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, 1997
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
AUDITED FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1997
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 ......... 6
Notes to Financial Statements ...................................... 10
Schedules
Assets Held for Investment ......................................... 17
Reportable Transactions ............................................ 18
Loans in Default..................................................... 19
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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, 1997 and 1996, 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, 1997 and 1996, 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, 1997, reportable
transactions, and loans in default 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 19, 1998
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1997
In thousands, except share amounts
Participant Directed
Equity
Stock Cash Index
Fund Fund Fund
Assets
Investments
American General Corporation
common stock (3,938,492 shares) ....... $68,443 $ - $ -
American General Life Insurance
Company deposit administration
group annuity contract ................ - 83,109 -
American General Series Portfolio
Company - Stock Index Fund
(637,996 shares) ...................... - - 18,955
Putnam OTC & Emerging Growth Fund
(271,891 shares) ...................... - - -
American General Series Portfolio
Company - Growth Fund
(158,542 shares) ...................... - - -
Templeton Foreign Fund
(340,576 shares) ...................... - - -
Vanguard Fixed Income Securities
Fund (140,180 shares) ................. - - -
Participant notes ....................... - - -
Short-term investments .................. 56 495 36
Total investments ..................... 68,499 83,604 18,991
Receivables
Contributions ........................... 8 20 14
Interfund transfers ..................... - - -
Other ................................... 22 34 123
Total assets .......................... 68,529 83,658 19,128
Liabilities
Payables
Forfeitures ............................. - - -
Excess contribution refunds ............. 88 114 51
Excess contribution forfeitures ......... - - -
Interfund transfers ..................... 66 413 92
Other ................................... 22 1,774 16
Total liabilities ..................... 176 2,301 159
Net assets available for benefits ........... $68,353 $81,357 $18,969
The accompanying notes are an integral part of these financial statements.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1997
In thousands, except share amounts
Participant Directed
Inter-
Small-Cap Mid-Cap national
Fund Fund Fund
Assets
Investments
American General Corporation
common stock (3,938,492 shares) ....... $ - $ - $ -
American General Life Insurance
Company deposit administration
group annuity contract ................ - - -
American General Series Portfolio
Company - Stock Index Fund
(637,996 shares) ...................... - - -
Putnam OTC & Emerging Growth Fund
(271,891 shares) ...................... 4,380 - -
American General Series Portfolio
Company - Growth Fund
(158,542 shares) ...................... - 3,179 -
Templeton Foreign Fund
(340,576 shares) ...................... - - 3,389
Vanguard Fixed Income Securities
Fund (140,180 shares) ................. - - -
Participant notes ....................... - - -
Short-term investments .................. 22 19 19
Total investments ..................... 4,402 3,198 3,408
Receivables
Contributions ........................... 20 20 13
Interfund transfers ..................... 19 85 394
Other ................................... 8 6 -
Total assets .......................... 4,449 3,309 3,815
Liabilities
Payables
Forfeitures ............................. - - -
Excess contribution refunds ............. 8 5 7
Excess contribution forfeitures ......... - - -
Interfund transfers ..................... - - -
Other ................................... 11 6 8
Total liabilities ..................... 19 11 15
Net assets available for benefits ........... $4,430 $3,298 $3,800
The accompanying notes are an integral part of these financial statements.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1997
In thousands, except share amounts
Participant Directed
Bond Participant
Fund Notes
Assets
Investments
American General Corporation
common stock (3,938,492 shares) ....... $ - $ -
American General Life Insurance
Company deposit administration
group annuity contract ................ - -
American General Series Portfolio
Company - Stock Index Fund
(637,996 shares) ...................... - -
Putnam OTC & Emerging Growth Fund
(271,891 shares) ...................... - -
American General Series Portfolio
Company - Growth Fund
(158,542 shares) ...................... - -
Templeton Foreign Fund
(340,576 shares) ...................... - -
Vanguard Fixed Income Securities
Fund (140,180 shares) ................. 1,298 -
Participant notes ....................... - 3,923
Short-term investments .................. 10 -
Total investments ..................... 1,308 3,923
Receivables
Contributions ........................... 7 -
Interfund transfers ..................... 73 -
Other ................................... - -
