an action taken in the person's official capacity as a director or
officer, (i) indemnification shall be limited to reasonable expenses (including
court costs or attorneys' fees) actually incurred in connection with such
proceeding, and (ii) indemnification shall be prohibited, if the person is
found liable for willful or intentional misconduct in the performance of his
duty to the company. The termination of any action, suit or proceeding by
judgment, order, settlement, or conviction, or on a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in the
best interests of the company; and, with respect to any criminal action or
proceeding, shall not create a presumption that the person had reasonable cause
to believe that his conduct was unlawful.
SECTION 2. Success on Merits or Otherwise. Where a potential indemnitee
has been wholly successful, on the merits or otherwise, in defense of any such
action, suit or proceeding, he shall be indemnified against reasonable expenses
(including court costs and attorneys' fees) actually incurred by him in
connection therewith.
SECTION 3. Determination that Indemnification is Proper. Any
indemnification under Section 1 of this article (unless otherwise ordered by a
court of competent jurisdiction) shall be made by the company only as
authorized in a specific case upon a determination that the applicable standard
of conduct has been met. Such determination shall be made (i) by the board of
directors by a majority vote of a quorum consisting of directors who at the
time of the vote have not been named as defendants or respondents in such
action, suit or proceeding, or (ii) if such a quorum cannot be obtained, by a
majority vote of a committee of the board of directors, designated to act in
the matter by a majority vote of all directors, consisting solely of two or
more directors who at the time of the vote are not named defendants or
respondents in such action, suit or proceeding, or (iii) by special legal
counsel selected by the board of directors (or a committee thereof) by vote in
the manner set forth in subparagraphs (i) and (ii) of this Section 3, or if
such a quorum cannot be obtained and such a committee cannot be established, by
a majority vote of all directors, or (iv) by the shareholders in a vote that
excludes the shares held by any director who is named as a defendant or
respondent in such action, suit or proceeding.
SECTION 4. Expenses Prior to Final Disposition. Reasonable expenses
incurred by a director, officer, or employee of the company or other person
entitled to indemnity hereunder, who was, is or is threatened to be made a
named defendant or respondent in any such action, suit or proceeding described
in Section 1 shall be paid by the company in advance of the final disposition
thereof upon receipt of a written affirmation by the director, officer,
employee or other person of his good faith belief that he has met the standard
of conduct necessary for indemnification under this article and a written
undertaking by or on behalf of the director, officer, employee or other person
to repay such amount if it is
Page 14 of 18
<PAGE> 16
ultimately determined that the person has not met such necessary standard of
conduct or that indemnification is prohibited by Section 1 of this article.
Determinations with respect to payments under this Section 4 shall be made in
the manner specified by Section 3 for determining that indemnification is
permissible, except as otherwise provided by law.
SECTION 5. Nonexclusive Rights-Continuance Beyond Tenure. The
indemnification provided by this article shall not be deemed (i) to be
exclusive of any other rights consistent with law to which the person
indemnified may be entitled under the articles of incorporation of the company,
bylaws, any general or specific action of the board of directors, agreement,
authorization of shareholders, or otherwise, or as may be permitted or required
by law, both as to action in his official capacity as a director and as to
action in another capacity while holding such office, or (ii) to be a
limitation upon the power of the company to indemnify and to advance expenses,
consistent with law. The indemnification provided by this article shall
continue as to a person who has ceased to be a director, officer, or employee
of the company or other person entitled to indemnity hereunder or to serve in
such other capacity in which he was entitled to indemnification hereunder, and
shall inure to the benefit of his heirs and legal representatives.
SECTION 6. Insurance Authorized. Subject to any restrictions now or
hereafter established by applicable law, the company shall have power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, or employee of the company or who is or was serving at the
request of the company as a director, officer, partner, venturer, proprietor,
trustee, employee, agent, or similar functionary of another foreign or domestic
corporation or non-profit corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, against any
liability asserted against him and incurred by him in such a capacity or
arising out of his status as such a person, whether or not the company would
have the power to indemnify him against that liability under the provisions of
this article or the Texas Business Corporation Act.
SECTION 7. Definitions. For purposes of this article, references to "the
company" include any domestic or foreign predecessor entity of the company in a
merger, consolidation, or other transaction in which the liabilities of the
predecessor are transferred to the company by operation of law and in any other
transaction in which the company assumes the liabilities of the predecessor but
does not specifically exclude liabilities that are the subject matter of this
article. For purposes of this article, references to "serving at the request of
the company" shall include any service as a director, officer or employee of
the company which imposes duties on, or involves services by, such director,
officer or employee with respect to an employee benefit plan, its participants
or beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the company" as referred to in this article.
SECTION 8. Expenses as Witness. Notwithstanding any other provision of
this article, the company may pay or reimburse expenses incurred by any
director, officer, or employee of the company or any other potential indemnitee
hereunder in connection with his appearance as a witness or other participation
in any action, suit or a proceeding described
Page 15 of 18
<PAGE> 17
in Section 1 at a time when he is not a named defendant or respondent in such
action, suit or proceeding.
SECTION 9. Notice to Shareholders. Any indemnification of or advance of
expenses to a director in accordance with this article shall be reported in
writing to the shareholders of the company with or before the notice or waiver
of notice of the next shareholders' meeting or with or before the next
submission to shareholders of a consent to action without a meeting and, in any
case, within the twelve-month period immediately following the date of the
indemnification or advance.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
SECTION 1. Registered Office. Unless the board of directors otherwise
determines, the registered office of the company, required by the Texas
Business Corporation Act to be maintained in the State of Texas, shall be the
principal place of business of the company, but such registered office may be
changed from time to time by the board of directors in the manner provided by
law and need not be identical to the principal place of business of the
company.
SECTION 2. Books and Records. Correct and complete books and records of
account of the company and the minutes of the proceedings of its shareholders,
board of directors, and each committee of its board of directors shall be kept
at the registered office of the company. Records of the original issuance of
shares issued by the company and of each transfer of those shares that have
been presented for registration of transfer shall be kept at the registered
office of the company or at the office of its principal transfer agent or
registrar. A record of the past and present shareholders of the company, giving
the names and addresses of all such shareholders and the number of shares of
each class and series of stock held by each, shall also be kept at the
registered office of the company or at the office of its principal transfer
agent or registrar. Any books, records, and minutes may be in written form or
in any other form capable of being converted into written form within a
reasonable time. Any person who shall have been a holder of record of shares
for at least six (6) months immediately preceding his demand, or who shall be
the holder of record of at least five percent (5%) of all the outstanding
shares of the company, upon written demand stating the purpose thereof, or any
director of the company shall have the right to examine, in person or by agent,
accountant, or attorney, at any reasonable time or times, for any proper
purpose, its relevant books and records of account, minutes, and share transfer
records, and to make extracts therefrom.
SECTION 3. Action Without Meeting and Telephone Meetings. Any action
permitted, or required by law, these bylaws, or the articles of incorporation
of the company, to be taken at a meeting of the board of directors or of any
committee thereof may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all the members of the board of
directors or of such committee, as the case may be. Such consent shall have the
same force and effect as a unanimous vote at a meeting.
Page 16 of 18
<PAGE> 18
Subject to the notice requirements of these bylaws, members of the board of
directors or of any committee created by the board of directors may participate
in and hold a meeting of such board or committee by means of conference
telephone or similar communications equipment, including teleconferencing via a
satellite communications system, provided all persons participating in the
meeting can hear each other.
SECTION 4. Fiscal Year. The fiscal year of the company shall be the
calendar year.
SECTION 5. Seal. The seal of the company shall be such as from time to
time may be approved by the board of directors.
SECTION 6. Notice and Waiver of Notice. Whenever any notice is required
to be given under the provisions of these bylaws, said notice shall be deemed
to be sufficient if given by depositing the same in a post office box in a
sealed postpaid wrapper addressed to the person entitled thereto at his post
office address, as it appears on the records of the company, and such notice
shall be deemed to have been given on the day of such mailing. A waiver of
notice, signed by the person or persons entitled to said notice, whether before
or after the date and time stated therein, shall be deemed equivalent thereto.
SECTION 7. Resignations. Any director or officer may resign at any time.
Such resignation shall be made in writing and shall take effect at the time
specified therein, or if no time be specified, at the time of its receipt by
the chairman of the board, the president, or the secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
SECTION 8. Securities of Other Corporations. The board of directors shall
by resolution designate the officers of the company who shall have power and
authority to transfer, endorse for transfer, vote, or consent to or take any
other action with respect to any securities of another issuer which may be held
or owned by the company and to make, execute, and deliver any waiver, proxy, or
consent with respect to any such securities.
SECTION 9. Investments and Loans. Investments and loans of the company
shall be made pursuant and subject to the provisions of the law.
SECTION 10. Execution of Contracts and Other Instruments. All contractual
or obligatory undertakings, including but not limited to deeds, conveyances,
transfers, and releases, shall be signed by, (a) the chairman of the board, a
vice chairman of the board, the president, or a vice president, or (b) any
attorney-in-fact or agent of the company who has been, or at any time in the
future may be, appointed by the chairman of the board, a vice chairman of the
board, the president, or a vice president, and by the company secretary or an
assistant secretary. When necessary, such instruments may have the corporate
seal affixed and may be attested by the secretary or an assistant secretary.
Checks may be signed by the chairman of the board, a vice chairman of the
board, the president, a vice president, the secretary, the treasurer, or any
other person who may be authorized by the board of directors or the chief
executive officer.
Page 17 of 18
<PAGE> 19
SECTION 11. Rules and Regulations. Rules and regulations for the conduct
of the company's business not in conflict with these bylaws may be adopted by
the executive committee by resolution duly recorded in the minutes of the
committee; provided, however, that such action may be modified or abrogated by
the board of directors.
ARTICLE VIII.
AMENDMENTS
Unless otherwise provided in the Articles of Incorporation, the power to
alter, amend, or repeal these bylaws or adopt new bylaws shall be vested in the
full board of directors subject, however, to repeal or change by action of the
affirmative vote of the holders of at least seventy-five percent (75%) of the
then outstanding shares of all classes of stock of the company entitled to vote
generally in election of directors, voting together as a single class.
CERTIFICATION
I HEREBY CERTIFY that the foregoing is a true and full copy of the bylaws of
AMERICAN GENERAL CORPORATION as the same are now in effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate
seal of AMERICAN GENERAL CORPORATION this ____ day of __________, 19__.
_________________________
Secretary
Page 18 of 18
<PAGE> 1
EXHIBIT 10.2
AMERICAN GENERAL CORPORATION 1984 STOCK AND INCENTIVE PLAN
(AMENDED AND RESTATED EFFECTIVE AS OF FEBRUARY 8, 1994)
1. PURPOSE
The purpose of the American General Corporation 1984 Stock and
Incentive Plan (Amended and Restated as of February 8, 1994) (the "Plan") is to
provide a means through which American General Corporation, a Texas
corporation, and its subsidiaries (collectively, the "Company") may attract
able persons to enter the employ of the Company and to provide a means whereby
those key employees upon whom the responsibilities of the successful
administration and management of the Company rest, and whose present and
potential contributions to the welfare of the Company are of importance, can
acquire and maintain stock ownership, thereby strengthening their concern for
the welfare of the Company and their desire to remain in its employ. A further
purpose of the Plan is to provide such key employees with additional incentive
and reward opportunities designed to enhance the profitable growth of the
Company. So that the maximum incentive can be provided each employee, the Plan
provides for granting Incentive Stock Options, Non-Qualified Options,
Restricted Stock Awards, Performance Awards, and Incentive Awards, or any
combination of the foregoing, as is best suited to the circumstances of the
particular employee.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan:
(a) "Award" means, individually or collectively, any Option,
Restricted Stock Award, Performance Award or Incentive Award.
(b) "Board" means the Board of Directors of American General
Corporation.
(c) "Code" means the Internal Revenue Code of 1986. Reference in the
Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations under such section.
(d) "Committee" means not less than three members of the Board who are
selected by the Board as provided in Section 4(a).
(e) "Common Stock" means the common stock of American General
Corporation.
(f) "Company" means, collectively, American General Corporation and
its subsidiaries.
(g) "Fair Market Value" means, as of any specified date, the average
of the highest and lowest quoted selling prices of the Common Stock as reported
on the Composite Tape for issues listed on the New York Stock Exchange on the
specified date, or, if no sales were reported on the Composite Tape on such
specified date, the average of the highest and lowest quoted selling prices of
the Common Stock on the nearest dates before and after such specified date on
which sales of the Common Stock were so reported.
(h) "Holder" means an employee of the Company who has been granted an
Option, a Restricted Stock Award, a Performance Award or an Incentive Award.
(i) "Incentive Award" means an Award granted under Section 10 of the
Plan.
(j) "Incentive Stock Option" means an Option within the meaning of
section 422(b) of the Code.
(k) "Option" means an Award under Section 7 of the Plan and includes
both Non-Qualified Options and Incentive Stock Options to purchase Common
Stock.
<PAGE> 2
(l) "Performance Award" means an Award granted under Section 9 of the
Plan.
(m) "Personal Representative" means the person who upon the death,
disability or incompetency of a Holder shall have acquired, by will or by the
laws of descent and distribution or by other legal proceedings, the right to
exercise an Option or the right to any Restricted Stock Award, Performance
Award or Incentive Award theretofore granted or made to such Holder.
(n) "Plan" means the American General Corporation 1984 Stock and
Incentive Plan (Amended and Restated Effective as of February 8, 1994).
(o) "Restricted Stock Award" means an Award granted under Section 8 of
the Plan.
3. EFFECTIVE DATE AND DURATION OF THE PLAN
The amended and restated Plan shall become effective on February 8,
1994, following adoption by the Board and approval by the shareholders of
American General Corporation at the annual meeting of shareholders to be held
on April 29, 1993, or any adjournment thereof. No further Awards may be granted
under the Plan after ten years from the date the amended and restated Plan
becomes effective. The Plan shall remain in effect until all Options granted
under the Plan have been exercised or expired by reason of lapse of time, all
restrictions imposed upon Restricted Stock Awards have been eliminated and all
Performance Awards and Incentive Awards have been satisfied.
4. ADMINISTRATION
(a) Composition of Committee. The Committee shall be selected and
appointed by the Board to administer the Plan. The members of the Committee
shall not include any employee of the Company or any individual who is or was
within the 12-month period immediately preceding the date he or she became a
member of the Committee eligible for selection to receive any stock option,
stock appreciation right, stock option surrender right or other stock
allocation under the Plan or under any other plan of the Company. A majority of
the Committee shall constitute a quorum. The Committee shall act by majority
action at a meeting, except that action permitted to be taken at a meeting may
be taken without a meeting if written consent thereto is given by all members
of the Committee.
(b) Powers. Subject to the express provisions of the Plan, the
Committee shall have authority, in its discretion, to determine which employees
of the Company shall receive an Award, the time or times when such Award shall
be made, whether an Incentive Stock Option or Non-Qualified Option shall be
granted, the number of shares to be subject to each Option and Restricted Stock
Award, and the value of each Performance Award and Incentive Award. In making
such determinations the Committee shall take into account the nature of the
services rendered by the respective employees, their present and potential
contribution to the Company's success and such other factors as the Committee
shall deem relevant.
(c) Additional Powers. The Committee shall have such additional powers
as are delegated to it by the other provisions of the Plan. Subject to the
express provisions of the Plan, this shall include the power to construe the
Plan and the respective agreements executed thereunder, to prescribe rules and
regulations relating to the Plan, and to determine the terms, restrictions, and
provisions of the agreement to each Award, including such terms, restrictions
and provisions as shall be requisite in the judgment of the Committee to cause
designated Options to qualify as Incentive Stock Options, to ensure that Awards
continue to qualify under Rule 16b-3 under the Securities Exchange Act of 1934,
and to make all other determinations necessary or advisable for administering
the Plan. Without limiting the generality of the foregoing, agreements
providing for Awards under the Plan may contain such provisions covering a
change of control of the Company, as defined by the Committee in its sole
discretion, as the Committee may approve, not inconsistent with the terms of
this Plan, including without limitation provisions for the acceleration of,
vesting of, or the payment of cash in lieu of, any Award. The Committee may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in
<PAGE> 3
any agreement relating to an Award in the manner and to the extent it shall
deem expedient to carry it into effect. The Committee may delegate to other
persons the responsibility of performing ministerial acts in furtherance of the
Plan's purposes, but only the Committee may act on any aspect of the Plan
affecting (i) an officer or director of the Company who is an employee of the
Company or (ii) an employee to whom the Committee delegates authority with
respect to the Plan. The determinations of the Committee on the matters
referred to in this Section 4 shall be conclusive.
5. GRANT OF OPTIONS, RESTRICTED STOCK AWARDS, PERFORMANCE AWARDS, AND
INCENTIVE AWARDS; SHARES SUBJECT TO THE PLAN
(a) Stock Grant Limit. The Committee may from time to time grant
Awards to one or more employees determined by it to be eligible for
participation in the Plan in accordance with the provisions of Section 6.
Subject to Section 11, the aggregate number of shares of Common Stock that may
be issued under the Plan shall not exceed the number of shares originally
authorized by shareholders in 1984, 9,000,000 (formerly 4,500,000 prior to the
2-for-1 stock split effected March 1, 1993), less the aggregate number of
shares issued or issuable under the Plan prior to its amendment and restatement
as of February 8, 1994. In addition to the foregoing limit on the aggregate
number of shares that may be issued under all Awards, the aggregate number of
Restricted Stock Awards that may be granted during any calendar year shall not
exceed one-tenth of one percent (0.1%) of the number of shares of Common Stock
outstanding as of December 31 of the prior year. Shares shall be deemed to have
been issued under the Plan only to the extent actually issued and delivered
pursuant to an Award. To the extent that an Award lapses or the rights of its
Holder terminate or the Award is paid in cash, any shares of Common Stock
subject to such Award shall again be available to the grant of an Award.
(b) Stock Offered. The stock to be offered pursuant to the grant of an
Award may be authorized but unissued Common Stock or Common Stock previously
issued and outstanding and reacquired by the Company.
6. ELIGIBILITY
Awards may be granted only to persons who, at the time of grant, are
key employees of the Company. Awards may not be granted to (i) any director who
is not an employee of the Company or (ii) any person who immediately after such
grant is the owner, directly or indirectly, of more than 10% of the total
combined voting power of all classes of stock of the Company. An Award may be
granted on more than one occasion to the same person, and such Award may
include an Incentive Stock Option, Non-Qualified Option, Restricted Stock
Award, Performance Award, Incentive Award or any combination thereof.
7. STOCK OPTIONS
(a) Option Period. The term of each Option shall be as specified by
the Committee at the date of grant but shall not exceed ten years.
(b) Limitations on Exercise of Option. An Option shall be exercisable
in whole or in such installments and at such times, commencing not earlier than
six months from the date of grant, as determined by the Committee.
(c) Stock Option Agreement. Each Option shall be evidenced by an
Option agreement in such form and containing such provisions not inconsistent
with the provisions of the Plan as the committee from time to time shall
approve, including, without limitation, provisions to qualify an Incentive
Stock Option under section 422 of the Code.
<PAGE> 4
(d) Option Price and Payment. The price at which a share of Common
Stock may be purchased upon exercise of an Option shall be determined by the
Committee but, subject to adjustment as provided in Section 11, shall not be
less than the Fair Market Value of a share of Common Stock at the date such
Option is granted. The Option or portion thereof may be exercised by delivery
of an irrevocable notice of exercise to the Company. The purchase price of the
Option or portion thereof shall be paid in full in the manner prescribed by the
Committee.
(e) Restrictions on Transfer. An Option shall not be transferable
otherwise than by will or the laws of descent and distribution and may be
exercisable during the lifetime of the Holder only by such Holder.
(f) Shareholder Rights and Privileges. The Holder shall be entitled to
all the privileges and rights of a shareholder only with respect to such shares
of Common Stock as have been purchased under the Option and for which
certificates of stock have been registered in the Holder's name.
(g) Individual Dollar Limitations. In the case of Incentive Stock
Options, the value of shares of stock for which such options are exercisable
for the first time in any one calendar year cannot exceed $100,000 based on the
Fair Market Value of the stock at the date of grant according to section
422(d)(1) of the Code (or such other individual limit as may be in effect under
the Code on the date of grant).
(h) Surrender of Options. The Committee (concurrently with the grant
of an Option or subsequent to such grant) may, in its sole discretion, grant to
any Option Holder the right, upon written request, to surrender any exercisable
Option or portion thereof in exchange for cash, whole shares of Common Stock or
a combination thereof, as determined by the Committee, with a value equal to
the excess of the Fair Market Value, as of the date of such request, of one
share of Common Stock over the Option price for such share multiplied by the
number of shares covered by the Option or portion thereof to be surrendered. In
the case of any such surrender right which is granted in connection with an
Incentive Stock Option, such right shall be exercisable only when the Fair
Market Value of the Common Stock exceeds the price specified therefor in the
Option or portion thereof to be surrendered. In the event of the exercise of
any surrender right granted hereunder, the number of shares reserved for
issuance under the Plan shall be reduced only to the extent that shares of
Common Stock are actually issued in connection with the exercise of such
surrender right. Additional terms and conditions governing any such surrender
rights may from time to time be prescribed by the Committee in its sole
discretion.
8. RESTRICTED STOCK AWARDS
(a) Restriction Period to be Established by the Committee. At the time
a Restricted Stock Award is made, the Committee shall establish a period of
time (the "Restriction Period") applicable to such Award. Each Restricted Stock
Award may have a different Restriction Period, in the discretion of the
Committee. The Restriction Period applicable to a particular Restricted Stock
Award shall not be changed except as permitted by Section 8(b).
(b) Other Terms and Conditions. Common Stock awarded pursuant to a
Restricted Stock Award shall be represented by a stock certificate registered
in the name of the Holder of such Restricted Stock Award. The Holder shall have
the right to receive dividends during the Restriction Period, to vote Common
Stock subject thereto and to enjoy all other shareholder rights, except that
(i) the Holder shall not be entitled to delivery of the stock certificate until
the Restriction Period shall have expired, (ii) the Company shall retain
custody of the stock during the Restriction Period, (iii) the Holder may not
sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the stock
during the Restriction Period and (iv) a breach of the terms and conditions
established by the Committee pursuant to the Restricted Stock Award, shall
cause a forfeiture of the Restricted Stock Award. At the time of such Award,
the Committee may, in its sole discretion, prescribe additional terms,
conditions or restrictions relating to Restricted Stock Awards, including, but
not limited to, rules pertaining to the termination of employment (by
retirement, disability, death or otherwise) of a Holder prior to expiration of
the Restriction Period.
<PAGE> 5
(c) Payment for Restricted Stock. A Holder shall not be required to
make any payment for Common Stock received pursuant to a Restricted Stock
Award, except to the extent otherwise required by law or the Committee.
9. PERFORMANCE AWARDS
(a) Performance Period. The Committee shall establish, with respect to
and at the time of each Performance Award, a performance period over which the
performance of the Holder shall be measured.
(b) Performance Awards. Each Performance Award shall have a maximum
value established by the Committee at the time of such Award.
(c) Performance Measures. A Performance Award shall be awarded to an
employee contingent upon future performance of the Company or any subsidiary,
division or department thereof by or in which he is employed during the
performance period. The Committee shall establish the performance measures
applicable to such performance prior to the beginning of the performance period
but subject to such later revisions as the Committee shall deem appropriate to
reflect significant, unforeseen events or changes.
(d) Awards Criteria. In determining the value of Performance Awards,
the Committee shall take into account an employee's responsibility level,
performance, potential, other Awards and such other considerations as it deems
appropriate.
(e) Payment. Following the end of the performance period, the Holder
of a Performance Award shall be entitled to receive payment of an amount, not
exceeding the maximum value of the Performance Award, based on the achievement
of the performance measures for such performance period, as determined by the
Committee. Payment of a Performance Award may be made in cash, Common Stock or
a combination thereof, as determined by the Committee. Payment shall be made in
a lump sum or in installments as prescribed by the Committee. Any payment to be
made in Common Stock shall be based on the Fair Market Value of the Common
Stock on the payment date.
(f) Termination of Employment. A Performance Award shall terminate if
the Holder does not remain continuously in the employ of the Company at all
times during the applicable performance period, except as may be determined by
the Committee.
10. INCENTIVE AWARDS
(a) Incentive Awards. Incentive Awards are rights to receive shares of
Common Stock (or the Fair Market Value thereof), or rights to receive an amount
equal to any appreciation or increase in the Fair Market Value of Common Stock
over a specified period of time, which vest over a period of time as
established by the Committee, without payment of any amounts by the Holder
thereof or satisfaction of any performance criteria or objectives. Each
Incentive Award shall have a maximum value established by the Committee at the
time of such Award.
(b) Award Period. The Committee shall establish, with respect to and
at the time of each Incentive Award, a period over which the Award shall vest
with respect to the Holder.
(c) Awards Criteria. In determining the value of Incentive Awards, the
Committee shall take into account an employee's responsibility level,
performance, potential, other Awards and such other considerations as it deems
appropriate.
<PAGE> 6
(d) Payment. Following the end of the vesting period for an Incentive
Award, the Holder of an Incentive Award shall be entitled to receive payment of
an amount, not exceeding the maximum value of the Incentive Award, based on the
then vested value of the Award. Payment of an Incentive Award may be made in
cash, Common Stock or a combination thereof as determined by the Committee.
Payment shall be made in a lump sum or in installments as prescribed by the
Committee. Any payment to be made in Common Stock shall be based on the Fair
Market Value of the Common Stock on the payment date. Cash dividend equivalents
may be paid during or after the vesting period with respect to an Incentive
Award, as determined by the Committee.
(e) Termination of Employment. An Incentive Award shall terminate if
the Holder does not remain continuously in the employ of the Company at all
times during the applicable vesting period, except as may be otherwise
determined by the Committee.
11. CHANGE IN CAPITAL STRUCTURE
Options, Restricted Stock Awards, Performance Awards, Incentive Awards
and any agreements evidencing such Awards shall be subject to adjustment by the
Committee at its discretion as to the number and price of shares of Common
Stock or other consideration subject to such Awards in the event of changes in
the outstanding Common Stock by reason of stock dividends, stock splits,
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any such Option or Awards. In the event of any such change in
the outstanding Common Stock, the aggregate number of shares available under
the Plan may be appropriately adjusted by the Committee, whose determination
shall be conclusive. No adjustment to either (i) the number or price of shares
of Common Stock subject to Incentive Stock Options or (ii) the aggregate number
of shares which may be issued as Incentive Stock Options shall be permitted
hereunder to the extent that such adjustment would cause an Incentive Stock
Option to fail to constitute an Incentive Stock Option within the meaning of
section 422 of the Code.
12. AMENDMENT OF THE PLAN
The Board may amend the Plan at any time; provided, however, that it
may not, without approval of the shareholders, amend the Plan:
(a) to increase the maximum number of shares which may be issued on
exercise or surrender of Options or pursuant to Restricted Stock Awards,
Performance Awards or Incentive Awards, except as provided in Section 11;
(b) to change the minimum Option price;
(c) to extend the maximum Option term;
(d) to change the class of employees eligible to receive Awards;
(e) to extend the maximum period during which Awards may be granted
under the Plan; or
(f) to materially increase the benefits accruing to employees under
the Plan.
<PAGE> 7
13. EFFECT OF THE PLAN
(a) No Right to an Award. Neither the adoption of the Plan nor any
action of the Board or of the Committee shall be deemed to give an employee any
right to be granted an Option to purchase Common Stock, a right to a Restricted
Stock Award or a right to a Performance Award or Incentive Award or any other
rights hereunder except as may be evidenced by an Award or by an Option
agreement duly executed on behalf of the Company, and then only to the extent
and on the terms and conditions expressly set forth therein. The Plan shall be
unfunded. The Company shall not be required to establish any special or
separate fund or to make any other segregation of funds or assets to assure the
payment of any Award.
(b) No Employment Rights Conferred. Nothing contained in the Plan
shall (i) confer upon any employee any right with respect to continuation of
employment with the Company or (ii) interfere in any way with the right of the
Company to terminate his or her employment at any time.
(c) Other Laws; Withholding. The Company shall not be obligated to
issue any shares of Common Stock until there has been compliance with such laws
and regulations as the Company may deem applicable. No fractional shares of
Common Stock shall be delivered. The Company shall have the right to deduct in
connection with all Awards any taxes required by law to be withheld and to
require any payments required to enable it to satisfy its withholding
obligations.
<PAGE> 1
EXHIBIT 10.3
RESTORATION OF RETIREMENT INCOME PLAN
FOR CERTAIN EMPLOYEES PARTICIPATING IN THE
RESTATED AMERICAN GENERAL RETIREMENT PLAN
The RESTORATION OF RETIREMENT INCOME PLAN FOR CERTAIN EMPLOYEES
PARTICIPATING IN THE RESTATED AMERICAN GENERAL RETIREMENT PLAN (hereinafter
referred to as the "Restoration Plan") is hereby restated effective as of
August 1, 1988 by AMERICAN GENERAL CORPORATION and its subsidiaries
(hereinafter referred to as the "EMPLOYER," jointly and severally). The
Restoration Plan has been established to provide for the payment of certain
pension and pension-related benefits to certain employees who are participants
in the AMERICAN GENERAL RETIREMENT PLAN (hereinafter referred to as the "Basic
Plan"). The Employer intends and desires to recognize the value to the
Employer of the past and present services of employees covered by the
Restoration Plan and to encourage and assure their continued service to the
Employer by making more adequate provision for their future retirement
security. All terms used in this Restoration Plan shall have the meanings
assigned to them under the provisions of the Basic Plan unless otherwise
qualified by the context.
1. Incorporation of the Basic Plan.
The Basic Plan, with any amendments thereto, shall be attached hereto
as Exhibit I and is hereby incorporated by reference into and shall form a part
of this Restoration Plan as fully as if set forth herein verbatim. Any
amendment made to the Basic Plan by the Employer shall also be incorporated by
reference into and form a part of this Restoration Plan, effective as of the
effective date of such amendment. The Basic Plan, whenever referred to in
1
<PAGE> 2
this Restoration Plan, shall mean the Basic Plan, as amended, as it exists as
of the date any determination is made of benefits payable under this
Restoration Plan.
2. Administration.
This Restoration Plan shall be administered by the administrative
committee (hereinafter referred to as the "Committee") under the Basic Plan
which shall administer it in a manner consistent with the administration of the
Basic Plan, as from time to time amended and in effect, except that this
Restoration Plan shall be administered as an unfunded plan that is not intended
to meet the qualification requirements of section 401 of the Internal Revenue
Code of 1986, as amended (the "Code"). The Committee shall have full power and
authority to interpret, construe and administer this Restoration Plan. No
member of the Committee shall be liable to any person for any action taken or
omitted in connection with the interpretation and administration of this
Restoration Plan unless attributable to his own willful misconduct or lack of
good faith. Members of the Committee shall not participate in any action or
determination regarding their own benefits hereunder.
3. Eligibility.
Employees who are participating in the Basic Plan and whose pension or
pension-related benefits under the Basic Plan are limited pursuant to (i)
section 415 of the Code, and/or (ii) section 401(a)(17) of the Code shall be
eligible for benefits under this Restoration Plan.
2
<PAGE> 3
4. Amount of Benefit.
The benefit payable to an eligible employee or his beneficiary under
this Restoration Plan shall be the Actuarial Equivalent of the excess, if any,
of (a) over (b):
(a) the benefit that would have been payable to such
employee or on his behalf under the Basic Plan if such benefit were
determined without regard to the maximum amount of benefit limitations
of section 415 of the Code, without regard to the considered
compensation limitation of section 401(a)(17) of the Code and as if
the definition of Compensation under the Basic Plan as in effect on
March 21, 1985 were applicable for the period January 1, 1985 through
March 20, 1985;
(b) the benefit which is in fact payable to such employee
or on his behalf under the Basic Plan, as in effect from time to time.
5. Payment of Benefits.
The benefit payable under this Restoration Plan on account of an
eligible employee's death shall be paid to the same beneficiary or
beneficiaries and in the same form and at the same time or times as the limited
benefits are payable to the employee's beneficiary under the Basic Plan. The
benefit payable under this Restoration Plan for any reason other than on
account of an eligible employee's death shall be payable in the form of a
benefit for the life of the employee, beginning at his age sixty-five or,
3
<PAGE> 4
if later, his termination of employment with the Employer. Notwithstanding the
foregoing, however, the Committee may, in its sole discretion, direct that the
benefit payable under this Restoration Plan shall be paid in the same form as,
and coincident with, the payment of the limited benefit payments made to the
eligible employee or on his behalf to his beneficiary or beneficiaries under
the Basic Plan.
Notwithstanding the preceding paragraph, during the period May 22,
1990 through November 21, 1991 the benefit payable under this Restoration Plan
for any reason shall be payable to the eligible employee (or in the event of
the employee's death, to the employee's Eligible Surviving Spouse) in one lump
sum payment within sixty days following termination of employment, with the
actuarially-equivalent value thereof determined based upon the actuarial
factors then used under the Basic Plan for determining lump sum payments.
