<PAGE> 1
FILED PURSUANT TO RULE: 424(b)(2)
REGISTRATION NOS.: 333-40583, 333-40583-01,
333-40583-02, 333-40583-03 AND 333-40583-04
PROSPECTUS SUPPLEMENT
--------------------------------------------
(TO PROSPECTUS DATED FEBRUARY 10, 1998)
[AMERICAN GENERAL LOGO]
$250,000,000
AMERICAN GENERAL CORPORATION
7 1/2% NOTES DUE 2010
---------------------
We will pay interest on the notes on February 11 and August 11 of each
year, beginning February 11, 2001. The notes will mature on August 11, 2010. We
may not redeem the notes before maturity. The notes will be unsecured
obligations and rank equally with our unsecured senior indebtedness. The notes
will be issued only in registered form in denominations of $1,000.
The notes offered hereby constitute a further issuance of, and will be
consolidated with, the 7 1/2% Notes Due 2010 issued by us on August 11, 2000 and
form a single series with those notes. The notes offered hereby will have the
same CUSIP number and will trade interchangeably with the previously issued
notes in this series immediately upon settlement. On October 30, 2000,
$250,000,000 aggregate principal amount of those notes were outstanding. The
issuance of the notes offered hereby will increase the aggregate principal
amount of the outstanding notes of this series to $500,000,000.
---------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- -----
<S> <C> <C>
Public offering price (1)................................... 100.0308% $250,077,000
Underwriting discount....................................... .6% $1,500,000
Proceeds, before expenses, to American General.............. 99.4308% $248,577,000
</TABLE>
(1) Plus accrued interest from August 11, 2000
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only through The
Depository Trust Company on or about November 2, 2000.
---------------------
JOINT BOOK-RUNNING MANAGERS
MERRILL LYNCH & CO. CHASE SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
FIRST UNION SECURITIES, INC.
---------------------
The date of this prospectus supplement is October 30, 2000.
<PAGE> 2
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
American General Corporation................................ S-3
Ratio of Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends...... S-4
Selected Financial Data of American General................. S-5
Description of Notes........................................ S-7
Underwriting................................................ S-8
Legal Matters............................................... S-9
Experts..................................................... S-9
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information....................................... 2
Incorporation by Reference.................................. 3
The Company................................................. 4
Use of Proceeds............................................. 4
Ratio of Earnings to Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends...... 5
Description of Debt Securities.............................. 5
Description of the Preferred Stock.......................... 16
Description of Common Stock................................. 19
Description of Warrants..................................... 23
Plan of Distribution........................................ 24
Legal Matters............................................... 25
Experts..................................................... 25
</TABLE>
------------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference is accurate only as of
their respective dates. Our business, financial condition, results of operations
and prospects may have changed since those dates.
S-2
<PAGE> 3
AMERICAN GENERAL CORPORATION
American General Corporation ("American General" or the "Company"), with
assets of $121 billion and shareholders' equity of $6.4 billion as of June 30,
2000, is the parent company of one of the nation's largest diversified financial
services organizations. Our operating divisions deliver a wide range of
retirement services, life insurance, consumer loans, and investments to 12
million customers through focused distribution channels. American General, a
general business corporation headquartered in Houston, is the successor to
American General Insurance Company, an insurance company incorporated in Texas
in 1926. Our principal executive offices are located at 2929 Allen Parkway,
Houston, Texas 77019-2155, and our telephone number is (713) 522-1111.
RETIREMENT SERVICES
The retirement services division represented 37% of our division earnings
for the year ended December 31, 1999, and 39% for the six months ended June 30,
2000. The division, with assets of $70 billion at June 30, 2000, is a leading
provider of retirement products and services, and ranks as the nation's
third-largest writer of annuities. A broad range of retirement savings products
is offered through a sales force of over 1,700 financial advisors and more than
34,000 financial institution representatives.
