-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OCwMNgqaSjo1B285KtXwcBmQNztdqhw3F4sW18dJovU0gHJQ7D4UWUKVBF/r8Xy0 tA04zlEOc8hKc24kaDkuzw== 0000025598-05-000028.txt : 20050505 0000025598-05-000028.hdr.sgml : 20050505 20050505134844 ACCESSION NUMBER: 0000025598-05-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050331 FILED AS OF DATE: 20050505 DATE AS OF CHANGE: 20050505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN GENERAL FINANCE CORP CENTRAL INDEX KEY: 0000025598 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 350416090 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06155 FILM NUMBER: 05802675 BUSINESS ADDRESS: STREET 1: 601 NW SECOND ST CITY: EVANSVILLE STATE: IN ZIP: 47708 BUSINESS PHONE: 8124248031 FORMER COMPANY: FORMER CONFORMED NAME: CREDITHRIFT FINANCIAL CORP DATE OF NAME CHANGE: 19890330 10-Q 1 cor0305.txt AGFC 10-Q FOR PERIOD ENDED 3/31/05 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission file number 1-6155 AMERICAN GENERAL FINANCE CORPORATION (Exact name of registrant as specified in its charter) Indiana 35-0416090 (State of Incorporation) (I.R.S. Employer Identification No.) 601 N.W. Second Street, Evansville, IN 47708 (Address of principal executive offices) (Zip Code) (812) 424-8031 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes No X At May 5, 2005, there were 10,160,012 shares of the registrant's common stock, $.50 par value, outstanding. 2 TABLE OF CONTENTS Item Page Part I - Financial Information 1. Financial Statements (Unaudited) . . . . . . . . . . . . . . . 3 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . 11 3. Quantitative and Qualitative Disclosures About Market Risk . . 25 4. Controls and Procedures . . . . . . . . . . . . . . . . . . . 26 Part II - Other Information 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 26 2. Unregistered Sales of Equity Securities and Use of Proceeds. . 26 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . 27 4. Submission of Matters to a Vote of Security Holders . . . . . 27 5. Other Information . . . . . . . . . . . . . . . . . . . . . . 27 6. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 AVAILABLE INFORMATION American General Finance Corporation (AGFC) files annual, quarterly, and current reports and other information with the Securities and Exchange Commission (the SEC). The SEC maintains a website that contains annual, quarterly, and current reports and other information that issuers (including AGFC) file electronically with the SEC. The SEC's website is www.sec.gov. The following reports are available free of charge on our Internet website www.agfinance.com as soon as reasonably practicable after we file them with or furnish them to the SEC: * our 2005 Current Reports on Form 8-K; * this Quarterly Report on Form 10-Q; and * our Annual Report on Form 10-K as amended by our Annual Report on Form 10-K/A (Amendment No. 1) for the year ended December 31, 2004. The information on our website is not incorporated by reference into this report. The website addresses listed above are provided for the information of the reader and are not intended to be active links. 3 Part I - FINANCIAL INFORMATION Item 1. Financial Statements AMERICAN GENERAL FINANCE CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Income (Unaudited) Three Months Ended March 31, 2005 2004 (dollars in thousands) Revenues Finance charges $531,324 $448,098 Insurance 42,509 45,701 Other: Service fee income from a non-subsidiary affiliate 63,057 35,617 Miscellaneous 27,631 33,428 Total revenues 664,521 562,844 Expenses Interest expense 192,829 135,556 Operating expenses: Salaries and benefits 130,449 118,265 Other operating expenses 73,639 69,799 Provision for finance receivable losses 63,217 58,177 Insurance losses and loss adjustment expenses 17,148 21,127 Total expenses 477,282 402,924 Income before provision for income taxes 187,239 159,920 Provision for Income Taxes 68,897 58,053 Net Income $118,342 $101,867 See Notes to Condensed Consolidated Financial Statements. 4 AMERICAN GENERAL FINANCE CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) March 31, December 31, 2005 2004 (dollars in thousands) Assets Net finance receivables: Real estate loans $16,811,170 $15,411,561 Non-real estate loans 2,971,165 2,987,591 Retail sales finance 1,297,603 1,340,734 Net finance receivables 21,079,938 19,739,886 Allowance for finance receivable losses (445,926) (445,731) Net finance receivables, less allowance for finance receivable losses 20,634,012 19,294,155 Investment securities 1,381,421 1,378,362 Cash and cash equivalents 206,194 151,348 Notes receivable from parent 299,573 308,923 Other assets 958,143 961,020 Total assets $23,479,343 $22,093,808 Liabilities and Shareholder's Equity Long-term debt $15,586,553 $14,481,059 Short-term debt 3,958,603 4,002,472 Insurance claims and policyholder liabilities 411,208 422,957 Other liabilities 528,313 411,358 Accrued taxes 105,985 43,489 Total liabilities 20,590,662 19,361,335 Shareholder's equity: Common stock 5,080 5,080 Additional paid-in capital 1,139,906 1,124,906 Accumulated other comprehensive income 60,279 37,413 Retained earnings 1,683,416 1,565,074 Total shareholder's equity 2,888,681 2,732,473 Total liabilities and shareholder's equity $23,479,343 $22,093,808 See Notes to Condensed Consolidated Financial Statements. 