Total assets .......................... 1,388 3,923
Liabilities
Payables
Forfeitures ............................. - -
Excess contribution refunds ............. 2 -
Excess contribution forfeitures ......... - -
Interfund transfers ..................... - -
Other ................................... 4 -
Total liabilities ..................... 6 -
Net assets available for benefits ........... $1,382 $3,923
The accompanying notes are an integral part of these financial statements.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1997
In thousands, except share amounts
Non-
Participant Directed
Stock
Fund Total
Assets
Investments
American General Corporation
common stock (3,938,492 shares) ....... $144,482 $212,925
American General Life Insurance
Company deposit administration
group annuity contract ................ - 83,109
American General Series Portfolio
Company - Stock Index Fund
(637,996 shares) ...................... - 18,955
Putnam OTC & Emerging Growth Fund
(271,891 shares) ...................... - 4,380
American General Series Portfolio
Company - Growth Fund
(158,542 shares) ...................... - 3,179
Templeton Foreign Fund
(340,576 shares) ...................... - 3,389
Vanguard Fixed Income Securities
Fund (140,180 shares) ................. - 1,298
Participant notes ....................... - 3,923
Short-term investments .................. 118 775
Total investments ..................... 144,600 331,933
Receivables
Contributions ........................... 16 118
Interfund transfers ..................... - 571
Other ................................... 46 239
Total assets .......................... 144,662 332,861
Liabilities
Payables
Forfeitures ............................. 98 98
Excess contribution refunds ............. 612 887
Excess contribution forfeitures ......... 82 82
Interfund transfers ..................... - 571
Other ................................... 3 1,844
Total liabilities ..................... 795 3,482
Net assets available for benefits ........... $143,867 $329,379
The accompanying notes are an integral part of these financial statements.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1996
In thousands, except share amounts
Participant Directed
Asset
Stock Cash Allocation
Fund Fund Fund
Assets
Investments
American General Corporation
common stock (3,959,169 shares) ..... $53,016 $ - $ -
American General Life Insurance
Company deposit administration
group annuity contract .............. - 57,606 -
American General Series Portfolio
Company - Timed Opportunity Fund
(702,080 shares) .................... - - 8,158
American General Series Portfolio
Company - Stock Index Fund
(509,096 shares)..................... - - -
Putnam OTC & Emerging Growth Fund ..... - - -
American General Series Portfolio
Company - Growth Fund ............... - - -
Templeton Foreign Fund ................ - - -
Vanguard Fixed Income
Securities Fund ..................... - - -
Participant notes ..................... - - -
Short-term investments ................ 335 603 171
Total investments ................... 53,351 58,209 8,329
Receivables
Interfund transfers ................... - 8,179 -
Other ................................. 1 2 1
Total assets ........................ 53,352 66,390 8,330
Liabilities
Payables
Forfeitures ........................... - - -
Excess contribution refunds ........... 180 316 -
Excess contribution forfeitures ....... - - -
Interfund transfers ................... 302 - 8,330
Other ................................. 4 14 -
Total liabilities ................... 486 330 8,330
Net assets available for benefits ......... $52,866 $66,060 $ -
The accompanying notes are an integral part of these financial statements.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1996
In thousands, except share amounts
Non-
Participant Participant
Directed Directed
Equity
Index Stock
Fund Fund Total
Assets
Investments
American General Corporation
common stock (3,959,169 shares) ..... $ - $108,815 $161,831
American General Life Insurance
Company deposit administration
group annuity contract .............. - - 57,606
American General Series Portfolio
Company - Timed Opportunity Fund
(702,080 shares) .................... - - 8,158
American General Series Portfolio
Company - Stock Index Fund
(509,096 shares)..................... 11,587 - 11,587
Putnam OTC & Emerging Growth Fund ..... - - -
American General Series Portfolio
Company - Growth Fund ............... - - -
Templeton Foreign Fund ................ - - -
Vanguard Fixed Income
Securities Fund ..................... - - -
Participant notes ..................... - - -
Short-term investments ................ 366 687 2,162
Total investments ................... 11,953 109,502 241,344
Receivables
Interfund transfers ................... 453 - 8,632
Other ................................. 1 3 8
Total assets ........................ 12,407 109,505 249,984
Liabilities
Payables
Forfeitures ........................... - 99 99
Excess contribution refunds ........... 93 639 1,228
Excess contribution forfeitures ....... - 67 67
Interfund transfers ................... - - 8,632
Other ................................. - 6 24
Total liabilities ................... 93 811 10,050
Net assets available for benefits ......... $12,314 $108,694 $239,934