The division sells tax-qualified annuities and mutual funds to employees of
educational, health care, and government entities, and other not-for-profit
organizations. The division also markets non-qualified annuities through
financial institution representatives at 250 banks and other financial
institutions. The non-qualified annuities are developed jointly with the
financial institution and tailored to meet the customers' specific needs. The
division has approximately 2.9 million customer accounts.
LIFE INSURANCE
The life insurance division represented 48% of our division earnings for
the year ended December 31, 1999, and 46% for the six months ended June 30,
2000. This division is the second-largest writer of new individual life
insurance in the United States and offers a comprehensive portfolio of life and
annuity products.
With assets of $38 billion at June 30, 2000, the division provides
traditional, interest-sensitive, and variable life insurance and annuities to 8
million customers. The division reaches its customers through a distribution
system of 36,000 independent and career agents, as well as banks,
broker-dealers, and financial planners.
CONSUMER FINANCE
The consumer finance division represented 15% of our division earnings for
the year ended December 31, 1999, and 15% for the six months ended June 30,
2000. The division is a leading provider of mortgages, consumer loans, and
credit-related insurance products. Gross finance receivables, consisting of 62%
real estate-secured loans, totaled $11.6 billion at June 30, 2000.
The division services 2.2 million customer accounts through a nationwide
network of 1,330 branch offices located in 40 states and through financing
programs with 16,000 retail merchants. In addition to the mortgages originated
by the branch offices, the division acquires loans through bulk purchases.
S-3
<PAGE> 4
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
ratio of earnings to combined fixed charges and preferred stock dividends of
American General for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------------ ------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges:
Consolidated operations.................. 2.4 3.5 3.4 2.9 2.5 2.5 2.3
Consolidated operations, corporate fixed
charges only.......................... 6.2 9.7 9.3 7.3 6.4 6.4 5.3
Ratio of earnings to combined fixed charges
and preferred stock dividends:
Consolidated operations.................. 2.1 2.9 2.8 2.4 2.1 2.3 2.2
Consolidated operations, corporate fixed
charges and preferred stock dividends
only.................................. 3.8 5.8 5.6 4.3 3.7 4.7 4.7
</TABLE>
For purposes of computing these ratios, earnings represent income before
income tax expense, net dividends on preferred securities of subsidiaries, and
minority interest, adjusted for undistributed income of an equity investee and
fixed charges (excluding capitalized interest). Fixed charges consist primarily
of interest expense (including capitalized interest) on short-term and long-term
borrowings. Preferred stock dividends consist of dividends on preferred
securities of subsidiaries and convertible preferred stock.
S-4
<PAGE> 5
SELECTED FINANCIAL DATA OF AMERICAN GENERAL
The following table presents selected financial data of American General
and its consolidated subsidiaries for the periods indicated. All data presented
includes the operating results and financial position of USLIFE Corporation
("USLIFE"), which was acquired June 17, 1997. The acquisition was accounted for
using the pooling of interests method and, accordingly, American General's
consolidated financial statements for all periods prior to the acquisition have
been restated to include the results of operations, financial position, and cash
flows of USLIFE.
The financial data as of December 31, 1999, 1998, 1997, 1996, and 1995 and
for the five years ended December 31, 1999 was derived from American General's
audited consolidated financial statements, incorporated herein by reference.