Notwithstanding the foregoing sentence, in the event of termination of the
Basic Plan on or after May 22, 1990 and before November 22, 1991 and within
twenty-four months following a Change of Control Date, each eligible employee
employed by the Employer on such Change of Control Date shall have his benefit
under this Restoration Plan paid as provided above as if he terminated
employment for a reason other than death on the date of termination of the
Basic Plan. Notwithstanding Section 7 and any other provisions of the
Restoration Plan to the contrary, the provisions of the preceding sentence may
not be amended or changed to reduce or eliminate any benefit right within
eighteen months from May 22, 1990; provided, however, that if one or more
Changes of Control occur with respect to an Employer or Employers within such
4
<PAGE> 5
eighteen-month period, the period shall be extended to the end of twenty-four
months following the respective Change of Control Dates of such Employers.
6. Employee's Rights.
Except as otherwise specifically provided, an employee's rights under
this Restoration Plan, including his rights to vested benefits, shall be the
same as his rights under the Basic Plan. Benefits payable under this
Restoration Plan shall be a general, unsecured obligation of the Employer to be
paid by the Employer from its own funds, and such payments shall not (i) impose
any obligation upon the Trust Fund under said Basic Plan; (ii) be paid from the
Trust Fund under said Basic Plan; or (iii) have any effect whatsoever upon the
Basic Plan or the payment of benefits from the Trust Fund under said Basic
Plan. No employee or his beneficiary or beneficiaries shall have any title to
or beneficial ownership in any assets which the Employer may earmark to pay
benefits hereunder.
7. Amendment and Discontinuance.
This Restoration Plan may be amended from time to time, or terminated
and discontinued at any time, in each case at the discretion of the Board of
Directors of American General Corporation. Notwithstanding the foregoing, no
amendment shall be made, nor shall this Restoration Plan be terminated in a
manner which would reduce the benefits or rights to benefits of any employee
accrued under the Restoration Plan (determined on the basis of each employee's
presumed termination of employment as of the date of such amendment or
5
<PAGE> 6
termination) prior to the later of the adoption or the effective date of such
amendment or termination.
8. Restrictions on Assignment.
The interest of an employee or his beneficiary or beneficiaries may
not be sold, transferred, assigned, or encumbered in any manner, either
voluntarily or involuntarily, and any attempt so to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be null and void;
neither shall the benefits hereunder be liable for or subject to the debts,
contracts, liabilities, engagements, or torts of any person to whom such
benefits or funds are payable, nor shall they be subject to garnishments,
attachment, or other legal or equitable process nor shall they be an asset in
bankruptcy.
9. Nature of Agreement.
This Restoration Plan is intended to constitute an unfunded "excess
benefit plan" within the meaning of sections 3(36) and 4(b)(5) of the Employee
Retirement Income Security Act of 1974, as amended, with respect to a part of
the Restoration Plan and an unfunded "deferred compensation plan" for a select
group of management or highly-compensated employees within the meaning of
sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974, as amended, with respect to the remainder of the
Restoration Plan. The adoption of this Restoration Plan and any setting aside
of amounts by the Employer with which to discharge its obligations hereunder
6
<PAGE> 7
shall not be deemed to create a trust; legal and equitable title to any funds
so set aside shall remain in the Employer, and any recipient of benefits
hereunder shall have no security or other interest in such funds. Any and all
funds so set aside shall remain subject to the claims of the general creditors
of the Employer, present and future. This provision shall not require the
Employer to set aside any funds, but the Employer may set aside such funds if
it chooses to do so.
10. Continued Employment.
Nothing contained herein shall be construed as conferring upon any
employee the right to continue in the employ of the Employer in any capacity.
11. Binding on Employer, Employees and Their Successors.
This Restoration Plan shall be binding upon and inure to the benefit
of the Employer, its successors and assigns and the employee and his heirs,
executors, administrators and legal representatives. The provisions of this
Restoration Plan shall be applicable with respect to each Employer separately,
and amounts payable hereunder shall be paid by the Employer of the particular
employee.
12. Employment with More Than One Employer.
If any employee shall be entitled to benefits under the Basic Plan on
account of service with more than one Employer, the obligations under this
7
<PAGE> 8
Restoration Plan shall be apportioned among such Employers on the basis of time
of service with each, except that an Employer from whose employ such employee
was transferred prior to his retirement, death or disability shall be obligated
with respect to employment prior to such transfer only to the extent of an
amount based on assumed pay increases in accordance with the scale used for
computing the actuarial cost under the Basic Plan for the year of the transfer.
If obligations are so limited, the remaining obligations shall be borne by the
last Employer.
13. Laws Governing.
This Restoration Plan shall be construed in accordance with and
governed by the laws of the State of Texas.
AMERICAN GENERAL CORPORATION
ATTEST:
/s/ PATRICIA W. NEIGHBORS By: /s/ ROBERT D. WOMACK
____________________________ ___________________________
Patricia W. Neighbors Robert D. Womack
8
<PAGE> 1
EXHIBIT 10.4
FIRST AMENDMENT TO THE
RESTORATION OF RETIREMENT INCOME PLAN
FOR CERTAIN EMPLOYEES PARTICIPATING IN THE
RESTATED AMERICAN GENERAL RETIREMENT PLAN
WHEREAS, AMERICAN GENERAL CORPORATION and certain of its subsidiaries
have heretofore adopted the RESTORATION OF RETIREMENT INCOME PLAN FOR CERTAIN
EMPLOYEES PARTICIPATING IN THE RESTATED AMERICAN GENERAL RETIREMENT PLAN (the
"Restoration Plan"); and
WHEREAS, AMERICAN GENERAL CORPORATION desires to amend the Restoration
Plan on behalf of itself and on behalf of each of its subsidiaries that has
adopted the Restoration Plan;
NOW, THEREFORE, the Restoration Plan shall be amended as follows,
effective as of November 22, 1991;
1. Article 3 is deleted and replaced with the following:
"3. Eligibility.
Employees who are Highly Compensated Participants, excluding Sales
Employees, who are participating in the Basic Plan, and whose pension or
pension-related benefits under the Basic Plan are limited pursuant to (i)
section 415 of the Code, and/or (ii) section 401(a)(17) of the Code, shall be
eligible for benefits under this Restoration Plan. In no event shall an
employee who is not eligible for any benefits under the Basic Plan be eligible
for a benefit under this Restoration Plan."
2. As amended hereby, the Restoration Plan is specifically ratified
and reaffirmed.
IN WITNESS WHEREOF, AMERICAN GENERAL CORPORATION has executed this First
Amendment as of the 22nd day of November, 1991.
AMERICAN GENERAL CORPORATION
ATTEST:
By: JAMES T. PULLIAM
----------------
By: PATRICIA W. NEIGHBORS
--------------------- Title: Vice President
--------------
Title: Assistant Secretary
-------------------
Page 1 of 2
<PAGE> 2
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day personally appeared
Patricia W. Neighbors, James T. Pulliam of AMERICAN GENERAL CORPORATION, a
corporation, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he executed the same
as the act and deed of said corporation for the purposes and consideration
therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, THIS 9 day of February, 1994.
NICKI Y. EMERSON
______________________
Notary Public in and
for the State of Texas
My Commission Expires: 7/22/96
___________
Page 2 of 2
<PAGE> 1
EXHIBIT 10.5
SECOND AMENDMENT TO THE
RESTORATION OF RETIREMENT INCOME PLAN
FOR CERTAIN EMPLOYEES PARTICIPATING IN THE
RESTATED AMERICAN GENERAL RETIREMENT PLAN
WHEREAS, AMERICAN GENERAL CORPORATION and certain of its subsidiaries
have heretofore adopted the RESTORATION OF RETIREMENT INCOME PLAN FOR CERTAIN
EMPLOYEES PARTICIPATING IN THE RESTATED AMERICAN GENERAL RETIREMENT PLAN (the
"Restoration Plan"); and
WHEREAS, AMERICAN GENERAL CORPORATION desires to amend the Restoration
Plan on behalf of itself and on behalf of each of its subsidiaries that has
adopted the Restoration Plan;
NOW, THEREFORE, the Restoration Plan shall be amended as follows,
effective as of January 1, 1994;
1. Section 4(a) is hereby deleted and replaced with the following:
"(a) the benefit that would have been payable to such employee or
on his behalf under the Basic Plan if such benefit were
determined without regard to the maximum amount of benefit
limitations of section 415 of the Code, without regard to the
considered compensation limitations of section 401(a)(17) of the
Code, as if the definition of Compensation under the Basic Plan
as in effect on March 21, 1985 were applicable for the period
January 1, 1985 through March 20, 1985 and as if the definition
of Compensation included executive deferred compensation;"
2. As amended hereby, the Restoration Plan is specifically ratified
and reaffirmed.
IN WITNESS WHEREOF, AMERICAN GENERAL CORPORATION has executed this
Second Amendment as of the 1st day of January, 1994.
AMERICAN GENERAL CORPORATION
ATTEST:
By: /s/ PATRICIA W. NEIGHBORS By: /s/ JAMES T. PULLIAM
_________________________________ __________________________________
Title: Assistant Secretary Title: Vice President
Page 1 of 2
<PAGE> 2
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day personally appeared
Patricia W. Neighbors, James T. Pulliam of AMERICAN GENERAL CORPORATION, a
corporation, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he executed the same
as the act and deed of said corporation for the purposes and consideration
therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, THIS 17th day of March, 1994.
NICKI Y. EMERSON
-----------------------------
Notary Public in and for the
State of Texas
My Commission Expires: 7/22/96
-------
Page 2 of 2
<PAGE> 1
EXHIBIT 10.6
AMERICAN GENERAL SUPPLEMENTAL THRIFT PLAN
Restated as of May 1, 1991
<PAGE> 2
AMERICAN GENERAL SUPPLEMENTAL THRIFT PLAN
WHEREAS, AMERICAN GENERAL CORPORATION and certain of its subsidiaries
(hereinafter referred to as the "Company," jointly and severally) have
heretofore adopted the AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
(the "Basic Plan") for the benefit of their employees; and
WHEREAS, the Company desires to provide for the payment of certain
thrift and thrift-related benefits to certain of its employees who are members
of the Basic Plan on and after the effective date hereof so that the total
thrift and thrift-related benefits offered employees can be determined without
regard to certain limitations in the Basic Plan;
WHEREAS, the Company adopted the AMERICAN GENERAL SUPPLEMENTAL THRIFT
PLAN (the "Supplemental Plan"), effective as of January 1, 1984, and has
amended the Supplemental Plan by a First Amendment effective as of January 1,
1985 and January 1, 1987, as stated therein; a Second Amendment, effective as
of February 1, 1989; and a Third Amendment, effective as of May 22, 1990; and
WHEREAS, the Company desires to amend the Supplemental Plan;
NOW, THEREFORE, the Company hereby amends and restates the
Supplemental Plan, effective as of May 1, 1991.
Page 1 of 11
<PAGE> 3
I.
Purpose of the Supplemental Plan
The Company intends and desires by the adoption and continuation of
this Supplemental Plan to recognize the value to the Company of the past and
present services of Employees covered by the Supplemental Plan and to encourage
and assure their continued service with the Company by making more adequate
provision for their future retirement security. This Supplemental Plan is
adopted and maintained due to certain benefit limitations which are imposed on
the Basic Plan by the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and by the Internal Revenue Code of 1986, as amended (the
"Code").
II.
Incorporation of the Basic Plan
The Basic Plan, with any amendments thereto to the date of
restatement of the Supplemental Plan, shall be attached hereto as Exhibit I and
is hereby incorporated by reference and shall form a part of this Supplemental
Plan as fully as if set forth herein verbatim. Any amendment made to the Basic
Plan by the Company shall also be incorporated by reference and form a part of
this Supplemental Plan, effective as of the effective date of such amendment.
The Basic Plan, whenever referred to in this Supplemental Plan, shall mean the
Basic Plan, as amended, as it exists as of the date any determination is made
of amounts credited or benefits payable under this Supplemental Plan. All
terms used in this Supplemental Plan shall have the meanings assigned to them
under the provisions of the Basic Plan unless otherwise qualified by the
context.
Page 2 of 11
<PAGE> 4
III.
Administration
This Supplemental Plan shall be administered by the Plan
Administrator who shall be the Committee charged with administering the
American General Corporation 1984 Stock and Incentive Plan, and who shall
administer it in a manner consistent with the administration of the Basic Plan,
as from time to time amended and in effect, except that this Supplemental Plan
shall be administered as an unfunded plan which is not intended to meet the
qualification requirements of section 401 of the Code. The Plan Administrator
shall have the power and authority to interpret, construe, and administer this
Supplemental Plan, and the Plan Administrator's interpretations and
construction hereof, and actions hereunder, including the timing, form, amount,
or recipient of any payment to be made hereunder, shall be binding and
conclusive on all persons for all purposes. The Plan Administrator shall not
be liable to any person for any action taken or omitted in connection with the
interpretation and administration of this Supplemental Plan unless attributable
to his/her own willful misconduct or lack of good faith. Neither the Plan
Administrator nor any member of the Committee shall participate in any action
or determination regarding his/her own benefits hereunder.
IV.
Eligibility
Employees who are participating in the Basic Plan and whose
thrift or thrift-related benefits under the Basic Plan are limited pursuant to
section 401(a)(17), section 402(g)(1), or section 415 of the Code, shall be
eligible for benefits under this Supplemental Plan. In no event shall an
employee who is not eligible for any benefits under the Basic Plan be eligible
for a benefit under this Supplemental Plan.
Page 3 of 11
<PAGE> 5
V.
Amount of Benefit
The Plan Administrator shall establish a memorandum bookkeeping
account (the "Supplemental Plan Account") for each Employee whose allocation of
Employer Contributions under the Basic Plan has been limited pursuant to
section 401(a)(17), section 402(g)(1), or section 415 of the Code. As of the
end of each month, the Plan Administrator shall credit such Employee's
Supplemental Plan Account in an amount equal to the excess, if any, of:
(a) the amount which would have been allocated to the Employer
Contribution Account of such Employee under the Basic Plan as of
the end of such month (based upon the Employee's actual basic
Employee contribution percentage election as in effect for such
month), if the provisions of the Basic Plan were administered
without regard to the considered compensation limitation of
section 401(a)(17) of the Code, the elective deferral limitation
of section 402(g)(1) of the Code, and the maximum amount of
contribution limitations of section 415 of the Code,
over
(b) the amounts that were in fact allocated as of the end of
the such month to the Employer Contribution Account of such
employee under the Basic Plan.
If any portion of the Employee's Employer Contribution Account under the Basic
Plan is forfeited for any reason, the Plan Administrator shall debit such
Employee's Supplemental Plan Account by an amount equal to the percentage of
such Supplemental Plan Account
Page 4 of 11
<PAGE> 6
which corresponds to the percentage of his Employer Contribution Account under
the Basic Plan which was forfeited.
Amounts credited to the Employee's Supplemental Plan Account shall be deemed to
be invested in shares of the common stock of American General Corporation
("Company Stock") on the date so credited and the value of such Employee's
Supplemental Plan Account at any time shall be equal to the fair market value
of the total number of shares of Company Stock in which such account is deemed
to be invested. The Employee's Supplemental Plan Account shall be
appropriately adjusted to reflect transactions affecting Company Stock
including, but not limited to, stock splits, dividends declared,
recapitalizations, adjustments to common stock account of American General
Corporation, or subdivisions or consolidations of shares of Company stock.
Benefits payable under this Supplemental Plan to any recipient shall be
computed in accordance with the foregoing and with the objective that such
recipient should receive under this Supplemental Plan and the Basic Plan that
total amount which would have been payable to that recipient solely under the
Basic Plan, had section 401(a)(17), section 402(g)(1), and section 415 of the
Code not been applicable thereto. This Supplemental Plan is intended to
constitute an unfunded "deferred compensation plan" for a select group of
management or highly-compensated employees within the meaning of sections
201(2), 301(a)(3), and 401(a)(1) of ERISA with respect to a part of the
Supplemental Plan and an unfunded "excess benefit plan" within the meaning of
sections 3(36) and 4(b)(5) of ERISA with respect to the remainder of the
Supplemental Plan.
VI.
Payment of Benefits
The benefit under this Supplemental Plan shall be payable on
account of an Employee's termination of employment, retirement, disability, or
death, and shall be paid in cash in a lump sum as soon as practicable and no
later than 60 days after the earlier of such
Page 5 of 11
<PAGE> 7
termination of employment, incurrence of disability (as determined by the Plan
Administrator), or death. In the event of termination of the Basic Plan within
24 months following a Change of Control Date, each Employee employed by the
Company on such Change of Control Date shall have his benefit under this
Supplemental Plan paid in a lump sum as soon as practicable and no later than
60 days after such termination. Notwithstanding Article VIII and any other
provisions of this Supplemental Plan to the contrary, the provisions of the
preceding sentence may not be amended or changed to reduce or eliminate any
benefit right after a Change of Control Date. Any benefit payable under this
Supplemental Plan shall be payable to the same recipient(s) who are to be paid
the limited benefits under the Basic Plan.
VII.
Employee's Rights
Except as otherwise specifically provided, the Employee's rights
under this Supplemental Plan shall be the same as his/her rights under the
Basic Plan. Benefits payable under this Supplemental Plan shall be a general,
unsecured obligation of the Company to be paid by the Company from its own
funds, and such payments shall not (i) impose any obligation upon the Trust
Fund under said Basic Plan; (ii) be paid from the Trust Fund under said Basic
Plan; or (iii) have any effect whatsoever upon the Basic Plan or the payment of
benefits from the Trust Fund under said Basic Plan. No Employee or his/her
beneficiary or beneficiaries shall have any title to or beneficial ownership in
any assets which the Company may earmark to pay benefits hereunder.
Page 6 of 11
<PAGE> 8
VIII.
Amendment and Discontinuance
Although it is expected that this Supplemental Plan shall
continue indefinitely, American General Corporation, on behalf of itself and on
behalf of each of its subsidiaries that has adopted the Supplemental Plan,
reserves the right to amend or discontinue it if, in its sole judgment, such a
change is deemed necessary or desirable. However, if American General
Corporation should, on behalf of itself and on behalf of each of its
subsidiaries that has adopted the Supplemental Plan, amend or discontinue this
Supplemental Plan, the Company shall be liable for any benefits accrued under
this Supplemental Plan (determined on the basis of each Employee's presumed
termination of employment as of the date of such amendment or discontinuance)
as of the date of such action.
IX.
Restriction on Assignment
The interest of the Employee or his beneficiary or beneficiaries
may not be sold, transferred, assigned, or encumbered in any manner, either
voluntarily or involuntarily, and any attempt so to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be null and void;
neither shall the benefits hereunder be liable for or subject to the debts,
contracts, liabilities, engagements, or torts of any person to whom such
benefits or funds are payable, nor shall they be subject to garnishment,
attachment, or other legal or equitable process nor shall they be an asset in
bankruptcy, except that no amount shall be payable hereunder until and unless
any and all amounts representing debts or other obligations owed to the Company
or any affiliate of the Company by the Employee with respect to whom such
amount would otherwise be payable shall have been fully paid and satisfied.
Page 7 of 11
<PAGE> 9
X.
Nature of Agreement
The adoption of this Supplemental Plan and any setting aside of
amounts by the Company with which to discharge its obligations hereunder shall
not be deemed to create a trust; legal and equitable title to any funds so set
aside shall remain in the Company, and any recipient of benefits hereunder
shall have no security or other interest in such funds. Any and all funds so
set aside shall remain subject to the claims of the general creditors of the
Company, present and future, and no payment shall be made under this
Supplemental Plan unless the Company is then solvent. This provision shall not
require the Company to set aside any funds, but the Company may set aside such
funds if it chooses to do so.
XI.
Continued Employment
Nothing contained herein shall be construed as conferring upon
any Employee the right to continue in the employ of the Company in any
capacity.
Page 8 of 11
<PAGE> 10
XII.
Binding on Company, Employees, and Their Successors
This Supplemental Plan shall be binding upon and inure to the
benefit of the Company, its successors and assigns, and the Employee and his
heirs, executors, administrators, and legal representatives. The provisions of
this Supplemental Plan shall be applicable with respect to each Company
separately, and amounts payable hereunder shall be paid by the Company which
employs the particular Employee.
XIII.
Employment with More than One Company
If any Employee shall be entitled to benefits under the Basic
Plan on account of service with more than one Company, the obligations under
this Supplemental Plan shall be apportioned among such Company on the basis of
Service with each.
Page 9 of 11
<PAGE> 11
XIV.
Laws Governing
This Supplemental Plan shall be construed in accordance with and
governed by the laws of the State of Texas.
EXECUTED this 30th day of April, 1991.
ATTEST: AMERICAN GENERAL CORPORATION
/s/ PATRICIA W. NEIGHBORS /s/ WAYNE D. BAKER
______________________________ _____________________________
Patricia W. Neighbors Wayne D. Baker
Page 10 of 11
<PAGE> 12
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day personally
appeared Wayne D. Baker, Senior Vice President of AMERICAN GENERAL CORPORATION,
a corporation, known to me to be the person and officer whose name is
subscribed to the foregoing instrument, and acknowledged to me that he executed
the same as the act and deed of said corporation for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 30th day of April
1991.
/s/ PAM TUDOR
_________________________________
Pam Tudor
Notary Public in and for
the State of Texas
My Commission Expires 1-15-92
Page 11 of 11
<PAGE> 1
EXHIBIT 10.7
FIRST AMENDMENT TO THE
AMERICAN GENERAL
SUPPLEMENTAL THRIFT PLAN
WHEREAS, AMERICAN GENERAL CORPORATION and certain of its subsidiaries
have heretofore adopted the AMERICAN GENERAL SUPPLEMENTAL THRIFT PLAN (the
"Supplemental Plan"); and
WHEREAS, AMERICAN GENERAL CORPORATION desires to amend the
Supplemental Plan on behalf of itself and on behalf of each of its subsidiaries
that has adopted the Supplemental Plan;
NOW, THEREFORE, the Supplemental Plan shall be amended as follows,
effective as of November 22, 1991;
1. Article VI is deleted and replaced with the following:
"VI
Payment of Benefits
The benefit payable under this Supplemental Plan on account of
an Employee's termination of employment, retirement,
disability or death shall be paid to the same recipients in
cash at the time or times as the limited benefits are payable
to the employee or his beneficiary under the Basic Plan."
2. As amended hereby, the supplemental Plan is specifically
ratified and reaffirmed.
IN WITNESS WHEREOF, AMERICAN GENERAL CORPORATION has executed this
Third Amendment as of the 22nd day of November, 1991.
AMERICAN GENERAL CORPORATION
ATTEST:
By: /s/ PATRICIA W. NEIGHBORS BY: /s/ ROBERT D. WOMACK
_____________________________ ____________________________
Patricia W. Neighbors Robert D. Womack
Title: Assistant Secretary Title: Senior Vice President
<PAGE> 2
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day personally appeared
Robert D. Womack, Senior Vice President of AMERICAN GENERAL CORPORATION, known
to me to be the person and officer whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same as the act and
deed of said corporation for the purposes and consideration therein expressed,
and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 6th day of November, 1991.
{SEAL} /s/ PAM TUDOR
__________________________
Pam Tudor
Notary Public in and for the
State of Texas
My commission expires: 1-15-92
<PAGE> 1
EXHIBIT 10.8
SECOND AMENDMENT TO THE
AMERICAN GENERAL
SUPPLEMENTAL THRIFT PLAN
WHEREAS, AMERICAN GENERAL CORPORATION and certain of its subsidiaries
have heretofore adopted the AMERICAN GENERAL SUPPLEMENTAL THRIFT PLAN (the
"Supplemental Plan"); and
WHEREAS, AMERICAN GENERAL CORPORATION desires to amend the
Supplemental Plan on behalf of itself and on behalf of each of its subsidiaries
that has adopted the Supplemental Plan;
NOW, THEREFORE, the Supplemental Plan shall be amended as follows,
effective as of January 1, 1993;
1. Article IV is deleted and replaced with the following:
"IV.
Eligibility
Employees who are Highly Compensated Participants, who are
participating in the Basic Plan, and whose thrift or thrift-related benefits
under the Basic Plan are limited pursuant to section 401(a)(17), section
402(g)(1), or section 415 of the Code, shall be eligible for benefits under
this Supplemental Plan. In no event shall an employee who is not eligible for
any benefits under the Basic Plan be eligible for a benefit under this
Supplemental Plan."
2. Article V is deleted and replaced with the following:
"V.
Amount of Benefit
The Plan Administrator shall establish a memorandum bookkeeping
account (the "Supplemental Plan Account") for each Employee whose allocation of
Employer Contributions under the Basic Plan has been limited pursuant to
section 401(a)(17), section 402(g)(1), or section 415 of the Code. As of the
end of each month, the Plan Administrator shall credit such Employee's
Supplemental Plan Account in an amount equal to the excess, if any, of:
(a) the amount which would have been allocated to the Employer
Contribution Account of such Employee under the Basic Plan as of the
end of such month (based upon the Employee's actual basic Employee
contribution percentage election as in effect for such month), if the
provisions of the Basic Plan were administered without regard to the
considered compensation limitation of section 401(a)(17) of the Code,
the elective deferral limitation of section 402(g)(1) of the Code, and
the maximum amount of contribution limitations of section 415 of the
Code,
over
(b) the amounts that were in fact allocated as of the end of the such
month to the Employer Contribution Account of such employee under the
Basic Plan.
If any portion of the Employee's Employer Contribution Account under the Basic
Plan is forfeited for any reason (other than pursuant to Section 4.10 of the
Basic Plan, relating to excess contributions), the Plan Administrator shall
debit such Employee's Supplemental Plan Account by an amount equal to the
Page 1 of 3
<PAGE> 2
percentage of such Supplemental Plan Account which corresponds to the
percentage of his Employer Contribution Account under the Basic Plan which was
forfeited.
Amounts credited to the Employee's Supplemental Plan Account shall be deemed to
be invested in shares of the common stock of American General Corporation
("Company Stock") on the date so credited and the value of such Employee's
Supplemental Plan Account at any time shall be equal to the fair market value
of the total number of shares of Company Stock in which such account is deemed
to be invested. The Employee's Supplemental Plan Account shall be
appropriately adjusted to reflect transactions affecting Company Stock
including, but not limited to, stock splits, dividends declared,
recapitalizations, adjustments to common stock account of American General
Corporation, or subdivisions or consolidations of shares of Company stock.
Benefits payable under this Supplemental Plan to any recipient shall be
computed in accordance with the foregoing and with the objective that such
recipient should receive under this Supplemental Plan and the Basic Plan that
total amount which would have been payable to that recipient solely under the
Basic Plan, had section 401(a)(17), section 402(g)(1), and section 415 of the
Code not been applicable thereto."
3. Article X is deleted and replaced with the following:
"X.
Nature of Agreement
This Supplemental Plan is intended to constitute an unfunded
"deferred compensation plan" for a select group of management or highly-
compensated employees within the meaning of sections 201(2), 301(a)(3), and
401(a)(1) of ERISA with respect to a part of the Supplemental Plan and an
unfunded "excess benefit plan" within the meaning of sections 3(36) and 4(b)(5)
of ERISA with respect to the remainder of the Supplemental Plan. The adoption
of this Supplemental Plan and any setting aside of amounts by the Company with
which to discharge its obligations hereunder shall not be deemed to create a
trust; legal and equitable title to any funds so set aside shall remain in the
Company, and any recipient of benefits hereunder shall have no security or
other interest in such funds. Any and all funds so set aside shall remain
subject to the claims of the general creditors of the Company, present and
future, and no payment shall be made under this Supplemental Plan unless the
Company is then solvent. This provision shall not require the Company to set
aside any funds, but the Company may set aside such funds if it chooses to do
so."
4. As amended hereby, the Supplemental Plan is specifically
ratified and reaffirmed.
IN WITNESS WHEREOF, AMERICAN GENERAL CORPORATION has executed this
Second Amendment as of the 1st day of January, 1993.
AMERICAN GENERAL CORPORATION
ATTEST:
By: JAMES T. PULLIAM
By: PATRICIA W. NEIGHBORS _________________
_____________________ Title: Vice President
Title: Assistant Secretary ________________
___________________
Page 2 of 3
<PAGE> 3
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day personally appeared
Patricia W. Neighbors , James T. Pulliam of AMERICAN GENERAL CORPORATION, a
corporation, known to me to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he executed the same
as the act and deed of said corporation for the purposes and consideration
therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, THIS 9 day of February ,
1994.
NICKI Y. EMERSON
----------------
Notary Public in and
for the State of Texas
My Commission Expires: 7/22/96
-------
Page 3 of 3
<PAGE> 1
EXHIBIT 10.9
THIRD AMENDMENT TO THE
AMERICAN GENERAL
SUPPLEMENTAL THRIFT PLAN
WHEREAS, AMERICAN GENERAL CORPORATION and certain of its subsidiaries
have heretofore adopted the AMERICAN GENERAL SUPPLEMENTAL THRIFT PLAN (the
"Supplemental Plan"); and
WHEREAS, AMERICAN GENERAL CORPORATION desires to amend the
Supplemental Plan on behalf of itself and on behalf of each of its subsidiaries
that has adopted the Supplemental Plan;
NOW, THEREFORE, the Supplemental Plan shall be amended as follows,
effective as of January 1, 1994;
1. Section V. (a) is hereby deleted and replaced with the
following:
"(a) the amount which would have been allocated to the
Employer Contribution Account of such Employee under the Basic
Plan as of the end of such month (based upon the Employee's
actual basic Employee contribution percentage election as in
effect for such month), if the provisions of the Basic Plan
were administered without regard to the considered
compensation limitation of section 401(a)(17) of the Code, the
elective deferral limitation of section 402(g)(1) of the Code,
the maximum amount of contribution limitations of section 415
of the Code, and as if the definition of Base Pay included any
compensation which would have been included in Base Pay had it
not been deferred under a deferred compensation agreement."
2. As amended hereby, the Supplemental Plan is specifically
ratified and reaffirmed.
IN WITNESS WHEREOF, AMERICAN GENERAL CORPORATION has executed this
Third Amendment as of the 1st day of January, 1994.
AMERICAN GENERAL CORPORATION
ATTEST:
By: JAMES T. PULLIAM
By: PATRICIA W. NEIGHBORS ________________________________
__________________________________
Title: Vice President
Title: Assistant Secretary _______________________________
__________________________________
Page 1 of 2
<PAGE> 2
EXHIBIT 10.9
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day personally appeared
James T. Pulliam, Patricia W. Neighbors of AMERICAN GENERAL CORPORATION, a
corporation, known to me to be the person and officer whose name is subscribe
to the foregoing instrument, and acknowledged to me that he executed the same
as the act and deed of said corporation for the purposes and consideration
therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, THIS 17th day of March,
1994.
NICKI Y. EMERSON
___________________________________
Notary Public in and for the
State of Texas
7/22/96
My Commission Expires:_____________
Page 2 of 2
<PAGE> 1
EXHIBIT 10.10
SEVERANCE AGREEMENT
This Severance Agreement ("Agreement") is made and effective as of the
day of , 19 , by and between American General
Corporation, a Texas corporation having its principal place of business in
Houston, Texas (the "Company"), and , an individual
currently residing in , ("Employee").
All terms defined in paragraph 2 shall throughout this Agreement have the
meanings given therein.
1. Payment of Severance Amount. If Employee's employment by the Company
or any subsidiary thereof or successor thereto shall be subject to a Voluntary
Termination or an Involuntary Termination within the Covered Period, then the
Company shall pay Employee an amount equal to the applicable Severance Amount,
payable within 15 days after the Termination Date. If any payment provided for
in this paragraph 1 is not made when due, the Company shall pay Employee
interest on the amount payable calculated at the prime or base rate of interest
announced by Texas Commerce Bank, Houston, Texas (or any successor thereto)
from time to time plus two percent (2%) from the date that payment to him
should have been made.
2. Definitions.
(a) An "Affiliate" shall mean any entity which owns or controls,
is owned or controlled by, or is under common ownership or control
with, the Company.
(b) "Base Annual Salary" shall, as determined on the Termination
Date, be equal to the greater of:
(i) Employee's annual salary excluding bonuses and special
incentive payments on the date of the earliest Change of
Control to occur during the Covered Period or
(ii) Employee's annual salary excluding bonuses and special
incentive payments on the Termination Date.
(c) "Change in Duties" shall mean any one or more of the following:
(i) a significant change in the nature or scope of the
Employee's authorities or duties from those applicable
to him immediately prior to the date on which a Change
of Control occurs;
(ii) a reduction in the Employee's Base Annual Salary from that
provided to him immediately prior to the date on which a
Change of Control occurs;
(iii) a diminution in the Employee's eligibility to participate
in bonus, stock option, incentive award and other
compensation plans which provide opportunities to receive
compensation, from the greater of:
-- the opportunities provided by the Company (including
its subsidiaries) for executives with comparable
duties; or
Page 1 of 7
<PAGE> 2
Severance Agreement, Date , Name
-- the opportunities under any such plans under which he
was participating immediately prior to the date on
which a Change of Control occurs;
(iv) a diminution in employee benefits (including but not
limited to medical, dental, life insurance and long-term
disability plans) and perquisites applicable to Employee,
from the greater of:
-- the employee benefits and perquisites provided by the
Company (including its subsidiaries) to executives with
comparable duties; or
-- the employee benefits and perquisites to which he was
entitled immediately prior to the date on which a
Change of Control occurs;
(v) a change in the location of Employee's principal place of
employment by the Company (including its subsidiaries) by
more than ten miles from the location where he was
principally employed immediately prior to the date on
which a Change of Control occurs; or
(vi) a reasonable determination by the Board of Directors of
the Company that, as a result of a Change of Control and
a change in circumstances thereafter significantly
affecting his position, he is unable to exercise the
authorities, powers, functions or duties attached to his
position immediately prior to the date on which a Change
of Control occurs.