The accompanying notes are an integral part of these financial statements.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
In thousands, except share amounts
Participant Directed
Equity
Stock Cash Index
Fund Fund Fund
Addition to net assets
Investment income
Dividends ........................ $ 1,765 $ - $ 332
Interest ......................... 12 4,818 8
Net appreciation (depreciation)
in fair value of
investments ................. 19,943 - 4,036
Total investment
income (loss) ............ 21,720 4,818 4,376
Contributions
Companies' ....................... - 2 -
Participants' .................... 4,297 7,191 2,747
Total contributions ............ 4,297 7,193 2,747
Merger of Franklin 401(k) Plan ...... - 11,147 -
Merger of Home Beneficial
Thrift Plan ....................... - 6,259 -
Total additions ................ 26,017 29,417 7,123
Deductions from net assets
Benefits
American General Corporation
common stock (40,650 shares) ... 616 - -
Cash ............................. 3,562 6,204 1,278
Forfeitures ...................... - 3 -
Participant loan origination fees .. 17 19 3
Total deductions ............. 4,195 6,226 1,281
Interfund transfers ................. (6,335) (7,894) 813
Net increase ................ 15,487 15,297 6,655
Net assets available for benefits
Beginning of year ........... 52,866 66,060 12,314
End of year ................. $68,353 $81,357 $18,969
The accompanying notes are an integral part of these financial statements.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
In thousands, except share amounts
Participant Directed
Inter-
Small-Cap Mid-Cap national
Fund Fund Fund
Addition to net assets
Investment income
Dividends ........................ $ - $ 52 $ 280
Interest ......................... 4 3 3
Net appreciation (depreciation)
in fair value of
investments ................. 491 305 (294)
Total investment
income (loss) ............ 495 360 (11)
Contributions
Companies' ....................... - - -
Participants' .................... 999 798 550
Total contributions ............ 999 798 550
Merger of Franklin 401(k) Plan ...... - - -
Merger of Home Beneficial
Thrift Plan ....................... - - -
Total additions ................ 1,494 1,158 539
Deductions from net assets
Benefits
American General Corporation
common stock (40,650 shares) ... - - -
Cash ............................. 118 70 79
Forfeitures ...................... - - -
Participant loan origination fees .. - - -
Total deductions ............. 118 70 79
Interfund transfers ................. 3,054 2,210 3,340
Net increase ................ 4,430 3,298 3,800
Net assets available for benefits
Beginning of year ........... - - -
End of year ................. $4,430 $3,298 $3,800
The accompanying notes are an integral part of these financial statements.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
In thousands, except share amounts
Participant Directed
Bond Participant
Fund Notes
Addition to net assets
Investment income
Dividends ........................ $ 64 $ -
Interest ......................... 2 120
Net appreciation (depreciation)
in fair value of
investments ................. 62 -
Total investment
income (loss) ............ 128 120
Contributions
Companies' ....................... - -
Participants' .................... 309 -
Total contributions ............ 309 -
Merger of Franklin 401(k) Plan ...... - 112
Merger of Home Beneficial
Thrift Plan ....................... - -
Total additions ................ 437 232
Deductions from net assets
Benefits
American General Corporation
common stock (40,650 shares) ... - -
Cash ............................. 42 134
Forfeitures ...................... - -
Participant loan origination fees .. - -
Total deductions ............. 42 134
Interfund transfers ................. 987 3,825
Net increase ................ 1,382 3,923
Net assets available for benefits
Beginning of year ........... - -
End of year ................. $1,382 $3,923
The accompanying notes are an integral part of these financial statements.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
In thousands, except share amounts
Non-
Participant Directed
Stock
Fund Total
Addition to net assets
Investment income
Dividends ........................ $ 3,725 $ 6,218
Interest ......................... 26 4,996
Net appreciation (depreciation)
in fair value of
investments ................. 31,740 56,283
Total investment
income (loss) ............ 35,491 67,497
Contributions
Companies' ....................... 9,113 9,115
Participants' .................... - 16,891
Total contributions ............ 9,113 26,006
Merger of Franklin 401(k) Plan ...... - 11,259
Merger of Home Beneficial
Thrift Plan ....................... - 6,259
Total additions ................ 44,604 111,021
Deductions from net assets
Benefits
American General Corporation
common stock (40,650 shares) ... 1,301 1,917
Cash ............................. 7,517 19,004
Forfeitures ...................... 613 616
Participant loan origination fees .. - 39
Total deductions ............. 9,431 21,576
Interfund transfers ................. - -
Net increase ................ 35,173 89,445
Net assets available for benefits
Beginning of year ........... 108,694 239,934
End of year ................. $143,867 $329,379
The accompanying notes are an integral part of these financial statements.
