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, 1998
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, 1998
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 ......... 8
Notes to Financial Statements ...................................... 14
Schedules
Item 27a - Schedule of Assets Held for Investment Purposes ......... 20
Item 27d - Schedule of Reportable Transactions ..................... 21
Item 27b - Schedule of Loans or Fixed Income Obligations ........... 23
<PAGE>
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, 1998 and 1997, 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, 1998 and 1997, 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 purposes as of December 31, 1998,
reportable transactions, and loans or fixed income obligations for the year
then ended are presented for purpose of additional analysis and are not a
required part of the financial statements but are supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. These
supplemental schedules are the responsibility of the Plan's management. The
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 Fund information have been
subjected to the auditing procedures applied in our audits 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 14, 1999
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AT DECEMBER 31, 1998
In thousands, except share amounts
Participant Directed
Equity
Stock Cash Index
Fund Fund Fund
Assets
Investments
American General Corporation common
stock (4,691,432 shares) ......... $116,629 $ - $ -
American General Life Insurance
Company deposit administration
group annuity contract ........... - 95,742 -
American General Series Portfolio
Company - Stock Index Fund
(1,025,283 shares) ............... - - 38,581
Putnam OTC & Emerging Growth Fund
(415,212 shares).................. - - -
American General Series Portfolio
Company - Growth Fund
(1,006,590 shares)................ - - -
Templeton Foreign Fund
(679,057 shares) ................. - - -
Vanguard Fixed Income Securities Fund
(596,653 shares) ................. - - -
Participant notes .................. - - -
Short-term investments ............. 137 115 39
Total investments ................ 116,766 95,857 38,620
Receivables
Contributions ...................... 92 194 320
Interfund transfers ................ - 582 115
Other .............................. 52 2 1
Total assets ..................... 116,910 96,635 39,056
Liabilities
Payables
Forfeitures ........................ - 3 2
Excess contribution refunds ........ 251 61 18
Excess contribution forfeitures .... - - -
Interfund transfers ............... 678 - -
Other .............................. 95 119 33
Total liabilities ................ 1,024 183 53
Net assets available for benefits ..... $115,886 $96,452 $39,003
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, 1998
In thousands, except share amounts
Participant Directed
Inter-
Small-Cap Mid-Cap national
Fund Fund Fund
Assets
Investments
American General Corporation common
stock (4,691,432 shares) ......... $ - $ - $ -
American General Life Insurance
Company deposit administration
group annuity contract ........... - - -
American General Series Portfolio
Company - Stock Index Fund
(1,025,283 shares) ............... - - -
Putnam OTC & Emerging Growth Fund
(415,212 shares).................. 7,162 - -
American General Series Portfolio
Company - Growth Fund
(1,006,590 shares)................ - 22,447 -
Templeton Foreign Fund
(679,057 shares) ................. - - 5,697
Vanguard Fixed Income Securities Fund
(596,653 shares) ................. - - -
Participant notes .................. - - -
Short-term investments ............. 23 25 17
Total investments ................ 7,185 22,472 5,714
Receivables
Contributions ...................... 150 348 77
Interfund transfers ................ - - 3
Other .............................. 1 1 1
Total assets ..................... 7,336 22,821 5,795
Liabilities
Payables
Forfeitures ........................ - 1 -
Excess contribution refunds ........ 3 8 4
Excess contribution forfeitures .... - - -
Interfund transfers ................ 20 35 -
Other .............................. 28 36 16
Total liabilities ................ 51 80 20
Net assets available for benefits ...... $7,285 $22,741 $5,775
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, 1998
In thousands, except share amounts
Non-
Participant
Participant Directed Directed
Bond Participant Stock
Fund Notes Fund Total
Assets
Investments
American General Corporation
common stock
(4,691,432 shares) ......... $ - $ - $249,303 $365,932
American General Life Insurance
Company deposit administration
group annuity contract ..... - - - 95,742
American General Series Portfolio
Company - Stock Index Fund
(1,025,283 shares) ......... - - - 38,581
Putnam OTC & Emerging Growth Fund
(415,212 shares)............ - - - 7,162
American General Series Portfolio
Company - Growth Fund
(1,006,590 shares).......... - - - 22,447
Templeton Foreign Fund
(679,057 shares) ........... - - - 5,697
Vanguard Fixed Income Securities
Fund (596,653 shares) ...... 5,543 - - 5,543
Participant notes ............ - 7,057 - 7,057
Short-term investments ....... 15 - 296 667
Total investments .......... 5,558 7,057 249,599 548,828
Receivables
Contributions ................ 67 - 199 1,447
Interfund transfers .......... 33 - - 733
Other ........................ 1 - 111 170
Total assets ............... 5,659 7,057 249,909 551,178
Liabilities
Payables
Forfeitures .................. 1 - 175 182
Excess contribution refunds .. 4 - 542 891
Excess contribution forfeitures - - 76 76
Interfund transfers .......... - - - 733
Other ........................ 12 - - 339
Total liabilities .......... 17 - 793 2,221
Net assets available for benefits $5,642 $7,057 $249,116 $548,957
The accompanying notes are an integral part of these financial statements.