5 AMERICAN GENERAL FINANCE CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, 2005 2004 (dollars in thousands) Cash Flows from Operating Activities Net income $ 118,342 $ 101,867 Reconciling adjustments: Provision for finance receivable losses 63,217 58,177 Depreciation and amortization 40,239 42,181 Deferral of finance receivable origination costs (19,321) (17,934) Deferred income tax (benefit) charge (11,500) 5,752 Origination of real estate loans held for sale (19,587) (20,135) Sales and principal collections of real estate loans held for sale 17,328 35,865 Change in other assets and other liabilities 95,001 155,264 Change in insurance claims and policyholder liabilities (11,749) (7,652) Change in taxes receivable and payable 62,534 42,635 Other, net 2,587 4,203 Net cash provided by operating activities 337,091 400,223 Cash Flows from Investing Activities Finance receivables originated or purchased (3,310,178) (2,673,802) Principal collections on finance receivables 1,909,919 1,730,312 Investment securities purchased (125,204) (248,144) Investment securities called and sold 79,967 220,980 Investment securities matured 16,000 2,600 Change in notes receivable from parent 9,350 (11,710) Change in premiums on finance receivables purchased and deferred charges (9,233) (2,009) Other, net (6,585) (2,794) Net cash used for investing activities (1,435,964) (984,567) Cash Flows from Financing Activities Proceeds from issuance of long-term debt 1,765,588 764,346 Repayment of long-term debt (583,000) (411,500) Change in short-term debt (43,869) 307,794 Capital contribution from parent 15,000 - Net cash provided by financing activities 1,153,719 660,640 Increase in cash and cash equivalents 54,846 76,296 Cash and cash equivalents at beginning of period 151,348 136,223 Cash and cash equivalents at end of period $ 206,194 $ 212,519 See Notes to Condensed Consolidated Financial Statements. 6 AMERICAN GENERAL FINANCE CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended March 31, 2005 2004 (dollars in thousands) Net income $118,342 $101,867 Other comprehensive gain: Changes in net unrealized (losses) gains: Investment securities (26,268) 15,687 Swap agreements 53,746 (7,793) Minimum pension liability (2,247) - Income tax effect: Investment securities 9,193 (5,491) Swap agreements (18,810) 2,728 Minimum pension liability 876 - Changes in net unrealized gains, net of tax 16,490 5,131 Reclassification adjustments for realized losses (gains) included in net income: Investment securities 2,307 (769) Swap agreements 7,502 15,589 Income tax effect: Investment securities (807) 269 Swap agreements (2,626) (5,456) Realized losses included in net income, net of tax 6,376 9,633 Other comprehensive gain, net of tax 22,866 14,764 Comprehensive income $141,208 $116,631 See Notes to Condensed Consolidated Financial Statements. 7 AMERICAN GENERAL FINANCE CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements March 31, 2005 Note 1. Basis of Presentation American General Finance Corporation will be referred to as "AGFC" or collectively with its subsidiaries, whether directly or indirectly owned, as the "Company" or "we". We prepared our condensed consolidated financial statements using accounting principles generally accepted in the United States for interim periods. The statements include the accounts of AGFC and its subsidiaries, all of which are wholly owned. We eliminated all intercompany items. AGFC is a wholly owned subsidiary of American General Finance, Inc. (AGFI). AGFI is an indirect wholly owned subsidiary of American International Group, Inc. (AIG). We made all adjustments, consisting only of normal recurring adjustments, that we considered necessary for a fair statement of the Company's condensed consolidated financial statements. You should read these statements in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2004. To conform to the 2005 presentation, we reclassified certain items in the prior period. Note 2. Finance Receivables Components of net finance receivables by type were as follows: March 31, 2005 Real Non-real Retail Estate Estate Sales Loans Loans Finance Total (dollars in thousands) Gross receivables $16,722,444 $3,277,145 $1,411,337 $21,410,926 Unearned finance charges and points and fees (121,917) (371,340) (128,208) (621,465) Accrued finance charges 101,628 35,796 14,503 151,927 Deferred origination costs 30,684 28,201 - 58,885 Premiums, net of discounts 78,331 1,363 (29) 79,665 Total $16,811,170 $2,971,165 $1,297,603 $21,079,938 December 31, 2004 Real Non-real Retail Estate Estate Sales Loans Loans Finance Total (dollars in thousands) Gross receivables $15,332,989 $3,303,758 $1,460,622 $20,097,369 Unearned finance charges and points and fees (124,147) (386,533) (134,465) (645,145) Accrued finance charges 98,495 39,047 14,663 152,205 Deferred origination costs 29,516 29,375 - 58,891 Premiums, net of discounts 74,708 1,944 (86) 76,566 Total $15,411,561 $2,987,591 $1,340,734 $19,739,886 8 Note 3. Allowance for Finance Receivable Losses Changes in the allowance for finance receivable losses were as follows: Three Months Ended March 31, 2005 2004 (dollars in thousands) Balance at beginning of period $445,731 $455,402 Provision for finance receivable losses 63,217 58,177 Charge-offs (76,045) (79,783) Recoveries 13,023 11,817 Balance at end of period $445,926 $445,613 Note 4. Derivative Financial Instruments AGFC uses derivative financial instruments in managing the cost of its debt but is neither a dealer nor a trader in derivative financial instruments. AGFC's derivative financial instruments consist of interest rate, foreign currency, and equity-indexed swap agreements. We design our interest rate and foreign currency swap agreements to qualify as cash flow hedges or fair value hedges. While our equity- indexed swap agreements mitigate economic exposure of related equity- indexed debt, these swap agreements do not qualify as cash flow or fair value hedges under GAAP. At March 31, 2005, equity-indexed debt was immaterial. Note 5. Accumulated Other Comprehensive Income Components of accumulated other comprehensive income were as follows: March 31, December 31, 2005 2004 (dollars in thousands) Net unrealized gains (losses) on swap agreements $33,710 $(6,102) Net unrealized gains on investment securities 27,940 43,515 Net unrealized losses on minimum pension liability (1,371) - Accumulated other comprehensive income $60,279 $37,413 9 Note 6. Segment Information We have three business segments: branch, centralized real estate, and insurance. We define our segments by types of financial service products we offer, nature of our production processes, and methods we use to distribute our products and to provide our services, as well as our management reporting structure. In our Annual Report on Form 10-K for the year ended December 31, 2004, we expanded our segment reporting to reflect our centralized real estate business as a separate segment. We also restated prior interim periods so that these prior periods are shown on a comparable basis to our new presentation. In our branch business segment, we: * originate real estate loans secured by first or second mortgages on residential real estate, which may be closed-end accounts or open-end home equity lines of credit; * originate secured and unsecured non-real estate loans; * purchase retail sales contracts and provide revolving retail services arising from the retail sale of consumer goods and services by retail merchants; and * purchase private label receivables originated by AIG Federal Savings Bank (AIG Bank) under a participation agreement. To supplement our lending and retail sales financing activities, we purchase portfolios of real estate loans, non-real estate loans, and retail sales finance receivables originated by other lenders. We also offer credit and non-credit insurance and ancillary products to all eligible branch customers. In our centralized real estate business segment, we: * provide, for fees, marketing, certain origination processing services, and loan servicing and related services for AIG Bank; * originate real estate loans for transfer to the centralized real estate servicing center; * originate real estate loans for sale to investors with servicing released to the purchaser; and * service a portfolio of real estate loans generated through: * portfolio acquisitions from third party lenders; * correspondent relationships; * our mortgage origination subsidiaries; * refinancing existing mortgages; or * advances on home equity lines of credit. In our insurance business segment, we write and reinsure credit life, credit accident and health, credit-related property and casualty, credit involuntary unemployment, and non-credit insurance covering our customers and the property pledged as collateral through products that the branch business segment offers its customers. We also monitor our finance receivables to determine that the collateral is adequately protected. 10 Information about the Company's segments as well as reconciliations of total segment pretax income to the condensed consolidated financial statement amounts were as follows: For the three months ended March 31, 2005: Centralized Total Branch Real Estate Insurance Segments (dollars in thousands) Revenues: External: Finance charges $421,748 $136,572 $ - $558,320 Insurance 177 - 42,332 42,509 Other (1,541) 62,921 23,824 85,204 Intercompany 20,167 375 (16,916) 3,626 Pretax income 144,829 31,846 24,418 201,093 For the three months ended March 31, 2004: Centralized Total Branch Real Estate Insurance Segments (dollars in thousands) Revenues: External: Finance charges $415,347 $ 60,666 $ - $476,013 Insurance 203 - 45,498 45,701 Other (3,473) 37,530 24,259 58,316 Intercompany 20,935 238 (18,096) 3,077 Pretax income 132,735 15,234 22,148 170,117 Reconciliations of total segment pretax income to the condensed consolidated financial statement amounts were as follows: Three Months Ended March 31, 2005 2004 (dollars in thousands) Pretax income: Segments $201,093 $170,117 Corporate (11,496) (10,917) Adjustments (2,358) 720 Consolidated pretax