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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
Participant Directed
Asset
Stock Cash Allocation
Fund Fund Fund
Addition to net assets
Investment income
Dividends ........................ $ 1,700 $ - $1,139
Interest ......................... 10 3,729 3
Net appreciation (depreciation)
in fair value of
investments ................. 5,796 47 (323)
Total investment
income ................... 7,506 3,776 819
Contributions
Companies' ....................... - - -
Participants' .................... 4,000 6,224 1,302
Total contributions ............ 4,000 6,224 1,302
Total additions .............. 11,506 10,000 2,121
Deductions from net assets
Benefits
American General Corporation
common stock (108,178 shares) .. 1,277 - -
Cash ............................. 1,647 5,913 714
Forfeitures ...................... - - -
Total deductions ............. 2,924 5,913 714
Interfund transfers ................. (1,269) 7,895 (8,466)
Net increase (decrease)...... 7,313 11,982 (7,059)
Net assets available for benefits
Beginning of year ........... 45,553 54,078 7,059
End of year ................. $52,866 $66,060 $ -
The accompanying notes are an integral part of these financial statements.
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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
Non-
Participant Participant
Directed Directed
Equity
Index Stock
Fund Fund Total
Addition to net assets
Investment income
Dividends ........................ $ 256 $ 3,489 $6,584
Interest ......................... 6 21 3,769
Net appreciation (depreciation)
in fair value of
investments ................. 1,642 17,726 24,888
Total investment
income ................... 1,904 21,236 35,241
Contributions
Companies' ....................... - 7,651 7,651
Participants' .................... 2,259 - 13,785
Total contributions ............ 2,259 7,651 21,436
Total additions ................ 4,163 28,887 56,677
Deductions from net assets
Benefits
American General Corporation
common stock (108,178 shares) ... - 2,621 3,898
Cash ............................. 604 10,279 19,157
Forfeitures ...................... - 558 558
Total deductions ............. 604 13,458 23,613
Interfund transfers ................. 1,840 - -
Net increase (decrease) ..... 5,399 15,429 33,064
Net assets available for benefits
Beginning of year ........... 6,915 93,265 206,870
End of year ................. $12,314 $108,694 $239,934
The accompanying notes are an integral part of these financial statements.
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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 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) Stock Index and Growth
Funds, the Putnam OTC & Emerging Growth Fund, the Templeton Foreign Fund, and
the Vanguard Fixed Income Securities Fund, 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.
Participant notes are recorded as plan investments at amortized values.
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 and certain regular 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 participate 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).
Substantially all of the costs of administering the Plan are 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 seven funds or
a combination of each fund. 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 Stock
Index Fund (Equity Index Fund); 4) shares of the Putnam OTC & Emerging Growth
Fund (Small-Cap Fund); 5) shares of the AGSPC Growth Fund (Mid-Cap Fund); 6)
shares of the Templeton Foreign Fund (International Fund); and 7) shares of
the Vanguard Fixed Income Fund (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. The Companies' contributions are invested
solely in the non-participant directed portion of the Stock Fund; however,
participants age 60 or older can direct the investment of their employer
matching contributions into any of the available funds.
Amounts which have not yet been used to purchase investments in either the
Stock, Cash, Equity Index, Small-Cap, Mid-Cap, International, or Bond Funds
are temporarily invested in short-term investments. Income from these short-
term investments is allocated to Plan participants based on current contribu-
tions.
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. The Companies contributed 75 percent of the employee's basic
contribution during 1997 and 1996.
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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 1997 and 1996, the total amount of participant pretax contributions is
limited to $9,500. 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 1997 and 1996, the total amount of
base pay that can be used in determining contributions under the Plan is
$160,000 and $150,000, respectively.
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.
Contributions from highly compensated individuals are limited to 6 percent of
base pay.
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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<PAGE>
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. For years
beginning after December 31, 1996, distributions must begin by April 1 of the
calendar year following the later of either the calendar year in which the
employee reaches age 70-1/2, or the calendar year in which the employee
retires.
Participants Loans Receivable
Beginning on January 1, 1997, participants may borrow from their fund
accounts, in a single loan, a minimum of $1,000 and up to a maximum equal to
the lesser of $50,000 or 50% of the participant's vested account balance.
Loan terms range from 12 to 58 months. Loans are secured by the vested
balance in the participant's account and bear interest at a rate commensurate
with prevailing rates as determined from time to time. Principal and interest
are paid to the participant's account through payroll deductions. Early loan
payoff is allowed.