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<PAGE>
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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<PAGE>
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
Non-
Participant
Participant Directed Directed
Bond Participant Stock
Fund Notes 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 - - 1,298
Participant notes ............ - 3,923 - 3,923
Short-term investments ....... 10 - 118 775
Total investments .......... 1,308 3,923 144,600 331,933
Receivables
Contributions ................ 7 - 16 118
Interfund transfers .......... 73 - - 571
Other ........................ - - 46 239
Total assets ............... 1,388 3,923 144,662 332,861
Liabilities
Payables
Forfeitures .................. - - 98 98
Excess contribution refunds .. 2 - 612 887
Excess contribution forfeitures - - 82 82
Interfund transfers .......... - - - 571
Other ........................ 4 - 3 1,844
Total liabilities .......... 6 - 795 3,482
Net assets available for benefits $1,382 $3,923 $143,867 $329,379
The accompanying notes are an integral part of these financial statements.
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<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
In thousands, except share amounts
Participant Directed
Equity
Stock Cash Index
Fund Fund Fund
Additions to net assets
Investment income
Dividends ....................... $ 2,260 $ - $ 548
Interest ........................ 13 6,130 15
Net appreciation (depreciation)in
fair value of investments ..... 39,495 - 7,971
Total investment income (loss). 41,768 6,130 8,534
Contributions
Companies' ...................... - - -
Participants' ................... 6,930 9,294 3,994
Total contributions ........... 6,930 9,294 3,994
Merger of USLIFE SIP ................ 8,456 12,248 8,128
Merger of WesternSave Plan .......... 1,869 127 442
Total additions .............. 59,023 27,799 21,098
Deductions from net assets
Benefits
American General Corporation
common stock (124,636 shares) . 2,751 - -
Cash ............................ 6,599 13,167 2,786
Forfeitures ....................... - 5 2
Participant loan origination fees . 4 12 3
Total deductions ............ 9,354 13,184 2,791
Interfund transfers ................. (2,136) 480 1,727
Net increase ................ 47,533 15,095 20,034
Net assets available for benefits
Beginning of year ........... 68,353 81,357 18,969
End of year ................. $115,886 $96,452 $39,003
The accompanying notes are an integral part of these financial statements.
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<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
In thousands, except share amounts
Participant Directed
Inter-
Small-Cap Mid-Cap national
Fund Fund Fund
Additions to net assets
Investment income
Dividends ....................... $ - $ 975 $ 152
Interest ........................ 2 23 4
Net appreciation (depreciation)in
fair value of investments ..... 645 3,114 (349)
Total investment income (loss). 647 4,112 (193)
Contributions
Companies' ...................... - - -
Participants' ................... 1,736 2,131 964
Total contributions ........... 1,736 2,131 964
Merger of USLIFE SIP ................ - 15,635 1,687
Merger of WesternSave Plan .......... - 1,742 -
Total additions .............. 2,383 23,620 2,458
Deductions from net assets
Benefits
American General Corporation
common stock (124,636 shares) . - - -
Cash ............................ 349 2,268 651
Forfeitures ....................... 1 1 -
Participant loan origination fees . 1 2 -
Total deductions ............ 351 2,271 651
Interfund transfers ................. 823 (1,906) 168
Net increase ................ 2,855 19,443 1,975
Net assets available for benefits
Beginning of year ........... 4,430 3,298 3,800
End of year ................. $7,285 $22,741 $5,775
The accompanying notes are an integral part of these financial statements.
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<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
In thousands, except share amounts
Non-
Participant
Participant Directed Directed
Bond Participant Stock
Fund Notes Fund Total
Additions to net assets
Investment income
Dividends ................... $ 249 $ - $ 4,888 $ 9,072
Interest .................... 3 968 29 7,187
Net appreciation (depreciation)
in fair value of investments 147 - 73,025 124,048
Total investment income (loss) 399 968 77,942 140,307
Contributions
Companies' .................. - - 12,203 12,203
Participants' ............... 754 - - 25,803
Total contributions ....... 754 - 12,203 38,006
Merger of USLIFE SIP ............ 1,897 3,141 34,596 85,788
Merger of WesternSave Plan ...... 474 129 1,592 6,375
Total additions .......... 3,524 4,238 126,333 270,476
Deductions from net assets
Benefits
American General Corporation
common stock (124,636 shares) - - 5,949 8,700
Cash ........................ 439 771 14,273 41,303
Forfeitures ................... 1 - 854 864
Participant loan origination fees 1 - 8 31
Total deductions ........ 441 771 21,084 50,898
Interfund transfers ............. 1,177 (333) - -
Net increase ............ 4,260 3,134 105,249 219,578
Net assets available for benefits
Beginning of year ....... 1,382 3,923 143,867 329,379
End of year ............. $5,642 $7,057 $249,116 $548,957
The accompanying notes are an integral part of these financial statements.