The financial data as of and for the six months ended June 30, 2000 and
1999 was derived from American General's unaudited quarterly financial
statements (incorporated herein by reference from American General's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2000), which, in the
opinion of management, reflect all adjustments necessary for a fair presentation
of such data. The data for the six months ended June 30, 2000 and 1999 is not
necessarily indicative of results of operations for the entire year. The data
should be read in conjunction with the consolidated financial statements,
related notes, "Management's Discussion and Analysis," and other financial
information incorporated by reference herein.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
---------------- ------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
(IN MILLIONS) ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Premiums and other considerations............... $1,966 $1,914 $ 3,772 $ 3,605 $3,362 $3,244 $2,969
Net investment income........................... 2,675 2,597 5,232 5,095 4,020 3,773 3,584
Finance charges................................. 789 713 1,455 1,354 1,265 1,450 1,492
Realized investment gains (losses).............. (109) (7) (19) 6 40 62 18
Equity in earnings of investee.................. -- -- -- -- 54 40 43
Other........................................... 151 116 239 191 186 145 130
------ ------ ------- ------- ------ ------ ------
Total revenues......................... 5,472 5,333 10,679 10,251 8,927 8,714 8,236
------ ------ ------- ------- ------ ------ ------
Insurance and annuity benefits.................. 2,751 2,691 5,313 5,159 4,332 4,218 4,085
Operating costs and expenses.................... 1,224 1,210 2,444 2,486 2,220 2,129 1,852
Provision for finance receivable losses......... 97 100 207 212 248 417 574
Interest expense
Corporate................................... 110 95 197 181 158 162 197
Consumer Finance............................ 333 276 574 512 461 493 518
Litigation settlements and other charges........ 315(a) -- 57(b) 378(b) 50(b) 50(b) --
Merger-related costs............................ -- -- -- -- 272(b) -- --
Loss on sale of non-strategic assets............ -- -- -- -- 113(b) 165(b) --
------ ------ ------- ------- ------ ------ ------
Total benefits and expenses............ 4,830 4,372 8,792 8,928 7,854 7,634 7,226
------ ------ ------- ------- ------ ------ ------
Income before income tax expense................ 642 961 1,887 1,323 1,073 1,080 1,010
Income tax expense.............................. 213 336 664 459 447 387 341
------ ------ ------- ------- ------ ------ ------
Income before net dividends on preferred
securities of subsidiaries and minority
interest...................................... 429 625 1,223 864 626 693 669
Net dividends on preferred securities of
subsidiaries.................................. 50 45 92 89 84 40 19
Minority interest in net income of investee..... -- -- -- 11 -- -- --
------ ------ ------- ------- ------ ------ ------
Net income............................. $ 379(a) $ 580 $ 1,131(c) $ 764(d) $ 542(e) $ 653(f) $ 650
====== ====== ======= ======= ====== ====== ======
</TABLE>
S-5
<PAGE> 6
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
------------------- -------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
(IN MILLIONS)
FINANCIAL POSITION
Total assets(g)................... $121,163 $109,869 $115,447 $105,107 $80,620 $74,134 $69,083
Invested assets(g)................ 71,539 68,918 68,335 69,863 54,006 50,832 49,598
Finance receivables, net.......... 11,260 9,573 10,634 9,275 7,639 7,230 7,918
Debt (including short-term)
Corporate..................... 3,173 2,990 3,120 2,743 1,916 2,102 2,295
Consumer Finance.............. 10,753 9,232 10,206 8,863 7,266 7,630 7,470
Total liabilities (excluding
debt)........................... 98,837 88,339 93,777 82,902 62,129 56,331 51,480
Redeemable equity................. 1,971 1,729 1,924 1,728 1,726 1,227 729
Shareholders' equity(g)........... 6,429 7,579 6,420 8,871 7,583 6,844 7,109
</TABLE>
---------------
(a) Includes effect of aftertax charges of $175 million for settlement of
industrial life insurance litigation and $32 million for alleged fraud
loss. See Note 9 of Item 1 within American General's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000, incorporated herein by
reference.
(b) See Note 3 of Item 8 within American General's Annual Report on Form 10-K
for the years ended December 31, 1999 and 1998, incorporated herein by
reference.
(c) Includes effect of $36 million aftertax charge for litigation settlement
related to financing of satellite dishes (see Note (b) above).
(d) Includes effect of $246 million aftertax litigation charge for market
conduct class action lawsuits (see Note (b) above).
(e) Includes effect of $247 million aftertax USLIFE merger-related costs, $73
million aftertax loss on sale of non-strategic assets, and $33 million
aftertax litigation charge (see Note (b) above).
(f) Includes effect of $111 million aftertax loss on sale of non-strategic
assets and $32 million aftertax write-down of USLIFE group business (see
Note (b) above).
