SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
_____________________
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from _______ to ______
Commission file number 1-7981
Full title of the Plan:
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
Name of the issuer of the securities held pursuant to the Plan
and the address of its principal executive office:
AMERICAN GENERAL CORPORATION
2929 Allen Parkway
Houston, Texas 77019
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
DECEMBER 31, 1996
Audited Financial Statements
Report of Independent Auditors ......................................... 1
Statements of Net Assets Available for Benefits ........................ 2
Statements of Changes in Net Assets Available for Benefits ............. 4
Notes to Financial Statements .......................................... 6
Schedules
Assets Held for Investment ............................................. 12
Reportable Transactions ................................................ 13
Signature Page ............................................................ 14
Appendix: Consent of Independent Auditors ................................ 16
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Report of Independent Auditors
Administrative Board
American General Employees' Thrift and Incentive Plan
We have audited the accompanying statements of net assets available for
benefits of the American General Employees' Thrift and Incentive Plan (the
Plan) as of December 31, 1996 and 1995, and the related statements of changes
in net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan'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 present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1996 and 1995, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental
schedules of assets held for investment as of December 31, 1996 and reportable
transactions for the year then ended are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The specific fund
information in the statements of net assets available for benefits and the
statements of changes in net assets available for benefits is presented for
purposes of additional analysis rather than to present the net assets
available for benefits and changes in net assets available for benefits of
each fund. The supplemental schedules and specific fund information have been
subjected to the auditing procedures applied in our audit of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
ERNST & YOUNG LLP
Houston, Texas
June 3, 1997
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<TABLE>AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1996
In thousands, except share amounts
<CAPTION>
Non-
Participant
Participant Directed Directed
Asset Equity
Stock Cash Allocation Index Stock
Fund Fund Fund Fund Fund Total
<S>
<C> <C> <C> <C> <C> <C>
Assets
Investments
American General Corporation common
stock (3,959,169 shares) ................... $53,016 $ - $ - $ - $108,815 $161,831
American General Life Insurance Company
deposit administration group annuity
contract ................................... - 57,606 - - - 57,606
American General Series Portfolio Company -
Timed Opportunity Fund (702,080 shares) .... - - 8,158 - - 8,158
American General Series Portfolio Company -
Stock Index Fund (509,096 shares) .......... - - - 11,587 - 11,587
Short-term investments ....................... 335 603 171 366 687 2,162
Total investments .......................... 53,351 58,209 8,329 11,953 109,502 241,344
Receivables
Interfund transfers .......................... - 8,179 - 453 - 8,632
Other ........................................ 1 2 1 1 3 8
Total assets ............................... 53,352 66,390 8,330 12,407 109,505 249,984
Liabilities
Payables
Forfeitures .................................. - - - - 99 99
Excess contribution refunds .................. 180 316 - 93 639 1,228
Excess contribution forfeitures .............. - - - - 67 67
Interfund transfers .......................... 302 - 8,330 - - 8,632
Other ........................................ 4 14 - - 6 24
Total liabilities .......................... 486 330 8,330 93 811 10,050
Net assets available for benefits ................ $52,866 $66,060 $ - $12,314 $108,694 $239,934
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The accompanying notes are an integral part of these financial statements.
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</TABLE>
<TABLE>AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1995
In thousands, except share amounts
<CAPTION>
Non-
Participant
Participant Directed Directed
Asset Equity
Stock Cash Allocation Index Stock
Fund Fund Fund Fund Fund Total
<S>
<C> <C> <C> <C> <C> <C>
Assets
Investments
American General Corporation common
stock (3,994,776 shares) ................... $45,743 $ - $ - $ - $93,575 $139,318
American General Life Insurance Company
deposit administration group annuity
contract ................................... - 53,287 - - - 53,287
American General Series Portfolio Company -
Timed Opportunity Fund (581,050 shares) .... - - 7,037 - - 7,037
American General Series Portfolio Company -
Stock Index Fund (357,525 shares) .......... - - - 6,804 - 6,804
Short-term investments ....................... 225 639 58 106 478 1,506
Total investments .......................... 45,968 53,926 7,095 6,910 94,053 207,952
Receivables
Interfund transfers .......................... - 298 6 55 - 359
Other ........................................ 2 4 - 1 161 168
Total assets ............................... 45,970 54,228 7,101 6,966 94,214 208,479
Liabilities
Payables
Forfeitures .................................. - - - - 92 92
Excess contribution refunds .................. 12 141 32 51 724 960
Excess contribution forfeitures .............. - - - - 14 14
Purchase of securities ....................... 52 - - - 112 164
Interfund transfers .......................... 349 - 10 - - 359
Other ........................................ 4 9 - - 7 20
Total liabilities .......................... 417 150 42 51 949 1,609
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<PAGE>
Net assets available for benefits ................ $45,553 $54,078 $7,059 $ 6,915 $93,265 $206,870
The accompanying notes are an integral part of these financial statements.