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<PAGE>
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
Additions 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
Additions 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
Non-
Participant
Participant Directed Directed
Bond Participant Stock
Fund Notes Fund Total
Additions to net assets
Investment income
Dividends ................... $ 64 $ - $ 3,725 $ 6,218
Interest .................... 2 120 26 4,996
Net appreciation (depreciation)
in fair value of investments 62 - 31,740 56,283
Total investment income (loss) 128 120 35,491 67,497
Contributions
Companies' .................. - - 9,113 9,115
Participants' ............... 309 - - 16,891
Total contributions ....... 309 - 9,113 26,006
Merger of Franklin 401 (k) Plan . - 112 - 11,259
Merger of Home Beneficial Thrift Plan - - - 6,259
Total additions .......... 437 232 44,604 111,021
Deductions from net assets
Benefits
American General Corporation
common stock (40,650 shares) - - 1,301 1,917
Cash ........................ 42 134 7,517 19,004
Forfeitures ................... - - 613 616
Participant loan origination fees - - - 39
Total deductions ........ 42 134 9,431 21,576
Interfund transfers ............. 987 3,825 - -
Net increase ............ 1,382 3,923 35,173 89,445
Net assets available for benefits
Beginning of year ....... - - 108,694 239,934
End of year ............. $1,382 $3,923 $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
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 or the Company)
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 additions and deductions 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.
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.
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AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE B--DESCRIPTION OF THE PLAN--Continued
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 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
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
Directors. The Companies contributed 75 percent of employee's basic
contributions during 1998 and 1997.
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 1998 and 1997, the total amount of participant pretax contributions is
limited to $10,000 and $9,500, 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 1998
and 1997, the total amount of base pay that can be used in determining
contributions under the Plan is $160,000.
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.
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
statement 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.
-15-
<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE B--DESCRIPTION OF THE PLAN--Continued
Participant Accounts
Each participant's account is credited with the participant's and the
Companies' 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
participant's vested account.
Vesting
Participants are immediately vested in their contributions plus the earnings
thereon. Participants obtain a vested interest in the Companies'
contributions 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.
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 exceeded
$5,000 in 1998 or $3,500 in 1997, 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
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, 1998, 8,135 active employees were contributing to the Plan.
-16-
<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
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 6.25% from April 12, 1997
through April 10, 1999, and will remain at 6.25% through December 31, 1999.
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 1998 and 1997 was 6.49%
and 6.47%, 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
1998 1997
Net assets available for benefits
per the financial statements ..................... $548,957 $329,379
Benefits payable to withdrawing participants ....... (7,599) (2,452)
Net assets available for benefits per Form 5500 .. $541,358 $326,927
The following is a reconciliation of benefits paid to participants per the
financial statements to Form 5500:
In thousands
Year Ended
December 31, 1998
Benefits paid to participants per the
financial statements
American General Corporation common stock ...... $ 8,700
Cash ........................................... 41,303
Total benefits paid to participants per the
financial statements ....................... 50,003
Benefits payable to withdrawing participants at
year end ......................................... 7,599
Benefits payable to withdrawing participants
at beginning of year ............................. (2,452)
Benefits paid to participants per Form 5500 .. $55,150
-17-
<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, and a new determination letter has been requested. The
Plan's administrators anticipate a favorable reply and believe that the Plan
is designed and is currently being operated in compliance with the applicable
requirements of the IRC.
NOTE G--PLAN MERGERS
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 included 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 were 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 $6 million, which included 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 were eligible to participate in the Plan as of March
1, 1998.
NOTE H--YEAR 2000 ISSUE (UNAUDITED)
As of December 31, 1998, American General had completed Year 2000 readiness
activities for substantially all of its critical systems, making them Year
2000 ready. The Company will continue to test its systems throughout 1999 to
maintain Year 2000 readiness. In addition, American General has developed a
plan to assess and attempt to mitigate the risks associated with the potential
failure of third parties to achieve Year 2000 readiness. As of April 30,
1999, the Company had identified and assessed its critical third-party
dependencies. Due to the various stages of Year 2000 readiness for critical
third-party dependencies, the Company's testing activities related to critical
third parties will extend throughout 1999.
The Company has commenced contingency planning to reduce the risk of Year
2000- related business failures. As of April 30, 1999, the Company had
completed its contingency plans. These plans will be tested during the second
and third quarters of 1999.