(d) A "Change of Control" shall mean the occurrence of any one or
more of the following events:
(i) the company shall (A) merge or consolidate with or into
another corporation or entity or enter into a share
exchange between shareholders of the Company and another
corporation or entity pursuant to Article 5.02 of the
Texas Business Corporation Act and as a result of such
merger, consolidation or share exchange less than
seventy percent (70%) of the outstanding voting
securities of the surviving or resulting corporation or
entity shall then be owned in the aggregate by the former
shareholders of the Company, other than (x) affiliates
(within the meaning of the Securitie Exchange Act of
1934, as amended (the "Exchange Act")) of the Company or
(y) any party to such merger, consolidation or share
exchange or (B) sell, lease, exchange or otherwise
dispose of all or substantially all of the Company's
property and assets in one transaction or a series of
related transactions to one or more corporations or
entities that are not subsidiaries of the Company;
(ii) the shareholder of the Company adopt a plan of
liquidation;
(iii) any corporation, person or group (within the meaning of
Sections 13(d) or 14(d)(2) of the Exchange Act) (other
than the Employee, the Company, any of the Company's
subsidiaries, any employee benefit plan of the Company
and/or one or more of its subsidiaries or any person or
entity organized, appointed or established pursuant to
the terms of any such employee benefit plan) becomes the
beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) of voting securities of the Company
representing thirty percent (30%) or more of the total
number of votes eligible to be cast at any election of
directors of the Company; or
Page 2 of 7
<PAGE> 3
Severance Agreement, Date , Name
(iv) as a result of, or in connection with, any tender offer or
exchange offer, share exchange, merger, consolidation or other
business combination, sale, lease, exchange or other disposition of
all or substantially all of the Company's assets, a contested
election, or any combination of the foregoing transactions, the
persons who were directors of the Company on May 1, 1990 (the
"Incumbent Board") shall cease to constitute a majority of the Board
of Directors of the Company or any successor to the Company, provided
that any person becoming a director subsequent to May 1, 1990 whose
election, or nomination for election by the Company's shareholders
was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board (either by a specific vote or by
approval of a proxy statement of the Company in which such person is
named as a nominee for director without objection to such nomination)
shall be, for purposes herein, considered as though such person were
a member of the Incumbent Board.
Notwithstanding the foregoing, no "Change of Control" shall be deemed to
have occurred with respect to Employee if he or she, after giving effect to
a reorganization, recapitalization, spin-off, or other transaction, however
structured, is employed by a corporation (or other entity)(the "Continuing
Corporation"), (x) at least seventy percent (70%) of the outstanding voting
securities of the ultimate parent entity of which (or of the Continuing
Corporation, if there is no such ultimate parent entity) are beneficially
owned in the aggregate, directly or indirectly through one or more inter-
mediaries, by the former shareholders of the Company, other than affiliates
(within the meaning of the Exchange Act) of the Company, and (y) at least a
majority of the directors of the ultimate parent entity of which (or of the
Continuing Corporation, if there is no such ultimate parent entity) are
members of the Incumbent Board (determined as provided in Subparagraph
(iv)); provided, however, that this exception shall apply only if the
ultimate parent entity of the Continuing Corporation (if there is such
ultimate parent entity) and the Continuing Corporation shall have adopted
the Plan or a plan substantially similar to the Plan (the "Substitute
Plan") and an agreement substantially similar to the Agreement (the
"Substitute Agreement") on or prior to the effective date of such
reorganization, recapitalization, spin-off, or other transaction, however
structured, with such ultimate parent entity (or the Continuing
Corporation, if there is no such ultimate parent entity) to be substituted
for the Company for all purposes under the Substitute Plan and under the
Substitute Agreement as applicable. Moreover, for purposes of the
Substitute Agreement, upon the creation of the Continuing Corporation, no
subsequent Change of Control of the Company shall be deemed to be a Change
of Control of the Continuing Corporation unless its ultimate parent entity
shall be the Company.
The "ultimate parent entity" of any corporation or other entity is that
entity (i) which either alone or through one or more majority owned
subsidiaries, beneficially owns (within the meaning of the Exchange Act)
fifty percent (50%) or more of the outstanding voting securities of such
corporation or other entity (based upon voting power in an election of
directors), and (ii) as to which there is no corporation or other entity
which beneficially owns (within the meaning of the Exchange Act) fifty
percent (50%) or more of its outstanding voting securities (based upon
voting power in an election of directors).
The occurrence of the above events shall be the date of, but immediately
prior to the time of, consummation of a merger, consolidation, share
exchange or sale, lease, exchange or disposition of property and assets
referred to in
Page 3 of 7
<PAGE> 4
Severance Agreement, Date , Name
Subparagraph 2(d)(i), the date of any shareholder adoption of a plan of
liquidation referred to in Subparagraph 2(d)(ii), the date on which the
event described in Subparagraph 2(d)(iii) occurs, or the date of the change
in constituency of the Board of Directors of the Company, as described in
Subparagraph 2(d)(iv), as the case may be.
(e) "Covered Period" for the Employee shall mean a period of time
following the occurrence of a Change of Control equal to the lesser of (i)
Employee's period of employment with the Company, any subsidiary, or any
predecessor of either thereof prior to that Change of Control, or (ii)
three years following the occurrence of the Change of Control.
(f) "Involuntary Termination" shall mean any termination which:
(i) does not result from a resignation by employee (other
than a resignation pursuant to clause (ii) of this subparagraph (f));
or
(ii) results from a resignation following any Change in Duties
(as defined above);
provided, however, the term "Involuntary Termination" shall not include:
(x) a Termination for Cause (as defined below), or
(y) any termination as a result of death, disability,
or normal retirement pursuant to a retirement plan to
which Employee was subject prior to any Change of Control.
(g) "Severance Amount" is equal to:
(i) in the case of an Involuntary Termination, 2.99 times
Employee's Base Annual Salary, and
(ii) in the case of a Voluntary Termination, two times
Employee's Base Annual Salary.
(h) "Termination for Cause" shall mean only a termination as a
result of fraud, misappropriation of or intentional material damage to
the property or business of the Company (including its subsidiaries), or
commission of a felony by Employee.
(i) "Voluntary Termination" shall mean any termination which is
not:
(i) an Involuntary Termination,
(ii) a Termination for Cause, or
(iii) the result of death, disability, or normal retirement
pursuant to a retirement plan to which Employee was subject
prior to any Change of Control.
(j) "Voting Securities" shall mean any securities which ordinarily
possess the power to vote in the election of directors without the happening
of any pre-condition or contingency.
3. Adjustments for Certain Taxes. To the extent that any payment made to
Employee under this Agreement and any benefit or payment received by Employee
under any other plan, program or arrangement sponsored or maintained by the
Page 4 of 7
<PAGE> 5
Severance Agreement, Date , Name
Company or its affiliates is subject to federal income, excise or other tax at
a rate above the rate ordinarily applicable to wages and salaries paid in the
ordinary course of business ("Penalty Tax"), whether as a result of the
provisions of sections 280G and 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), any similar or analogous provisions of any statute
adopted subsequent to the date hereof, or otherwise, then the Severance Amount
shall be increased by an amount (the "Additional Amount") such that the net
amount received by Employee, after paying any applicable Penalty Tax and any
federal or state income tax on such Additional Amount, shall be equal to the
amount that Employee would have received if such Penalty Tax were not
applicable to payments made to Employee under this Agreement and to benefits or
payments received by Employee under any other plan, program or arrangement
sponsored or maintained by the Company or its affiliates.
4. Medical and Dental Benefits. If Employee's employment by the Company
or any subsidiary thereof or successor thereto shall be subject to a Voluntary
Termination or an Involuntary Termination within the Covered Period, then to
the extent that Employee or any of Employee's dependents may be covered under
the terms of any medical and dental plans of the Company (or any subsidiary
thereof or successor thereto) for active employees immediately prior to such
termination, the Company will provide Employee and those dependents with
equivalent coverages for a period of thirty (30) months from the date of such
termination; provided, however, that such coverages shall terminate if and to
the extent that Employee becomes eligible for similar coverages from a
subsequent employer (and any such eligibility shall be reported to the
Company by Employee). Such coverages may be procured directly by the Company
(or any subsidiary thereof, if appropriate) apart from, and outside of the
terms of the plans themselves; provided that Employee and Employee's dependents
comply with all of the conditions of the aforementioned plans. In
consideration for these benefits, Employee must make contributions equal to
those required from time to time from employees for equivalent coverages under
the aforementioned plans.
5. Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Company to: American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Attention: General Counsel
If to Employee to: Name
Company
Address
City, State Zip
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
6. Applicable Law. This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Texas.
Page 5 of 7
<PAGE> 6
Severance Agreement, Date , Name
7. Severability. If a court of competent jurisdiction determines
that any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the validity
or enforceability of any other provision of this Agreement and all other
provisions shall remain in full force and effect.
8. Withholding of Taxes. Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
9. No Employment Agreement. Nothing in this Agreement shall give
Employee any rights (or impose any obligations) to continued employment by
the Company or any subsidiary thereof or successor thereto, nor shall it
give the Company any rights (or impose any obligations) with respect to
continued performance of duties by Employee for the Company or any
subsidiary thereof or successor thereto.
10. No Assignment; Successors.
(a) Employee's right to receive payments or benefits
hereunder shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by
will or by the laws of descent or distribution, and in the event of any
attempted assignment or transfer contrary to this paragraph 10 the
Company shall have no liability to pay any amount so attempted to be
assigned or transferred. This Agreement shall inure to the benefit of
and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees,
and legatees.
(b) This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or
other disposition of all or substantially all of its assets unless
either (i) the person or entity acquiring such assets or a substantial
portion thereof shall expressly assume by an instrument in writing all
duties and obligations of the Company hereunder or (ii) the Company
shall provide, through the establishment of a separate reserve
therefor, for the payment in full of all amounts which are or may
reasonably be expected to become payable to Employee hereunder.
11. Term. This Agreement shall be effective as of the date first
above written and shall remain in effect until ____________; provided, however,
that in the event of a Change of Control during the term hereof, this Agreement
shall remain in effect for the Covered Period, as defined in paragraph 2 hereof.
12. Extension. The Compensation Committee of the Company may, at any
time prior to the expiration hereof, extend the term hereof for a period of
up to two years from the date on which such extension is approved, without any
further action on the part of Employee or the Company.
13. Indemnification. If Employee shall obtain any money judgment or
otherwise prevail with respect to any litigation brought by Employee or the
Company to enforce or interpret any provision contained herein, the Company, to
the fullest extent permitted by applicable law, hereby indemnifies Employee for
his reasonable attorneys' fees and disbursements incurred in such litigation
and hereby agrees (a) to pay in full all such fees and disbursements and (b) to
pay prejudgment interest on any money judgment obtained by Employee calculated
at the
Page 6 of 7
<PAGE> 7
Severance Agreement, Date , Name
prime or base rate of interest announced by Texas Commerce Bank, Houston, Texas
(or any successor thereto) from time to time plus two percent (2%) from the
earliest date that payment to him should have been made under this Agreement.
14. No Mitigation. Employee shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made under any
provision of this Agreement, and, except as provided in paragraph 4 hereof, the
obtaining of any such other employment shall in no event effect any reduction
of the Company's obligation to make (or cause to be made) the payments and
arrangements required to be made under this Agreement. Further, except as
provided in paragraph 4 hereof, the Company's obligation to make the payments
and arrangements required to be made under this Agreement shall not be affected
by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other rights which the Company may have
against Employee.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year first written.
AMERICAN GENERAL CORPORATION
by order of the Personnel Committee
of the Board of Directors
By:____________________________
Employee
____________________________
(Employee Name)
Page 7 of 7
<PAGE> 1
EXHIBIT 10.11
SUPPLEMENTAL RETIREMENT AGREEMENT
THIS AGREEMENT, made as of the 12th day of April, 1989, by and
between AMERICAN GENERAL CORPORATION, a Texas corporation with principal
executive offices in Houston, Texas ("Company") and HAROLD S. HOOK, of Houston,
Harris County, Texas ("Hook");
W I T N E S S E T H:
WHEREAS, Hook has been employed by the Company for a long and valuable
career of executive service to the Company, including over ten years as chief
executive officer of the Company; and
WHEREAS, the Company desires to reward such past service and to
encourage and reward the continued employment of Hook with the Company until
his retirement and to promote his devotion to his duties on behalf of the
Company without uncertainty or concern as to the retirement income security of
him and his spouse; and
WHEREAS, the Company desires to promote and enable timely retirement
and orderly succession with respect to the office of chief executive officer of
the Company; and
WHEREAS, the Company desires to facilitate the foregoing by providing
for Hook a separate contractual supplement to the basic Company retirement
program;
NOW, THEREFORE, the Company and Hook hereby agree as follows:
1. Retirement Benefit. Subject to the terms and conditions of
this Agreement, the Company shall pay to Hook as a supplemental retirement
benefit a monthly amount equal to (a) minus (b), where
(a) equals 55% of Hook's Average Monthly Compensation, within the
meaning of that term as used in the Restated American General
Retirement Plan ("Basic Plan") as in effect on the date of
this Agreement but without any limitation on the maximum
dollar amount of compensation considered in determining
Average Monthly Compensation under the Basic Plan; and
(b) equals the aggregate monthly retirement benefit (expressed in
the form of a joint and two-thirds survivor annuity for Hook
and his spouse at the relevant date) to which Hook is actually
entitled under the Basic Plan, any other qualified defined
benefit pension plan maintained by the Company or its
affiliates and any nonqualified supplemental retirement plan
maintained by the Company or its affiliates (including, but
not limited to, the Restoration of Retirement Income Plan for
Certain
<PAGE> 2
Employees Participating in the Restated American
General Retirement Plan). This amount (b) shall not include
amounts payable under any defined contribution plan of the
Company or its affiliates (including, but not limited to, the
American General Thrift and Incentive Plan and Supplemental
Thrift Plan).
2. Retirement Date. The benefit amount determined in Paragraph 1
shall be payable upon Hook's retirement or other termination of employment with
the Company at or after his attainment of age 62. If his retirement or other
termination of employment occurs upon his attainment of age 60, the figure
"50%" shall be substituted for the figure "55%" in Paragraph 1(a) in
determining the benefit amount payable. If his retirement or other termination
of employment with the Company occurs after his attainment of age 60 but prior
to his attainment of age 62, the figure to be substituted for the figure "55%"
in Paragraph 1(a) in determining the benefit amount payable shall be equal to
55% minus an amount equal to a Reduction Factor times 5%. The Reduction Factor
shall be a fraction, the numerator of which is the number of full months by
which Hook's retirement or other termination of employment with the Company
precedes his attainment of age 62 and the denominator of which is 24. Except
as otherwise provided in this Agreement, no supplemental retirement benefit
shall be payable to or on behalf of Hook under this Agreement if his retirement
or other termination of employment with the Company occurs prior to his
attainment of age 60.
3. Time and Form of Payment. The supplemental retirement benefit
provided under this Agreement shall be payable monthly, beginning on the first
day of the month following Hook's retirement or other termination of employment
with the Company. The normal form of such benefit shall be an annuity payable
to Hook for his lifetime and upon his death continuing to his surviving spouse,
if any, for her lifetime in an amount equal to two-thirds of the amount payable
during Hook's life. Hook may, prior to his retirement or other termination of
employment with the Company, elect to have such supplemental retirement benefit
paid in any other actuarially-equivalent form available under the Basic Plan
and, in such case, the benefit amount payable shall be determined by using the
actuarial factors then used under the qualified defined benefit plan of the
Company; provided, however, that Hook may not elect any form of payment for
such supplemental retirement benefit that would increase the amount payable
during his lifetime under this Agreement.
4. Death Benefit. If Hook dies after the commencement of the
supplemental retirement benefit provided under this Agreement,
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the death benefit provided hereunder shall be that provided, if any, under the
form of benefit then being paid. If Hook dies after his attainment of age 60
while employed by the Company and prior to commencement of the supplemental
retirement benefit provided under this Agreement, his surviving spouse, if any,
shall receive for her lifetime a death benefit equal to the two-thirds survivor
annuity she would have received hereunder had Hook retired on the day before
his death with the normal form of benefit in effect, beginning immediately.
5. Disability Benefit. Notwithstanding anything to the contrary
in this Agreement, any payments paid to Hook under any long term disability
plan of the Company (to the extent such payments are attributable to Company
contributions to the cost of such payments) shall reduce, dollar-for-dollar,
the supplemental retirement benefits otherwise payable hereunder for the period
for which such long term disability payments are made.
6. Termination after Change of Control. Notwithstanding the last
sentence of Paragraph 2, if Hook's employment with the Company terminates for
any reason prior to his attainment of age 60 but after a Change of Control
occurs, Hook will be considered to have remained in the employment of the
Company until his attainment of age 60. In such case, upon his attainment of
age 60, he will be deemed to have thereupon retired, and the supplemental
retirement benefit provided under this Agreement will become payable. For
purposes of this Paragraph 7, "Change of Control" shall have the meaning set
forth in the Severance Agreement between Hook and the Company dated as of March
19, 1986, as amended.
7. Independence of Benefit. The supplemental retirement benefit
provided under this Agreement shall be in addition to any other amounts payable
to or on behalf of Hook by the Company or under Company benefit plans or
agreements (subject to the offsets specifically contained in this Agreement).
8. Administration. This Agreement shall be interpreted and
administered by the Compensation Committee of the Board of Directors of the
Company.
9. Affiliates. For purposes of this Agreement, the term
"affiliates" shall mean any parent or subsidiary corporation (within the
meaning of such terms as defined in section 425 of the Internal Revenue Code of
1986, as amended) of the Company.
10. Employment. Hook shall be considered to be in the employment
of the Company as long as he remains an employee of the Company or any of its
affiliates. Nothing in this Agreement shall
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confer on Hook the right to continued employment by the Company or its
affiliates or affect in any way the right of the Company or its affiliates to
terminate his employment at any time.
11. Nonassignable. No right, title, interest or benefit hereunder
shall ever be liable for or charged with any of the torts or obligations of
Hook or any person claiming under him or be subject to seizure by any creditor
of Hook or any person claiming under him. Neither Hook nor any person claiming
under him shall have the power to anticipate, dispose of, assign or pledge any
right, title, interest or benefit hereunder in any manner until the same shall
have been actually distributed free and clear of the terms of this Agreement.
12. Nature of Agreement. Nothing in this Agreement shall be
deemed to create a trust. Hook shall have no security or other interest in any
funds set aside by the Company to provide amounts payable pursuant to this
Agreement. Any funds so set aside by the Company shall remain subject to the
claims of general creditors of the Company, present and future. No payment
shall be made under this Agreement unless the Company is then solvent. This
Agreement shall constitute an unfunded, unsecured obligation of the Company to
make payments in accordance with this Agreement.
13. Binding Nature. This Agreement shall be binding upon the
Company and any successor to the Company by merger, consolidation or other
reorganization or acquisition.
14. Amendment or Termination. This Agreement may not be amended
or terminated without the written consent of Hook and the Company.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
AMERICAN GENERAL CORPORATION
By /s/ MICHAEL J. POULOS
___________________________
Michael J. Poulos
/s/ HAROLD S. HOOK
___________________________
Harold S. Hook
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EXHIBIT 10.12
AMERICAN GENERAL
SUPPLEMENTAL RETIREMENT TRUST
This Trust Agreement is entered into this 31st day of August,
1989, by and between AMERICAN GENERAL CORPORATION, a Texas corporation
(hereinafter referred to as the "Company"), and FIDUCIARY TRUST COMPANY
INTERNATIONAL (hereinafter referred to as the "Trustee").
ARTICLE I
PRELIMINARY RECITALS
1.1 Supplemental Retirement Agreement. The Company has heretofore
entered into a Supplemental Retirement Agreement (the "Retirement Agreement")
with its Chief Executive Officer, Harold S. Hook ("Hook"), under which the
Company has agreed to provide certain supplemental retirement benefits (the
"Benefits") to Hook and, in the event of his death, to his spouse ("Surviving
Spouse"), according to the terms and conditions of such Retirement Agreement.
1.2 Establishment of Trust. In order to provide a source of
payment for its obligations under the Retirement Agreement, the Company has
entered into this Trust Agreement to create a trust (hereinafter referred to as
the "Trust") and has delivered certain property to the Trustee, the receipt of
which is hereby acknowledged by the Trustee. The Trustee agrees to hold such
property and all other property, real or personal, which may be contributed and
made subject to the provisions of the Trust Agreement as well as the proceeds,
investments, and reinvestments thereof, in trust for the uses and purposes and
subject to the provisions hereinafter set forth.
1.3 Grantor Trust. It is intended that the Company shall be
treated as the owner of the assets of the Trust pursuant to Sections 671-679 of
the Internal Revenue Code of 1986, as amended, and the terms of the Trust
Agreement shall be so construed.
1.4 Company Deduction. It is intended that distributions from the
Trust to Hook or his Surviving Spouse shall be deductible by Company to the
same extent, at the same time, and in the same manner as if made directly by
the Company.
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ARTICLE II
DEFINITIONS
2.1 Definitions. Unless the context of the Trust Agreement
otherwise requires or unless otherwise defined herein, the terms defined in the
Retirement Agreement shall have the same meaning when used herein as the
meaning given to those terms in the Retirement Agreement.
(a) The term "Change in Control" shall mean the occurrence of
any of the following events:
(1) any "person," including a "group" as determined
in accordance with Section 13(d)(3) of the Exchange Act, is or
becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding
securities;
(2) as a result of, or in connection with, any
tender offer or exchange offer, merger or other business
combination, sale of assets or contested election, or any
combination of the foregoing transactions (a "Transaction"),
the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board
of Directors of the Company or any successor to the Company;
(3) the Company is merged or consolidated with
another corporation and as a result of such merger or
consolidation less than 70% of the outstanding voting
securities of the surviving or resulting corporation shall
then be owned in the aggregate by the former stockholders of
the Company, other than (i) affiliates within the meaning of
the Exchange Act, or (ii) any party to such merger or
consolidation;
(4) a tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing 30% or more of the combined voting power of the
Company's then outstanding voting securities; or
(5) the Company transfers substantially all of its
assets to another corporation which is not a wholly-owned
subsidiary of the Company.
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(b) The term "Code" shall mean
the Internal Revenue Code of 1986, as amended from time to
time.
(c) The term "Consultant" shall mean the independent
consulting firm employed by the Company to make the computations
required by this Trust Agreement.
(d) The term "Exchange Act" shall mean the Securities
Exchange Act of 1934.
(e) The term "Insolvency" shall mean the condition of the
Company in the event that it either is unable to pay its debts as they
mature or is subject to a pending proceeding as a debtor under the
Bankruptcy Code.
(f) The term "Potential Change in Control" shall mean the
occurrence of any of the following events:
(1) when a third person, including a "group" as
determined in accordance with section 13(d)(3) of the Exchange
Act, becomes the beneficial owner of shares of the Company
having 20% or more of the total number of votes that may be
cast for the election of directors of the Company; or
(2) when any person publicly announces an intention
to take actions which, if consummated, would result in a
Change of Control.
(h) The term "Required Funding Amount" shall mean the amount
determined pursuant to the provisions of Section 4.2 to fund the
obligation of the Company with respect to the Benefits to be provided
under the Retirement Agreement.
(i) The term "Trust Fund" shall mean all money or other
property delivered to the Trustee by the Company, all investments or
reinvestments made therewith or proceeds thereof and all earnings and
profits thereon, less all payments and charges as authorized herein.
(j) The term "Valuation Date" shall mean the last business
day of each calendar year.
2.2 Construction. Where necessary or appropriate to the meaning
hereof, the singular shall be deemed to include the plural, the masculine to
include the feminine, and the feminine to include the masculine.
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ARTICLE III
RIGHTS AND DUTIES OF COMPANY AND
RIGHTS OF ITS GENERAL CREDITORS
3.1 Trust Irrevocable. The Trust shall be irrevocable and shall be
held for the exclusive purpose of providing Benefits to Hook and his Surviving
Spouse and defraying expenses of the Trust in accordance with the provisions of
this Trust Agreement. Except as provided in Section 3.2 and Articles IV, XI
and XII, no part of the income or corpus of the Trust Fund shall be recoverable
by or for the Company.
3.2 Rights of General Creditors of Company. Notwithstanding any
provision of the Trust Agreement or the Retirement Agreement to the contrary,
the Trust Fund shall be subject at all times to the claims of general creditors
of the Company, so long as the Trust Fund is in the possession of the Trustee.
No general creditor of the Company shall have any right to recover, or any
title or interest in, the Trust Fund after it has been distributed by the
Trustee to Hook or his Surviving Spouse, even if prior to such payment the
Trustee had knowledge or notice that such general creditor has made or intends
to make claim to the Trust Fund. Notwithstanding any such knowledge or notice,
the Trustee shall continue to make distributions to Hook or his Surviving
Spouse (except as provided in Article XII) unless and until such time as a
general creditor of the Company brings legal action against the Trustee and
serves it with process claiming the Trust Fund to satisfy its claim against the
Company.
3.3 Duty of Company to Notify Trustee of Insolvency. The Board of
Directors, the Chief Executive Officer and the President of the Company (or
their representatives) shall have the duty to notify and inform the Trustee of
the Company's Insolvency. Such notification shall be in writing and shall be
delivered within five business days of the Board of Directors, the Chief
Executive Officer or the President having actual knowledge of such Insolvency.
ARTICLE IV
CONTRIBUTIONS
4.1 Contributions.
(a) The Company shall make contributions to the Trust from time to
time as it shall determine in its sole discretion.
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(b) Notwithstanding paragraph (a) above, if the value of the Trust
Fund is less than the Required Funding Amount upon the occurrence of a
Potential Change in Control or a Change in Control, within the five-day period
following the Potential Change in Control or Change in Control, whichever is
applicable, the Company shall be required to make and shall make a contribution
("Special Contribution") to the Trust equal to the amount by which the Required
Funding Amount exceeds the value of the Trust Fund. If the Company fails to
make the Special Contribution upon the occurrence of such event, the Trustee is
empowered to bring suit against the Company to require specific performance of
its obligation to make the Special Contribution. If the Trustee fails to bring
suit within a reasonable period, Hook or his Surviving Spouse may bring suit
against the Company for such specific performance.
(c) As of each Valuation Date, the Trustee shall determine if the
value of the Trust Fund is less than or exceeds the Required Funding Amount.
If, as of any Valuation Date after a Potential Change in Control or Change in
Control, the Required Funding Amount exceeds the value of the Trust Fund, the
Company shall contribute to the Trust the amount by which the Required Funding
Amount exceeds the value of the Trust Fund. If, as of any Valuation Date, the
value of the Trust Fund exceeds the Required Funding Amount, at the request of
the Company, the Trustee shall distribute to the Company the amount by which
the value of the Trust Fund exceeds the Required Funding Amount.
4.2 Determination of Required Funding Amount. As of any Potential
Change in Control, Change in Control, or applicable Valuation Date, the
Required Funding amount shall be the sum of the amount determined as necessary
to satisfy the Company's obligation to pay Benefits under the Retirement
Agreement and the amount deemed to be appropriate by the Trustee, after
consultation with the Company, to pay for the expenses and compensation of the
Trustee in connection with the administration of the Trust. The Required
Funding Amount shall be recalculated as of each Valuation Date and
appropriately adjusted in accordance with the provisions of Section 4.1. The
Consultant shall determine the Required Funding Amount, and any recalculation
of such amount, and shall notify and inform the Trustee of such amount.
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ARTICLE V
INVESTMENT, ADMINISTRATION AND DISBURSEMENT OF TRUST FUND
5.1 Investment of Trust Fund. The Trustee shall have, with respect
to the Trust Fund, power in its discretion: To invest and reinvest in any
property, real, personal or mixed, wherever situate, foreign or domestic,
including, without limitation, common and preferred stocks, bonds, notes and
debentures (including convertible stocks and securities but not including any
stock or securities of the Company, the Trustee or their affiliates or any debt
instruments of the Company or its affiliates); leaseholds; mortgages
(including, without limitation, any collective or part interest in any bond and
mortgage or note and mortgage); certificates of deposit; insurance contracts;
and oil, mineral or gas properties, royalties, interests or rights (including
equipment pertaining thereto). In addition, the Trustee shall have the power
in its discretion to use Trust Fund assets to purchase, and pay all premiums
and other charges upon, individual or group annuity contracts, the rates of
return and maturity dates of which may reasonably be expected to yield assets
of the Trust Fund sufficient to pay the benefits under the Retirement
Agreement.
5.2 Valuation of Trust Fund. As soon as practicable after each
Valuation Date (and after each such other date as the Company and Trustee may
agree), the Trustee shall report to the Company the assets held in the Trust
Fund as of such day and shall determine and include in such report the fair
market value as of such day of each such asset. In determining such fair
market values, the Trustee shall use such market quotations and other
information as are available to it and may in its discretion be appropriate.
The report of any such valuation shall not constitute a representation by the
Trustee that the amounts reported as fair market values would actually be
realized upon the liquidation of the Trust Fund. The Trustee shall not be
accountable to the Company or to any other person on the basis of any such
valuation, but its accountability shall be in accordance with the provisions of
Article VI hereof.
5.3 Additional Investment Powers of Trustee. Subject to the
provisions of Sections 5.1, 5.6 and 11.2 hereof, the Trustee shall have, with
respect to the Trust Fund, the power in its discretion:
(a) To retain any property at any time received by it;
(b) To sell, exchange, convey, transfer, or dispose of, and to
grant options for the purchase or exchange with respect to, any
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<PAGE> 7
property at any time held by it, by public or private sale for cash or on
credit or partly for cash and partly upon credit;
(c) To participate in any plan of reorganization, consolidation,
merger, combination, liquidation, or other similar plan or oppose any such plan
or any action thereunder, or any contract, purchase, sale, or other action by
any person or corporation;
(d) To deposit any property with any protective, reorganization or
similar committee, to delegate discretionary power to any such committee and to
pay and agree to pay part of the expenses and compensation of any such
committee and any assessments levied with respect to any property so deposited;
(e) To exercise all conversion and subscription rights pertaining
to any property;
(f) To extend the time of payment of any obligation held in the
Trust Fund;
(g) To enter into stand-by agreements for future investment,
either with or without a stand-by fee; and
(h) To invest and reinvest all or any specified portion of the
Trust Fund through the medium of any common, collective or commingled trust
fund which has been or may hereafter be established and maintained by the
Trustee.
5.4. Administrative Powers of Trustee. The Trustee shall have the
power in its discretion:
(a) To exercise all voting rights with respect to the shares of
stock held in the Trust Fund and to grant proxies, discretionary or otherwise;
(b) To cause any shares of stock to be registered and held in the
name of one or more of its nominees, or one or more nominees of any system for
the central handling of securities, without increase or decrease of liability;
(c) To collect and receive any and all money and other property
due to the Trust Fund and to give full discharge therefor;
(d) Subject to the provisions of Section 5.6 hereof, to settle,
compromise or submit to arbitration any claims, debts, or damages due or owing
to or from the Trust; to commence or defend suits or legal proceedings to
protect any interest of the Trust;
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<PAGE> 8
and to represent the Trust in all suits or legal proceedings in any court or
before any other body or tribunal;
(e) To organize under the laws of any state a corporation for the
purpose of acquiring and holding title to any property which it is authorized
to acquire under this Trust Agreement and to exercise with respect thereto any
or all of the powers set forth in this Trust Agreement;
(f) To determine how all receipts and disbursements shall be
credited, charged, or apportioned as between income and principal;
(g) To engage such independent third parties as the Trustee may
deem necessary in carrying out its duties hereunder; and
(h) Generally to do all acts, whether or not expressly authorized,
which the Trustee may deem necessary or desirable for the protection of the
Trust Fund.
5.5 Dealings with Trustee. Persons dealing with the Trustee shall
be under no obligation to see to the proper application of any money paid or
property delivered to the Trustee or to inquire into the Trustee's authority as
to any transaction.
5.6 Distributions from Trust Fund.
(a) Except as set forth in this Section 5.6 and in Section 4.1,
Section 11.2 and Article XII, distributions from the Trust Fund shall be made
by the Trustee to Hook or his Surviving Spouse at the times and in the amounts
set forth in the Retirement Agreement as directed by the Company and, to the
maximum extent permitted by applicable law, the Trustee shall be fully
protected in so doing. Any amounts so paid shall be reduced by the amount of
income tax withholding required by law. The Company shall inform the Trustee
of the amounts to be so withheld and the Trustee shall pay such amounts to the
Company for payment to the appropriate governmental authorities. If the
Company fails to timely inform the Trustee of the amounts to be withheld, the
Trustee shall make such determination and shall pay such withholding amounts
directly to the appropriate governmental authorities. Notwithstanding the
provisions of this Trust Agreement, the Company shall be obligated to pay the
Benefits. To the extent the Trust Fund is not sufficient to pay any Benefit
when due, the Company shall pay such Benefit directly. Nothing in this Trust
Agreement shall relieve the Company of its liabilities to pay Benefits except
to the extent such liabilities are met by application of Trust Fund assets.