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</TABLE>
<TABLE>AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
In thousands, except share amounts
<CAPTION>
Non-
Participant
Participant Directed Directed
Asset Equity
Stock Cash Allocation Index Stock
Fund Fund Fund Fund Fund Total
<S>
<C> <C> <C> <C> <C> <C>
Additions to net assets
Investment income
Dividends .................................... $ 1,700 $ - $1,139 $ 256 $ 3,489 $ 6,584
Interest ..................................... 10 3,729 3 6 21 3,769
Net appreciation (depreciation) in fair value
of investments ............................. 5,796 47 (323) 1,642 17,726 24,888
Total investment income .................... 7,506 3,776 819 1,904 21,236 35,241
Contributions
Companies' ................................... - - - - 7,651 7,651
Participants' ................................ 4,000 6,224 1,302 2,259 - 13,785
Total contributions ........................ 4,000 6,224 1,302 2,259 7,651 21,436
Total additions .......................... 11,506 10,000 2,121 4,163 28,887 56,677
Deductions from net assets
Benefits
American General Corporation common stock
(108,178 shares) ........................... 1,277 - - - 2,621 3,898
Cash ......................................... 1,647 5,913 714 604 10,279 19,157
Forfeitures .................................... - - - - 558 558
Total deductions ......................... 2,924 5,913 714 604 13,458 23,613
Interfund transfers .............................. (1,269) 7,895 (8,466) 1,840 - -
Net increase (decrease) .................. 7,313 11,982 (7,059) 5,399 15,429 33,064
Net assets available for benefits
Beginning of year ........................ 45,553 54,078 7,059 6,915 93,265 206,870
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End of year .............................. $52,866 $66,060 $ - $12,314 $108,694 $239,934
The accompanying notes are an integral part of these financial statements.
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<PAGE>
</TABLE>
<TABLE>AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
In thousands, except share amounts
<CAPTION>
Non-
Participant
Participant Directed Directed
Asset Equity
Stock Cash Allocation Index Stock
Fund Fund Fund Fund Fund Total
<S>
<C> <C> <C> <C> <C> <C>
Additions to net assets
Investment income
Dividends .................................... $ 1,574 $ - $ 372 $ 253 $ 3,345 $ 5,544
Interest ..................................... 9 3,367 1 2 19 3,398
Net appreciation in fair value of investments. 8,315 - 966 1,349 17,769 28,399
Total investment income .................... 9,898 3,367 1,339 1,604 21,133 37,341
Contributions
Companies' ................................... - - - - 8,023 8,023
Participants' ................................ 4,097 6,936 1,169 1,604 - 13,806
Total contributions ........................ 4,097 6,936 1,169 1,604 8,023 21,829
Total additions .......................... 13,995 10,303 2,508 3,208 29,156 59,170
Deductions from net assets
Benefits
American General Corporation common stock
(156,288 shares) ........................... 1,890 - - - 2,834 4,724
Cash ......................................... 2,235 4,387 469 715 7,576 15,382
Forfeitures .................................... - - - - 410 410
Total deductions ......................... 4,125 4,387 469 715 10,820 20,516
Interfund transfers .............................. (2,157) 1,698 (20) 479 - -
Net increase ............................. 7,713 7,614 2,019 2,972 18,336 38,654
Net assets available for benefits
Beginning of year ........................ 37,840 46,464 5,040 3,943 74,929 168,216
End of year .............................. $45,553 $54,078 $7,059 $ 6,915 $93,265 $206,870
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The accompanying notes are an integral part of these financial statements.