(g) Includes effect of SFAS 115. To facilitate analysis of period-to-period
balances, the effect of SFAS 115 on reported balances was as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
-------------- -------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
(IN MILLIONS)
Increase (decrease) in assets................ $(1,702) $147 $(1,426) $2,436 $1,782 $ 949 $1,956
Increase (decrease) in invested assets....... (2,175) 328 (1,750) 3,519 2,786 1,488 3,071
Increase (decrease) in shareholders' equity... (1,482) 95 (1,304) 1,575 1,154 610 1,265
</TABLE>
RECENT DEVELOPMENTS
On October 26, 2000, American General released unaudited information about
its earnings for the third quarter of 2000. Net income was $319 million for the
three months ended September 30, 2000, compared to $294 million for the same
period in 1999. Net income per share was $1.26 for the third quarter of 2000 and
$1.15 for the third quarter of 1999.
The retirement services division reported earnings of $167 million in the
third quarter of 2000 compared to $140 million in the same period of 1999. This
earnings increase reflected growth in the division's assets under management,
which generated an increase in fixed margin, variable fees, and asset management
fees. Earnings in our life insurance division increased to $193 million for the
three months ended September 30, 2000, from $182 million in the same period of
1999. This increase resulted from growth in life and annuity reserves and
insurance in force, as well as reduced operating expenses. Our consumer finance
division's earnings were $63 million in the third quarter of 2000 compared to
$57 million in the third quarter of 1999. This growth in earnings related to an
increase in average receivables, partially offset by lower spread between yield
on receivables and borrowing costs.
S-6
<PAGE> 7
DESCRIPTION OF NOTES
The following description of the particular terms of the notes offered
hereby supplements the description of the general terms and provisions of Debt
Securities set forth in the prospectus under the caption "Description of Debt
Securities".
GENERAL
The notes will be issued under the Senior Indenture dated as of November
15, 1997 between the Company and Bankers Trust Company, which is more fully
described in the prospectus. Certain terms used herein are defined in the
prospectus.
The notes offered hereby constitute a further issuance of, and will be
consolidated with, the 7 1/2% Notes Due 2010 issued by us on August 11, 2000 and
form a single series with those notes. The notes offered hereby will have the
same CUSIP number and will trade interchangeably with the previously issued
notes in this series immediately upon settlement. On October 30, 2000,
$250,000,000 aggregate principal amount of those notes were outstanding. The
issuance of the notes offered hereby will increase the aggregate principal
amount of the outstanding notes of this series to $500,000,000.
The notes will mature on August 11, 2010 and bear interest at the rate set
forth on the cover page of this prospectus supplement, payable semi-annually on
February 11 and August 11, commencing February 11, 2001, to the registered
holders thereof on the preceding January 27 or July 27, as the case may be.
We may not redeem the notes prior to maturity.
The notes will be issued as a global Debt Security. See "Description of
Debt Securities -- Global Debt Securities" in the prospectus. The Depository
Trust Company, New York, New York (the "Depository" or "DTC") will be the
Depository with respect to the notes. The notes will be issued as fully
registered securities in the name of Cede & Co., the Depository's partnership
nominee, and will be deposited with the Depository.
BOOK-ENTRY NOTES
The Depository has advised us that it is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended. The Depository holds
securities that its Participants deposit with it and facilitates the settlement
among Participants of securities transactions in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers (including the
underwriters), banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of its Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to DTC's book-entry system is
also available to others, such as securities brokers and dealers, banks and
trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the notes will be made by the underwriters in immediately
available funds. All payments of principal and interest on the notes will be
made by the Company in immediately available funds. The notes will trade in
DTC's Same-Day Funds Settlement System until maturity, and secondary market
trading activity in the notes will therefore be required by DTC to settle in
immediately available funds.