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(b) If Hook or his Surviving Spouse believes that he or she is
entitled to a Benefit, he or she may apply in writing directly to the Trustee
for payment of such Benefits. Such application shall advise the Trustee of the
circumstances which entitle Hook or his Surviving Spouse to payment of such
Benefits. The Trustee shall, in such case, reach its own independent
determination as to Hook's or his Surviving Spouse's entitlement to Benefits,
even though the Trustee may be informed from another source (including the
Company) that payments are not due under the Retirement Agreement. If the
Trustee so desires, it may, in its sole discretion, make such additional
inquiries and take such additional measures as it deems necessary in order to
enable it to determine whether Benefits are due and payable, including, but not
limited to, interviewing appropriate persons, requesting affidavits, soliciting
oral or written testimony under oath, or holding a hearing or other proceeding.
The Trustee shall determine whether Benefits are payable as promptly as
possible.
(c) The Trustee shall not itself commence any legal action,
whether in the nature of an interpleader action, request for declaratory
judgment or otherwise, requesting the court to make the determination of Hook's
or his Surviving Spouse's entitlement to a Benefit.
(d) Notwithstanding any other provision of this Trust Agreement,
if any amounts held in the Trust are found in a "determination" (within the
meaning of Section 1313(a) of the Code) to have been includible in gross income
of Hook or his Surviving Spouse prior to payment of such amounts from the
Trust, the Trustee shall, as soon as practicable, pay such amounts to Hook or
his Surviving Spouse (but not in excess of the present value of his or her
accrued Benefit at the time of such payment); provided, however, that such
payment shall be made only if and after the Trustee receives the acknowledgment
and agreement of Hook or his Surviving Spouse that such payment constitutes
satisfaction and payment of all or the applicable portion of the obligations
payable to Hook or his Surviving Spouse by the Company under the Retirement
Agreement. For purposes of this Section 5.6(d), the Trustee shall be entitled
to rely on a copy of the determination described in the preceding sentence and
an affidavit by Hook or his Surviving Spouse that such determination has
occurred.
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ARTICLE VI
SETTLEMENT OF ACCOUNTS
The Trustee shall keep full accounts of all of its receipts and
disbursements. Its books and records with respect to the Trust Fund shall be
open to inspection by the Company, Hook or his Surviving Spouse or their
representatives at all times during business hours of the Trustee. Within
sixty days after the close of each calendar year, or any termination of the
duties of the Trustee, the Trustee shall mail to the Company and Hook or his
Surviving Spouse an account of its acts and transactions as Trustee hereunder.
If within sixty days after the mailing of the account or any amended account
neither the Company nor Hook or his Surviving Spouse has filed with the Trustee
notice of any objection to any act or transaction of the Trustee, the account
or amended account shall become an account stated. If any objection has been
filed, and if the party who filed such objection is satisfied that it should be
withdrawn or if the account is adjusted to the objecting party's satisfaction,
the objecting party shall in a writing filed with the Trustee signify its
approval of the account and it shall become an account stated. When an account
becomes an account stated, such account shall be finally settled, and the
Trustee shall be completely discharged and released, as if such account had
been settled and allowed by a judgment or decree of a court of competent
jurisdiction in an action or proceeding in which the Trustee, the Company, and
all persons having or claiming to have any interest in the Trust Fund were
parties. The Trustee, the Company and Hook or his Surviving Spouse shall have
the right to apply at any time to a court of competent jurisdiction for
judicial settlement of any account of the Trustee not previously settled as
hereinabove provided. In any such action or proceeding it shall be necessary
to join as parties the Trustee, the Company and Hook or his Surviving Spouse
and any judgment or decree entered therein shall be conclusive upon all such
persons.
ARTICLE VII
TAXES, EXPENSES AND COMPENSATION OF TRUSTEE
7.1 Taxes. The Company agrees that all income, deductions, and
credits of the Trust Fund belong to it as owner for income tax purposes and
will be included on the Company's income tax returns. The Company shall from
time to time pay taxes (references in this Trust Agreement to the payment of
taxes shall include interest and applicable penalties) of any and all kinds
whatsoever which at any time are lawfully levied or assessed upon or become
payable in
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respect of the Trust Fund, the income, or any property forming a part thereof,
or any security transaction pertaining thereto. To the extent that any taxes
levied or assessed upon the Trust Fund are not paid by the Company or contested
by the Company pursuant to the last sentence of this Section 7.1, the Trustee
shall pay such taxes out of the Trust Fund and the Company shall upon demand by
the Trustee deposit into the Trust Fund an amount equal to the amount paid from
the Trust Fund to satisfy such tax liability. If requested by the Company, the
Trustee shall, at Company expense, contest the validity of such taxes in any
manner deemed appropriate by the Company or its counsel, but only if it has
received an indemnity bond or other security satisfactory to it to pay any
expenses of such contest. Alternatively, the Company may itself contest the
validity of any such taxes, but any such contest shall not affect the Company's
obligation to reimburse the Trust Fund for taxes paid from the Trust Fund.
7.2 Expenses and Compensation. The Trustee shall be paid
compensation by the Company in accordance with the Trustee's regular schedule
of fees for trust services and applicable investment management services, as in
effect from time to time, unless the Company and the Trustee otherwise agree.
The Trustee shall be reimbursed by the Company for its reasonable expenses of
management and administration of the Trust, including reasonable compensation
of counsel and any agent engaged by the Trustee to assist it in such management
and administration. In the event that the Company shall fail or refuse to make
such reimbursement upon demand, the Trustee may satisfy such obligations out of
the assets of the Trust Fund; in that event, the Company shall immediately upon
demand by the Trustee deposit into the Trust Fund a sum equal to the amount
paid by the Trust Fund for such fees and expenses.
ARTICLE VIII
FOR PROTECTION OF TRUSTEE
8.1 Communications with the Company and Hook.
(a) The Company shall certify to the Trustee the name or names of
any person or persons authorized to act for the Company. Such certification
shall be signed by the Chief Executive Officer (but not including Hook), the
President, a Vice Chairman or a Vice President and the Secretary or an
Assistant Secretary of the Company. Until the Company notifies the Trustee, in
a similarly signed notice, that any such person is no longer authorized to act
for the Company, the Trustee may continue to rely upon the authority of such
person.
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(b) The Trustee may rely upon any certificate, notice or direction
of the Company which the Trustee reasonably believes to have been signed by a
duly authorized officer or agent of the Company.
(c) Communications to the Trustee shall be sent in writing to the
Trustee's principal office or to such other address as the Trustee may specify.
No communication shall be binding upon the Trust Fund or the Trustee until it
is received by the Trustee and unless it is in writing and signed by an
authorized person.
(d) Communications to the Company shall be sent in writing to the
Company's principal office or to such other address as the Company may specify
in writing to the Trustee. Communications to Hook or his Surviving Spouse
shall be sent in writing to the address such person specifies in writing to the
Trustee. No communication shall be binding upon the Company or Hook or his
Surviving Spouse until it is received by such person.
8.2 Advice of Counsel. The Trustee may consult with any legal
counsel with respect to the construction of this Trust Agreement, its duties
hereunder, or any act which it proposes to take or omit, and shall not be
liable for any action taken or omitted in good faith pursuant to such advice.
Expenses of such counsel shall be deemed to be expenses of management and
administration of the Trust within the meaning of Section 7.2 hereof.
8.3 Fiduciary Responsibility.
(a) The Trustee shall discharge its duties under this Trust
Agreement in effectuating the Retirement Agreement in a manner consistent with
the objectives of this Trust Agreement and the Retirement Agreement. The
Trustee shall not be liable for any loss sustained by the Trust Fund by reason
of the purchase, retention, sale, or exchange of any investment in good faith
and in accordance with the provisions of this Trust Agreement. The Trustee
shall have no responsibility or liability for any failure of the Company to
make contributions to the Trust Fund or for any insufficiency of assets in the
Trust Fund to pay Benefits when due. The Trustee shall not be liable hereunder
for any act taken or omitted to be taken in good faith, except for its own
gross negligence or willful misconduct.
(b) The Trustee's duties and obligations shall be limited to those
expressly imposed upon it by this Trust Agreement, notwith-
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standing the incorporation by reference of the Retirement Agreement.
(c) The Company at any time may employ as agent (to perform any
act, keep any records or accounts, or make any computations required of the
Company by this Trust Agreement or the Plans) the corporation or association
serving as Trustee hereunder. Nothing done by said corporation or association
as such agent shall affect its responsibilities or liability as Trustee
hereunder.
ARTICLE IX
INDEMNITY OF TRUSTEE
The Company hereby indemnifies and holds the Trustee harmless from and
against any and all losses, damages, costs, expenses or liabilities (herein,
"Liabilities"), including reasonable attorneys' fees and other costs of
litigation, to which the Trustee may become subject pursuant to, arising out
of, occasioned by, incurred in connection with, or in any way associated with
this Trust Agreement, except for any act or omission constituting gross
negligence or willful misconduct of the Trustee. If one or more Liabilities
shall arise, or if the Company fails to indemnify the Trustee as provided
herein, or both, then the Trustee may engage counsel of its choice, but at the
Company's expense, either to conduct the defense against such Liabilities or to
conduct such actions as may be necessary to obtain the indemnity provided for
herein, or to take both such actions. The Trustee shall notify the Company
within fifteen days after the Trustee has so engaged counsel of the name and
address of such counsel. If the Trustee shall be entitled to indemnification
by the Company pursuant to this Article IX and the Company shall not provide
such indemnification upon demand, the Trustee shall apply assets of the Trust
Fund in full satisfaction of the obligations for indemnity by the Company, and
any legal proceeding by the Trustee against the Company for such
indemnification shall be on behalf of the Trust.
ARTICLE X
RESIGNATION AND REMOVAL OF TRUSTEE
10.1 Resignation of Trustee. The Trustee may resign upon thirty
days' prior written notice to the Company and Hook or his Surviving Spouse
except that any such resignation shall not be effective until (i) the Company
has appointed in writing a successor trustee, which must be a bank or trust
company, (ii) such
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<PAGE> 14
successor Trustee has been approved by Hook or his Surviving Spouse, and (iii)
such successor has accepted the appointment in writing. The Company shall make
a good faith effort, following receipt of notice of resignation from the
Trustee, to find and appoint a successor Trustee who will adhere to the
obligations imposed on such successor under the terms of this Trust Agreement.
If a successor Trustee has not been appointed and received the consent of Hook
or his Surviving Spouse within ninety days of the Trustee's resignation, the
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor Trustee.
10.2 Removal of Trustee. The Company may remove the Trustee upon
thirty days' prior written notice to the Trustee and Hook or his Surviving
Spouse except that any such removal shall not be effective until (i) such
removal has been approved by Hook or his Surviving Spouse, (ii) the Company
appoints a successor trustee, which must be a bank or trust company approved by
Hook or his Surviving Spouse, and (iii) such successor accepts its appointment
in writing.
10.3 Successor Trustee. All of the provisions set forth herein
with respect to the Trustee shall relate to each successor with the same force
and effect as if such successor had been originally named as the Trustee
hereunder.
10.4 Transfer of Trust Fund to Successor. Upon the resignation or
removal of the Trustee and appointment of a successor, the Trustee shall
transfer and deliver the Trust Fund to such successor. Following the effective
date of the appointment of the successor, the Trustee's responsibility
hereunder shall be limited to managing the assets in its possession and
transferring such assets to the successor, and settling its final account.
Neither the Trustee nor the successor shall be liable for the acts of the
other.
ARTICLE XI
DURATION AND TERMINATION OF TRUST AND AMENDMENT
11.1 Duration and Termination. The Trust is hereby declared to be
irrevocable and shall continue until (i) all payments required hereunder have
been made or (ii) until the Trust Fund contains no assets and retains no claims
to recover assets from the Company or any other person or entity, whichever
shall first occur.
11.2 Distribution upon Termination. If this Trust terminates under
the provisions of Section 11.1, the Trustee shall liquidate
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<PAGE> 15
the Trust Fund and, after its final account has been settled as provided in
Article VI, shall distribute to the Company the net balance of any assets of
the Trust remaining after all Benefits and expenses have been paid. Upon
making such distribution, the Trustee shall be relieved from all further
liability. The powers of the Trustee hereunder shall continue so long as any
assets of the Trust Fund remain in its hands.
11.3 Amendment. The Company may from time to time amend, in whole
or in part, any or all of the provisions of this Trust Agreement, provided,
however, that (i) such amendment must be approved by Hook or his Surviving
Spouse, (ii) no amendment will be made to this Trust Agreement or the
Retirement Agreement which shall cause this Trust Agreement, the Retirement
Agreement, or the assets of the Trust Fund to be governed by or subject to Part
2, 3 or 4 of Title I of ERISA, (iii) no such amendment shall adversely affect
any accrued Benefits or the amount of assets of the Trust Fund available to pay
such Benefits, (iv) no such amendment shall purport to alter the irrevocable
character of the Trust established under this Trust Agreement, and (v) no such
amendment shall increase the duties or responsibilities of the Trustee unless
the Trustee consents thereto in writing.
ARTICLE XII
CLAIMS OF COMPANY'S CREDITORS
12.1 Trustee's Responsibilities if Company may be Insolvent.
(a) If at any time the Company or a person claiming to be a
creditor of the Company alleges in writing to the Trustee that the Company has
become Insolvent, the Trustee shall within thirty days request a determination
as to the Company's Insolvency from the firm of certified public accountants
which issued the most recent audited financial statement for the Company (the
"Accountants"), and, pending such determination, the Trustee shall discontinue
payments of Benefits under the Retirement Agreement and this Trust Agreement
and shall hold the Trust Fund for the benefit of bankruptcy creditors. If the
Accountants do not make a determination as to the Company's Insolvency within
ninety days of a request from the Trustee, the Trustee shall select a firm of
certified public accountants to make such determination and any reference to
the "Accountants" herein shall refer to such firm. The Accountants' fees for
making a determination of Insolvency hereunder shall be paid by the Trustee
from the Trust Fund. The Trustee shall resume payments of Benefits under the
Retirement Agreement
-15-
<PAGE> 16
and this Trust Agreement in accordance with Section 5.6 hereof only after the
Accountants have notified the Trustee of their determination that the Company
is not Insolvent (or is no longer Insolvent, if the Accountants initially
determined such corporation to be Insolvent) or upon receipt of an order of a
court of competent jurisdiction requiring such payments. American General
Corporation, by its Board of Directors, Chief Executive Officer and President
shall be obligated to give the Trustee prompt notice in writing in the event
that the Company becomes Insolvent. In determining whether the Company is
Insolvent, the Accountants may rely conclusively upon, and shall be protected
in relying upon, court records showing that the Company is Insolvent, or a
current report or statement from a nationally recognized credit reporting
agency showing that the Company is Insolvent. For purposes of this Trust
Agreement, knowledge and information concerning the Company which is not in the
possession of employees of the Trustee's Corporate Trust Department shall not
be imputed to the Trustee. The Trustee shall have no duty or obligation to
request a determination as to the Company's Insolvency unless and until it
receives a writing that the Company is Insolvent as described in the first
sentence of this Section 12.1.
(b) If the Trustee is notified by the Accountants that the
Accountants have determined that the Company is Insolvent, the Trustee shall
hold the Trust Fund for the benefit of the Company's bankruptcy creditors, and
shall disburse the Trust Fund to satisfy such claims as a court of competent
jurisdiction shall direct.
(c) If the Trustee discontinues payment of Benefits pursuant to
Section 12.1(a) and subsequently resumes such payments, the first payment to
Hook or his Surviving Spouse following such discontinuance shall include an
aggregate amount equal to the difference between the payments which would have
been made to Hook or his Surviving Spouse under this Trust Agreement but for
this Section 12.1 and the aggregate payments actually made to Hook or his
Surviving Spouse by the Company pursuant to the Retirement Agreement during any
such period of discontinuance, plus interest on such amount at a rate
equivalent to the net rate of return earned by the Trust Fund during the period
of such discontinuance.
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<PAGE> 17
ARTICLE XIII
MISCELLANEOUS
13.1 LAWS OF TEXAS TO GOVERN. THIS TRUST AGREEMENT AND THE TRUST
HEREBY CREATED SHALL BE CONSTRUED AND REGULATED BY THE LAWS OF THE STATE OF
TEXAS, EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW.
13.2 Titles and Headings not to Control. The titles to Articles and
headings of Sections in this Trust Agreement are placed herein for convenience
of reference only and in case of any conflict the text of this Trust Agreement,
rather than such titles or headings, shall control.
13.3 Successors and Assigns. This Trust Agreement may not be
assigned by either party without the prior written consent of the other, and
any purported assignment without such prior written consent shall be null and
void. This Trust Agreement shall be binding upon the successors and permitted
assigns of each party hereto.
13.4 Non-Alienation. No interest in or right to receive benefits from
the Trust (i) may be assigned, sold, anticipated, alienated, or otherwise
transferred by Hook or his Surviving Spouse or (ii) shall be subject to
execution, attachment or garnishment.
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
AMERICAN GENERAL CORPORATION
By /s/ HENRY S. ROMAINE
__________________________________
Henry S. Romaine
Vice Chairman and
Chief Investment Officer
FIDUCIARY TRUST COMPANY
INTERNATIONAL, TRUSTEE
By /s/ ROBERT F. PHELPS
__________________________________
Robert F. Phelps
Vice President and
Trust Counsel
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<PAGE> 1
EXHIBIT 10.13
AMENDMENT TO
SUPPLEMENTAL RETIREMENT AGREEMENT
WHEREAS, AMERICAN GENERAL CORPORATION (the "Company") and HAROLD S.
HOOK ("Hook") have heretofore entered into a SUPPLEMENTAL RETIREMENT AGREEMENT
dated as of April 12, 1989 (the "Agreement"); and
WHEREAS, the Company and Hook desire to amend the Agreement in certain
respects;
NOW, THEREFORE, the Agreement shall be amended as follows, effective
as of August 22, 1990:
1. Paragraphs 1 through 7 of the Agreement shall be deleted and
the following shall be substituted therefor:
"1. Lump Sum Benefit. Subject to the terms and
conditions of this Agreement, the Company shall pay to Hook a
supplemental lump sum retirement benefit expressed in the form of a
monthly annuity commencing as of September 1, 1990 payable to Hook for
his lifetime and upon his death continuing to his surviving spouse, if
any, for her lifetime in an amount equal to two-thirds of the amount
payable during Hook's life, with each monthly payment during Hook's
life equal to (a) minus (b), where:
(a) equals 50% of Hook's Average Monthly Compensation,
within the meaning of that term as used in the
Restated American General Retirement Plan ('Basic
Plan') as in effect on April 12, 1989 but without any
limitation on the maximum dollar amount of
compensation considered in determining Average
Monthly Compensation under the Basic Plan, as if he
terminated employment with the Company as of August
24, 1990; and
(b) equals the aggregate monthly retirement benefit
(expressed in the form of a joint and two-thirds
survivor annuity for Hook and his spouse at September
1, 1990) to which Hook would be entitled under the
Basic Plan, any other qualified defined benefit
pension plan maintained by the Company or its
affiliates and any nonqualified supplemental
retirement plan
<PAGE> 2
maintained by the Company or its affiliates
(including, but not limited to, the Restoration of
Retirement Income Plan for Certain Employees
Participating in the Restated American General
Retirement Plan), as if he terminated employment
with the Company as of August 24, 1990. This amount
(b) shall not include amounts payable under any
defined contribution plan of the Company or its
affiliates (including, but not limited to, the
American General Employee's Thrift and Incentive
Plan and the American General Supplemental Thrift
Plan).
The supplemental lump sum retirement benefit provided under this
Paragraph 1 shall be payable in one lump sum payment on August 31,
1990, with the actuarially-equivalent value thereof determined based
upon the actuarial factors then used under the Basic Plan (or other
qualified defined benefit plan of the Company) for determining lump
sum payments.
2. Monthly Benefit. Subject to the terms and conditions
of this Agreement, in addition to the supplemental lump sum retirement
benefit provided in Paragraph 1 above, the Company shall pay to Hook a
supplemental monthly retirement benefit expressed in the form of a
monthly annuity, commencing as of the first day of the month
coinciding with or next following Hook's retirement or other
termination of employment with the Company, payable to Hook for his
lifetime and upon his death continuing to his surviving spouse, if
any, for her lifetime in an amount equal to two-thirds of the amount
payable during Hook's life, with each monthly payment during Hook's
life equal to the excess, if any, of (a) minus (b), where:
(a) equals 55% of Hook's Average Monthly Compensation,
within the meaning of that term as used in the
Restated American General Retirement Plan ('Basic
Plan') as in effect on April 12, 1989 but without any
limitation on the maximum dollar amount of
compensation considered in determining Average
Monthly Compensation under the Basic Plan; and
(b) equals the sum of (1) the monthly retirement benefit
(expressed in the form of a joint and two-thirds
survivor annuity for Hook and his spouse at the
relevant date) which could be provided by the
actuarially-equivalent value of the supplemental lump
sum retirement benefit provided in Paragraph 1 above,
and (2) the aggregate monthly retirement benefit
(expressed in the form of a joint and two- thirds
survivor annuity for Hook and his spouse at the
relevant date) to which Hook is actually entitled
under the Basic Plan, any other qualified defined
benefit pension plan maintained by the
-2-
<PAGE> 3
Company or its affiliates and any nonqualified
supplemental retirement plan maintained by the
Company or its affiliates (including, but not
limited to, the Restoration of Retirement Income
Plan for Certain Employees Participating in the
Restated American General Retirement Plan).
This amount (b) shall not include amounts payable
under any defined contribution plan of the Company
or its affiliates (including, but not limited to,
the American General Employee's Thrift and Incentive
Plan and the American General Supplemental Thrift
Plan). Actuarial-equivalent values for determining
this amount (b) shall be based upon the actuarial
factors under the Basic Plan (or other qualified
defined benefit plan of the Company) at the relevant
date.
Notwithstanding the foregoing, the supplemental monthly retirement
benefit provided above shall be payable upon Hook's retirement or
other termination of employment with the Company at or after his
attainment of age 62. If his retirement or other termination of
employment with the Company occurs upon his attainment of age 60, the
figure '50%' shall be substituted for the figure '55%' in (a) above in
determining the benefit amount payable. If his retirement or other
termination of employment with the Company occurs after his attainment
of age 60 but prior to his attainment of age 62, the figure to be
substituted for the figure '55%' in (a) above in determining the
benefit amount payable shall be equal to 55% minus an amount equal to
a Reduction Factor times 5%. The Reduction Factor shall be a
fraction, the numerator of which is the number of full months by which
Hook's retirement or other termination of employment with the Company
precedes his attainment of age 62 and the denominator of which is 24.
No supplemental monthly retirement benefit pursuant to this Paragraph
2 shall be payable to or on behalf of Hook under this Agreement if his
retirement or other termination of employment with the Company occurs
prior to his attainment of age 60; provided, however, if Hook's
employment with the Company terminates for any reason prior to his
attainment of age 60 but after a Change of Control occurs, Hook will
be considered to have remained in the employment of the Company until
his attainment of age 60. In such case, upon his attainment of age
60, he will be deemed to have thereupon retired, and the supplemental
monthly retirement benefit provided by this Paragraph 2 will become
payable. For purposes of this Paragraph 2, 'Change of Control' shall
have the meaning set forth in the Severance Agreement between Hook and
the Company dated as of March 16, 1990, as amended.
The supplemental monthly retirement benefit provided under
this Paragraph 2 shall be payable monthly, beginning on the first day
of the month coinciding with or next following Hook's retirement or
other termination of employment with the Company. The normal form of
such benefit shall be an annuity payable to Hook for his lifetime and
upon his death continuing to his surviving spouse, if any, for her
lifetime in an amount equal to two-thirds of the amount payable during
Hook's life.
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<PAGE> 4
Hook may, prior to his retirement or other termination of employment
with the Company, elect to have such supplemental monthly retirement
benefit paid in any other actuarially-equivalent form available under
the Basic Plan and, in such case, the benefit amount payable shall be
determined by using the actuarial factors then used under the Basic
Plan (or other qualified defined benefit plan of the Company);
provided, however, that Hook may not elect any form of payment for
such supplemental monthly retirement benefit that would increase the
amount payable during his lifetime under this Agreement.
Notwithstanding the foregoing, any payments paid to Hook under
any long-term disability plan of the Company (to the extent such
payments are attributable to Company contributions to the cost of such
payments) shall reduce, dollar-for-dollar, the supplemental monthly
retirement benefits otherwise payable pursuant to this Paragraph 2 for
the period for which such long-term disability payments are made.
3. Death Benefit. If Hook dies after the effective date
of this Amendment but prior to the time of the lump sum payment as
provided in Paragraph 1, Hook's surviving spouse (or Hook's estate, if
there is no surviving spouse) shall receive the lump sum payment
provided in Paragraph 1. If Hook dies after his attainment of age 60
and while employed by the Company, his surviving spouse, if any, shall
receive a death benefit expressed in the form of a single life annuity
equal to the two-thirds survivor annuity for the life of his
surviving spouse as described in Paragraph 2 assuming Hook had retired
on the day before his death with the joint and two-thirds survivor
annuity form of benefit in effect, beginning immediately. This death
benefit shall be payable as a monthly annuity for the lifetime of
Hook's surviving spouse beginning on the first day of the month
coinciding with or next following Hook's death.
4. Independence of Benefits. The benefits provided
under this Agreement shall be in addition to any other amounts payable
to or on behalf of Hook by the Company or under Company benefit plans
or agreements (subject to the offsets specifically contained in this
Agreement)."
2. Paragraphs 8, 9, 10, 11, 12, 13, 14 and 15 of the Agreement
shall be renumbered as Paragraphs 5, 6, 7, 8, 9, 10, 11 and 12,
correspondingly.
3. As amended hereby, the Agreement is specifically ratified and
reaffirmed.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
the Agreement on this 30th day of August 1990,
effective as of August 22, 1990.
AMERICAN GENERAL CORPORATION
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<PAGE> 5
BY: /s/ MICHAEL J. POULOS
________________________
/s/ KURT G. SCHREIBER
________________________
/s/ OTTO B GERLACH
________________________
/s/ HAROLD S. HOOK
________________________
Harold S. Hook
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<PAGE> 1
EXHIBIT 10.14
SECOND AMENDMENT TO
SUPPLEMENTAL RETIREMENT AGREEMENT
WHEREAS, AMERICAN GENERAL CORPORATION (the "Company") and HAROLD S.
HOOK ("Hook") have heretofore entered into a SUPPLEMENTAL RETIREMENT AGREEMENT
dated as of April 12, 1989 (the "Supplemental Retirement Agreement");
WHEREAS, the Supplemental Retirement Agreement was amended effective
August 22, 1990; and
WHEREAS, the Company and Hook desire to amend the Supplemental
Retirement Agreement in certain respects;
NOW, THEREFORE, the Supplemental Retirement Agreement shall be amended
as follows, effective as of January 1, 1994;
1. Paragraph 2(a) of the Supplemental Retirement Agreement shall
be deleted and the following substituted therefor:
"(a) equals 55% of Hook's Average Monthly Compensation,
within the meaning of that term as used in the
Restated American General Retirement Plan ("Basic
Plan") as in effect on April 12, 1989 but without any
limitation on the maximum dollar amount of
compensation considered in determining Average
Monthly Compensation under the Basic Plan and
including executive deferred compensation within the
definition of Compensation; and"
2. As amended hereby, the Supplemental Retirement Agreement is
specifically ratified and reaffirmed.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
the Supplemental Retirement Agreement on this 17th day of March, 1994,
effective as of January 1, 1994.
AMERICAN GENERAL CORPORATION
By: _______________________________________________
James T. Pulliam, Vice President
_______________________________________________
HAROLD S. HOOK
<PAGE> 1
EXHIBIT 10.16
DEFERRED COMPENSATION PLAN
I. INTRODUCTION
American General Corporation (hereinafter referred to as "AGC") hereby
establishes a Deferred Compensation Plan (hereinafter referred to as
the "Plan") for Harold S. Hook (hereinafter referred to as
"Participant").
II. DEFINITIONS
2.01 "Cash Bonus" means the annual cash bonus awarded by a
Committee consisting of members of the Personnel Committee of
the AGC Board of Directors in their complete discretion to
chosen members of the highest-paid group of salaried
employees.
2.02 "Deferred Compensation" means the amount of Cash Bonus defined
in Section 2.01 and the Normal Compensation defined in Section
2.04 which Participant and AGC mutually agree to defer.
2.03 "Election" means Participant's election to defer his Cash
Bonus and Normal Compensation as evidenced by a Notice of
Election to Defer Income whose form will be substantially
similar to Exhibit I attached to this Plan. Such election
shall fix the amount of Deferred Compensation, establish the
time when the payment of benefits shall commence, specify the
option under which benefits will be paid, and incorporate the
terms, conditions, and provisions of this Plan by reference.
An executed Election form will continue in force for
subsequent calendar years unless Participant enters into a new
Election in the event of his disability or he receives an
emergency withdrawal.
2.04 "Normal Compensation" means the amount of compensation which
would be payable to Participant if no Election were in effect
to defer compensation under this Plan.
2.05 "Separation from Service" means severance of Participant's
relationship with AGC as an employee. Participant shall be
deemed to have severed his employment or contractual
relationship with AGC for purposes of this Plan when, in
accordance with the established practices of AGC, the
employment or contractual relationship is considered to have
terminated.
III. ADMINISTRATION
This Plan will be administered by a Committee of one or more persons
appointed by AGC. The Committee will act as the agent of AGC in all
matters concerning the administration of this Plan.
IV. DEFERRAL ELECTION
4.01 Participant may elect to defer all or any part of his Cash
Bonus, as defined in Section 2.01 of this Plan, and Normal
Compensation, as defined in Section 2.04 of this Plan, by
completing an Election as provided below. If no Election is
made, all compensation will be paid on a regular basis.
4.02 The Election to defer Normal Compensation must be made within
30 days prior to the beginning of the calendar year in which
the compensation is to be deferred and must defer compensation
not yet earned.
-1-
<PAGE> 2
4.03 Participant may not amend or modify the Plan to change the
amount of Deferred Compensation, the payment option selected,
or the time when the payment of benefits should commence,
except in the case of Participant's becoming disabled as
discussed in Section 5.04. However, Participant may make an
Election to defer his Cash Bonus and Normal Compensation each
calendar year.
4.04 If Participant makes a withdrawal pursuant to Section 5.05,
Participant may again defer his Cash Bonus and Normal
Compensation by executing a new Election prior to the
beginning of the calendar year in which it is effective. The
effective date of the new Election will be subject to the
provisions of Section 5.05.
V. BENEFITS
PAYMENT OPTION
5.01 The benefit payable under this Plan shall be payable to
Participant in one lump sum payment in an amount equal to the
total of the deferred compensation plus interest at the rate
in effect from time to time under the Cash Fund of the
American General Employees' Thrift and Incentive Plan.
Interest on the benefit shall be credited at the end of each
calendar quarter on the basis of the time during such quarter
the various portions of such amounts were credited as payable
under this Plan, and such interest shall be compounded
quarterly at the end of each calendar quarter.
SEPARATION FROM SERVICE
5.02 Participant will be entitled to his lump sum payment on the
first business day of the calendar year following the date of
Participant's Separation from Service.
DEATH BENEFITS
5.03 Should Participant die before he has begun to receive the
benefits provided in Section 5.01, AGC shall cause to be paid
to Participant's spouse within thirty (30) days of receipt of
satisfactory proof of death, a lump sum benefit in an amount
equal to the then value of Participant's account. If
Participant's spouse does not survive Participant for a period
of fifteen (15) days, then AGC shall cause such death benefit
to be paid to Participant's estate.
DISABILITY BENEFITS
5.04 Should Participant become disabled before the commencement
date of the benefits, Participant may elect to receive his
lump sum payment on the first day of the month following the
determination of disability. The Plan shall consider
Participant disabled on the date the committee appointed by
AGC to administer this Plan determines Participant is unable
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can
be expected to result in death or mental impairment or be of
long-continued and indefinite duration. The disability of
Participant shall be determined by the committee in accordance
with uniform principles consistently applied, upon the basis
of such evidence as the committee deems necessary and
desirable. An election to receive disability benefits must be
made within a reasonable time after the determination of
disability.
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<PAGE> 3
UNFORESEEABLE EMERGENCY WITHDRAWALS
5.05 In the event of an unforeseeable emergency prior to the
commencement of the benefits provided in Section 5.01,
Participant may apply to the committee to receive that part of
his account which is reasonably needed to satisfy the
emergency needs. If such application for emergency withdrawal
is approved by AGC, AGC shall pay Participant such value as
AGC deems necessary to meet the emergency needs. An
unforeseeable emergency involves only circumstances of sudden
and unexpected emergencies which would cause great hardship to
Participant if early withdrawal were not permitted. The
emergency must be beyond Participant's control and payment may
not be made to the extent that such hardship may be relieved
by other financial resources available to Participant,
including insurance reimbursement, cessation of deferrals
under the Plan, or liquidation of other assets.