</TABLE>
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
The American General Employees' Thrift and Incentive Plan (the Plan) financial
statements are prepared in conformity with generally accepted accounting
principles.
Investments in American General Corporation (American General) common stock
are reported at fair value based on published market prices. Fair values of
other investments not having an established market are reported as follows:
1) investment in American General Life Insurance Company (American General
Life) deposit administration group annuity contract, at contract value (see
Note C); 2) investments in the American General Series Portfolio Company
(AGSPC) Timed Opportunity and Stock Index Funds, at net asset value; and 3)
short-term investments, at cost which approximates fair value. AGSPC is an
open-end management investment company (mutual fund) whose investment adviser
is The Variable Annuity Life Insurance Company (VALIC). VALIC and American
General Life are wholly owned subsidiaries of American General.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded as income on ex-dividend dates, and interest income is
recorded using the accrual method of accounting.
Contributions are recorded as additions to net assets on the date the
contributions become payable to the Plan.
Interfund transfers are recorded at the market value of the amount
transferred.
Benefits paid to participants are recorded upon distribution at the market
value of the assets distributed.
The preparation of financial statements requires management to make estimates
and assumptions that affect (1) the reported amounts of assets and
liabilities, (2) disclosures of contingent assets and liabilities, and (3) the
reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
NOTE B--DESCRIPTION OF THE PLAN
The following description of the Plan provides only general information.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE B--DESCRIPTION OF THE PLAN--Continued
General
The Plan, which is subject to certain provisions of the Employee Retirement
Income Security Act of 1974 (ERISA), is a defined contribution plan offered to
eligible employees of American General and certain of its subsidiaries (the
Companies). Salaried employees are eligible to participate in the Plan upon
the earlier of completion of one year of service or attainment of age thirty-
five. Non-salaried employees who have completed one thousand hours of service
in one service year and have attained age twenty-one are eligible to partici-
pate in the Plan. The Plan provides for participant elective salary deferrals
(participant pretax contributions) in accordance with Section 401(k) of the
Internal Revenue Code of 1986, as amended (IRC).
The cost of administering the Plan is paid by the Companies.
The Plan's investments are held in a bank-administered trust fund.
Investment Options
Participants may direct their employee contributions in one of four funds or a
combination of two funds. These funds, designated on the financial statements
as participant directed, invest in: 1) shares of American General common
stock (Stock Fund); 2) a deposit administration group annuity contract issued
by American General Life (Cash Fund); 3) shares of the AGSPC Timed Opportunity
Fund (Asset Allocation Fund); or 4) shares of the AGSPC Stock Index Fund
(Equity Index Fund). The Companies' contributions are invested solely in the
non-participant directed portion of the Stock Fund. Refer to Note G for
changes in the Plan's investment options for 1997.
Amounts which have not yet been used to purchase investments in either common
stock, the deposit administration contract, the AGSPC Timed Opportunity Fund,
or the AGSPC Stock Index Fund are temporarily invested in short-term invest-
ments. Income from these short-term investments is allocated to Plan partici-
pants based on current contributions.
Contributions
Employees who elect to participate may contribute, on a pretax basis, a basic
amount ranging from one to six percent of base pay and an additional amount
ranging from one to ten percent of base pay, subject to the contribution
limitations discussed below. The Companies contribute an amount ranging from
50 percent to 100 percent of the employee's basic contribution as determined
annually by the Personnel Committee of the American General Board of Direc-
tors.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE B--DESCRIPTION OF THE PLAN--Continued
Participants may change their contribution rate and investment election for
future contributions, as well as transfer all or part of their employee
account balances among funds, no more than once each month. All changes
except transfers are effective on the first day of the first pay period of
each month. Transfers are effective on the last business day of the month the
request is received.
Contribution Limitations
For 1996 and 1995, the total amount of participant pretax contributions is
limited to $9,500 and $9,240, respectively. Additionally, the total amount of
annual participant and company contributions (including forfeitures) must not
exceed the lesser of 25 percent of compensation or $30,000. During 1996 and
1995, the total amount of base pay that can be used in determining contribu-
tions under the Plan is $150,000.