income $187,239 $159,920 Adjustments for pretax income include realized gains (losses) and certain other investment revenue, interest expense due to releveraging of debt, and provision for finance receivable losses due to redistribution of amounts provided for the allowance for finance receivable losses. Note 7. Legal Contingencies AGFC and certain of its subsidiaries are parties to various lawsuits and proceedings, including certain purported class action claims, arising in the ordinary course of business. In addition, many of these proceedings are pending in jurisdictions that permit damage awards disproportionate to the actual economic damages alleged to have been incurred. Based upon information presently available, we believe 11 that the total amounts, if any, that will ultimately be paid arising from these lawsuits and proceedings will not have a material adverse effect on our consolidated results of operations or financial position. However, the continued occurrences of large damage awards in general in the United States, including large punitive damage awards that bear little or no relation to actual economic damages incurred by plaintiffs in some jurisdictions, create the potential for an unpredictable judgment in any given suit. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. REPORT OF MANAGEMENT'S RESPONSIBILITY The Company's management is responsible for the integrity and fair statement of our condensed consolidated financial statements and all other financial information presented in this report. We prepared our condensed consolidated financial statements using accounting principles generally accepted in the United States (GAAP) for interim periods. We made estimates and assumptions that affect amounts recorded in the financial statements and disclosures of contingent assets and liabilities. The Company's management is responsible for establishing and maintaining an internal control structure and procedures for financial reporting. We designed these systems to provide reasonable assurance that assets are safeguarded from loss or unauthorized use, that transactions are recorded according to GAAP under management's direction and that financial records are reliable to prepare financial statements. We support the internal control structure with careful selection, training and development of qualified personnel. The Company's employees are subject to AIG's Code of Conduct designed to assure that all employees perform their duties with honesty and integrity. In 2004, AIG adopted the AIG Director, Executive Officer, and Senior Financial Officer Code of Business Conduct and Ethics, which covers such directors and officers of AIG and its subsidiaries, including the Company's Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer. We do not allow loans to executive officers. The aforementioned systems include a documented organizational structure and policies and procedures that we communicate throughout the Company. Our internal auditors report directly to AIG to strengthen independence. They continually monitor the operation of our internal controls and report their findings to the Company's management, AIG's management, and AIG's internal audit department. We take prompt action to correct control deficiencies and improve the systems. The Company's management assesses any changes to our internal control structure quarterly. Based on these assessments, management has concluded that the internal control structure and the procedures for financial reporting have functioned effectively and that the condensed consolidated financial statements fairly present our consolidated financial position and the results of our operations for the periods presented. 12 FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q and our other publicly available documents may include, and the Company's officers and representatives may from time to time make, statements which may constitute "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent only our belief regarding future events, many of which are inherently uncertain and outside of our control. These statements may address, among other things, the Company's strategy for growth, product development, regulatory approvals, market position, financial results and reserves. The Company's actual results and financial condition may differ from the anticipated results and financial condition indicated in these forward-looking statements. The important factors, many of which are outside of our control, which could cause the Company's actual results to differ, possibly materially, include, but are not limited to, the following: * changes in general economic conditions, including the interest rate environment in which we conduct business and the financial markets through which we access capital and invest cash flows from the insurance business segment; * changes in the competitive environment in which we operate, including the demand for our products, customer responsiveness to our distribution channels and the formation of business combinations among our competitors; * the effectiveness of our credit risk scoring models in assessing the risk of