If Participant is granted an unforeseeable emergency hardship
withdrawal, he shall be required to cease deferring
compensation under this Plan. The period of cessation shall
commence as of the date of the request and shall expire as of
the last day of the calendar year next following the calendar
year containing the date of the request. Participant can
execute a new Election and resume making deferrals of his Cash
Bonus and Normal Compensation effective as of the first day of
the first calendar year following the end of the period of
cessation.
VI. RELATIONSHIP TO OTHER PLANS
This Plan serves in addition to any other retirement, pension, or
benefit plan or system presently in existence of hereinafter
established.
VII. ANTI-ALIENATION
Participant's rights, interests, and benefits hereunder cannot be
assigned, transferred, pledged, sold, conveyed or encumbered in any
way by Participant or his estate, and are not subject to execution,
attachment, or similar process. Any attempted sale, conveyance,
transfer, assignment, pledge or encumbrance of the rights, interests,
or benefits provided pursuant to the terms of this Plan contrary to
the terms of the foregoing sentence, or the levy of any attachment or
similar process thereupon, shall be null and void and without effect.
VIII. AMENDMENT OR TERMINATION OF PLAN
AGC may at any time amend or terminate this Plan, provided that such
amendment or termination shall not affect the rights of Participant
with respect to any compensation deferred before the date of the
termination of this Plan. Participant will thereafter receive his
Cash Bonus and Normal Compensation and benefits shall be paid as
provided in Article V.
IX. APPLICABLE LAW
This Agreement shall be construed under the laws of the State of Texas.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties have signed this Deferred Compensation
Agreement, this 29th day of December, 1993.
WITNESS: AMERICAN GENERAL CORPORATION
PATRICIA NEIGHBORS By: JAMES R. TUERFF
- ------------------ ---------------
WITNESS:
KURT G. SCHREIBER HAROLD S. HOOK
- ----------------- --------------
Harold S. Hook
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<PAGE> 5
EXHIBIT I
NOTICE OF ELECTION TO DEFER INCOME
December 29, 1993
American General Corporation
2929 Allen Parkway
Houston, Texas 77019
Gentlemen:
1. Deferral of Income. Pursuant to Article 4 of my Deferred
Compensation Plan with American General Corporation, I hereby
elect to have 80 % of the amount payable to me as my Normal
Compensation for services rendered during the 1994 calendar
year and 100 % of my Cash Bonus deferred and paid to me on my
"Deferral Date."
2. Deferral Date. For purposes of the Deferred Compensation
Plan, the Deferral Date, which is the date the payments
commence, shall be the first business day of the calendar year
following the date of my Separation from Service.
3. Manner of Deferred Payment. Deferred payments are to be made
in a lump sum payment payable on the first business day of the
calendar year following the date of my Separation from
Service.
4. Terms of Election. I understand that this election is subject
to the terms and conditions of the Deferred Compensation Plan.
I further understand that upon my disability, this election
may be revoked or modified by filing with the Committee a
notice of revocation or a new election.
Dated: December 29, 1993
HAROLD S. HOOK
--------------
Harold S. Hook
Received this 29 day of December, 1993
KURT G. SCHREIBER
- -----------------
<PAGE> 1
EXHIBIT 10.17
AMERICAN GENERAL CORPORATION
RETIREMENT PLAN FOR DIRECTORS
1. TABLE OF CONTENTS
<TABLE>
PARA. NO.
<S> <C>
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Payments of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Years of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Disability Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Benefit Not Assignable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Effective Date, Amendment, and Termination of Plan . . . . . . . . . . . . . . . . . . . . . . . 8
Administration of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
2. PURPOSE. This plan shall be known as the American General Corporation
Retirement Plan for Directors (The "Plan"). The Plan shall be maintained by
American General Corporation, a Texas corporation (the "Company") solely for the
purpose of providing retirement benefits to persons who have served as directors
of the Company and who, since July 1, 1965, have not been officers or employees
of the Company or of any subsidiary of which the Company owns directly or
indirectly more than 50% of the outstanding capital stock ("Directors").
3. PAYMENT OF BENEFITS. The benefits payable under the Plan will be paid from
the Company's general revenues as payments become due under the Plan, will not
be funded in advance through an arrangement constituting a qualified trust under
the Internal Revenue Code or through insurance annuity contracts, and will not
be subject to the jurisdiction of nor be guaranteed by the Pension Benefit
Guaranty Corporation. The Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure
the payment of benefits under the Plan.
4. YEARS OF SERVICE. Service as a Director of the Company from one Annual
Meeting of Shareholders to the next subsequent Annual Meeting of Shareholders
shall constitute one "Year of Service" under the Plan. In the case of service
as a Director for part of a Year of Service, service for at least six months
- -- or attendance at two or more board meetings if the period is less than six
months -- shall count as one full Year of Service. All Years of Service shall
be counted for Directors who serve as such, both before and after the effective
date of the Plan.
5. RETIREMENT BENEFITS. A Director who retires from the Board of
Directors of the Company at age 65 or older with at least six (6) Years of
Service as a Director shall have a vested right to receive an annual benefit
equal to the amount of the annual retainer that is payable to Company directors
for the Year of Service in which the Director's retirement occurs. A Director
will be entitled to receive the annual benefit for a period of years equal to
his or her full Years of Service or until death, whichever is earlier. The
annual benefit will commence in May after the Annual Meeting of Shareholders
next following the Director's 70th Birthday. During any year in which the
Company is not a publicly held corporation, the Annual Meeting of Shareholders
shall be deemed to have occurred on the last business day of April. The annual
benefit shall be payable on a quarterly basis starting with the month of May in
which the benefit commences, until the benefit period ends or death occurs,
whichever is earlier.
Page 1 of 4
<PAGE> 2
Directors who have retired prior to the effective date of this Plan and meet
the qualification requirements will commence receiving an annual benefit of
$20,000 on the later of (i) November 15, 1989 or (ii) the month of May after
the Annual Meeting of Shareholders next following the Director's 72nd birthday.
Notwithstanding the foregoing, a Director who ceases to serve as a Director
after May 22, 1990 and within 24 months of the occurrence of a "Change of
Control" shall, for purposes of meeting the eligibility requirements for the
retirement benefits provided hereunder, but not for purposes of determining the
time of commencement of such benefits, be deemed to have satisfied the age 65
requirement as of the date he ceases to so serve. For this purpose, a "Change
of Control" shall mean the occurrence of any one or more of the following
events:
(i) the Company shall (i) merge or consolidate with or into another
corporation or entity or enter into a share exchange between
shareholders of the Company and another corporation or entity pursuant
to Article 5.02 of the Texas Business Corporation Act and as a result
of such merger, consolidation or share exchange less than seventy
percent (70%) of the outstanding voting securities of the surviving or
resulting corporation or entity shall then be owned in the aggregate
by the former shareholders of the Company, other that (x) affiliates
(within the meaning of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of the Company or (y) any party to such merger,
consolidation or share exchange or (ii) sell, lease, exchange or
otherwise dispose of all or substantially all of the Company's
property and assets in one transaction or a series of related
transactions to one or more other corporations or entities that are
not subsidiaries of the Company;
(ii) the shareholders of the Company adopt a plan of liquidation;
(iii) any corporation, person or group (within the meaning of Sections 13(d)
or 14 (d)(2) of the Exchange Act) (other than a participant in this
Plan, the Company, any of the Company's subsidiaries, any employee
benefit plan of the Company and/or one or more of its subsidiaries or
any person or entity organized, appointed or established pursuant to
the terms of any such employee benefit plan) becomes the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of
voting securities of the Company representing thirty percent (30%) or
more of the total number of votes eligible to be cast at any election
of Directors; or
(iv) as a result of, or in connection with, any tender offer or exchange
offer, share exchange, merger, consolidation or other business
combination, sale, lease, exchange or other disposition of all or
substantially all of the Company's assets, a contested election, or
any combination of the foregoing transactions, the persons who were
Directors on May 1, 1990 (the "Incumbent Board") shall cease to
constitute a majority of the Board of Directors of the Company or any
successor to the Company, provided that any person becoming a Director
subsequent to May 1, 1990 whose election, or nomination for election
by the Company's shareholders was approved by a vote of at least
three-quarters of the Directors comprising the Incumbent Board (either
by a specific vote or by approval of a proxy statement of the Company
in which such person is named as a nominee for Director without
objection to such nomination) shall be, for purposes of the Plan,
considered as though such person were a member of the Incumbent Board.
Notwithstanding the foregoing, no "Change of Control" shall be deemed to have
occurred with respect to a Director who, after giving effect to a
reorganization, recapitalization, spin-off, or other transaction, however
structured, is a director of a corporation (or other entity) (the "Continuing
Corporation"), (x) at least 70% of the outstanding voting securities of the
ultimate parent entity of which (or of the Continuing Corporation, if there is
no such ultimate parent entity) are beneficially owned in the aggregate,
directly or indirectly through one or more intermediaries, by the former
shareholders of the Company, other than affiliates (within the meaning of the
Exchange Act) of the Company, and (y) at least a majority of the directors of
the ultimate
Page 2 of 4
<PAGE> 3
parent entity of which (or of the Continuing Corporation, if there is no such
ultimate parent entity) are members of the Incumbent Board (determined as
provided in item (iv) above; provided, however, that this exception shall apply
only if the ultimate parent entity of the Continuing Corporation (if there is
such ultimate parent entity) or the Continuing Corporation (if there is no such
ultimate parent entity) shall have adopted a plan substantially similar to the
Plan (the "Substitute Plan") on or prior to the effective date of such
reorganization, recapitalization, spin-off, or other transaction, however
structured, with such ultimate parent entity (or the Continuing Corporation, if
there is no such ultimate parent entity) to be substituted for the Company for
all purposes under the Substitute Plan.
The "ultimate parent entity" of any corporation or other entity is the entity
(i) which either alone or through one or more majority owned subsidiaries,
beneficially owns (within the meaning of the Exchange Act) 50% or more of the
outstanding voting securities of such corporation or other entity (based upon
voting power in an election of directors), and (ii) as to which there is no
corporation or other entity which beneficially owns (within the meaning of the
Exchange Act) 50% or more of its outstanding voting securities (based upon
voting power in an election of directors).
The occurrence of the above events shall be the date of, but immediately prior
to the time of, consummation of a merger, consolidation, share exchange or
sale, lease, exchange or disposition of property and assets referred to in item
(i) above, the date of any shareholder adoption of a plan of liquidation
referred to in item (ii) above, the date on which the event described in item
(iii) above occurs, or the date of the change in constituency of the Board of
Directors of the Company, as described in item (iv) above.
6. DISABILITY BENEFITS. If a Director who has six or more Years of
Service resigns as a director or refrains from seeking reelection as a director
because of an inability to perform, to a material and substantial extent, the
duties of a director of the Company as the result of sickness or bodily injury,
such Director will be entitled to receive an annual benefit for a period of
years equal to his or her number of full Years of Service or until death,
whichever is earlier. The annual Benefit will be equal to the amount of annual
retainer that is payable to Company Directors for the Year of Service in which
the Director's disability occurs. The annual benefit shall be payable to the
Director on a quarterly basis starting in the month of May, August, November or
February first following the date he or she ceases to be a Director. Benefits
will continue on a quarterly basis until the end of the benefit period or the
date of death, whichever is sooner.
7. BENEFIT NOT ASSIGNABLE. A Director's rights under the Plan shall not be
subject to assignment encumbrance, garnishment, attachment, or charge, whether
voluntary or involuntary.
8. EFFECTIVE DATE, AMENDMENT, AND TERMINATION OF PLAN. The Plan shall
be effective as of October 26, 1989. The Company reserves the right to amend
or terminate the Plan at any time by action of its Board of Directors, provided
that any such action shall not, without a Director's consent, adversely affect
any Director's right to a benefit which accrued pursuant to the provisions of
the Plan prior to such action.
9. ADMINISTRATION OF PLAN. The Plan shall be administered by an
Administrator who shall be a person or committee appointed by the Chairman of
the Board. All decisions that are made by the Administrator with respect to
interpretation of the terms of the Plan, with respect to the amount of
benefits payable under the Plan, and with respect to any questions or disputes
arising under the Plan shall be final and binding on the Company and the
directors and their heirs or beneficiaries.
10. CONSTRUCTION. The Plan shall be governed by, and interpreted and
enforced in accordance with, the laws of the State of Texas and of the United
States of America.
Page 3 of 4
<PAGE> 4
IN WITNESS WHEREOF, the Company has adopted this Plan as evidenced by the
signatures affixed hereto of its duly authorized officers, as of October 28,
1993.
AMERICAN GENERAL CORPORATION
By: /s/ JAMES R. TUERFF
---------------------------------
James R. Tuerff
President
ATTEST:
/s/ KURT G. SCHREIBER
---------------------------
Kurt G. Schreiber
Corporate Secretary
Page 4 of 4
<PAGE> 1
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
For the Years Ended December 31,
In millions, except share data 1993 1992 1991
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Net income available to common stock
Income before cumulative effect of accounting changes $ 250* $ 533 $ 480
Cumulative effect of accounting changes (46) - -
Less dividends on preferred stock - - (1)
- ---------------------------------------------------------------------------------------------------------------
Net income available to common stock $ 204 $ 533 $ 479
- ---------------------------------------------------------------------------------------------------------------
Average shares outstanding
Common shares 216,117,181 217,042,022 224,741,640
Assumed exercise of stock options 461,655 608,334 465,994
Assumed conversion of debentures - 54,264 154,312
- ---------------------------------------------------------------------------------------------------------------
Total 216,578,836 217,704,620 225,361,946
- ---------------------------------------------------------------------------------------------------------------
Earnings per share
Income before cumulative effect of accounting changes $ 1.15* $ 2.45 $ 2.13
Cumulative effect of accounting changes (.21) - -
- ---------------------------------------------------------------------------------------------------------------
Net income per share $ .94 $ 2.45 $ 2.13
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* 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.
<PAGE> 1
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
For the Years Ended December 31,
In millions, except ratios 1993 1992 1991
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Consolidated operations:
Income before income tax expense and cumulative effect of
accounting changes $ 602* $ 775 $ 678
Fixed charges deducted from income
Interest expense
Consolidated 483 508 565
Relating to real estate operations 5 8 3
Implicit interest in rents 15 13 13
- -----------------------------------------------------------------------------------------------------------
Total fixed charges deducted from income 503 529 581
- -----------------------------------------------------------------------------------------------------------
Earnings available for fixed charges $ 1,105* $ 1,304 $ 1,259
- -----------------------------------------------------------------------------------------------------------
Fixed charges per above $ 503 $ 529 $ 581
Capitalized interest relating to real estate operations 15 21 31
- -----------------------------------------------------------------------------------------------------------
Total fixed charges $ 518 $ 550 $ 612
- -----------------------------------------------------------------------------------------------------------
Ratio of earnings to fixed charges 2.1 2.4 2.1
- -----------------------------------------------------------------------------------------------------------
Consolidated operations, corporate fixed charges only:
Income before income tax expense and cumulative effect of
accounting changes $ 602* $ 775 $ 678
Corporate fixed charges deducted from income - corporate
interest expense 121 126 140
- -----------------------------------------------------------------------------------------------------------
Earnings available for fixed charges $ 723* $ 901 $ 818
- -----------------------------------------------------------------------------------------------------------
Ratio of earnings to corporate fixed charges 6.0 7.2 5.8
- -----------------------------------------------------------------------------------------------------------
American General Finance, Inc.:
Income before income tax expense and cumulative effect of
accounting changes $ 337 $ 250 $ 208
Fixed charges deducted from income
Interest expense 380 398 440
Implicit interest in rents 10 9 9
- -----------------------------------------------------------------------------------------------------------
Total fixed charges deducted from income 390 407 449
- -----------------------------------------------------------------------------------------------------------
Earnings available for fixed charges $ 727 $ 657 $ 657
- -----------------------------------------------------------------------------------------------------------
Ratio of earnings to fixed charges 1.9 1.6 1.5
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Includes $300 million write-down of goodwill. Additional information is
incorporated herein by reference from Note 1.7 of the Notes to Financial
Statements.
<PAGE> 1
Exhibit 13
______________________________________________________________________________
BUSINESS SEGMENT OVERVIEW
1993 HIGHLIGHTS
______________________________________________________________________________
RETIREMENT ANNUITIES
The Variable Annuity Life Insurance Company -- Operating earnings up 25% to
(VALIC) is a leading provider of tax- a record $162 million
deferred retirement plans for teachers and -- 10th consecutive year of
other employees of not-for-profit double-digit earnings increases
organizations. -- Assets grow 18% to $21 billion
(See pages 12 and 18) -- Participants increase 11% to
761,000
______________________________________________________________________________
CONSUMER FINANCE -- Operating earnings up 28% to
American General Finance offers a wide a record $206 million
range of consumer loans and other credit- -- 13th consecutive year of record
related products and services. earnings
(See pages 14 and 19) -- Receivables grow to $6.6 billion
-- Customer accounts increase 17%
to more than two million
______________________________________________________________________________
LIFE INSURANCE -- Operating earnings total
American General's life insurance $291 million
companies emphasize the sale and service -- Life and annuity sales up 16%
of both traditional and interest-sensitive and 21%, respectively
life insurance and annuities. -- $88 billion of insurance in
(See pages 16 and 19) force
-- Life insurance for more than
three million households
______________________________________________________________________________
OPERATING EARNINGS
- -- Retirement Annuities
- -- Consumer Finance {PIE CHART}
- -- Life Insurance
_____________________________________________________________________________
10 AMERICAN GENERAL CORPORATION
<PAGE> 2
_______________________________________________________________________________
{AMERICAN GENERAL LOGO}
PRODUCTS AND SERVICES
- ----------------------------------------
RETIREMENT ANNUITIES
-- Tax-deferred retirement plans
_ Pension and thrift programs
_ Deferred compensation plans
_ IRAs
-- Annuities
_ Fixed
_ Variable
-- Retirement counseling services
- ----------------------------------------
CONSUMER FINANCE
-- Consumer loans
-- Home equity loans
-- Retail financing
-- Credit-related insurance
-- VISA_ and MasterCard_
-- Private label credit cards
- ----------------------------------------
LIFE INSURANCE
-- Traditional life insurance
_ Whole life
_ Term life
-- Interest-sensitive life insurance
_ Universal life
_ Excess-interest whole life
-- Annuities
_ Fixed
_ Variable
- ----------------------------------------
DISTRIBUTION SYSTEMS
- ----------------------------------------
RETIREMENT ANNUITIES
-- 740 retirement plan specialists
-- 32 branch offices
-- 19 regional offices
- ----------------------------------------
CONSUMER FINANCE
-- 6,500 consumer loan specialists
-- 1,200 branch offices
-- 17,000 retail merchants
- ----------------------------------------
LIFE INSURANCE
-- 5,500 employee-agents
-- 221 district offices
-- 8,500 general agents and agents
-- 520 master general agents
- ----------------------------------------
PRIMARY MARKETS
- ----------------------------------------
RETIREMENT ANNUITIES
-- Employees of:
_ Primary/secondary schools
_ Colleges and universities
_ Hospitals
_ State and local governments
-- All states and the District of
Columbia
- ----------------------------------------
CONSUMER FINANCE
-- Individual consumers
-- Retail merchants
-- 40 states, Puerto Rico, and the
Virgin Islands
- ----------------------------------------
LIFE INSURANCE
-- Individual consumers
-- Business owners
-- Employer-sponsored programs
-- Customers of banks and credit unions
-- All states and the District of Columbia
- ----------------------------------------
REVENUES ASSETS EQUITY
{PIE CHART} {PIE CHART} {PIE CHART}
_______________________________________________________________________________
1993 ANNUAL REPORT 11
<PAGE> 3
_______________________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
BUSINESS SEGMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS APPEARS ON PAGES 18-24, 26, 28,
AND 30, AND SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL
STATEMENTS AND RELATED NOTES BEGINNING ON PAGE 25.
American General reports the results of its business operations in three
segments: Retirement Annuities, Consumer Finance, and Life Insurance. To
facilitate meaningful period-to-period comparisons, operating earnings of each
segment include earnings from its business operations and earnings on that
amount of equity considered necessary to support its business, and exclude net
realized investment gains, non-recurring items, and the effect of accounting
changes.
SEGMENT OPERATING EARNINGS
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Retirement Annuities $162 $130 $110
Consumer Finance 206 161 136
Life Insurance 291 323 326
_______________________________________________________________________________
Segment operating earnings 659 614 572
Non-recurring items (329) _ _
_______________________________________________________________________________
Total segment earnings $330 $614 $572
_______________________________________________________________________________
</TABLE>
Non-recurring items include a $300 million write-down of
acquisition-related goodwill in the Life Insurance segment (see Note 1.7) and a
$29 million charge due to a 1993 tax law change (see Note 6.2).
RETIREMENT ANNUITIES
The Variable Annuity Life Insurance Company (VALIC), American General's
retirement annuity company, specializes in providing tax-deferred retirement
plans for teachers and other employees of not-for-profit organizations.
RETIREMENT ANNUITIES
Assets Operating Earnings
$ in billions $ in millions
{BAR CHART} {BAR CHART}
RESULTS. Profitability of the retirement annuity business is a function
of three elements: assets, net interest margin, and operating expenses.
RETIREMENT ANNUITIES
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Assets $20,896 $17,673 $15,056
Deposits received 2,132 1,901 1,645
Revenues 1,470 1,358 1,212
Operating earnings 162 130 110
_______________________________________________________________________________
</TABLE>
Revenues, which consist principally of investment income, increased as
a result of the 15% growth in total assets in 1993 (excluding the fair value
adjustment discussed in Note 1.2) and the 17% growth in 1992.
With lower prevailing interest rates, more of VALIC's participants are
electing equity investments offered by VALIC's variable accounts. Variable
account premium deposits grew 60% in 1993 to $432 million, compared to a growth
of 45% in 1992.
Average investment yields on fixed accounts declined 59 basis points in
1993 and 41 basis points in 1992. As a result of management's ability to make
corresponding reductions in the rates credited to policyholders, the net
interest margin increased 7 basis points in 1993 and remained stable in 1992.
During these years, the ratio of operating expenses to total assets also
declined slightly.
A large part of this segment's business is tax-qualified retirement
annuities, which generally experience lower withdrawal rates than non-qualified
annuities. The rate of policyholder surrenders has remained low at 3.9% of
average reserves in 1993 and 3.8% in 1992, an improvement from 4.6% in 1991.
Operating earnings for 1993, 1992, and 1991 were reduced by aftertax
charges of $5 million, $8 million, and $7 million, respectively, for actual and
anticipated assessments by state insurance guaranty associations.
OUTLOOK. Despite increased competition, especially from equity mutual
funds, this segment's leading market position, exclusive distribution system,
and strong claims-paying ability ratings should result in continued strong
asset growth. By managing interest-crediting rates to reflect changing
investment yields, the company expects to maintain a stable net interest
margin. As a result, earnings in this segment should continue to increase.
18 AMERICAN GENERAL CORPORATION
<PAGE> 4
______________________________________________________________________________
{AMERICAN GENERAL LOGO}
CONSUMER FINANCE
American General Finance and its subsidiaries offer a wide range of
consumer loans and other credit-related products and services through a
national network of 1,200 branch offices.
RESULTS. Principal influences on this segment's results include the cost
of borrowed funds, credit loss experience, operating expenses, and the
aggregate amount and mix of finance receivables.
CONSUMER FINANCE
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_____________________________________________________________________________
<S> <C> <C> <C>
Assets $7,641 $7,192 $6,875
Loan volume 5,408 4,362 3,655
Revenues 1,282 1,178 1,147
Operating earnings 206 161 136
_____________________________________________________________________________
</TABLE>
Due to the decline in interest rates over the past two years, the
average cost of borrowing for this segment declined by 82 basis points in 1993
and 87 basis points in 1992. By changing the mix of receivables to emphasize
direct consumer loans rather than home equity loans, management has been able
to increase the average yield on finance receivables by 18 and 19 basis points
during 1993 and 1992, respectively.
During 1993, internally generated business development produced a 6%
increase in total finance receivables to $6.6 billion. The 4% increase in 1992
principally reflected growth through acquisitions of blocks of receivables
during the year.
As expected, credit quality was off slightly in 1993 due to the shift in
receivables mix. Delinquencies increased from 2.2% in 1992 to 2.5% in 1993,
while charge offs remained flat at 2.2%. Operating expenses increased 8% in
1993 and 5% in 1992 reflecting higher costs of branches acquired in 1992, a
major branch office automation program in 1993, and increased provision for
credit losses in 1993, partially offset by increased deferrals of loan
origination costs.
OUTLOOK. Based on the expectation of continued gradual improvement in the
economy, the company expects stable cost of borrowed funds and credit loss
experience in 1994. Management also expects to maintain the yield on the
finance receivables portfolio while increasing its size. As a result, earnings
in this segment should continue to increase.
LIFE INSURANCE
The Life Insurance segment includes American General Life and Accident
(AGLA), which emphasizes the sale and service of traditional life insurance
products in the home by employee-agents, and American General Life, which
provides life insurance and annuity products for business, estate planning,
and capital accumulation needs.
RESULTS. Principal factors in the declining earnings of this segment
over the past three years have been lower interest rates and increased income
taxes. In addition, crediting practices on interest-sensitive products, sales,
persistency, mortality, and operating expenses affect operating earnings.
LIFE INSURANCE
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_____________________________________________________________________________
<S> <C> <C> <C>
Assets $14,192 $13,328 $12,632
Deposits received 993 838 602
Revenues 2,054 2,045 2,021
Operating earnings 291 323 326
_____________________________________________________________________________
</TABLE>
Life sales, as measured by new annualized premiums, increased 16% to
$260 million in 1993, compared to a 13% increase in 1992. Annuity sales
increased 21% to $451 million in 1993, compared to an increase of 126% in 1992.
Improved sales reflect favorable agent recruiting and retention, and the
"flight to quality" resulting from the AAA claims-paying ratings of companies
in this segment. Continued attention to expense management improved expense
ratios in 1993.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CONSUMER FINANCE LIFE INSURANCE
Assets Operating Earnings Assets Operating Earnings
$ in billions $ in millions $ in billions $ in millions
{BAR CHART} {BAR CHART} {BAR CHART} {BAR CHART}
</TABLE>
1993 ANNUAL REPORT 19
<PAGE> 5
_______________________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
BUSINESS SEGMENTS (CONTINUED)
However, the positive impact on earnings of higher sales and favorable
operating expense trends was more than offset by a decline in investment
yields, from 9.9% in 1992 to 9.3% in 1993. American General Life has been able
to manage interest crediting rates on interest-sensitive and annuity products
to partially offset declining yields. However, AGLA's margins have declined
because of fixed crediting rates on the majority of its insurance in force.
Changes in mortality and persistency did not materially affect operating
results for 1993.
In addition, operating earnings were adversely affected by an increase
in the effective income tax rate to 36% in 1993 from 30% in 1992. Earnings for
1992 and 1991 were positively affected by tax benefits of $29 million and $33
million, respectively.
Operating earnings for 1991 also included a $6 million aftertax gain on
the restructuring of a group life contract and $4 million from a subsidiary
sold that year.
Operating earnings for 1993 exclude non-recurring items: a $21 million
charge to reflect the one-time effect of the increase in the federal income tax
rate from 34% to 35% (see Note 6.2) and a $300 million non-cash write-down of
acquisition-related goodwill (see Note 1.7). The write-down of goodwill
resulted from a strategic review of certain life insurance subsidiaries
completed in 1993. This review, which included a comprehensive analysis by
management and outside advisers, indicated the book value of these subsidiaries
exceeded their fair value by $300 million. This review also resulted in the
decision to sell two life insurance subsidiaries.
OUTLOOK. The expected continued decline of investment yields in 1994
will be partially offset by the effect of continued sales increases,
particularly of annuity and other interest-sensitive products, and operating
expense reductions.
ECONOMIC FACTORS AFFECTING BUSINESS SEGMENTS
INTEREST RATES. The pricing and profit margins of the products and
services offered by American General's operating subsidiaries are sensitive to
interest rates. Fluctuations in interest rates also affect the value and
duration of the assets and liabilities supporting these products and services.
American General may respond to fluctuations in interest rates by adjusting
interest-crediting rates, repricing products, and/or changing investment
strategy.
American General's investment portfolio includes $10.7 billion of
mortgage-backed securities (MBSs), primarily collateralized mortgage
obligations, which are subject to prepayment at any time without penalty. MBSs
having an amortized cost less than par produce additional income in the year of
prepayment due to the unamortized discount. As a result of the current interest
rate environment, approximately $2.7 billion of higher coupon MBSs were repaid
in 1993, and the proceeds were reinvested at lower current yields. Repayment of
a somewhat lower amount is expected in 1994.
TAXATION. Tax laws affect not only the way American General is taxed
but also the design of many of its products. Changes in tax laws or regulations
could adversely affect operating results. The Revenue Reconciliation Act of
1993 increased the federal corporate tax rate by 1% and caused an increase in
current taxes and a one-time increase in deferred income taxes, which together
decreased net income by $30 million in 1993 (see Note 6.2).
STATUTORY ACCOUNTING. Statutory accounting is the basis for determining
the adequacy of capital and dividend-paying capacity of insurance companies.
State insurance laws prescribe statutory accounting practices for calculating
net income and equity (capital and surplus) that differ from generally accepted
accounting principles (GAAP). A reconciliation of those differences for
subsidiaries in the Life Insurance and Retirement Annuities segments was as
follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
Statutory net income $ 443 $ 392 $ 460
GAAP income before accounting changes $ 127(a) $ 453 $ 435
______________________________________________________________________________
Statutory equity $ 1,718 $1,717 $1,791
Investment valuation differences 1,862(b) 259 185
Deferred policy acquisition costs 1,758 2,077 1,914
Deferred income taxes (1,117) (634) (635)
Adjustments to policy reserves 679 602 644
Equity allocated to corporate (536) (492) (678)
Acquisition-related goodwill 319 626 647
Other, net (136) (24) (86)
______________________________________________________________________________
Total GAAP equity $4,547 $4,131 $3,782
______________________________________________________________________________
</TABLE>
(a) Includes $300 million goodwill write-down and $26 million tax charge.
(b) Includes $1.5 billion due to adoption of SFAS 115.
GUARANTY ASSOCIATIONS. All 50 states have laws requiring solvent life
insurance companies to pay assessments to protect the interests of
policyholders of insolvent life insurance and annuity companies. A portion of
these assessments can be recovered against the payment of future premium taxes;
however, changes in state laws could decrease the amount available for offset.
20 AMERICAN GENERAL CORPORATION
<PAGE> 6
_______________________________________________________________________________
{AMERICAN GENERAL LOGO}
The amounts assessed American General's life insurance and annuity
subsidiaries under such laws were $14 million each for 1993 and 1992, and $4
million for 1991. The assessments for 1993 and 1992 were offset by $5 million
considered recoverable against future premium taxes. At year-end 1993, the
accrued liability for anticipated unrecoverable assessments was $19 million,
compared to $17 million for 1992 and $10 million for 1991.
REGULATION. Concerns about asset quality and capital adequacy of the
insurance industry have resulted in increased scrutiny by insurance regulators.
On January 1, 1994, the National Association of Insurance Commissioners
(NAIC) adopted a Risk-based Capital (RBC) formula that can be used to evaluate
the adequacy of life insurance companies' statutory capital and surplus. The
RBC formula specifies various weighting factors that are applied to financial
balances or levels of activity of each company, based on the perceived degree
of risk. Calculations at December 31, 1993, using the RBC formula, indicate
that the Life Insurance and Retirement Annuities subsidiaries' "Total Adjusted
Capital" ranges from 2.4 to 5.9 times (or a weighted average of 3.0 times) the
RBC standard, or "Company Action Level."
The NAIC recently withdrew proposed regulations that would further
restrict the payment of dividends by insurance subsidiaries to their parent
companies. The NAIC has indicated that it intends to continue work on a new
model law that will set forth the types of investments insurance companies may
lawfully make.
American General is not aware of any regulations or pending regulatory
actions that would have a material effect on the company's liquidity, capital
resources, or operations.
AIDS. AIDS-related claims of American General's life insurance
companies represented 2% of claims paid during the last three years, comparable
to the industry average.
ENVIRONMENTAL. American General's principal exposure to environmental
regulation arises from its ownership of investment real estate. Probable costs
related to environmental cleanup are estimated to be $5 million and appropriate
liabilities have been recorded to reflect these costs.
_______________________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
INVESTMENTS
At year-end 1993, American General's $44 billion of assets included $32
billion of investments, principally supporting insurance and annuity
liabilities.
INVESTED ASSETS
<TABLE>
<CAPTION>
In millions 1993 % 1992 1991
<S> <C> <C> <C> <C>
________________________________________________________________________
Fixed maturity securities* $26,479 83% $21,308 $17,913
Mortgage loans 3,032 10 3,703 4,247
Policy loans 1,156 4 1,081 1,039
Investment real estate 772 2 1,066 1,044
Equity securities 233 1 390 438
Other 204 _ 266 344
________________________________________________________________________
Total invested assets $31,876 100% $27,814 $25,025
________________________________________________________________________
</TABLE>
*1993 reflects adoption of SFAS 115 (see Note 1.2).
INVESTMENT STRATEGY
The objective of American General's investment strategy is to meet
long-term obligations to insurance policyholders, customer expectations for
competitive products, and shareholder expectations for competitive returns. In
pursuing this objective, American General continually reviews the investment
portfolio to identify opportunities to maximize total aftertax return on
invested assets subject to the constraints of safety, liquidity,
diversification, and regulation.