ERISA and the IRC provide that qualified plans, such as the American General
Employees' Thrift and Incentive Plan, cannot discriminate in favor of highly
compensated individuals. Certain highly compensated individuals may be
required to receive refunds of any contributions in excess of the IRC Sections
401(k) and (m) limits and all earnings attributable to such contributions.
Highly compensated individuals are not allowed to make additional
contributions if such contributions will adversely affect the Plan's
nondiscrimination test under Sections 401(k) and (m).
Amounts in excess of the limits discussed above are designated on the state-
ment of net assets as "Payables - Excess contribution refunds" and were
refunded within 2-1/2 months of the Plan's year end. "Payables - Excess
contribution forfeitures" represent the nonvested excess contributions of the
Companies and are available to reduce future company contributions.
Participant Accounts
Each participant's account is credited with the participant's and Company's
contributions and an allocation of Plan earnings. Allocations of Plan
earnings are based on participants' account balances. The benefit to which a
participant is entitled is the benefit that can be provided from the particip-
ant's vested account.
Vesting
Participants are immediately vested in their contributions plus the earnings
thereon. Participants obtain a vested interest in the Companies' contribu-
tions and the earnings thereon at the rate of two percent per month of plan
participation after one year of service. In addition, participants will become
100 percent vested in the Companies' contributions upon their retirement,
attainment of age 65, total disability, or death.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE B--DESCRIPTION OF THE PLAN--Continued
Payment of Benefits
Upon termination of service, and if consented to by the participant (required
only if the total value, both vested and nonvested, of the account exceeds
$3,500 and the participant is under age 65), a participant will receive a
distribution equal to the vested value of his or her account. A minimum
distribution must be made after a participant reaches age 70-1/2, regardless
of whether service has been terminated.
Forfeitures
Participants terminating employment forfeit their nonvested interest in the
Companies' contributions on the earlier of (1) the distribution of the entire
nonforfeitable portion of their account or (2) upon incurring a period of
severance equal to five consecutive one-year breaks in service. Forfeitures
are available to reduce the Companies' future contributions. Participants who
terminate and are reemployed with a participating company before incurring
five consecutive one-year breaks in service are entitled to their nonvested or
forfeited amounts, subject to certain provisions as stated in the Plan
document.
Plan Members
At December 31, 1996, 6,274 active employees were contributing to the Plan.
NOTE C--INVESTMENT CONTRACT WITH INSURANCE COMPANY
The Plan maintains an investment contract with American General Life, a wholly
owned subsidiary of American General. The deposit administration group
annuity contract is valued at contract value, which approximates fair value,
and represents contributions under the contract, plus interest at the contract
rate, less funds used to pay benefits. The guaranteed minimum rate of the
contract is reset annually by American General Life, effective the first full
pay period in April.
The contract had a guaranteed minimum rate of 6.60% from April 1, 1995 through
April 12, 1996; effective April 13, 1996, the rate changed to 6.00%, and
effective April 12, 1997, the rate changed to 6.25%. Any earnings in excess
of the guaranteed minimum rate are credited to the participants.
The effective earned yield is calculated based on the calendar year. The
effective earned yield of the investment contract for 1996 and 1995 was 6.87%
and 6.88%, respectively.
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NOTE D--PLAN TERMINATION
Although they have not expressed any intent to do so, the Companies have the
right under the Plan to discontinue their contributions at any time and to
withdraw from the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100 percent vested in their
accounts.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE E--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
Benefits processed and approved for payment, but not paid as of December 31,
are recorded on Form 5500 but not in the financial statements.