Based on these activities and plans, American General believes that it will
experience at most isolated and minor disruptions of business processes
following the turn of the century. Such disruptions are not expected to have
a material effect on the Plan's operations.
-18-
<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE I--SUBSEQUENT EVENTS
Effective January 1, 1999, the following changes were made to the Plan:
The Companies contribute an amount equal to 100 percent of the first three
percent of the participant's basic contribution, plus 50 percent of the next
three percent of the participant's basic contribution. Participants will be
100 percent vested in the Companies' matching contributions made in 1999 and
subsequent years. Pre-1999 contributions by the Companies will continue to
accrue vesting under the existing vesting schedule. These changes place the
Plan under the safe harbor provisions of the IRC. Under the safe harbor
provisions, nondiscrimination testing and refunds of excess contributions will
no longer be required.
Also effective January 1, 1999, the Plan's eligibility requirements were
changed from the earlier of the attainment of age 35 or one year of service to
30 days of service.
-19-
<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT DECEMBER 31, 1998
EIN: 74-0483432
PN: 001
In thousands, except share amounts
Fair
Issuer Description Cost Value
American General 4,691,432 shares of $135,382 $365,932
Corporation* common stock
American General Life Deposit administration 95,742 95,742
Insurance Company* group annuity contract
American General Series 1,025,283 shares of AGSPC 24,493 38,581
Portfolio Company* Stock Index Fund
Putnam 415,212 shares of Putnam OTC 6,256 7,162
& Emerging Growth Fund
American General Series 1,006,590 shares of AGSPC 19,621 22,447
Portfolio Company* Growth Fund
Templeton 679,057 shares of Templeton 6,750 5,697
Foreign Fund
Vanguard 596,653 shares of Vanguard 5,497 5,543
Fixed Income Securities
Fund
Participant Notes* Loans issued at interest - 7,057
rates between 8.25%
and 11.25%
State Street Bank Short-term investments
& Trust Company* in money-market fund 667 667
$294,408 $548,828
*Party in interest
-20-
<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS (A)
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN: 74-0483432
PN: 001
In thousands, except share amounts and transaction counts
Amount of
Party Involved Description Transaction
Category (i) - Individual transactions in excess of 5% of Plan assets
(B) Purchase of 892,063 shares of
American General Series Portfolio
Company Growth Fund $ 17,083
State Street Bank Purchase of short-term investments 17,069
& Trust Company
State Street Bank Sale of short-term investments 17,083
& Trust Company
Category (iii) - Series of transactions in excess of 5% of Plan assets
State Street Bank Purchases of short-term investments in 108,117
& Trust Company 776 transactions
State Street Bank Sales of short-term investments in
& Trust Company 490 transactions 108,225
(B) Purchases of American General Life
Insurance Company deposit
administration group annuity
contract in 44 transactions 29,038
(B) Sales of American General Life
Insurance Company deposit
administration group annuity
contract in 25 transactions 16,405
(B) Purchases of 1,137,379 shares
of American General Corporation
common stock in 40 transactions 36,559
(B) Sales of 259,803 shares of American
General Corporation common stock in
26 transactions at a gain of $10,649 17,151
(B) Distributions of 124,636 shares of
American General Corporation common
stock to various individuals who
withdrew from or terminated
participation in the Plan in 25
transactions at a gain of $5,008 8,109
-21-
<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS (A)- CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN: 74-0483432
PN: 001
In thousands, except share amounts and transaction counts
Amount of
Party Involved Description Transaction
(B) Purchases of 1,093,118 shares of
American General Series Portfolio
Company Growth fund in 34 transactions $21,461
(B) Sales of 245,069 shares American General
Series Portfolio Company Growth Fund
in 16 transactions at a gain of $536 4,715
(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.
-22-
<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
ITEM 27b - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN: 74-0483432
PN: 001
In whole dollars
Original Amount Received Unpaid
Identity Amount of during Reporting Year: Balance at
of Obligor* Loan Principal Interest End of Year
Callahan, Charles $3,800 $ - $ - $3,661
Garegnani, David 6,800 468 80 5,992
* Form 1099-R to be issued to terminated participants with loans in default
-23-
<PAGE>
AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN
ITEM 27b - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
EIN: 74-0483432
PN: 001
In whole dollars
Loan Interest Amount Overdue:
Issued Rate Defaulted Principal Interest
07/30/97 9.50% 01/15/98 $3,661 $ 87
09/29/97 9.50 06/15/98 5,992 142
* Form 1099-R to be issued to terminated participants with loans in default
-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 25, 1999 ELIZABETH A. DOBBS
Elizabeth A. Dobbs
Vice President-Benefits and Payroll
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-13407) pertaining to the American General Employees' Thrift
and Incentive Plan of our report dated June 14, 1999, 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, 1998.
ERNST & YOUNG LLP
Houston, Texas
June 23, 1999