The investment portfolios of each insurance and annuity subsidiary are
designed and managed centrally to produce risk/return profiles and durations
that reflect the reserve liability profiles and competitive needs of each
subsidiary's insurance products. As a result, assets and liabilities are
managed to reduce the risk of loss arising from changes in interest rates by
seeking to match cash flows of the assets with the cash flows of liabilities
they support.
FIXED MATURITY SECURITIES
At year-end 1993, fixed maturity securities included $13.9 billion of
corporate bonds, $10.7 billion of mortgage-backed securities, $1.7 billion of
bonds issued by governmental agencies, and $133 million of preferred stocks
with mandatory redemption provisions.
On adoption of Statement of Financial Accounting Standards (SFAS) 115
(see Note 1.2) at December 31, 1993, all debt and equity securities were
classified as available-for-
1993 ANNUAL REPORT 21
<PAGE> 7
_______________________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
INVESTMENTS (CONTINUED)
sale and reported at fair value. Before adoption of SFAS 115,
unrealized gains on fixed maturity securities, equal to the excess of fair
value over amortized cost, were not recorded on the balance sheet. The
unrealized gains on fixed maturities at December 31, 1993 were $1.6 billion.
This compares to $1.2 billion and $1.3 billion at year-end 1992 and 1991,
respectively.
RATINGS OF FIXED MATURITY SECURITIES
<TABLE>
<CAPTION>
Average
In millions Fair Value % Rating
_________________________________________________________________
<S> <C> <C> <C>
Investment grade $15,044 57% A
Mortgage-backed 10,678 40 AAA
Below investment grade 757 3 BB-
_________________________________________________________________
Total fixed maturity securities $26,479 100% AA-
_________________________________________________________________
</TABLE>
The average credit rating of the fixed maturity securities was AA- at
year-end 1993, 1992, and 1991.
Below investment grade bonds, defined as bonds which have a credit
rating below BBB-, accounted for 2.3% of invested assets at year-end 1993, down
from 2.5% at year-end 1992 and 3.0% at year-end 1991. These percentages compare
to the life insurance industry average of 4.4% as of December 31, 1992, the
last date for which information is available. Net income from below investment
grade bonds, including realized investment gains and losses and write-downs,
was $49 million in 1993, compared to $40 million in 1992 and $50 million in
1991.
Bonds are deemed to be non-performing when the payment of interest is
sufficiently uncertain as to preclude the accrual of interest. Non-performing
bonds, net of an allowance for losses in 1992 and 1991, were 0.2% of total
fixed maturity securities at year-end 1993, compared to 0.5% and 0.6% at
year-end 1992 and 1991, respectively.
NON-PERFORMING BONDS
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_____________________________________________________
<S> <C> <C> <C>
Non-performing bonds $46 $126 $147
Allowance for losses - (26) (40)
_____________________________________________________
Net non-performing bonds $46 $100 $107
_____________________________________________________
</TABLE>
MORTGAGE LOANS
Mortgage loans on real estate represented 10% of invested assets at
December 31, 1993, down from 13% in 1992 and 17% in 1991. In 1993, new mortgage
loans were 1% of new investments, compared to 1% in 1992 and 5% in 1991. These
declines reflect prepayment of loans as a result of declining interest rates
and the company's reduced emphasis on mortgage lending.
MORTGAGE LOANS
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_______________________________________________________________
<S> <C> <C> <C>
Commercial $2,997 $3,453 $3,682
Residential 133 303 615
Allowance for losses (98) (53) (50)
_______________________________________________________________
Total mortgage loans $3,032 $3,703 $4,247
_______________________________________________________________
Delinquent (60+ days) 2.2% 3.1% 2.6%
Restructured commercial loans 2.2 1.6 1.6
_______________________________________________________________
Total non-performing 4.4% 4.7% 4.2%
_______________________________________________________________
Foreclosures during the year $45 $69 $59
_______________________________________________________________
</TABLE>
An allowance for losses has been established for all non-performing
loans and loans about which there is a concern based on management's assessment
of risk factors such as potential non-payment or non-monetary default. The
allowance is based on a loan-specific review and a formula that reflects past
results and current trends. At year-end 1993, the allowance for losses on
mortgage loans was $98 million or 3.1% of total mortgage loans, compared to $53
million or 1.4% and $50 million or 1.2%, at year-end 1992 and 1991,
respectively. The increase in the allowance is due principally to a $20 million
reserve for California and other properties affected by adverse economic
conditions and an increase in the amount of loans on the company's watch list.
At year-end 1993, $467 million of performing commercial mortgage loans
were on the company's watch list. This amount is up from $188 million at
year-end 1992 and $155 million at year-end 1991. The increase in the watch list
amount is due primarily to a more active portfolio review and a tightening of
standards for the placement of loans on the watch list. While this increase may
be predictive of higher non-performing loans in the future, American General
does not anticipate a significant effect on operations, liquidity, or capital
from these loans. Non-performing mortgage loans include loans delinquent 60
days or more and commercial loans that have been restructured.
Non-performing mortgage loans totaled $137 million at year-end 1993,
compared to $179 million and $184 million at year-end 1992 and 1991,
respectively. At year-end 1993, the average yield on restructured commercial
mortgage loans was 8.2%.
22 AMERICAN GENERAL CORPORATION
<PAGE> 8
_______________________________________________________________________________
{AMERICAN GENERAL LOGO}
At year-end 1993, 4.4% of the commercial mortgage loan portfolio was
non-performing, down from 5.0% and 4.7% at year-end 1992 and 1991,
respectively. This portfolio continues to outperform the life insurance
industry averages for non-performing commercial mortgage loans, which were
14.6% at September 30, 1993, 14.1% at year-end 1992, and 11.0% at year-end
1991.
During 1993, the company foreclosed on $45 million of mortgage loans
and recognized write-downs of $15 million upon acquisition of the related
properties, most of which had previously been included in the allowance for
losses.
POLICY LOANS
Policy loans represented 3.6% of invested assets at year-end 1993, down
from 3.9% at year-end 1992 and 4.2% at year-end 1991. Policy loan interest
rates, which are contractually established, averaged 6.3% during 1993.
INVESTMENT REAL ESTATE
At year-end 1993, investment real estate totaled 2.4% of invested
assets, compared to 3.8% in 1992 and 4.2% in 1991.
INVESTMENT REAL ESTATE
<TABLE>
<CAPTION>
In millions 1993 1992 1991
__________________________________________________________________________
<S> <C> <C> <C>
Land development projects $642 $ 653 $ 613
Income-producing real estate 189 282 230
American General Center, Houston 125 130 130
Foreclosed real estate 69 130 133
Allowance for losses (253) (129) (62)
___________________________________________________________________________
Total investment real estate $772 $1,066 $1,044
___________________________________________________________________________
</TABLE>
The 1993 decreases in income-producing and foreclosed real estate were
due to sales. The 1992 increases reflected additional investments in existing
master-planned land development projects, as well as the assumption of control
of certain income-producing joint ventures.
The increase in the allowance for losses over the past two years
primarily reflects declines in the net realizable value of certain real estate
investments. While the value of any property may fluctuate with local market
conditions, the net realizable value of the investment real estate portfolio,
calculated in accordance with current GAAP, is at least equal to the value
reflected in the financial statements. The adoption of a proposed SFAS, which
would change the carrying value of land development projects from net
realizable value to fair value, would require additional allowances for losses
in the period of adoption, but American General does not anticipate a
significant effect on liquidity, capital, or ongoing operations.
Pretax net losses on real estate investments, including sales and
reserve increases, totaled $170 million, $74 million, and $14 million in 1993,
1992, and 1991, respectively.
No new real estate investments are planned, except for commitments on
existing land development projects and possible foreclosures. All foreclosed
real estate is considered held for sale.
EQUITY SECURITIES
Equity securities included $91 million of common stock and $142 million
of perpetual preferred stock at year-end 1993. All equity securities were
classified as available-for-sale and reported at fair value at December 31,
1993 in accordance with SFAS 115. Pretax realized gains from equity securities
totaled $121 million, $55 million, and $29 million in 1993, 1992, and 1991,
respectively.
INVESTMENTS
<TABLE>
<S> <C>
Invested Assets Investment Yield
$ in billions Percent
[BAR CHART] [BAR CHART]
Net Non-Performing Fair Value of Bonds
Percent of invested assets Percent of amortized cost
[BAR CHART] [BAR CHART]
</TABLE>
1993 ANNUAL REPORT 23
<PAGE> 9
_______________________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
STATEMENT OF INCOME
REVENUES
PREMIUMS AND OTHER CONSIDERATIONS. Premiums and other considerations,
which consist of premiums on traditional life insurance products and mortality,
expense, and surrender charges on interest-sensitive products, increased 3% in
1993 compared to 4% in 1992. Revenues exclude policyholder deposits on annuity
and other interest-sensitive products.
The company has focused increasingly on annuity and interest-sensitive
products, which generated deposits of $3.1 billion, $2.7 billion, and $2.2
billion for the years 1993, 1992, and 1991, respectively.
NET INVESTMENT INCOME. During the past three years, the rate of
growth in net investment income has lagged the rate of growth in invested
assets. This lag is the result of declining average portfolio yields, which
reflect increased repayments of higher yielding investments and lower new
investment rates.
FINANCE CHARGES. The increase in finance charges during 1993 and 1992 of
9% and 2%, respectively, resulted from continued growth in finance receivables
and an increased average yield on receivables.
REALIZED INVESTMENT GAINS. Realized investment gains and losses may vary
significantly from year to year since the decision to sell investments is
determined principally by considerations of investment timing and tax
consequences. Realized investment gains can also result from early redemption
of fixed maturity securities and perpetual preferred stocks at the election of
the issuer (calls) and changes in write-downs and reserves.
<TABLE>
<CAPTION>
REALIZED INVESTMENT GAINS
In millions 1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
Calls of fixed maturity securities $ 129 $ 102 $ 15
Sales/calls of equity securities 123 61 31
Other 54 10 52
Write-downs/reserve changes* (298) (155) (90)
______________________________________________________________________________
Total realized investment gains $ 8 $ 18 $ 8
______________________________________________________________________________
</TABLE>
*Primarily related to investment real estate.
BENEFITS AND EXPENSES
INSURANCE AND ANNUITY BENEFITS. The 5% increase in 1993 and 6% increase
in 1992 in insurance and annuity benefits were primarily the result of an
increase in interest credited to policyholder accounts due to growth in the
Retirement Annuities segment.
OPERATING COSTS AND EXPENSES. Operating costs and expenses increased
1% in 1993 and 3% in 1992. Excluding certain reclassifications, operating
expenses increased 6% in 1993, primarily due to growth in salary expenses and
a higher provision for credit losses in the Consumer Finance segment. The 1992
expenses reflected higher salary and employee benefit costs. State income
taxes were $19 million in 1993, $21 million in 1992, and $16 million in 1991.
State income taxes were reported in income tax expense in 1993 in accordance
with SFAS 109.
WRITE-DOWN OF ACQUISITION-RELATED GOODWILL. A $300 million non-cash
write-down of acquisition-related goodwill was taken in 1993 to bring certain
life insurance subsidiaries to fair value (see Note 1.7).
INTEREST EXPENSE. Interest expense on corporate debt declined 6% in 1993
and 13% in 1992, primarily due to lower average corporate debt outstanding,
combined with lower short-term interest rates. Interest expense on consumer
finance debt declined 4% in 1993 and 9% in 1992, primarily due to lower
borrowing rates, partially offset by the effect of higher average consumer
finance debt outstanding.
INCOME TAX EXPENSE
Total income tax expense increased 45% in 1993, resulting in an effective
tax rate of 58% (40% excluding the effect of the write-down of acquisition-
related goodwill) compared to 31% for 1992 and 29% for 1991 (see Note 6.4).
The 1993 increase in total income tax expense is due to a 16% increase in
taxable income, the 1% tax rate increase (see Note 6.2), reclassification of
state taxes, and the effect of the non-recurring $29 million of tax benefits
in 1992.
EARNINGS
Operating earnings, which exclude net realized investment gains, non-
recurring items, and the cumulative effect of accounting changes, increased
10% to $574 million, or $2.65 per share, in 1993, compared to a 9% increase to
$524 million, or $2.41 per share, in 1992. Non-recurring items in 1993
include the $300 million write-down of goodwill and a $30 million tax rate
related adjustment.
EARNINGS PER SHARE
Share purchases in 1993 under the company's ongoing buyback program had no
significant impact on 1993 earnings per share, while purchases in 1992 and 1991
increased earnings per share in these years by $.01 and $.05, respectively.
24 AMERICAN GENERAL CORPORATION
<PAGE> 10
_______________________________________________________________________________
CONSOLIDATED STATEMENT OF INCOME
AMERICAN GENERAL CORPORATION {AMERICAN GENERAL LOGO}
For the Years Ended December 31,
In millions, except per share data
<TABLE>
<CAPTION>
1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C> <C>
REVENUES Premiums and other considerations $1,252 $1,213 $1,168
Net investment income 2,437 2,327 2,178
Finance charges 1,083 994 977
Realized investment gains 8 18 8
Other 49 50 64
_______________________________________________________________________________
Total revenues 4,829 4,602 4,395
_______________________________________________________________________________
BENEFITS Insurance and annuity benefits 2,311 2,198 2,065
AND EXPENSES Operating costs and expenses 1,133 1,121 1,087
Write-down of acquisition-related
goodwill 300 - -
Interest expense
Corporate 108 116 132
Consumer Finance 375 392 433
_______________________________________________________________________________
Total benefits and expenses 4,227 3,827 3,717
_______________________________________________________________________________
EARNINGS Income before income tax expense and
cumulative effect of accounting changes 602 775 678
_______________________________________________________________________________
Income tax expense
Excluding tax rate related adjustment 322 242 198
Tax rate related adjustment 30 - -
_______________________________________________________________________________
Total income tax expense 352 242 198
_______________________________________________________________________________
Income before cumulative effect of
accounting changes 250 533 480
Cumulative effect of accounting changes (46) - -
_______________________________________________________________________________
Net income $204 $533 $480
_______________________________________________________________________________
SHARE DATA Income before cumulative effect of
accounting changes $1.15 $2.45 $2.13
Cumulative effect of accounting changes (.21) - -
_______________________________________________________________________________
Net income per share $.94 $2.45 $2.13
_______________________________________________________________________________
</TABLE>
See Notes to Financial Statements.
1993 ANNUAL REPORT 25
<PAGE> 11
_______________________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
BALANCE SHEET
ASSETS
INVESTMENTS. Management's Discussion and Analysis of Investments is on
pages 21-23. At December 31, 1993, upon adoption of SFAS 115, the company
classified all fixed maturity securities as available-for-sale and recorded a
$1.6 billion adjustment to increase carrying value from amortized cost to fair
value (see Note 1.2).
FINANCE RECEIVABLES. Finance receivables are well diversified throughout
40 states, Puerto Rico, and the Virgin Islands.
QUALITY OF FINANCE RECEIVABLES
<TABLE>
<CAPTION>
As a percent of finance receivables 1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
Delinquencies (60+ days) 2.5% 2.2% 2.6%
Charge offs 2.2 2.2 2.3
Allowance for credit losses 2.8 2.6 2.5
_____________________________________________________________________________
</TABLE>
As expected, credit quality was off slightly in 1993, due to the shift
in the receivables mix described on page 19. While finance receivables have some
exposure to economic downturns, management believes that in the present
environment the allowance for credit losses is adequate.
INTANGIBLE ASSETS. The two largest intangible assets are deferred
policy acquisition costs (DPAC) (see Note 1.6) and acquisition-related goodwill
(see Note 1.7). At December 31, 1993, the company recorded a $550 million
reduction in DPAC to reflect the effect of unrealized gains on fixed maturity
securities under SFAS 115 (see Note 1.2). During 1993, the company recorded a
$300 million non-cash write-down of acquisition-related goodwill to bring the
value of certain life insurance subsidiaries to fair value.
NET ASSETS OF LIFE INSURANCE COMPANIES HELD FOR SALE. On November 29,
1993, the company announced its intent to offer two life insurance subsidiaries
for sale. The assets and liabilities of these subsidiaries were reclassified
as net assets held for sale at December 31, 1993.
SEPARATE ACCOUNT ASSETS AND LIABILITIES. Separate Accounts represent
assets held under insurance and annuity contracts in which the policyholder
bears the investment risk. Consequently, the insurer's liability for these
accounts equals the value of the account assets. The 1993 and 1992 increases of
49% and 23%, respectively, reflect the rise in the equity markets and new sales
in the Retirement Annuities segment.
LIABILITIES
INSURANCE AND ANNUITY LIABILITIES. Life insurance companies collect
premiums and deposits from policyholders in exchange for long-term promises to
pay future benefits. Insurance and annuity liabilities of $27 billion at year-
end 1993 represent a quantification of these long-term obligations.
INSURANCE AND ANNUITY LIABILITIES
<TABLE>
<CAPTION>
In millions 1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
Retirement annuities $17,029 $15,012 $12,974
Traditional life 4,199 4,430 4,445
Interest-sensitive life 2,664 2,258 2,035
Other annuities 2,765 2,383 1,993
Other 582 653 624
______________________________________________________________________________
Total insurance and annuity liabilities $27,239 $24,736 $22,071
______________________________________________________________________________
</TABLE>
CORPORATE DEBT. Corporate debt is used primarily for acquisitions and the
buyback of common stock. Higher dividends from subsidiaries in 1993 were used
to reduce debt.
REAL ESTATE DEBT. Capital contributions from the parent company in 1993
were used to reduce debt. The 1992 increase resulted from the assumption of
control of certain real estate joint ventures.
CONSUMER FINANCE DEBT. Consumer finance debt, which is not guaranteed by
the parent company, was increased in 1993 and 1992 to support higher levels of
receivables.
SHAREHOLDERS' EQUITY
NET UNREALIZED GAINS. Historically, the amount reported as net unrealized
gains related only to equity securities, which were carried at fair value.
With the adoption of SFAS 115 at December 31, 1993, shareholders' equity
increased $676 million due to the recording of net unrealized gains on fixed
maturity securities classified as available-for-sale (see Note 1.2). Due to the
requirements of SFAS 115, shareholders' equity will be subject to further
volatility, resulting from the effect of interest rate changes on the fair
value of fixed maturity securities.
STOCK SPLIT. The 1992 changes in common stock and cost of treasury stock
principally result from the issuance of treasury shares in connection with a
two-for-one stock split (see Note 7.2).
26 AMERICAN GENERAL CORPORATION
<PAGE> 12
_______________________________________________________________________________
CONSOLIDATED BALANCE SHEET
AMERICAN GENERAL CORPORATION {AMERICAN GENERAL LOGO}
At December 31,
In millions
<TABLE>
<CAPTION> 1993 1992 1991
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C>
ASSETS Investments
Fixed maturity securities
Fair value (amortized cost: $24,885) $26,479 $ - $ -
Amortized cost (fair value: $22,509; $19,195) - 21,308 17,913
Mortgage loans on real estate 3,032 3,703 4,247
Equity securities (cost: $182; $273; $349) 233 390 438
Policy loans 1,156 1,081 1,039
Investment real estate 772 1,066 1,044
Other long-term investments 137 231 302
Short-term investments 67 35 42
_____________________________________________________________________________________
Total investments 31,876 27,814 25,025
_____________________________________________________________________________________
Cash 6 17 39
Finance receivables, net 6,390 6,038 5,794
Deferred policy acquisition costs 1,637 2,083 1,919
Acquisition-related goodwill 618 937 952
Other assets 1,205 1,446 1,233
Net assets of life insurance companies held
for sale 153 - -
Assets held in Separate Accounts 2,097 1,407 1,143
_____________________________________________________________________________________
Total assets $43,982 $39,742 $36,105
_____________________________________________________________________________________________________
LIABILITIES Insurance and annuity liabilities $27,239 $24,736 $22,071
Debt (short-term amount)
Corporate ($312; $379; $336) 1,257 1,371 1,391
Real Estate ($414; $569; $583) 429 616 590
Consumer Finance ($1,824; $1,930; $2,474) 5,843 5,484 5,243
Income tax liabilities 1,241 756 672
Other liabilities 739 756 666
Liabilities related to Separate Accounts 2,097 1,407 1,143
_____________________________________________________________________________________
Total liabilities 38,845 35,126 31,776
_____________________________________________________________________________________________________
SHAREHOLDERS' Common stock 365 368 1,894
EQUITY Net unrealized gains on securities 709 88 70
Retained earnings 4,229 4,263 3,959
Cost of treasury stock (166) (103) (1,594)
_____________________________________________________________________________________
Total shareholders' equity 5,137 4,616 4,329
_____________________________________________________________________________________
Total liabilities and shareholders'
equity $ 43,982 $39,742 $36,105
_____________________________________________________________________________________________________
</TABLE>
See Notes to Financial Statements.
1993 ANNUAL REPORT 27
<PAGE> 13
_______________________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
CAPITAL REQUIREMENTS
The overall financial strength of American General and its subsidiaries
is based on consolidated shareholders' equity of $5.1 billion and is confirmed
by strong ratings for both debt-paying and claims-paying ability.
For analysis of capital requirements, the parent company and the
business segments are discussed separately.
PARENT COMPANY
Total capital of the parent company is referred to as "corporate
capital." Since the parent company is a holding company, the level of corporate
capital is determined primarily by the required equity of its business
segments, while the mix of corporate capital between debt and equity is
influenced by overall corporate strategy and structure.
At year-end 1993, corporate capital, consisting of $5.1 billion of
shareholders' equity and $1.3 billion of corporate debt, totaled $6.4 billion,
compared to $6.0 billion at year-end 1992. The 1993 increase in corporate
capital reflects unrealized gains on fixed maturity securities of $676 million
due to the adoption of SFAS 115 (see Note 1.2) and net income of $204 million,
offset by a $114 million decrease in corporate debt, $238 million of dividends
paid to shareholders, and $78 million of share repurchases.
At year-end 1993, the ratio of corporate debt to corporate
capital was 20%, compared to 23% at year-end 1992. Excluding the effect
of the SFAS 115 adjustment, the 1993 ratio was 22%. Management has no present
intention to significantly change this ratio, which is consistent with target
corporate debt ratings.
CORPORATE DEBT RATINGS
<TABLE>
<CAPTION>
Commercial Paper Long-term Debt
_______________________________________________________________________________
<S> <C> <C>
Standard & Poor's A-1+ (Highest) AA (Very Strong)
Duff & Phelps Duff 1+ (Highest) AA (Very Strong)
Moody's P-1 (Highest) A1 (Strong)
_______________________________________________________________________________
</TABLE>
CONSUMER FINANCE SEGMENT
The capital of American General's Consumer Finance segment varies
directly with the amount of finance receivables outstanding. The capital mix of
consumer finance debt and equity is based primarily upon maintaining leverage
at a level that supports cost-effective funding.
At year-end 1993, consumer finance capital was $6.9 billion, compared
to $6.6 billion a year earlier, due to a $374 million increase in finance
receivables. The 1993 amount included $5.8 billion of consumer finance debt,
which is not guaranteed by the parent company, and $1.1 billion of equity.
The ratio of debt to tangible net worth (equity less goodwill and the
fair value adjustment discussed in Note 1.2), which is a key measure of
financial risk in the consumer finance industry, was 7.5 to 1 for the Consumer
Finance segment at year-end 1993 and 1992. Management expects to maintain the
current level of debt to tangible net worth.
CONSUMER FINANCE DEBT RATINGS
<TABLE>
<CAPTION>
Commercial Paper Long-term Debt
_______________________________________________________________________________
<S> <C> <C>
Standard & Poor's A-1+ (Highest) A+ (Strong)
Duff & Phelps Duff 1+ (Highest) --
Moody's P-1 (Highest) A1 (Strong)
_______________________________________________________________________________
</TABLE>
LIFE INSURANCE AND RETIREMENT
ANNUITIES SEGMENTS
The amount of capital required to support the business of American
General's Life Insurance and Retirement Annuities segments is a function of
three factors: the mortality risk of the life insurance in force; the quality
of the assets invested to support insurance and annuity reserve liabilities;
and the interest-rate risk resulting from potential mismatching of asset and
liability durations.
Total capital, or equity, for American General's Life Insurance and
Retirement Annuities segments was $4.5 billion at year-end 1993, while
insurance and annuity reserves were $27 billion and life insurance in force was
$88 billion.
The NAIC adopted risk-based capital requirements, which establish
minimum capital levels for life insurers, effective January 1, 1994. Rating
agencies are expected to use the NAIC approach as one of the factors in
determining claims-paying ability ratings. Management believes that the capital
of these subsidiaries is more than sufficient to maintain their claims-paying
ability ratings.
CLAIMS-PAYING ABILITY RATINGS
<TABLE>
<CAPTION>
American
American General Life
VALIC General Life and Accident
_______________________________________________________________________________
<S> <C> <C> <C>
A.M. Best A++ A++ A++
Standard & Poor's AAA AAA AAA
Duff & Phelps AAA AAA --
Moody's Aa2 -- --
_______________________________________________________________________________
</TABLE>
28 AMERICAN GENERAL CORPORATION
<PAGE> 14
______________________________________________________________________________
CONSOLIDATED STATEMENT OF SHAREHOLDERS'S EQUITY
AMERICAN GENERAL CORPORATION {AMERICAN GENERAL LOGO}
For the Years Ended December 31,
In millions
<TABLE>
<CAPTION>
1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
COMMON Balance at beginning of year $ 368 $ 1,894 $ 1,893
STOCK Treasury shares issued and other (3) 7 1
Treasury shares issued for
two-for-one stock split -- (1,533) --
__________________________________________________________________
Balance at end of year 365 368 1,894
______________________________________________________________________________
NET Balance at beginning of year 88 70 37
UNREALIZED Change during year -- equity
GAINS ON securities (55) 18 33
SECURITIES Effect of accounting change --
fixed maturity securities 676 -- --
__________________________________________________________________
Balance at end of year 709 88 70
______________________________________________________________________________
RETAINED Balance at beginning of year 4,263 3,959 3,708
EARNINGS Net income 204 533 480
Dividends paid (238) (226) (227)
Other -- (3) (2)
__________________________________________________________________
Balance at end of year 4,229 4,263 3,959
______________________________________________________________________________
COST OF Balance at beginning of year (103) (1,594) (1,500)
TREASURY Purchases on the open market (78) (47) (92)
STOCK Other, net 15 5 (2)
Treasury shares issued for
two-for-one stock split -- 1,533 --
__________________________________________________________________
Balance at end of year (166) (103) (1,594)
______________________________________________________________________________
SHARE-
HOLDERS' Total shareholders' equity at
EQUITY end of year $5,137 $ 4,616 $ 4,329
__________________________________________________________________
</TABLE>
See Notes to Financial Statements
______________________________________________________________________________
CONSOLIDATED STATEMENT OF STOCK ACTIVITY
AMERICAN GENERAL CORPORATION
For the Years Ended December 31,
In thousands of shares
<TABLE>
<CAPTION>
1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
COMMON Balance at beginning of year 220,122 169,753 169,753
SHARES Conversion of convertible
ISSUED securities -- 59 --
Two-for-one stock split -- 50,310 --
__________________________________________________________________
Balance at end of year 220,122 220,122 169,753
______________________________________________________________________________
TREASURY Balance at beginning of year (3,865) (60,922) (58,478)
SHARES Purchases on the open market (2,655) (996) (2,558)
Two-for-one stock split -- 57,818 --
Issuance under employee benefit
plans 556 235 114
__________________________________________________________________
Balance at end of year (5,964) (3,865) (60,922)
______________________________________________________________________________
OUTSTANDING Outstanding at end of year 214,158 216,257 108,831
SHARES __________________________________________________________________
Restated for two-for-one
stock split 217,662
__________________________________________________________________
</TABLE>
See Notes to Financial Statements.
1993 ANNUAL REPORT 29
<PAGE> 15
_______________________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS
CASH FLOWS
American General's cash flow activity in 1993 included cash flow from
operations of $1.3 billion, a net increase in policyholder deposits of $2.2
billion, and net proceeds of $354 million from issuance of consumer finance
debt. The major uses of this cash in 1993 were as follows:
- -- $2.6 billion of net new investments to support increased insurance and
annuity liabilities;
- -- $523 million to fund increased finance receivables;
- -- $270 million to reduce corporate and real estate debt;
- -- $238 million to pay dividends to shareholders; and
- -- $78 million to buy back common stock.
PARENT COMPANY
Operating cash flow for the parent company includes dividends from the
business segments, partially offset by interest and other expenses not
allocated to the segments.
During 1993, operating cash flow of the parent company of $586 million
was used to pay dividends to shareholders, to buy back common stock, and to
reduce debt.
LIFE INSURANCE AND RETIREMENT
ANNUITIES SEGMENTS
In 1993, the Life Insurance and Retirement Annuities segments generated
$3.0 billion of cash, composed of $.8 billion from operations and $2.2 billion
from the net increase in policyholder account deposits. This compares to total
cash generated of $2.9 billion in 1992 and $2.4 billion in 1991. The increases
resulted principally from the earnings and asset growth in the Retirement
Annuities segment.
The major uses of cash were the net purchase of investments necessary
to support increases in insurance and annuity liabilities, and dividends paid
to the parent company. The Life Insurance segment paid dividends to the parent
company of $506 million in 1993, compared to $408 million in 1992 and $316
million in 1991.
The Life Insurance segment is expected to continue to pay dividends to
the parent company, while the Retirement Annuities segment is expected to use
most of its internally generated cash to support its further growth.
CONSUMER FINANCE SEGMENT
Operating cash flow for the Consumer Finance segment includes net
income adjusted for non-cash expenses such as the amortization of intangible
assets and the provision for credit losses. In 1993, operating cash flow
totaled $479 million, an increase from $365 million and $353 million in 1992
and 1991, respectively.
The 1993 operating cash flow, coupled with net proceeds from increased
debt, generated total cash flow of $833 million, compared to $602 million in
1992 and $497 million in 1991. This cash was used to fund the net increase in
receivables and to pay dividends to the parent company. Dividends paid to the
parent company totaled $163 million in 1993, compared to $137 million in 1992
and $150 million in 1991. Dividend levels are adjusted to maintain consumer
finance leverage (ratio of debt to tangible net worth) at 7.5 to 1.
Operating cash flow and access to money and capital markets, resulting
from strong debt and commercial paper ratings, are expected to satisfy 1994
cash requirements, including long-term debt maturities.
INVESTMENT CALLS, MATURITIES, AND SALES
The source of cash flow from investment calls, maturities, and sales
was as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Fixed maturities
Repayments of mortgage-
backed securities $2,650 $ 952 $ 265
Calls 2,098 2,790 736
Sales 842 240 368
Maturities 191 257 198
Mortgage loans 610 574 371
Equity securities 283 239 102
Other 293 137 91
_______________________________________________________________________________
Total $6,967 $5,189 $2,131
_______________________________________________________________________________
</TABLE>
LIQUIDITY
American General believes that its overall sources of liquidity will
continue to be sufficient to satisfy its foreseeable financial obligations.
American General and its subsidiaries maintain committed credit
facilities of $2.5 billion with 45 domestic and foreign banks. While the
principal purpose of these facilities is to support the issuance of commercial
paper, they also provide an additional source of cash to American General and
its subsidiaries.
30 AMERICAN GENERAL CORPORATION
<PAGE> 16
______________________________________________________________________________
CONSOLIDATED STATEMENT OF CASH FLOWS
AMERICAN GENERAL CORPORATION {AMERICAN GENERAL LOGO}
For the Years Ended December 31,
In millions
<TABLE>
<CAPTION>
1993 1992 1991
________________________________________________________________________________
<S> <C> <C> <C> <C>
OPERATING Income before cumulative effect
ACTIVITIES of accounting changes $ 250 $ 533 $ 480
Reconciling adjustments to net cash
provided by operating activities
Insurance and annuity liabilities 671 708 691
Deferred policy acquisition costs (192) (164) (96)
Provision for finance receivable
credit losses 163 135 137
Realized investment gains (306) (173) (98)
Investment write-downs and reserves 298 155 90
Write-down of acquisition-related
goodwill 300 -- --
Other, net 134 (141) 2
___________________________________________________________________
Net cash provided by operating
activities 1,318 1,053 1,206
________________________________________________________________________________
INVESTING Investment purchases (9,523) (7,747) (4,335)
ACTIVITIES Investment calls, maturities,
and sales 6,967 5,189 2,131
Finance receivable originations
or acquisitions (4,320) (3,687) (3,155)
Finance receivable principal
payments received 3,797 3,302 2,909
Other, net (207) (23) 299
___________________________________________________________________
Net cash used for investing
activities (3,286) (2,966) (2,151)
________________________________________________________________________________
FINANCING Retirement Annuities and Life
ACTIVITIES Insurance
Policyholder account deposits 3,125 2,739 2,247
Policyholder account withdrawals (918) (784) (803)
___________________________________________________________________
Total Retirement Annuities and
Life Insurance 2,207 1,955 1,444
___________________________________________________________________
Consumer Finance
Net decrease in short-term debt (106) (529) (433)
Long-term debt issuances 1,005 1,034 1,009
Long-term debt and preferred stock
redemptions (545) (268) (432)
___________________________________________________________________
Total Consumer Finance 354 237 144
___________________________________________________________________
Corporate
Net increase (decrease) in
short-term debt
Corporate (214) (18) (150)
Real Estate (156) (17) 95
Net long-term debt issuance
(redemptions) 100 (2) (16)
Dividend payments (238) (226) (227)
Common share purchases (78) (47) (378)
Other, net (18) 9 (19)
___________________________________________________________________
Total Corporate (604) (301) (695)
___________________________________________________________________
Net cash provided by financing
activities 1,957 1,891 893
________________________________________________________________________________
NET CHANGE Net decrease in cash (11) (22) (52)
IN CASH Cash at beginning of year 17 39 91
___________________________________________________________________
Cash at end of year $ 6 $ 17 $ 39
___________________________________________________________________
</TABLE>
See Notes to Financial Statements.