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, 1997, 7,097 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 6.00% from April 13, 1996
through April 11, 1997; effective April 12, 1997, the rate changed to 6.25%,
and will remain at 6.25% through April 10, 1999. Any earnings in excess of the
guaranteed minimum rate are credited to the participants.
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<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE C--INVESTMENT CONTRACT WITH INSURANCE COMPANY--Continued
The effective earned yield is calculated based on the calendar year. The
effective earned yield of the investment contract for 1997 and 1996 was 6.47%
and 6.87%, respectively.
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.
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
1997 1996
Net assets available for benefits
per the financial statements ..................... $329,379 $239,934
Benefits payable to withdrawing participants ....... (2,452) (1,683)
Net assets available for benefits per Form 5500 .. $326,927 $238,251
The following is a reconciliation of benefits paid to participants per the
financial statements to Form 5500:
In thousands
Year Ended
December 31, 1997
Benefits paid to participants per the
financial statements
American General Corporation common stock ...... $ 1,917
Cash ........................................... 19,004
Total benefits paid to participants per the
financial statements ....................... 20,921
Benefits payable to withdrawing participants at
year end ......................................... 2,452
Benefits payable to withdrawing participants
at beginning of year ............................. (1,683)
Benefits paid to participants per Form 5500 .. $21,690
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<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
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. 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.
NOTE G--PLAN MERGERS
On January 1, 1997, the Franklin Life Insurance Company Employees' 401(k)
Retirement Plan (the Franklin 401(k) Plan) was merged into the Plan. Assets
from the Franklin 401(k) Plan totaling approximately $11.3 million were
transferred to the Plan's trust. This plan merger was the result of the
acquisition of The Franklin Life Insurance Company, made by American General
through one of its wholly owned subsidiaries on January 31, 1995. Participants
of the Franklin 401(k) Plan became eligible to participate in the Plan on
January 1, 1997.
Effective October 1, 1997, the Home Beneficial Thrift Plan was split into two
identical plans: one covering home office and field clerical employees and the
other covering agents. The Home Beneficial Thrift Plan covering home office
and field clerical employees was merged into the Plan, and assets totaling
approximately $6.3 million were transferred to the Plan's trust. This plan
merger was the result of the acquisition of Home Beneficial Corporation, made
by American General through one of its wholly owned subsidiaries on April 16,
1997. Participants of the Home Beneficial Thrift Plan became eligible to
participate in the Plan on October 1, 1997.
NOTE H--YEAR 2000 ISSUE (UNAUDITED)
American General has developed a plan to modify its internal information
technology to be ready for the year 2000 and has begun converting critical
data processing systems. The project also includes determining whether third-
party service providers have reasonable plans in place to become year 2000
compliant. American General currently expects the project to be substantially
complete by December 31, 1998, and does not expect this project to have a
significant effect on Plan operations.
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<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE I--SUBSEQUENT EVENTS
Effective January 1, 1998, the USLIFE Corporation Employee Savings and
Investment Plan (USLIFE SIP) was merged into the Plan. Assets totaling
approximately $86 million, which includes 775,806 shares of American General
Corporation common stock, were transferred to the Plan's trust in January
1998. This plan merger was the result of the acquisition of USLIFE
Corporation, made by American General through one of its wholly owned
subsidiaries on June 17, 1997. Participants of the USLIFE SIP are eligible to
participate in the Plan as of January 1, 1998.
Effective March 1, 1998, the Western National Corporation Employees' 401(k)
Retirement Plan (the WesternSave Plan) was merged into the Plan. Assets
totaling approximately $5.9 million, which includes 32,841 shares of American
General Corporation common stock, were transferred to the Plan's trust in
March 1998. The plan merger was the result of American General completing the
acquisition of Western National Corporation on February 25, 1998. Participants
of the WesternSave Plan are eligible to participate in the Plan as of February
28, 1998.