S-7
<PAGE> 8
UNDERWRITING
We intend to offer the notes through the underwriters. Subject to the terms
and conditions contained in an underwriting agreement and the related pricing
agreement between us and the underwriters, we have agreed to sell to the
underwriters and the underwriters severally have agreed to purchase from us, the
principal amount of the notes listed opposite their names below.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... $ 87,500,000
Chase Securities Inc........................................ 87,500,000
Banc of America Securities LLC.............................. 25,000,000
Banc One Capital Markets, Inc............................... 25,000,000
First Union Securities, Inc................................. 25,000,000
------------
Total............................................. $250,000,000
============
</TABLE>
The underwriters have agreed to purchase all of the notes sold pursuant to
the underwriting agreement if any of these notes are purchased. If an
underwriter defaults, the underwriting agreement provides that the purchase
commitments of the nondefaulting underwriters may be increased or the
underwriting agreement may be terminated.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments the
underwriters may be required to make in respect of those liabilities.
The underwriters are offering the notes, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of legal matters by
their counsel, including the validity of the notes, and other conditions
contained in the underwriting agreement, such as the receipt by the underwriters
of officer's certificates and legal opinions. The underwriters reserve the right
to withdraw, cancel or modify offers to the public and to reject orders in whole
or in part.
COMMISSIONS AND DISCOUNTS
The underwriters have advised us that they propose initially to offer the
notes to the public at the public offering price on the cover page of this
prospectus supplement, and to dealers at that price less a concession not in
excess of .2% of the principal amount of the notes. The underwriters may allow,
and the dealers may reallow, a discount not in excess of .125% of the principal
amount of the notes to other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
The underwriters have agreed to reimburse American General for certain
expenses, including expenses incurred in connection with the offering of the
notes, in the amount of $687,500.
S-8
<PAGE> 9
TRADING MARKET
We do not intend to apply for listing of the notes on any national
securities exchange or for quotation of the notes on any automated dealer
quotation system. We have been advised by the underwriters that they presently
intend to make a market in the notes after completion of the offering. However,
they are under no obligation to do so and may discontinue any market-making
activities at any time without any notice. We cannot assure the liquidity of the
trading market for the notes or that an active public market for the notes will
develop. If an active public trading market for the notes does not develop, the
market price and liquidity of the notes may be adversely affected.
PRICE STABILIZATION AND SHORT POSITIONS
In connection with the offering, the underwriters are permitted to engage
in transactions that stabilize the market price of the notes. Such transactions
consist of bids or purchases to peg, fix or maintain the price of the notes. If
the underwriters create a short position in the notes in connection with the
offering, i.e., if they sell more notes than are on the cover page of this
prospectus supplement, the underwriters may reduce that short position by
purchasing notes in the open market. Purchases of a security to stabilize the
price or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the notes. In addition, neither we nor
any of the underwriters makes any representation that the underwriters will
engage in these transactions or that these transactions, once commenced, will
not be discontinued without notice.
OTHER RELATIONSHIPS
Some of the underwriters and their affiliates have engaged in, and may in
the future engage in, investment banking and other banking or commercial
dealings in the ordinary course of business with us.
LEGAL MATTERS
The validity of the notes offered hereby will be passed upon for the
Company by Kevin T. Abikoff, Deputy General Counsel and Corporate Responsibility
Officer of the Company, and certain legal matters relating to the notes offered
hereby will be passed upon for the underwriters by Brown & Wood LLP, New York,
New York. Brown & Wood LLP may rely as to matters of Texas law on the opinion of
Kevin T. Abikoff. Each of Mr. Abikoff and the other in-house counsel assisting
Mr. Abikoff in passing upon the validity of the securities offered hereby owns
shares of Common Stock of the Company as a result of participation in Company
benefit plans or otherwise, and has options to purchase additional shares of
such Common Stock.
EXPERTS
The consolidated financial statements of American General Corporation
incorporated by reference in American General Corporation's Annual Report (Form
10-K) for the year ended December 31, 1999, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon incorporated by
reference therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
S-9
<PAGE> 10
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$250,000,000
AMERICAN GENERAL CORPORATION
7 1/2% NOTES DUE 2010
--------------------------------------------
PROSPECTUS SUPPLEMENT
--------------------------------------------
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
FIRST UNION SECURITIES, INC.
OCTOBER 30, 2000
--------------------------------------------------------------------------------
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