1993 ANNUAL REPORT 31
<PAGE> 17
_____________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 PREPARATION OF FINANCIAL STATEMENTS
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles. The consolidated financial
statements include the accounts of American General Corporation ("American
General" or "the company") and its subsidiaries. All material intercompany
transactions have been eliminated in consolidation. To conform with the 1993
presentation, certain items in the prior years' financial statements have been
reclassified.
1.2 NEW ACCOUNTING PRINCIPLES
During 1993, American General adopted six new Statements of Financial
Accounting Standards (SFAS) issued by the Financial Accounting Standards Board.
POSTRETIREMENT BENEFITS. SFAS 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," was adopted through a cumulative
adjustment, effective January 1, 1993, resulting in a one-time reduction of
net income of $45 million ($68 million pretax) or $.21 per share. This
standard requires accrual of a liability for postretirement benefits other
than pensions. Other than the cumulative effect, adoption did not have a
material impact on 1993 net income and is not expected to have a material
impact in the future.
INCOME TAXES. SFAS 109, "Accounting for Income Taxes," was adopted
through a cumulative adjustment, effective January 1, 1993, resulting in a
one-time increase of net income of $8 million or $.04 per share. This standard
changes the way income tax expense is determined for financial reporting
purposes. The adoption reduced certain tax-related benefits in the Life
Insurance segment, which reduced 1993 net income by $11 million and is
expected to reduce net income by approximately $9 million in 1994 and $6
million in 1995.
POSTEMPLOYMENT BENEFITS. SFAS 112, "Employers' Accounting for
Postemployment Benefits," was adopted through a cumulative adjustment,
effective January 1, 1993, resulting in a one-time reduction of net income of
$9 million ($14 million pretax) or $.04 per share. This standard requires the
accrual of benefits provided to employees after employment but before
retirement. Other than the cumulative effect, adoption did not have a material
impact on 1993 net income and is not expected to have a material impact in the
future.
REINSURANCE. SFAS 113, "Accounting and Reporting for Reinsurance of
Short-Duration and Long-Duration Contracts," was adopted effective January 1,
1993. This standard, which does not have a material impact on the consolidated
financial statements, requires that reinsurance receivables and prepaid
reinsurance premiums be reported as assets, rather than netted against the
related insurance liabilities.
LOAN IMPAIRMENTS. SFAS 114, "Accounting by Creditors for Impairment of a
Loan," was adopted effective January 1, 1993. This standard requires that
certain impaired loans be reported at the present value of expected future
cash flows, the loan's observable market price, or the fair value of
underlying collateral. The adoption did not have a material impact on 1993
net income and is not expected to have a material impact in the future.
FAIR VALUE. SFAS 115, "Accounting for Certain Investments in Debt and
Equity Securities," was adopted at December 31, 1993. This statement requires
that debt and equity securities be carried at fair value unless the company
has the positive intent and ability to hold these investments to maturity.
Debt and equity securities must be classified into one of three categories:
1) held-to-maturity, 2) available-for-sale, or 3) trading securities. Upon
adoption, the company classified all debt and equity securities as
available-for-sale and, accordingly, recorded them at fair value. Related
balance sheet accounts were adjusted as if the unrealized gains had been
realized at the balance sheet date, and the net unrealized gains on securities
were credited directly to shareholders' equity, as follows:
<TABLE>
<CAPTION>
In millions 1993
__________________________________________________________________
<S> <C>
Fair value adjustment to fixed maturity securities $1,594
Less:
Decrease in deferred policy acquisition costs (550)
Increase in insurance and annuity liabilities (4)
Increase in deferred federal income taxes (364)
__________________________________________________________________
Net unrealized gains on securities $ 676
__________________________________________________________________
</TABLE>
1.3 INVESTMENTS
FIXED MATURITY AND EQUITY SECURITIES. Prior to December 31, 1993, the
company reported fixed maturity securities in accordance with the then-existing
accounting standards. Fixed maturity securities were considered held for
investment purposes and were carried at amortized cost, adjusted for declines
considered other than temporary and for possible uncollectible amounts.
32 AMERICAN GENERAL CORPORATION
<PAGE> 18
_______________________________________________________________________________
{AMERICAN GENERAL LOGO}
Effective with the adoption of SFAS 115, management determines the
appropriate classification of fixed maturity and equity securities at the time
of purchase and re-evaluates such designation at each balance sheet date. All
fixed maturity and equity securities currently are classified as available-
for-sale and recorded at fair value. After adjusting related balance sheet
accounts as if the unrealized gains had been realized, the net adjustment is
recorded in net unrealized gains on securities within shareholders' equity. If
the fair value of a security classified as available-for-sale declines below
its cost and this decline is considered to be other than temporary, the
security is reduced to its net realizable value, and the reduction is recorded
as a realized loss.
LOANS. Mortgage, policy, and other loans are reported at cost and
adjusted periodically for any differences between face value and cost, and
for possible uncollectible amounts.
INVESTMENT INCOME. Interest on fixed maturity securities, loans, and
notes is recorded as income when earned and is adjusted for any amortization
of premium or discount. Dividends are recorded as income on ex-dividend dates.
REALIZED INVESTMENT GAINS OR LOSSES. Realized gains or losses are
recognized using the specific identification method and include declines in
fair value of investments below cost that are considered other than temporary.
1.4 FINANCE RECEIVABLES
FINANCE CHARGES. Finance charges on discounted receivables and interest
on interest-bearing receivables are recognized as income using the interest
method. The accrual of income is suspended when contractual payments are not
received for four consecutive months for loans and retail sales contracts, and
for six months for credit cards. Extension fees and late charges are recognized
as income when received. Non-refundable points and fees on loans and retail
sales contracts are recognized using the interest method over the lesser of the
contractual term or the expected life based upon prepayment experience. If a
loan is prepaid before all fees are recognized, any remaining fees are
recognized as income at the date of prepayment.
LOSSES ON FINANCE RECEIVABLES. The company's policy is to charge off
consumer loan accounts (except where secured by real estate) and credit card
accounts for which minimal or no collections were made in the prior six-month
period. Retail sales contracts are charged off when four monthly installments
are past due. For loans secured by real estate, foreclosure proceedings are
instituted when four monthly installments are past due.
The allowance for losses on finance receivables is based on experience
with charge offs, delinquency, and liquidation and is maintained at an amount
considered adequate to absorb losses in the portfolio based on current
conditions and economic trends.
1.5 LOAN ORIGINATION FEES AND COSTS
Fees charged to a borrower and costs incurred in originating a consumer
or mortgage loan are deferred and amortized over the lesser of the contractual
term or the estimated life of the loan. The deferred amounts are included in
the carrying value of the related loans.
1.6 DEFERRED POLICY ACQUISITION COSTS (DPAC)
The costs of writing an insurance policy, including agents' commissions
and underwriting and marketing expenses, are deferred, capitalized, and
included in the DPAC asset. The cost assigned to certain acquired subsidiaries'
insurance contracts in force at the acquisition date, referred to as the
present value of future profits (PVFP), also is included in DPAC.
DPAC associated with interest-sensitive life and insurance investment
contracts is charged to expense in relation to the estimated gross profits of
those contracts; under SFAS 115, it is adjusted for the impact on estimated
gross profits of net unrealized gains on securities. DPAC associated with all
other life and health contracts is charged to expense over the premium-paying
period or as the premiums are earned over the life of the contract.
PVFP is charged to expense using the same assumptions used to amortize
DPAC. Interest is accreted on the unamortized balance of PVFP at rates of 7.2%
to 8.5%.
The DPAC carrying value is regularly reviewed; its reported value and
remaining life are considered appropriate.
1.7 ACQUISITION-RELATED GOODWILL
Acquisition-related goodwill is charged to expense in equal amounts,
generally over 20 or 40 years. The carrying value of goodwill is regularly
reviewed for indicators of impairment in value.
In 1993, the company recorded a one-time, non-cash charge of $300 million
to reduce acquisition-related goodwill. The principal source of this goodwill
was the $1.2 billion
1993 ANNUAL REPORT 33
<PAGE> 19
_______________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
acquisition of the Gulf United insurance operations in 1984. The write-down was
the result of a strategic review completed in 1993 of certain life insurance
operations by management and outside advisors, which indicated the book value
of these subsidiaries exceeded fair value. After this charge, the reported
value and remaining life of acquisition-related goodwill are considered
appropriate.
1.8 NET ASSETS OF LIFE INSURANCE COMPANIES HELD FOR SALE
On November 29, 1993, the company announced its intent to offer for
sale American-Amicable Life and Financial Life of Canada. At December 31, 1993,
the assets and liabilities of these companies were reported as net assets of
life insurance companies held for sale.
1.9 SEPARATE ACCOUNTS
Separate Accounts are assets and liabilities associated with certain
contracts, principally annuities. The investment risk lies solely with the
holder of the contract rather than the company. Investment income and realized
investment gains allocable to Separate Accounts are excluded from the
consolidated statement of income.
1.10 INSURANCE INVESTMENT CONTRACTS
Insurance investment contracts do not subject the company to
significant risks arising from policyholder mortality or morbidity. The
majority of the company's annuity products are considered insurance investment
contracts.
The carrying amount and fair value of liabilities for insurance
investment contracts at December 31 were as follows:
<TABLE>
<CAPTION>
Carrying Amount Fair Value
________________________ _______________
In millions 1993 1992 1991 1993 1992
_______________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Investment
contracts $19,216 $16,906 $14,509 $18,880 $15,922
_______________________________________________________________________________
</TABLE>
Fair value was estimated using cash flows discounted at market interest
rates. Assumptions regarding future economic activity have been made in
estimating fair value. Care should be exercised in drawing conclusions based on
the estimated fair value of insurance investment contracts, since the
liabilities are scheduled to mature over a number of years.
1.11 POLICY RESERVES
SHORT-DURATION CONTRACTS. Short-duration contracts, which provide
insurance for a period of one year or less, include certain term life and most
property insurance contracts. Reserves to cover all estimated claims under
these contracts are considered adequate. However, final claim payments may
differ from these reserves. Any adjustments to the reserves are reflected in
net income in the current year.
LONG-DURATION CONTRACTS. Long-duration contracts, which generally
require performance over a period of more than one year, include traditional
whole life, endowment, guaranteed renewable term life, guaranteed renewable
health, interest-sensitive life, limited payment, and insurance investment
contracts. The contract provisions generally cannot be changed or cancelled by
the company during the contract period. For interest-sensitive life and
insurance investment contracts, reserves equal the sum of the policy account
balance and deferred revenue charges. In establishing reserves for other types
of long-duration contracts, an estimate is made of the cost of future policy
benefits to be paid as a result of present and future claims due to death,
disability, surrender of a policy, or payment of an endowment. Reserves are
determined using the net level premium method. Interest assumptions used to
compute reserves ranged from 2.0% to 13.5% at December 31, 1993.
1.12 PREMIUM RECOGNITION
SHORT-DURATION CONTRACTS. When a short-duration contract is written, the
premiums are recognized evenly over the life of the contract in proportion to
the amount and term of the insurance protection provided.
LONG-DURATION CONTRACTS. Most receipts for annuities and
interest-sensitive life insurance polices are classified as deposits instead of
revenues. Revenues for these contracts consist of the mortality, expense, and
surrender charges assessed against the account balance. Policy charges that are
designed to compensate the company for future services are deferred and
recognized in income over the period benefitted, using the same assumptions
used to amortize DPAC (see Note 1.6).
For limited-payment contracts, net premiums are recorded as revenue,
and the difference between the gross premium received and the net premium is
deferred and recognized in income in a constant relationship to insurance in
force. For all other long-during contracts, premiums are recognized when due.
34 AMERICAN GENERAL CORPORATION
<PAGE> 20
_______________________________________________________________________________
{AMERICAN GENERAL LOGO}
1.13 REINSURANCE
The company's insurance subsidiaries are routinely involved in
reinsurance transactions. Ceded reinsurance becomes a liability of the
reinsurer that assumes the risk. The company's insurance subsidiaries diversify
their risk of exposure to reinsurance loss by using several reinsurers and
entering into reinsurance transactions with strong life reinsurers. The maximum
retention on one life (in the case of individual life insurance) is $1.5
million. If the reinsurer could not meet its obligations, American General's
insurance subsidiaries would reassume the liability. The likelihood of a
material reinsurance liability being reassumed by the company's insurance
subsidiaries is considered to be remote.
Amounts paid or deemed to have been paid for ceded reinsurance
contracts are recorded as reinsurance receivables. The cost of reinsurance
related to long-duration contracts is recognized over the life of the
underlying reinsured policies using assumptions consistent with those used to
account for the underlying policies.
Reinsurance premiums included in premiums and other considerations were
as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
________________________________________________________________________________
<S> <C> <C> <C>
Direct premiums and other
considerations $1,262 $1,227 $1,181
Reinsurance assumed 38 32 29
Reinsurance ceded (48) (46) (42)
________________________________________________________________________________
Premiums and other
considerations $1,252 $1,213 $1,168
________________________________________________________________________________
</TABLE>
Reinsurance recoveries on ceded reinsurance contracts during 1993 were
$52 million. The amount of reinsurance recoverable on paid and unpaid losses
was not material at December 31, 1993.
1.14 INTEREST CAPITALIZED OR PAID
Essentially all interest incurred on real estate investment properties
under development is capitalized until the property is substantially complete
and ready for its intended use. Interest capitalized was $15 million, $21
million, and $31 million in 1993, 1992, and 1991, respectively.
Interest paid, excluding interest capitalized, was as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
________________________________________________________________________________
<S> <C> <C> <C>
Corporate and real estate $ 142 $ 121 $ 158
Consumer Finance 379 386 397
________________________________________________________________________________
</TABLE>
1.15 EARNINGS PER SHARE
Earnings per share are computed by dividing earnings by average
outstanding common shares. Common shares include common share equivalents from
the assumed exercise of stock options. The average common shares used to
compute earnings per share were 216,578,836 in 1993; 217,704,620 in 1992; and
225,361,946 in 1991.
2. INVESTMENTS
2.1 INVESTMENT INCOME
Income by type of investment was as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
________________________________________________________________________________
<S> <C> <C> <C>
Fixed maturity securities $2,005 $1,836 $1,628
Mortgage loans on real estate 357 412 468
Other investments 195 209 199
________________________________________________________________________________
Gross investment income 2,557 2,457 2,295
Investment expense* 120 130 117
________________________________________________________________________________
Net investment income $2,437 $2,327 $2,178
________________________________________________________________________________
</TABLE>
*Primarily related to investment real estate.
The carrying value of investments that produced no investment income
during 1993 totaled $319 million or 1% of total invested assets. The ultimate
disposition of these assets is not expected to have a material effect on
American General's consolidated financial position.
2.2 NET REALIZED INVESTMENT GAINS
Net realized investment gains were as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
________________________________________________________________________________
<S> <C> <C> <C>
Fixed maturity securities
Gross gains $ 201 $ 128 $ 44
Gross losses (59) (37) (14)
________________________________________________________________________________
Total fixed maturity securities 142 91 30
Mortgage loans on real estate (69) (34) (27)
Equity securities 121 55 29
Investment real estate (170) (74) (14)
Other investments (16) (20) (10)
________________________________________________________________________________
Realized gains before taxes 8 18 8
Income tax expense 2 9 7
________________________________________________________________________________
Net realized investment gains $ 6 $ 9 $ 1
________________________________________________________________________________
</TABLE>
1993 ANNUAL REPORT 35
<PAGE> 21
_______________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2.3 FIXED MATURITY AND EQUITY SECURITIES
As of December 31, 1993, all fixed maturity and equity securities were
classified as available-for-sale and reported at fair value (see Note 1.2).
Previously, fixed maturity securities were classified as held-to-maturity and
reported at amortized cost. Fair value and amortized cost information as of
December 31 were as follows:
<TABLE>
<CAPTION>
Amortized Cost Gross Unrealized Gains
_________________________ ______________________
In millions 1993 1992 1991 1993 1992 1991
________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Fixed maturity securities:
Corporate bonds
Investment grade $12,207 $10,767 $9,303 $1,021 $ 680 $ 675
Below investment grade 707 704 756 42 21 19
Mortgage-backed 10,217 8,712 6,893 536 481 533
U.S. government 882 292 329 49 28 30
Foreign governments 565 557 407 37 36 42
States/political
subdivisions 180 156 151 22 24 23
Redeemable preferred
stocks 127 120 74 6 5 7
________________________________________________________________________________
Total fixed maturity
securities $24,885 $21,308 $17,913 $1,713 $1,275 $1,329
________________________________________________________________________________
Equity securities $ 182 $ 273 $ 349 $ 53 $ 119 $ 96
________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Gross Unrealized Losses Fair Value
_________________________ ______________________
In millions 1993 1992 1991 1993 1992 1991
________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Fixed maturity securities:
Corporate bonds
Investment grade $ (25) $ (41) $ (7) $13,203 $11,406 $9,971
Below investment grade (6) (12) (34) 743 713 741
Mortgage-backed (75) (18) (4) 10,678 9,175 7,422
U.S. government (12) -- -- 919 320 359
Foreign governments (1) (1) (1) 601 592 448
States/political
subdivisions -- -- -- 202 180 174
Redeemable preferred
stocks -- (2) (1) 133 123 80
________________________________________________________________________________
Total fixed maturity
securities $ (119) $ (74) $ (47) $26,479 $22,509 $19,195
________________________________________________________________________________
Equity securities $ (2) $ (2) $ (7) $ 233 $ 390 $ 438
________________________________________________________________________________
</TABLE>
Fair values of fixed maturity and equity securities were based on quoted
market prices, where available. For investments not actively traded, fair values
were estimated using values obtained from independent pricing services or, in
the case of private placements, by discounting expected future cash flows using
a current market rate applicable to yield, credit quality, and maturity of the
investments. The reporting of fixed maturity securities at fair value without a
corresponding revaluation of related policyholder liabilities can be
misinterpreted, and care should be exercised in drawing conclusions from such
data.
Net unrealized gains on securities included in shareholders' equity at
December 31 were as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Gross unrealized gains $1,766 $119 $ 96
Gross unrealized losses (121) (2) (7)
DPAC and other fair value adjustments (554) -- --
Deferred federal income taxes (382) (29) (19)
_______________________________________________________________________________
Net unrealized gains on securities $ 709 $ 88 $ 70
_______________________________________________________________________________
</TABLE>
The contractual maturities of fixed maturity securities at December 31,
1993 were as follows:
<TABLE>
<CAPTION>
Amortized Fair
In millions Cost Value
________________________________________________________________________________
<S> <C> <C>
Fixed maturity securities, excluding
mortgage-backed securities
Due in one year or less $ 257 $ 263
Due after one year through five years 2,012 2,152
Due after five years through ten years 7,351 7,898
Due after ten years 5,048 5,488
Mortgage-backed securities 10,217 10,678
_______________________________________________________________________________
Total fixed maturity securities $24,885 $26,479
_______________________________________________________________________________
</TABLE>
Actual maturities may differ from contractual maturities since
borrowers may have the right to call or prepay obligations. Corporate
requirements and investment strategies may result in the sale of investments
before maturity.
2.4 MORTGAGE LOANS ON REAL ESTATE
Diversification of the geographic location and type of property
collateralizing mortgage loans reduces the concentration of credit risk. For
new loans, the company requires loan-to-value ratios of 75% or less, based on
management's credit assessment of the borrower.
36 AMERICAN GENERAL CORPORATION
<PAGE> 22
_______________________________________________________________________________
{AMERICAN GENERAL LOGO}
At December 31, the mortgage loan portfolio was distributed as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Geographic distribution
Atlantic $1,181 $1,348 $1,491
Central 1,009 1,342 1,648
Pacific and Mountain 940 1,066 1,158
Allowance for losses (98) (53) (50)
_______________________________________________________________________________
Total $3,032 $3,703 $4,247
_______________________________________________________________________________
Property type
Retail $1,038 $1,229 $1,322
Office 994 1,056 1,125
Industrial 531 606 649
Apartments 334 437 449
Residential and other 233 428 752
Allowance for losses (98) (53) (50)
_______________________________________________________________________________
Total $3,032 $3,703 $4,247
_______________________________________________________________________________
Fair value $3,145 $3,821
_______________________________________________________________________________
% Non-performing 4.4% 4.7% 4.2%
_______________________________________________________________________________
</TABLE>
Fair value of mortgage loans was estimated primarily using discounted cash
flows, based on contractual maturities and discount rates that were based on
U.S. Treasury rates for similar maturity ranges, adjusted for risk, based on
property type. Care should be exercised in drawing conclusions based on fair
value, since the company usually holds mortgage loans until maturity.
2.5 ALLOWANCE FOR MORTGAGE LOAN LOSSES
The allowance for mortgage loan losses was as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Balance at January 1, $ 53 $ 50 $ 31
Net additions(a) 84 34 30
Deductions(b) (39) (31) (11)
_______________________________________________________________________________
Balance at December 31, $ 98 $ 53 $ 50
_______________________________________________________________________________
</TABLE>
(a) Charged to realized investment gains.
(b) Resulting from foreclosures and payoffs.
A mortgage loan is considered impaired when the company determines that it
probably will not collect all amounts due under the contractual terms. At
December 31, 1993, impaired mortgage loans, valued at the fair value of the
underlying collateral, totaled $110 million, which is net of an allowance of
$27 million.
2.6 POLICY LOANS
The fair value of policy loans was $1.2 billion and $1.1 billion at December
31, 1993 and 1992, respectively. The fair value was estimated using discounted
cash flows and actuarially determined assumptions, incorporating market rates.
2.7 ALLOWANCE FOR INVESTMENT REAL ESTATE LOSSES
The allowance for investment real estate losses was as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Balance at January 1, $129 $ 62 $ 23
Net additions(a) 199 82 40
Deductions(b) (75) (15) (1)
_______________________________________________________________________________
Balance at December 31, $253 $129 $ 62
_______________________________________________________________________________
</TABLE>
(a) Charged to realized investment gains.
(b) Resulting from sales.
3. FINANCE RECEIVABLES
3.1 DETAIL OF FINANCE RECEIVABLES
Finance receivables net of unearned finance charges at December 31 were as
follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Consumer loans
Real estate $2,642 $2,782 $2,953
Other 2,318 2,054 1,817
_______________________________________________________________________________
Total consumer loans 4,960 4,836 4,770
Retail sales contracts 923 872 791
Credit cards 691 492 384
_______________________________________________________________________________
Total 6,574 6,200 5,945
Allowance for losses (184) (162) (151)
_______________________________________________________________________________
Finance receivables, net $6,390 $6,038 $5,794
_______________________________________________________________________________
</TABLE>
Fair value, which was estimated using discounted cash flows computed by
category of receivable, approximated the net carrying amount at December 31,
1993 and 1992. Cash flows were based on contractual payment terms adjusted for
delinquencies and losses, discounted at the weighted-average rates currently
being offered for similar loans. Care should be exercised in drawing
conclusions based on fair value, since the estimate does not reflect the value
of the underlying customer relationships or the related distribution system.
1993 ANNUAL REPORT 37
<PAGE> 23
______________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At December 31, 1993, 91% of the outstanding consumer loans and retail
sales contracts were secured by real estate or other property.
3.2 DISTRIBUTION
Geographic diversification of finance receivables reduces the
concentration of credit risk associated with a recession in any one region.
The largest concentrations of finance receivables at December 31 were as
follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
California $ 751 $ 838 $ 969
North Carolina 582 512 407
Florida 503 504 546
Illinois 409 387 340
Indiana 365 361 345
Virginia 353 325 297
Ohio 341 284 262
Other 3,270 2,989 2,779
______________________________________________________________________________
Total $6,574 $6,200 $5,945
______________________________________________________________________________
</TABLE>
3.3 CONTRACTUAL MATURITIES AND COLLECTIONS
Contractual maturities of consumer loans and retail sales contracts, net
of unearned finance charges, at December 31, 1993 were as follows:
<TABLE>
<CAPTION>
After
In millions 1994 1995 1996 1997 1998 1998
______________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Maturities $2,080 $1,219 $758 $376 $225 $1,225
______________________________________________________________________________
</TABLE>
Contractual maturities should not be considered a forecast of future cash
collections. A substantial portion of consumer loans and retail sales contracts
may be renewed, converted, or paid in full prior to maturity. Cash collections
of principal and such collections as a percentage of average net finance
receivable balances were as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
Consumer loans
Cash collections $2,101 $1,881 $1,653
Percent of average balances 43% 40% 36%
Retail sales contracts
Cash collections $1,123 $ 882 $ 787
Percent of average balances 125% 113% 102%
Credit cards
Cash collections $ 573 $ 539 $ 469
Percent of average balances 104% 128% 132%
_______________________________________________________________________________
</TABLE>
3.4 ALLOWANCE FOR FINANCE RECEIVABLES
The allowance for finance receivables was as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
Balance at January 1, $ 162 $ 151 $ 149
Provision for credit losses* 163 135 137
Charge offs, net of recoveries (141) (124) (135)
______________________________________________________________________________
Balance at December 31, $ 184 $ 162 $ 151
______________________________________________________________________________
</TABLE>
*Reported as operating costs and expenses.
4. DEFERRED POLICY ACQUISITION COSTS (DPAC)
The balance of DPAC at December 31, and the components of the change
reported as operating costs and expenses for the years then ended, were as
follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
Balance at January 1, $2,083 $1,919 $1,823
Capitalization 395 335 275
Amortization
Policy origination costs (182) (149) (155)
PVFP, net (21) (22) (24)
Reclassification to net assets of life
insurance companies held for sale (130) -- --
Cumulative effect of accounting changes
Fair value (SFAS 115) (550) -- --
Income taxes (SFAS 109) 42 -- --
_______________________________________________________________________________
Balance at December 31, $1,637 $2,083 $1,919
_______________________________________________________________________________
</TABLE>
The unamortized balance of PVFP included in DPAC at December 31, 1993,
1992, and 1991 was $189 million, $210 million, and $232 million, respectively.
PVFP amortization, net of accretion, expected to be recorded in each of the
next five years is $18 million, $17 million, $15 million, $14 million, and
$12 million.
38 AMERICAN GENERAL CORPORATION
<PAGE> 24
______________________________________________________________________________
{AMERICAN GENERAL LOGO}
5. DEBT
5.1 DEBT OUTSTANDING
Long-term debt at December 31 was as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
Corporate
Senior, 6.3 - 10%, through 2018 $ 945 $ 992 $1,055
Fair value - Corporate $1,083 $1,088
______________________________________________________________________________
Real Estate
Senior, 5.2 - 12.8%, through 1997 $ 15 $ 47 $ 7
______________________________________________________________________________
Consumer Finance
Senior, 3.8 - 13%, through 2009 $3,547 $3,155 $2,445
Senior subordinated, 3.2 - 12.8%,
through 1995 472 399 324
______________________________________________________________________________
Total Consumer Finance $4,019 $3,554 $2,769
Fair value - Consumer Finance $4,264 $3,722
______________________________________________________________________________
</TABLE>
The fair value of long-term debt was estimated using discounted cash
flows based on current borrowing rates. The fair value of short-term debt
approximated the carrying amount at December 31, 1993 and 1992.
5.2 LONG-TERM DEBT MATURITIES
Maturities of long-term debt and sinking fund requirements for each of
the next five years are as follows:
<TABLE>
<CAPTION>
In millions 1994 1995 1996 1997 1998
______________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Corporate $209 $100 $ -- $133 $ 67
Real Estate 15 -- -- -- --
Consumer Finance 665 939 563 352 243
______________________________________________________________________________
</TABLE>
Current maturities of long-term debt expected to be refinanced with
short-term debt are included in short-term debt.
Certain other debt issues of the Consumer Finance segment that are
scheduled to mature after 1998 are redeemable prior to maturity at par, at
the option of the holders. If these issues were so redeemed, the amounts above
would increase $150 million in 1994 and 1996.
5.3 CREDIT AGREEMENTS
During 1993, American General and certain subsidiaries used commercial
paper to meet short-term funding requirements. Unsecured bank credit
facilities are used to support commercial paper borrowings.
At December 31, 1993, American General and its consumer finance
subsidiaries maintained unsecured committed credit facilities of $2.5 billion
with a total of 45 domestic and foreign banks. Interest rates are based on a
money market index, and annual commitment fees range from 0.075% to 0.1875%.
Borrowings under these facilities were $43 million at December 31, 1993.
5.4 INTEREST CONVERSION AGREEMENTS
Certain subsidiaries use off-balance-sheet interest rate swaps and
options on swaps, referred to as interest conversion agreements, as a means of
managing their interest rate exposure.
The interest conversion agreements involve credit risk due to possible
non-performance by the counterparties. Notional amounts, shown below, represent
amounts on which interest payments to be exchanged are calculated. The credit
risk to the company is limited to the interest differential based on the
interest rates contained in the agreements. The interest differential to be
paid or received on interest conversion agreements is accrued as interest rates
change and is recognized over the life of the agreements as an adjustment to
interest expense. The following table identifies agreements outstanding at
December 31:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
______________________________________________________________________________
<S> <C> <C> <C>
Swaps - obligation to pay fixed rate
Underlying notional amount $ 290 $ 415 $ 765
Weighted-average rate 8.75% 8.83% 8.87%
Fair value $ (29) $ (20)
Options sold on swaps - to pay fixed rate
Underlying notional amount $ 200 $ 250 $ 350
Weighted-average rate 9.29% 9.24% 9.09%
Fair value $ (33) $ (21)
______________________________________________________________________________
</TABLE>
Fair values of the agreements were based on estimates obtained from the
individual counterparties. Fair values may fluctuate based on expectations of
future interest rates.
The company does not anticipate non-performance by the counterparties;
however, non-performance would not have a material impact on net income.
6. INCOME TAXES
6.1 ACCOUNTING CHANGE
Beginning in 1993, income taxes have been provided in accordance with
SFAS 109 (see Note 1.2). Under this method, deferred tax assets and
liabilities are calculated using the differences between the financial
reporting basis
1993 ANNUAL REPORT 39
<PAGE> 25
_______________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
and the tax basis of assets and liabilities, using the enacted tax rate. The
effect of a tax rate change is recognized in income in the period of
enactment. Before 1993, the company recognized deferred taxes on timing
differences between financial reporting income and taxable income. Deferred
tax liabilities were not adjusted for tax rate changes. Under SFAS 109, state
income taxes, previously reported in operating costs and expenses, are now
included in income tax expense.
As a result of this accounting change, 1993 income tax disclosures are
not comparable to prior years.
6.2 TAX RATE RELATED ADJUSTMENT
During third quarter 1993, the federal corporate tax rate increased from
34% to 35%, retroactive to January 1, 1993. The additional 1% tax on first and
second quarter 1993 income was $4 million, and the effect of the 1% increase on
existing deferred tax liabilities was $26 million. This charge of $30 million
was included in income tax expense in the third quarter.
6.3 TAX LIABILITIES
Income tax liabilities at December 31 were as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Current tax liabilities $ 76 $ 39 $ 23
_______________________________________________________________________________
Deferred, applicable to:
Income 783 688 630
Net unrealized gains on securities 382 29 19
_______________________________________________________________________________
Deferred tax liabilities 1,165 717 649
_______________________________________________________________________________
Income tax liabilities $1,241 $756 $672
_______________________________________________________________________________
</TABLE>
Components of deferred tax liabilities at December 31, 1993 were as
follows:
<TABLE>
<CAPTION>
In millions 1993
_______________________________________________________________________________
<S> <C>
Deferred tax liabilities, applicable to:
Basis differential of investments $ 589
Deferred policy acquisition costs 480
Other 380
Less deferred tax assets* (284)
_______________________________________________________________________________
Deferred tax liabilities $1,165
_______________________________________________________________________________
</TABLE>
* No valuation allowance is considered necessary.
A portion of life insurance income earned prior to 1984 is not taxable
unless it exceeds certain statutory limitations or is distributed as dividends.
Such income, accumulated in policyholders' surplus accounts, totaled $361
million at December 31, 1993. At current corporate rates, the maximum amount
of tax on such income is approximately $126 million. Deferred income taxes on
these accumulations are not required because no distributions are expected.