customer unwillingness or inability to repay; * shifts in collateral values, contractual delinquencies, and credit losses; * levels of unemployment and personal bankruptcies; * our ability to access capital markets and maintain our credit rating position; * changes in laws or regulations that affect our ability to conduct business or the manner in which we conduct business, such as licensing requirements, pricing limitations or restrictions on the method of offering products; * the costs and effects of any litigation or governmental inquiries or investigations that are determined adversely to the Company; * changes in accounting standards or tax policies and practices and the application of such new policies and practices to the manner in which we conduct business; * our ability to integrate the operations of our acquisitions into our businesses; * changes in our ability to attract and retain employees or key executives to support our businesses; and * natural or accidental events such as fires or floods affecting our branches or other operating facilities. We also direct readers to other risks and uncertainties discussed in other documents we file with the SEC. We are under no obligation to (and expressly disclaim any obligation to) update or alter any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future events or otherwise. 13 CRITICAL ACCOUNTING ESTIMATES We consider our most critical accounting estimate to be the establishment of an adequate allowance for finance receivable losses. Our Credit Strategy and Policy Committee evaluates our finance receivable portfolio monthly. The Credit Strategy and Policy Committee exercises its judgment, based on quantitative analyses, qualitative factors, and each committee member's experience in the consumer finance industry, when determining the amount of the allowance for finance receivable losses. If its review concludes that an adjustment is necessary, we charge or credit this adjustment to expense through the provision for finance receivable losses. We consider this estimate to be a critical accounting estimate that affects the net income of the Company in total and the pretax operating income of our branch and centralized real estate business segments. We document the adequacy of the allowance for finance receivable losses, the analysis of the trends in credit quality, and the current economic conditions the Credit Strategy and Policy Committee considered to support its conclusions. See Provision for Finance Receivable Losses for further information on the allowance for finance receivable losses. OFF-BALANCE SHEET ARRANGEMENTS We do not have any off-balance sheet arrangements as defined by SEC rules. CAPITAL RESOURCES AND LIQUIDITY Capital Resources Our capital varies primarily with the amount of net finance receivables. We base the mix of debt and equity primarily upon maintaining leverage that supports cost-effective funding. March 31, 2005 2004 Amount Percent Amount Percent (dollars in millions) Long-term debt $15,586.5 69% $11,055.4 66% Short-term debt 3,958.6 18 3,492.3 21 Total debt 19,545.1 87 14,547.7 87 Equity 2,888.7 13 2,168.1 13 Total capital $22,433.8 100% $16,715.8 100% Net finance receivables $21,079.9 $15,700.5 Debt to equity ratio 6.77x 6.71x Debt to tangible equity ratio 7.49x 7.47x 14 Reconciliations of equity to tangible equity were as follows: March 31, 2005 2004 (dollars in millions) Equity $ 2,888.7 $ 2,168.1 Goodwill (220.5) (220.5) Accumulated other comprehensive (income) loss (60.3) 0.2 Tangible equity $ 2,607.9 $ 1,947.8 We issue a combination of fixed-rate debt, principally long-term, and floating-rate debt, both long-term and short-term. AGFC obtains most of our fixed-rate funding through public issuances of long-term debt with maturities generally ranging from three to ten years. AGFC obtains floating-rate funding by issuing and refinancing commercial paper and through issuances of long-term, floating-rate debt. We issue commercial paper, with maturities ranging from 1 to 270 days, to banks, insurance companies, corporations, and other accredited investors. At March 31, 2005, short-term debt included $3.4 billion of commercial paper. AGFC also issues extendible commercial notes with initial maturities of up to 90 days, which AGFC may extend to 390 days. At March 31, 2005, short-term debt included $518.6 million of extendible commercial notes. AGFC uses interest rate, foreign currency, and equity-indexed swap agreements in conjunction with specific debt issuances. AGFC's objective is to achieve net U.S. dollar, fixed or floating interest exposure at costs not materially different from costs AGFC would have incurred by issuing debt for the same net exposure without using derivatives. Accordingly, this cost differential did not have a material effect on the Company's net income during the three months ended March 31, 2005 or 2004. AGFC has historically paid dividends to (or received capital contributions from) its parent to manage our leverage of debt to tangible equity to a targeted amount, which is currently 7.5 to 1. Certain AGFC financing agreements effectively limit the amount of dividends AGFC