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<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
ASSETS HELD FOR INVESTMENT
AT DECEMBER 31, 1997
In thousands, except share amounts
Fair
Issuer Description Cost Value
American General 3,938,492 shares of $ 98,620 $212,925
Corporation* common stock
American General Life Deposit administration 83,109 83,109
Insurance Company* group annuity contract
American General Series 637,996 shares of AGSPC 12,240 18,955
Portfolio Company* Stock Index Fund
Putnam 271,891 shares of Putnam OTC 3,890 4,380
& Emerging Growth Fund
American General Series 158,542 shares of AGSPC 2,875 3,179
Portfolio Company* Growth Fund
Templeton 340,576 shares of Templeton 3,682 3,389
Foreign Fund
Vanguard 140,180 shares of Vanguard 1,237 1,298
Fixed Income Securities
Fund
Participant Notes* Loans issued at interest - 3,923
rates between 9.00%
and 11.25%
State Street Bank Short-term investments
& Trust Company* in money-market fund 775 775
$206,428 $331,933
*Party in interest
- 21 -
<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
REPORTABLE TRANSACTIONS (A)
FOR THE YEAR ENDED DECEMBER 31, 1997
In thousands, except share amounts and transaction counts
Amount of
Party Involved Description Transaction
Category (iii) - Series of transactions in excess of 5% of Plan assets
State Street Bank Purchases of short-term investments in $41,843
& Trust Company 721 transactions
State Street Bank Sales of short-term investments in 43,230
& Trust Company 335 transactions
(B) Purchases of American General Life 36,153
Insurance Company deposit
administration group annuity
contract in 30 transactions
(B) Sales of American General Life 10,650
Insurance Company deposit
administration group annuity
contract in 18 transactions
(B) Purchases of 197,160 shares of American 9,551
General Corporation common stock in
16 transactions
(B) Sales of 177,187 shares of American 8,214
General Corporation common stock in
13 transactions at a gain of $4,247
(B) Distributions of 40,650 shares of 1,917
American General Corporation common
stock to various individuals who
withdrew from or terminated
participation in the Plan in 14
transactions at a gain of $992
(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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<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
LOANS IN DEFAULT
FOR THE YEAR ENDED DECEMBER 31, 1997
In whole dollars
Original Amount Received Unpaid
Indentity Amount of during Reporting Year: Balance at
Of obligor* Loan Principal Interest End of Year
Beatty, Brian $ 1,400 $ - $ - $ 1,069
Brown, Jody 3,700 - - 3,388
Browning, Carl 1,000 - - 816
Campbell, Cheryl 1,000 - - 667
Carlen, Beverly 1,252 - - 1,140
Coleman, Leslie 1,500 26 6 1,474
Eagan, Kevin 29,464 381 93 29,083
Gantt, Susanne 1,900 - - 1,579
Gudgel, Hazel 1,000 - - 145
Ivandick, Deloris 1,140 - - 793
Langenfield, Mark 7,214 - - 689
Large, Kelly 1,245 - - 1,202
McLaughlin, Susan 1,300 - - 54
Peters, James 1,000 - - 298
Phillips, Margaret 3,150 - - 2,900
Rainford, Eleanor 1,000 - - 597
Romanski, Deborah 2,200 - - 1,770
Steckel, Suzanne 1,175 - - 1,134
Watson, Karen 1,500 198 29 1,302
Webb, Lisa 992 83 12 909
*Tax statements to be issued to participants with loans in default
- 23 -
<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
LOANS IN DEFAULT
FOR THE YEAR ENDED DECEMBER 31, 1997
In whole dollars
Loan Interest Amount Overdue:
Issued Rate Defaulted Principal Interest
7/31/94 9.00% 3/31/97 $ 1,069 $ 24
11/30/95 10.50 3/31/97 3,388 89
5/31/93 9.50 3/31/97 816 19
8/31/94 9.00 3/31/97 667 15
2/28/96 11.09 3/31/97 1,140 32
3/28/97 9.25 8/15/97 1,474 34
1/31/97 9.25 6/15/97 29,083 673
9/30/94 9.00 3/31/97 1,579 36
11/30/93 9.00 3/31/97 145 3
3/31/94 9.00 3/31/97 793 18
8/31/95 10.29 6/15/97 689 18
7/31/96 11.25 3/31/97 1,202 34
1/31/95 10.00 4/15/97 54 1
6/30/93 9.50 3/31/97 298 7
8/31/93 11.25 3/31/97 2,900 82
2/28/94 9.00 3/31/97 597 13
10/31/94 9.00 3/31/97 1,770 40
4/30/96 11.15 3/31/97 1,134 32
1/31/97 9.25 10/15/97 1,302 30
1/31/97 9.25 8/15/97 909 21
- 24 -
<PAGE>
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 26, 1998 ELLEN H. MASTERSON
Ellen H. Masterson, Member of
the Administrative Board
- 25 -
<PAGE>
Appendix
- 26 -
<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 19, 1998, 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, 1997.
ERNST & YOUNG LLP
Houston, Texas
June 26, 1998
- 27 -
<PAGE>