6.4 TAX EXPENSE
Components of income tax expense were as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Current
Federal $354 $205 $157
State 18 -- --
_______________________________________________________________________________
Total current 372 205 157
_______________________________________________________________________________
Deferred, applicable to:
Basis differential of investments (27) 19
Deferred policy acquisition costs 30 6
Insurance and annuity liabilities (6) (17)
Interest on tax assessments 34 --
Operating loss carryovers 20 45
Other, net (14) (12)
_______________________________________________________________________________
Total deferred (20) 37 41
_______________________________________________________________________________
Income tax expense $352 $242 $198
_______________________________________________________________________________
</TABLE>
A reconciliation between the federal income tax rate and the effective
tax rate follows:
<TABLE>
<CAPTION>
1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Federal income tax rate 35% 34% 34%
Tax rate change 4 -- --
Amortization resulting from acquisitions
Acquisition-related goodwill 1 1 2
Value of insurance contracts -- (1) (2)
Tax-exempt investment income (2) (1) (2)
State taxes, net 2 -- --
Write-down of goodwill 18 -- --
Other, net -- (2) (3)
_______________________________________________________________________________
Effective tax rate 58%* 31% 29%
_______________________________________________________________________________
</TABLE>
* Excludes tax effect of accounting changes.
6.5 TAXES PAID
Federal income taxes paid in 1993, 1992, and 1991 were $260 million,
$265 million, and $180 million, respectively. State income taxes paid in 1993
were $15 million.
40 AMERICAN GENERAL CORPORATION
<PAGE> 26
________________________________________________________________________________
{AMERICAN GENERAL LOGO}
6.6 TAX RETURN EXAMINATIONS
The company and its subsidiaries file a consolidated federal income tax
return. The Internal Revenue Service (IRS) has completed examinations of the
company's returns through 1985 and has commenced examination of the company's
tax returns for 1986 through 1988. As a result of disputes over the treatment
of some items for the years 1977 through 1985, the IRS issued tax assessments
of $83 million and also proposed tax deficiencies of approximately $130
million. During 1993, the company finalized settlements regarding $71 million
of the assessed deficiencies and $114 million of the proposed deficiencies. The
settlements finalized were within the amounts previously provided in the
consolidated financial statements and, therefore, had no impact on 1993 net
income.
The IRS is continuing to dispute the company's tax treatment of some
items for the years 1977 through 1985. Some of these issues will require
litigation to resolve, and any amounts ultimately settled with the IRS would
also include interest. Although the final outcome is uncertain, the company
believes that the ultimate liability, including interest, resulting from these
issues will not exceed amounts currently provided in the consolidated financial
statements.
7. CAPITAL STOCK
7.1 CLASSES OF CAPITAL STOCK
American General has two classes of capital stock. Preferred stock
($1.50 par value, 60 million shares authorized) may be issued in series with
such dividend, liquidation, redemption, conversion, voting, and other rights as
the board of directors may determine. Common stock ($.50 par value, 300 million
shares authorized) was owned by 29,602 shareholders of record at February 11,
1994. At December 31, 1993, approximately 1.6 million shares of common stock
were reserved for issuance, primarily for the exercise of stock options.
Dividends paid per common share were $1.10, $1.04, and $1.00 in 1993, 1992, and
1991, respectively.
7.2 STOCK SPLIT
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.
7.3 PREFERRED SHARE PURCHASE RIGHTS
One preferred share purchase right is attached to each share of common
stock. These rights are not currently exercisable and will become exercisable
only upon the occurrence of certain events related to a change in control of
the company. When exercisable, each right will entitle the holder to purchase
1/100 of a share of American General's Series A Junior Participating Preferred
Stock. All rights expire August 7, 1999, unless extended or redeemed.
8. STOCK AND INCENTIVE PLANS
The company's stock and incentive plans provide for the award of stock
options, restricted stock awards, performance awards, and incentive awards to
key employees.
Options for the purchase of shares of American General common stock are
exercisable at prices not less than the market value of the stock on the date
of grant. Such options may not be exercised within six months of, nor after 10
years from, the date of grant.
Shares available and stock option activity were as follows:
<TABLE>
<CAPTION>
Shares Shares Issuable under
Available Outstanding Options
for Issue _____________________________________
during 1993 1993 1992 1991
________________________________________________________________________________
<S> <C> <C> <C> <C>
Balance at January 1, 6,444,192 1,654,854 1,870,514 1,917,756
Stock options
Granted (516,305) 516,305 451,018 401,192
Exercised (531,637) (501,198) (133,786)
Forfeited 75,542 (75,542) (165,480) (314,648)
Restricted stock issued (89,000)
Performance shares issued (28,932)
________________________________________________________________________________
Balance at December 31, 5,885,497 1,563,980 1,654,854 1,870,514
________________________________________________________________________________
</TABLE>
The average price of options exercised was $17.70 in 1993, $15.82 in
1992, and $13.10 in 1991. At December 31, 1993, there were 1,170,315 options
exercisable, and the exercise price of all options outstanding ranged from
$14.00 to $34.88, for an average price of $23.07 per share. The options expire
on various dates between 1995 and 2003.
1993 ANNUAL REPORT 41
<PAGE> 27
________________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. BENEFIT PLANS
9.1 PENSION PLANS
American General and its subsidiaries have non-contributory defined
benefit pension plans covering most employees. Pension benefits are based on
the participant's average monthly compensation and length of credited service.
The company's funding policy is to contribute annually no more than the maximum
amount deductible for federal income tax purposes. The company uses the
projected unit credit method to compute pension expense.
More than 96% of the plans' assets were invested in readily marketable
stocks and bonds at the plans' most recent balance sheet date.
The pension plans have purchased annuity contracts from American
General subsidiaries that provide benefits for certain retirees. During 1993,
1992, and 1991, these annuity contracts provided approximately $37 million
annually for retiree benefits.
The components of pension expense were as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
________________________________________________________________________________
<S> <C> <C> <C>
Service cost (benefits earned) $ 12 $ 10 $ 10
Interest cost on projected
benefit obligation 19 18 19
Actual return on plan assets (65) (43) (95)
Net amortization and deferral 15 (7) 43
________________________________________________________________________________
Total pension expense (income) $(19) $(22) $(23)
________________________________________________________________________________
Assumptions:
Weighted-average discount rate
on benefit obligation 7.25% 8.00% 8.50%
Rate of increase in compensation levels 4.00 5.00 5.00
Expected long-term rate of return
on plan assets 10.00 10.00 10.00
________________________________________________________________________________
</TABLE>
The funded status of the plans and the prepaid pension expense included
in other assets at December 31 were as follows:
<TABLE>
<CAPTION>
In millions 1993 1992 1991
________________________________________________________________________________
<S> <C> <C> <C>
Actuarial present value of
benefit obligation
Vested $248 $203 $191
Non-vested 5 4 3
________________________________________________________________________________
Accumulated benefit obligation 253 207 194
Effect of increase in compensation levels 36 26 31
________________________________________________________________________________
Projected benefit obligation 289 233 225
Plan assets at fair value 531 482 482
________________________________________________________________________________
Plan assets at fair value in excess of
projected benefit obligation 242 249 257
Unrecognized net gain (80) (98) (118)
Unrecognized prior service cost 11 13 16
Unrecognized net asset at January 1,
net of amortization (27) (39) (51)
________________________________________________________________________________
Prepaid pension expense $146 $125 $104
________________________________________________________________________________
</TABLE>
9.2 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
American General and its subsidiaries have life, medical, and dental
plans for certain retired employees and agents. Most plans are contributory,
with retiree contributions adjusted annually to limit employer contributions to
predetermined amounts. For individuals retiring after December 31, 1992, the
cost of the supplemental major medical plan is borne entirely by retirees.
American General and its subsidiaries have reserved the right to change or
eliminate these benefits at any time.
The life plans are fully insured; the retiree medical and dental plans
are unfunded and self-insured.
42 AMERICAN GENERAL CORPORATION
<PAGE> 28
______________________________________________________________________________
{AMERICAN GENERAL LOGO}
The plans' combined funded status and the accrued postretirement benefit
cost included in other liabilities at December 31, 1993 were as follows:
<TABLE>
<CAPTION>
In millions 1993
______________________________________________________________________________
<S> <C>
Actuarial present value of benefit obligation
Retirees $ 39
Fully eligible active plan participants 11
Other active plan participants 12
______________________________________________________________________________
Accumulated postretirement benefit obligation 62
______________________________________________________________________________
Unrecognized net gain (3)
______________________________________________________________________________
Accrued postretirement benefit cost $ 59
______________________________________________________________________________
Discount rate on postretirement benefit obligation 7.25%
______________________________________________________________________________
</TABLE>
Postretirement benefit expense for 1993 was as follows:
<TABLE>
<CAPTION>
In millions 1993
______________________________________________________________________________
<S> <C>
Service cost (benefits earned) $ 1
Interest cost on accumulated postretirement benefit obligation 4
______________________________________________________________________________
Postretirement benefit expense $ 5
______________________________________________________________________________
</TABLE>
For measurement purposes, a 13.5% annual rate of increase in the per
capita cost of covered health care benefits was assumed in 1994; the rate was
assumed to decrease gradually to 6% in 2009 and remain at that level. A 1%
increase in the assumed annual rate of increase in per capita cost of health
care benefits results in a $.7 million increase in the accumulated
postretirement benefit obligation and a $.1 million increase in postretirement
benefit expense.
10. RESTRICTIONS AND CONTINGENCIES
10.1 LEGAL PROCEEDINGS
Two real estate subsidiaries of the company were defendants in a lawsuit
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, a 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. 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. No provision has been made in the consolidated financial statements
related to this contingency.
In April 1992, the IRS issued Notices of Deficiency in the amount of
$12.4 million for the 1977-1981 tax years of certain insurance subsidiaries
(see Note 6.6). The basis of the dispute was the tax treatment of modified
coinsurance agreements. During 1992, the company elected to pay the assessment
plus associated interest. A claim for refund of tax and interest was
disallowed by the IRS in January 1993. On June 30, 1993, a suit for refund was
filed in the Court of Federal Claims. The company believes that the IRS's
claims are without merit, and is continuing to vigorously pursue refund of the
amounts paid. No provision has been made in the consolidated financial
statements related to this contingency.
American General and certain of its subsidiaries are defendants in
various other lawsuits. American General and its subsidiaries believe they
have valid defenses in these pending lawsuits and are defending these cases
vigorously. The company also believes that the total amounts that would
ultimately be paid, if any, arising from these lawsuits would have no material
effect on the consolidated financial statements.
10.2 REGULATION
American General's insurance subsidiaries are restricted by state
insurance laws as to the amounts they may pay as dividends without prior
notice to, or in some cases prior approval from, their respective state
insurance departments. Certain non-insurance subsidiaries are similarly
restricted in the payment of dividends by long-term debt agreements. The
amount of dividends available to the parent company from subsidiaries during
1994 not limited by such restrictions is $571 million.
See pages 20 and 21 of Management's Discussion and Analysis for a
discussion of state guaranty associations, regulation, and environmental
costs, and Note 6.6 concerning tax return examinations.
1993 ANNUAL REPORT 43
<PAGE> 29
_______________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. BUSINESS SEGMENT INFORMATION
American General reports the results of its business operations in
three 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. Results of each segment
include earnings from its business operations and earnings on that amount of
equity considered necessary to support its business.
Business segment information was as follows:
<TABLE>
<CAPTION>
Revenues
_____________________________________________
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Retirement Annuities $ 1,470 $ 1,358 $ 1,212
Consumer Finance 1,282 1,178 1,147
Life Insurance 2,054 2,045 2,021
_______________________________________________________________________________
Total business segments 4,806 4,581 4,380
_______________________________________________________________________________
Corporate 73 75 74
Intersegment eliminations (50) (54) (59)
_______________________________________________________________________________
Consolidated $ 4,829 $ 4,602 $ 4,395
_______________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Income before Taxes
_____________________________________________
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Retirement Annuities $ 240 $ 188 $ 159
Consumer Finance 330 248 210
Life Insurance 152(a) 463 452
_______________________________________________________________________________
Total business segments 722 899 821
_______________________________________________________________________________
Corporate (121)(b) (126)(b) (144)(b)
Intersegment eliminations 1 2 1
_______________________________________________________________________________
Consolidated $ 602 $ 775 $ 678
_______________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Assets
___________________________________________
In millions 1993 1992 1991
_______________________________________________________________________________
<S> <C> <C> <C>
Retirement Annuities $20,896 $17,673 $15,056
Consumer Finance 7,641 7,192 6,875
Life Insurance 14,192 13,328 12,632
_______________________________________________________________________________
Total business segments 42,729 38,193 34,563
_______________________________________________________________________________
Corporate 1,506 1,859 1,864
Intersegment eliminations (253) (310) (322)
_______________________________________________________________________________
Consolidated $43,982 $39,742 $36,105
_______________________________________________________________________________
</TABLE>
(a) Includes $300 million write-down of goodwill.
(b) Primarily interest on corporate debt.
12. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
1993
_____________________________________________
In millions,
except per share data 4th 3rd 2nd 1st
______________________________________________________________________________
<S> <C> <C> <C> <C>
Revenues $1,215 $1,222 $1,205 $1,187
Net realized investment
gains (losses) 1 1 3 1
Net income (loss) (164)(a) 119(b) 151 98(c)
Net income (loss) per share (.76)(a) .55(b) .70 .45(c)
______________________________________________________________________________
Per common share
Dividends paid $ .275 $ .275 $ .275 $ .275
Market price
High 34.75 36.50 33.25 32.88
Low 26.25 30.13 27.75 27.31
Close 28.63 32.75 31.63 31.25
______________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
1992
_____________________________________________
In millions,
except per share data 4th 3rd 2nd 1st
______________________________________________________________________________
<S> <C> <C> <C> <C>
Revenues $1,192 $1,159 $1,123 $1,128
Net realized investment
gains (losses) 4 2 (1) 4
Net income (loss) 134 138 127 134
Net income (loss) per share .62 .63 .59 .61
______________________________________________________________________________
Per common share
Dividends paid $ .26 $ .26 $ .26 $ .26
Market price
High 29.38 25.19 24.63 22.38
Low 23.63 23.69 20.50 20.13
Close 28.50 24.63 24.50 21.06
______________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
1991
_____________________________________________
In millions,
except per share data 4th 3rd 2nd 1st
______________________________________________________________________________
<S> <C> <C> <C> <C>
Revenues $1,121 $1,088 $1,110 $1,076
Net realized investment
gains (losses) 2 (2) 1 --
Net income (loss) 119 116 126 119
Net income (loss) per share .55 .53 .55 .50
______________________________________________________________________________
Per common share
Dividends paid $ .25 $ .25 $ .25 $ .25
Market price
High 22.50 20.25 20.56 19.56
Low 19.50 18.88 18.19 14.00
Close 22.25 20.19 18.94 19.25
______________________________________________________________________________
</TABLE>
(a) Includes write-down of goodwill of $300 million or $1.39 per share.
(b) Includes tax rate related charge of $30 million or $.14 per share.
(c) Includes net cumulative charge of $46 million or $.21 per share due to
adoption of accounting changes: SFAS 106, SFAS 109, and SFAS 112. Amounts
previously reported in the 1993 first quarter Form 10-Q have been
restated above for SFAS 112.
44 AMERICAN GENERAL CORPORATION
<PAGE> 30
________________________________________________________________________________
{AMERICAN GENERAL LOGO}
REPORT OF MANAGEMENT
MANAGEMENT RESPONSIBILITY
Management is responsible for the information in this report. The
consolidated financial statements were prepared in conformity with generally
accepted accounting principles. Informed estimates and judgments were used for
transactions not yet complete or for which ultimate effects cannot be precisely
determined.
INTERNAL CONTROLS
American General's system of internal controls is designed to provide
reasonable assurance that assets are safeguarded, that transactions are
properly recorded and executed, and that established policies and procedures
are followed. The system includes: a documented organizational structure and
division of responsibility; established policies and procedures that are
communicated throughout the company, including a policy on business conduct to
foster a strong ethical climate; and the careful selection, training, and
development of employees.
Internal auditors monitor the operation of the internal control system
and report findings and recommendations to management and the audit committee
of the board. Corrective actions are taken to address control deficiencies and
other opportunities for improving the system.
INDEPENDENT AUDITORS
American General engaged Ernst & Young as principal independent
auditors to perform an audit of the consolidated financial statements of the
company. Ernst & Young was given unrestricted access to all financial records
and related data, including minutes of all meetings of shareholders, the board
of directors, and committees of the board. Management believes that all
representations made to Ernst & Young during their audit were valid and
appropriate.
AUDIT COMMITTEE OF THE BOARD
The audit committee is composed of four members of the board of
directors who are not employees of the company. It meets regularly with members
of management, internal auditors, and the independent auditors to discuss the
adequacy of American General's internal controls, quality of financial
reporting, results of the auditing activities, and accounting policies. The
independent auditors and internal auditors have full and free access to the
audit committee.
AUSTIN P. YOUNG
Senior Vice President and Chief Financial Officer
HAROLD S. HOOK
Chairman and Chief Executive Officer
________________________________________________________________________________
REPORT OF INDEPENDENT AUDITORS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
AMERICAN GENERAL CORPORATION
We have audited the accompanying consolidated balance sheets of
American General Corporation and subsidiaries as of December 31, 1993, 1992,
and 1991, and the related consolidated statements of income, shareholders'
equity, stock activity, and cash flows for each of the three years in the
period ended December 31, 1993. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above (pages 25,
27, 29, 31-44) present fairly, in all material respects, the consolidated
financial position of American General Corporation and subsidiaries as of
December 31, 1993, 1992, and 1991, and the consolidated results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1993, in conformity with generally accepted accounting
principles.
As discussed in Note 1.2 to the financial statements, in 1993 the
company changed its method of accounting for postretirement benefits other than
pensions, income taxes, postemployment benefits, reinsurance, loan impairments,
and certain investments in debt and equity securities, as a result of adopting
recently promulgated accounting standards governing the accounting treatment
for these items.
ERNST & YOUNG
Houston, Texas
February 15, 1994
1993 ANNUAL REPORT 45
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF AMERICAN GENERAL CORPORATION
The following list includes certain of American General Corporation's active
subsidiaries at March 1, 1994. Subsidiaries of subsidiaries are indicated by
indentations. Under Securities and Exchange Commission rules, certain
subsidiaries have been omitted.
<TABLE>
<CAPTION>
Jurisdiction
Name of Incorporation
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
AGC Life Insurance Company................................................................ Missouri
American General Life and Accident Insurance Company.................................... Tennessee
Gulf Life Insurance Company.......................................................... Tennessee
American General Life Insurance Company................................................. Texas
American-Amicable Life Insurance Company of Texas.................................... Texas
Alico Management Company........................................................... Texas
Pioneer American Insurance Company................................................. Texas
Pioneer Security Life Insurance Company............................................ Texas
American General Life Insurance Company of New York.................................. New York
The Winchester Agency, Ltd......................................................... New York
American General Securities Incorporated............................................. Texas
American General Insurance Agency, Inc. ........................................... Missouri
American General Insurance Agency of Hawaii, Inc................................... Hawaii
American General Insurance Agency of Massachusetts, Inc............................ Massachusetts
The Variable Annuity Life Insurance Company.......................................... Texas
The Variable Annuity Marketing Company............................................. Texas
American General Finance, Inc............................................................. Indiana
AGF Investment Corp..................................................................... Indiana
American General Finance Corporation(a)................................................. Indiana
American General Finance Group, Inc.................................................. Delaware
American General Financial Services, Inc.(b)....................................... Delaware
The National Life and Accident Insurance Company................................ Texas
CommoLoCo, Inc................................................................ Puerto Rico
Merit Life Insurance Co.............................................................. Indiana
Yosemite Insurance Company........................................................... California
American General Financial Center....................................................... Utah
American General Investment Corporation................................................... Delaware
American General Mortgage Company....................................................... Texas
American General Realty Investment Corporation(c)....................................... Texas
American General Land Holding Company(d)............................................. Delaware
American Athletic Club, Inc.......................................................... Texas
Cinco Ranch Development Corporation..................................................... Texas
Pebble Creek Development Corporation.................................................... Florida
American General Land Development, Inc.................................................... Delaware
American General Property Insurance Company............................................... Tennessee
Financial Life Assurance Company of Canada................................................ Canada
Knickerbocker Corporation................................................................. Texas
Lincoln American Corporation.............................................................. Delaware
</TABLE>
- --------------------------------------------------------------------------------
(a) American General Finance Corporation is the parent of 52 additional
wholly-owned consolidated subsidiaries incorporated in 25 states for the
purpose of conducting its consumer finance operations.
(b) American General Financial Services, Inc. is the parent of nine additional
wholly-owned consolidated subsidiaries incorporated in six states and Puerto
Rico for the purpose of conducting its consumer finance operations.
(c) American General Realty Investment Corporation is the parent of five
additional wholly-owned consolidated subsidiaries incorporated
in four states for the purpose of conducting its real estate operations.
(d) American General Land Holding Company is the parent of eight wholly-owned
consolidated subsidiaries incorporated in four states for
the purpose of conducting its real estate operations.
<PAGE> 1
- --------------------------------------------------------------------------------
AMERICAN GENERAL CORPORATION
EXHIBIT 23
CONSENT OF ERNST & YOUNG,
INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of American General Corporation of our report dated February 15, 1994,
included in the 1993 Annual Report to Shareholders of American General
Corporation.
Our audits also included the financial statement schedules of American
General Corporation listed in Item 14(a). These schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in
Registration
Statement on
Number Form
--------------------------------------------------------------------------
33-39200.................................................... S-8
33-39201.................................................... S-8
33-39202.................................................... S-8
2-98021.................................................... S-8
33-51973.................................................... S-8
33-19075.................................................... S-3
33-30693.................................................... S-3
33-33115.................................................... S-3
33-51045.................................................... S-3
--------------------------------------------------------------------------
of our report dated February 15, 1994, with respect to the consolidated
financial statements incorporated herein by reference, and our report included
in the preceding paragraph with respect to the financial statement schedules
included in this Annual Report (Form 10-K) of American General Corporation.
ERNST & YOUNG
Houston, Texas
March 23, 1994
1993 FORM 10-K
<PAGE> 1
EXHIBIT 24
American General Corporation: Board of Directors
Date: February 3, 1994
Subject: Form 10-K; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the company to execute, on behalf of the undersigned
person, the company's 1993 Form 10-K, together with any required
amendments, exhibits or other related documents and to file the
Form 10-K with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (company),
will file with the Securities and Exchange Commission (Commission) under
Section 13 of the Securities Exchange Act of 1934, as amended (Act), its annual
report on Form 10-K for the fiscal year ended December 31, 1993 (Form 10-K),
with such amendments thereto as may be necessary or appropriate, together with
any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his capacity as a director or
officer or both, as the case may be, of the company does hereby appoint AUSTIN
P. YOUNG, JON P. NEWTON, and KURT G. SCHREIBER, and each of them, severally,
his true and lawful attorney or attorneys-in-fact with or without the others
and with full power of substitution and resubstitution, to execute in his name,
place, and stead, in his capacity as a director or officer or both, as the case
may be, of the company, the Form 10-K and any and all amendments thereto as
said attorneys-in-fact or any of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every
act whatsoever necessary or desirable in connection with the Form 10-K, as
fully and for all intents and purposes as the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
third day of February, 1994.
J. EVANS ATTWELL
----------------
<PAGE> 2
American General Corporation: Board of Directors
Date: February 3, 1994
Subject: Form 10-K; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the company to execute, on behalf of the undersigned
person, the company's 1993 Form 10-K, together with any required
amendments, exhibits or other related documents and to file the
Form 10-K with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (company),
will file with the Securities and Exchange Commission (Commission) under
Section 13 of the Securities Exchange Act of 1934, as amended (Act), its annual
report on Form 10-K for the fiscal year ended December 31, 1993 (Form 10-K),
with such amendments thereto as may be necessary or appropriate, together with
any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his capacity as a director or
officer or both, as the case may be, of the company does hereby appoint AUSTIN
P. YOUNG, JON P. NEWTON, and KURT G. SCHREIBER, and each of them, severally,
his true and lawful attorney or attorneys-in-fact with or without the others
and with full power of substitution and resubstitution, to execute in his name,
place, and stead, in his capacity as a director or officer or both, as the case
may be, of the company, the Form 10-K and any and all amendments thereto as
said attorneys-in-fact or any of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every
act whatsoever necessary or desirable in connection with the Form 10-K, as
fully and for all intents and purposes as the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
third day of February, 1994.
THOMAS D. BARROW
----------------
<PAGE> 3
American General Corporation: Board of Directors
Date: February 3, 1994
Subject: Form 10-K; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the company to execute, on behalf of the undersigned
person, the company's 1993 Form 10-K, together with any required
amendments, exhibits or other related documents and to file the
Form 10-K with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (company),
will file with the Securities and Exchange Commission (Commission) under
Section 13 of the Securities Exchange Act of 1934, as amended (Act), its annual
report on Form 10-K for the fiscal year ended December 31, 1993 (Form 10-K),
with such amendments thereto as may be necessary or appropriate, together with
any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his capacity as a director or
officer or both, as the case may be, of the company does hereby appoint AUSTIN
P. YOUNG, JON P. NEWTON, and KURT G. SCHREIBER, and each of them, severally,
his true and lawful attorney or attorneys-in-fact with or without the others
and with full power of substitution and resubstitution, to execute in his name,
place, and stead, in his capacity as a director or officer or both, as the case
may be, of the company, the Form 10-K and any and all amendments thereto as
said attorneys-in-fact or any of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every
act whatsoever necessary or desirable in connection with the Form 10-K, as
fully and for all intents and purposes as the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
third day of February, 1994.
BRADY F. CARRUTH
----------------
<PAGE> 4
American General Corporation: Board of Directors
Date: February 3, 1994
Subject: Form 10-K; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the company to execute, on behalf of the undersigned
person, the company's 1993 Form 10-K, together with any required
amendments, exhibits or other related documents and to file the
Form 10-K with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (company),
will file with the Securities and Exchange Commission (Commission) under
Section 13 of the Securities Exchange Act of 1934, as amended (Act), its annual
report on Form 10-K for the fiscal year ended December 31, 1993 (Form 10-K),
with such amendments thereto as may be necessary or appropriate, together with
any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his capacity as a director or
officer or both, as the case may be, of the company does hereby appoint AUSTIN
P. YOUNG, JON P. NEWTON, and KURT G. SCHREIBER, and each of them, severally,
his true and lawful attorney or attorneys-in-fact with or without the others
and with full power of substitution and resubstitution, to execute in his name,
place, and stead, in his capacity as a director or officer or both, as the case
may be, of the company, the Form 10-K and any and all amendments thereto as
said attorneys-in-fact or any of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every
act whatsoever necessary or desirable in connection with the Form 10-K, as
fully and for all intents and purposes as the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
third day of February, 1994.
W. LIPSCOMB DAVIS, JR.
----------------------
<PAGE> 5
American General Corporation: Board of Directors
Date: February 3, 1994
Subject: Form 10-K; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the company to execute, on behalf of the undersigned
person, the company's 1993 Form 10-K, together with any required
amendments, exhibits or other related documents and to file the Form
10-K with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (company),
will file with the Securities and Exchange Commission (Commission) under
Section 13 of the Securities Exchange Act of 1934, as amended (Act), its annual
report on Form 10-K for the fiscal year ended December 31, 1993 (Form 10-K),
with such amendments thereto as may be necessary or appropriate, together with
any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his capacity as a director or
officer or both, as the case may be, of the company does hereby appoint AUSTIN
P. YOUNG, JON P. NEWTON, and KURT G. SCHREIBER, and each of them, severally,
his true and lawful attorney or attorneys-in-fact with or without the others
and with full power of substitution and resubstitution, to execute in his name,
place, and stead, in his capacity as a director or officer or both, as the case
may be, of the company, the Form 10-K and any and all amendments thereto as said
attorneys-in-fact or any of them shall deem necessary or appropriate, together
with all instruments necessary or incidental in connection therewith, and to
file the same or cause the same to be filed with the Commission. Each of said
attorneys-in-fact shall have full power and authority to do and perform in the
name and on behalf of the undersigned, in any and all capacities, every act
whatsoever necessary or desirable in connection with the Form 10-K, as fully
and for all intents and purposes as the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
third day of February, 1994.
ROBERT M. DEVLIN
________________
<PAGE> 6
American General Corporation: Board of Directors
Date: February 3, 1994
Subject: Form 10-K; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the company to execute, on behalf of the undersigned
person, the company's 1993 Form 10-K, together with any required
amendments, exhibits or other related documents and to file the Form
10-K with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (company),
will file with the Securities and Exchange Commission (Commission) under
Section 13 of the Securities Exchange Act of 1934, as amended (Act), its annual
report on Form 10-K for the fiscal year ended December 31, 1993 (Form 10-K),
with such amendments thereto as may be necessary or appropriate, together with
any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his capacity as a director or
officer or both, as the case may be, of the company does hereby appoint AUSTIN
P. YOUNG, JON P. NEWTON, and KURT G. SCHREIBER, and each of them, severally,
his true and lawful attorney or attorneys-in-fact with or without the others
and with full power of substitution and resubstitution, to execute in his name,
place, and stead, in his capacity as a director or officer or both, as the case
may be, of the company, the Form 10-K and any and all amendments thereto as
said attorneys-in-fact or any of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every
act whatsoever necessary or desirable in connection with the Form 10-K, as
fully and for all intents and purposes as the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
third day of February, 1994.
LARRY D. HORNER
_______________
<PAGE> 7
American General Corporation: Board of Directors
Date: February 3, 1994
Subject: Form 10-K; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the company to execute, on behalf of the undersigned
person, the company's 1993 Form 10-K, together with any required
amendments, exhibits or other related documents and to file the Form
10-K with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (company),
will file with the Securities and Exchange Commission (Commission) under
Section 13 of the Securities Exchange Act of 1934, as amended (Act), its annual
report on Form 10-K for the fiscal year ended December 31, 1993 (Form 10-K),
with such amendments thereto as may be necessary or appropriate, together with
any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his capacity as a director or
officer or both, as the case may be, of the company does hereby appoint AUSTIN
P. YOUNG, JON P. NEWTON, and KURT G. SCHREIBER, and each of them, severally,
his true and lawful attorney or attorneys-in-fact with or without the others
and with full power of substitution and resubstitution, to execute in his name,
place, and stead, in his capacity as a director or officer or both, as the case
may be, of the company, the Form 10-K and any and all amendments thereto as
said attorneys-in-fact or any of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every
act whatsoever necessary or desirable in connection with the Form 10-K, as
fully and for all intents and purposes as the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
third day of February, 1994.
RICHARD J. V. JOHNSON
_____________________
<PAGE> 8
American General Corporation: Board of Directors
Date: February 3, 1994
Subject: Form 10-K; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the company to execute, on behalf of the undersigned
person, the company's 1993 Form 10-K, together with any required
amendments, exhibits or other related documents and to file the Form
10-K with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (company),
will file with the Securities and Exchange Commission (Commission) under
Section 13 of the Securities Exchange Act of 1934, as amended (Act), its annual
report on Form 10-K for the fiscal year ended December 31, 1993 (Form 10-K),
with such amendments thereto as may be necessary or appropriate, together with
any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his capacity as a director or
officer or both, as the case may be, of the company does hereby appoint AUSTIN
P. YOUNG, JON P. NEWTON, and KURT G. SCHREIBER, and each of them, severally,
his true and lawful attorney or attorneys-in-fact with or without the others
and with full power of substitution and resubstitution, to execute in his name,
place, and stead, in his capacity as a director or officer or both, as the case
may be, of the company, the Form 10-K and any and all amendments thereto as
said attorneys-in-fact or any of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every
act whatsoever necessary or desirable in connection with the Form 10-K, as
fully and for all intents and purposes as the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
third day of February, 1994.
ROBERT E. SMITTCAMP
___________________
<PAGE> 9
American General Corporation: Board of Directors
Date: February 3, 1994
Subject: Form 10-K; Limited Power of Attorney for
Purpose. The purpose of this limited power of attorney is to authorize certain
officers of the company to execute, on behalf of the undersigned
person, the company's 1993 Form 10-K, together with any required
amendments, exhibits or other related documents and to file the Form
10-K with the SEC.
LIMITED POWER OF ATTORNEY
WHEREAS, AMERICAN GENERAL CORPORATION, a Texas corporation (company),
will file with the Securities and Exchange Commission (Commission) under
Section 13 of the Securities Exchange Act of 1934, as amended (Act), its annual
report on Form 10-K for the fiscal year ended December 31, 1993 (Form 10-K),
with such amendments thereto as may be necessary or appropriate, together with
any and all exhibits and other documents related thereto;
NOW, THEREFORE, the undersigned in his capacity as a director or
officer or both, as the case may be, of the company does hereby appoint AUSTIN
P. YOUNG, JON P. NEWTON, and KURT G. SCHREIBER, and each of them, severally,
his true and lawful attorney or attorneys-in-fact with or without the others
and with full power of substitution and resubstitution, to execute in his name,
place, and stead, in his capacity as a director or officer or both, as the case
may be, of the company, the Form 10-K and any and all amendments thereto as
said attorneys-in-fact or any of them shall deem necessary or appropriate,
together with all instruments necessary or incidental in connection therewith,
and to file the same or cause the same to be filed with the Commission. Each
of said attorneys-in-fact shall have full power and authority to do and perform
in the name and on behalf of the undersigned, in any and all capacities, every
act whatsoever necessary or desirable in connection with the Form 10-K, as
fully and for all intents and purposes as the undersigned might or could do in
person, the undersigned hereby ratifying and approving the acts of said
attorneys-in-fact and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
third day of February, 1994.
JAMES R. TUERFF
_______________