may pay. Liquidity Facilities We maintain credit facilities to support the issuance of commercial paper and to provide an additional source of funds for operating requirements. At March 31, 2005, AGFC had committed credit facilities totaling $3.5 billion consisting of a $1.5 billion multi-year facility and $2.0 billion of credit facilities with commitments of less than one year (but with one-year term out provisions upon drawdown) under which AGFI is an eligible borrower for up to $660 million. The annual commitment fees for the facilities are based upon AGFC's long-term credit ratings and averaged 0.07% at March 31, 2005. At March 31, 2005, AGFC and certain of its subsidiaries also had an uncommitted credit facility totaling $50.0 million which was shared with AGFI and could be increased depending upon lender ability to participate its loans under the facility. There were no amounts outstanding under any facility at March 31, 2005 and March 31, 2004. AGFC does not guarantee any borrowings of AGFI. 15 Liquidity Our sources of funds include operations, issuances of long-term debt in domestic and foreign markets, short-term borrowings in the commercial paper market, borrowings from banks under credit facilities, and sales of finance receivables for securitizations. AGFC has also received capital contributions from its parent to support finance receivable growth and maintain targeted leverage. We believe that our overall sources of liquidity will continue to be sufficient to satisfy our foreseeable operational requirements and financial obligations. The principal factors that could decrease our liquidity are delinquent payments from our customers and an inability to access capital markets. The principal factors that could increase our cash needs are significant increases in net originations and purchases of finance receivables. We intend to mitigate liquidity risk by continuing to operate the Company utilizing the following existing strategies: * maintain a finance receivable portfolio comprised mostly of real estate loans, which generally represent a lower risk of customer non-payment; * originate and monitor finance receivables with our credit risk management system; * maintain an investment securities portfolio of predominantly investment grade, liquid securities; and * maintain a capital structure appropriate to our asset base. Principal sources and uses of cash were as follows: Three Months Ended March 31, 2005 2004 (dollars in millions) Principal sources of cash: Net issuances of debt $1,138.7 $ 660.6 Operations 337.1 400.2 Capital contribution 15.0 - Total $1,490.8 $1,060.8 Principal uses of cash: Net originations and purchases of finance receivables $1,400.3 $ 943.5 Net originations and purchases of finance receivables and net issuances of debt increased for the three months ended March 31, 2005 when compared to the same period in 2004 primarily due to an increase in our centralized real estate loan production. 16 We believe that consistent execution of our business strategies should result in continued profitability, strong credit ratings, and investor confidence. These results should allow continued access to capital markets to issue our commercial paper and long-term debt. We have implemented programs and operating guidelines to ensure adequate liquidity, to mitigate the impact of any inability to access capital markets, and to provide contingent funding sources. These programs and guidelines include the following: * We manage commercial paper as a percentage of total debt. At March 31, 2005 that percentage was 18% compared to 20% at March 31, 2004. * We spread commercial paper maturities throughout upcoming weeks and months. * We limit the amount of commercial paper that any one investor may hold. * We maintain credit facilities to support the issuance of commercial paper and to provide an additional source of funds for operating requirements. At March 31, 2005, we had $3.5 billion of committed bank credit facilities. * As of March 31, 2005, we had effective shelf registration statements that provided AGFC with the ability to issue up to $4.2 billion of long-term debt securities registered under the Securities Act of 1933. AGFC could issue these securities as traditional public term debt, retail notes, or equity index- linked notes, among other forms. * We have established AGFC as an issuer in the international capital markets. * We have the ability to sell, on a whole loan basis, or sell for securitization a portion of our finance receivables to provide additional sources of liquidity for needs potentially not met through other funding sources. * We collected principal payments on our finance receivables totaling $7.4 billion in the past twelve months. We chose to reinvest most of these collections, plus additional amounts from borrowings, in new finance receivables during this period, but these funds could be made available for other uses, if necessary. * We have the ability to sell a portion of our insurance subsidiaries' investment securities and dividend, subject to certain limits, cash from the securities sales. ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION Net Income Three Months Ended March 31, 2005 2004 (dollars in millions) Net income $118.3 $101.9 Amount change $ 16.4 $ 18.1 Percent change 16% 22% Return on average assets 2.07% 2.36% Return on average equity 16.89% 19.30% Ratio of earnings to fixed charges 1.95x 2.14x 17 See Note 6. of the Notes to Condensed Consolidated Financial Statements for information on the results of the Company's business segments. Factors that affected the Company's operating results were as follows: Finance Charges Finance charges by type were as follows: Three Months Ended March 31, 2005 2004 (dollars in millions) Real estate loans $ 332.7 $ 248.8 Non-real estate loans 155.8 153.7 Retail sales finance 42.8 45.6 Total $ 531.3 $ 448.1 Amount change $ 83.2 $ 17.4 Percent change 19% 4% Average net receivables $20,473.9 $15,223.8 Yield 10.50% 11.83% Finance charges increased due to the following: Three Months Ended March 31, 2005 2004 (dollars in millions) Increase in average net receivables $139.3 $ 43.6 Decrease in yield (51.1) (30.2) (Decrease) increase in number of days (5.0) 4.0 Total $ 83.2 $ 17.4 Average net receivables by type and changes in average net receivables when compared to the same period for the previous year were as follows: Three Months Ended March 31, 2005 2004 Amount Change Amount Change (dollars in millions) Real estate loans $16,179.0 $5,094.6 $11,084.4 $1,707.6 Non-real estate loans 2,972.8 105.5 2,867.3 16.1 Retail sales finance 1,322.1 50.0 1,272.1 (53.6) Total $20,473.9 $5,250.1 $15,223.8 $1,670.1 Percent change 34% 12% 18 The low interest rate environment contributed to the increase in originations of our real estate loans. Real estate loan production arising from our centralized real estate origination services also increased real estate loan originations by $4.8 billion during the last twelve months. In addition, real estate loan production continued to benefit from correspondent relationships we have established. Yield by type and changes in yield in basis points (bp) when compared to the same period for the previous year were as follows: Three Months Ended March 31, 2005 2004 Yield Change Yield Change Real estate loans 8.34% (69) bp 9.03% (94) bp Non-real estate loans 21.13 (38) 21.51 2 Retail sales finance 13.09 (130) 14.39 (26) Total 10.50 (133) 11.83 (102) Yield decreased for the three months ended March 31, 2005 when compared to the same period in 2004 primarily due to the low interest rate environment and the larger proportion of finance receivables that are real estate loans. Insurance Revenues Insurance revenues were as follows: Three Months Ended March 31, 2005 2004 (dollars in millions) Earned premiums $42.3 $44.7 Commissions 0.2 1.0 Total $42.5 $45.7 Amount change $(3.2) $ - Percent change (7)% - % Earned premiums decreased for the three months ended March 31, 2005 when compared to the same period in 2004 primarily due to declining credit and non-credit premium volume. We continued to experience decreases in the number of non-real estate loan customers, who historically have purchased the majority of our insurance products, due to the low mortgage interest rate environment. 19 Other Revenues Other revenues were as follows: Three Months Ended March 31, 2005 2004 (dollars in millions) Service fee income from a non-subsidiary affiliate $63.1 $35.6 Miscellaneous: Investment revenue 20.9 25.3 Interest revenue - notes receivable from AGFI 3.9 3.7 Writedowns on real estate owned (2.0) (2.3) Net recovery on sales of real estate owned 0.9 0.3 Net gain on sales of real estate loans held for sale 0.7 3.5 Other 3.2 2.9 Total $90.7 $69.0 Amount change $21.7 $23.8 Percent change 31% 53% Other revenues increased for the three months ended March 31, 2005 when compared to the same period in 2004 primarily due to higher service fee income from a non-subsidiary affiliate, partially offset by lower investment revenue. Service fee income from a non-subsidiary affiliate increased due to higher AIG Bank real estate loan production using our centralized real estate segment's services. Investment revenue was affected by the following: Three Months Ended March 31, 2005 2004 (dollars in millions) Average invested assets $1,408.2 $1,339.1 Investment portfolio yield 6.50% 7.14% Net realized (losses) gains on investments $ (2.3) $ 0.8 20 Interest Expense The impact of using swap agreements to fix floating-rate debt or float fixed-rate debt is included in interest expense and the related borrowing statistics below. Interest expense by type was as follows: Three Months Ended March 31, 2005 2004 (dollars in millions) Long-term debt $ 161.3 $ 112.1 Short-term debt 31.5 23.5 Total $ 192.8 $ 135.6 Amount change $ 57.2 (6.2) Percent change 42% (4)% Average borrowings $18,795.6 $14,038.0 Borrowing cost 4.11% 3.87% Interest expense increased (decreased) due to the following: Three Months Ended March 31, 2005 2004 (dollars in millions) Increase in average borrowings $ 46.0 $ 14.7 Increase (decrease) in borrowing cost 11.2 (20.9) Total $ 57.2 $ (6.2) Average borrowings by type and changes in average borrowings when compared to the same period for the previous year were as follows: Three