The following is a reconciliation of net assets available for benefits per the
financial statements to Form 5500:
At December 31,
In thousands
1996 1995
Net assets available for benefits
per the financial statements ..................... $239,934 $206,870
Benefits payable to withdrawing participants ....... (1,683) (777)
Net assets available for benefits per Form 5500 .. $238,251 $206,093
The following is a reconciliation of benefits paid to participants per the
financial statements to Form 5500:
In thousands
Year Ended
December 31, 1996
Benefits paid to participants per the
financial statements
American General Corporation common stock ...... $ 3,898
Cash ........................................... 19,157
Total benefits paid to participants per the
financial statements ....................... 23,055
Benefits payable to withdrawing participants at
year end ......................................... 1,683
Benefits payable to withdrawing participants
at beginning of year ............................. (777)
Benefits paid to participants per Form 5500 .. $23,961
NOTE F--FEDERAL INCOME TAXES
Based on a favorable determination letter dated August 3, 1995, the Internal
Revenue Service has ruled that the Plan, as restated and amended, is qualified
under Section 401(a) of the IRC and, therefore, exempt under Section 501(a)
from federal income taxes. The Plan has been amended since receiving the
determination letter (see Note G). However, the Plan's administrators believe
that the Plan is designed and is currently being operated in compliance with
the applicable requirements of the IRC.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE G--SUBSEQUENT EVENT
Effective January 1, 1997, the Plan was restated and amended. The amendments
include increased investment options for participants in four new funds: 1)
The Templeton Foreign Fund (International Fund), 2) Putnam OTC & Emerging
Growth Fund (Small-Cap Fund), 3) AGSPC Growth Fund (Mid-Cap Fund), and 4)
Vanguard Fixed Income Securities Fund - Long-Term Corporate Portfolio (Bond
Fund). The AGSPC Timed Opportunity Fund (Asset Allocation Fund) was
liquidated at December 31, 1996 and is no longer available as an investment
option. In addition, participants age 60 or over can direct the investment of
their employer matching contributions to any of the available funds. The
amendments include participant loan provisions.
Effective January 1, 1997, the Franklin Life Insurance Company Employees'
401(k) Retirement Plan (the Franklin Thrift Plan) was merged into the Plan.
Assets from the Franklin Thrift Plan totaling approximately $11.4 million were
transferred to the Plan's trust. Participants of the Franklin Thrift Plan are
eligible to participate in the Plan.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
ASSETS HELD FOR INVESTMENT
AT DECEMBER 31, 1996
In thousands, except share amounts
Fair
Issuer Description Cost Value
American General 3,959,169 shares of $ 89,247 $161,831
Corporation* common stock
American General Life Deposit administration 57,606 57,606
Insurance Company* group annuity contract
American General Series 702,080 shares of AGSPC 7,454 8,158
Portfolio Company* Timed Opportunity Fund
American General Series 509,096 shares of AGSPC 8,595 11,587
Portfolio Company* Stock Index Fund
State Street Bank Short-term investments
& Trust Company* in money-market fund 2,162 2,162
$165,064 $241,344
*Party in interest
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
REPORTABLE TRANSACTIONS (A)
FOR THE YEAR ENDED DECEMBER 31, 1996
In thousands, except share amounts and transaction counts
Amount of
Party Involved Description Transaction
State Street Bank Purchases of short-term investments in $29,829
& Trust Company 336 transactions
State Street Bank Sales of short-term investments in 228 29,173
& Trust Company transactions
(B) Purchases of 260,687 shares of American 9,568
General Corporation common stock in
18 transactions
(B) Sales of 188,116 shares of American 6,702
General Corporation common stock in
11 transactions at a gain of $2,427
(B) Distributions of 108,178 shares of 3,898
American General Corporation common
stock to various individuals who
withdrew from or terminated
participation in the Plan in 25
transactions at a gain of $1,820
(A) Reportable transactions are transactions or series of transactions in
excess of five percent of the current value of Plan assets at the
beginning of the year and are defined in Section 2520.103-6 of the
Department of Labor's Rules and Regulations.
(B) Parties involved are not presented, as permitted by Section 2520.103-6
(d)(1)(i) of the Department of Labor's Rules and Regulations.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
American General Employees' Thrift and Incentive Plan Administrative Board has
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
AMERICAN GENERAL EMPLOYEES'
THRIFT AND INCENTIVE PLAN
June 24, 1997 CARL J. SANTILLO
Carl J. Santillo, Member of
the Administrative Board
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Appendix
<PAGE>
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<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Nos. 33-39200 and 333-13407) pertaining to the American General Employees'
Thrift and Incentive Plan of our report dated June 3, 1997, with respect to
the financial statements and schedules of the American General Employees'
Thrift and Incentive Plan included in this Annual Report (Form 11-K) for the
year ended December 31, 1996.
ERNST & YOUNG LLP
Houston, Texas
June 23, 1997
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