Months Ended March 31, 2005 2004 Amount Change Amount Change (dollars in millions) Long-term debt $14,620.7 $4,135.9 $10,484.8 $1,192.1 Short-term debt 4,174.9 621.7 3,553.2 124.9 Total $18,795.6 $4,757.6 $14,038.0 $1,317.0 Percent change 34% 10% AGFC issued $6.7 billion of long-term debt during the last twelve months. The proceeds of these long-term debt issuances were used to support finance receivable growth and to refinance maturing debt. 21 Borrowing cost by type and changes in borrowing cost in basis points when compared to the same period for the previous year were as follows: Three Months Ended March 31, 2005 2004 Rate Change Rate Change Long-term debt 4.41% 13 bp 4.28% (76) bp Short-term debt 3.06 41 2.65 (24) Total 4.11 24 3.87 (59) Short-term, market interest rates have risen significantly since mid- 2004, when interest rates were at the lowest levels since the 1950s. We expect our borrowing costs to continue rising over the remainder of 2005, particularly for short-term debt. Our actual future borrowing costs will be dependent upon general interest rate levels and market credit spreads, which are influenced by our credit ratings and the market perception of credit risk for the Company and possibly our affiliates, including our ultimate parent, AIG. Operating Expenses Operating expenses were as follows: Three Months Ended March 31, 2005 2004 (dollars in millions) Salaries and benefits $130.4 $118.3 Other 73.7 69.8 Total $204.1 $188.1 Amount change $ 16.0 $ 27.6 Percent change 9% 17% Operating expenses as a percentage of average net receivables 3.99% 4.94% Operating expenses increased for the three months ended March 31, 2005 when compared to the same period in 2004 primarily due to growth in our centralized real estate business segment, including higher salaries and benefits expenses. Approximately $58.6 million of the Company's operating expenses for the three months ended March 31, 2005 were directly related to the centralized real estate business segment, compared to $43.7 million for the same period in 2004. The increase in salaries and benefits reflected approximately 620 centralized real estate employees hired during the last twelve months. The decrease in operating expenses as a percentage of average net receivables for the three months ended March 31, 2005 when compared to the same period in 2004 reflected higher average net receivables and continued emphasis on controlling operating expenses, partially offset by growth in our centralized real estate business segment. 22 Provision for Finance Receivable Losses At or for the Three Months Ended March 31, 2005 2004 (dollars in millions) Provision for finance receivable losses $ 63.2 $ 58.2 Amount change $ 5.0 $(11.3) Percent change 9% (16)% Net charge-offs $ 63.0 $ 68.0 Charge-off ratio 1.24% 1.80% Charge-off coverage 1.77x 1.64x 60 day+ delinquency $423.4 $464.0 Delinquency ratio 1.98% 2.89% Allowance for finance receivable losses $445.9 $445.6 Allowance ratio 2.12% 2.84% Net charge-offs by type and changes in net charge-offs when compared to the same period for the previous year were as follows: Three Months Ended March 31, 2005 2004 Amount Change Amount Change (dollars in millions) Real estate loans $14.2 $(0.4) $14.6 $ 2.3 Non-real estate loans 40.2 (3.1) 43.3 (5.3) Retail sales finance 8.6 (1.5) 10.1 (1.5) Total $63.0 $(5.0) $68.0 $(4.5) The improvement in net charge-offs for the three months ended March 31, 2005 when compared to the same period in 2004 was primarily due to the improving economy. Charge-off ratios by type and changes in charge-off ratios in basis points when compared to the same period for the previous year were as follows: Three Months Ended March 31, 2005 2004 Ratio Change Ratio Change Real estate loans 0.36% (17) bp 0.53% - bp Non-real estate loans 5.41 (63) 6.04 (73) Retail sales finance 2.59 (55) 3.14 (32) Total 1.24 (56) 1.80 (34) The improvement in the charge-off ratio for the three months ended March 31, 2005 when compared to the same period in 2004 was primarily due to the improving economy and a higher proportion of average net receivables that were real estate loans. 23 Delinquency based on contract terms in effect by type and changes in delinquency when compared to the same period for the previous year were as follows: March 31, 2005 2004 Amount Change Amount Change (dollars in millions) Real estate loans $262.1 $(25.8) $287.9 $(23.0) Non-real estate loans 132.0 (11.2) 143.2 (17.0) Retail sales finance 29.3 (3.6) 32.9 (5.9) Total $423.4 $(40.6) $464.0 $(45.9) Delinquency at March 31, 2005 was favorably impacted by the improving economy. Delinquency ratios based on contract terms in effect by type and changes in delinquency ratios in basis points when compared to the same period for the previous year were as follows: March 31, 2005 2004 Ratio Change Ratio Change Real estate loans 1.57% (92) bp 2.49% (81) bp Non-real estate loans 4.03 (48) 4.51 (63) Retail sales finance 2.08 (35) 2.43 (30) Total 1.98 (91) 2.89 (76) The delinquency ratio at March 31, 2005 improved when compared to March 31, 2004 primarily due to the improving economy and a higher proportion of net finance receivables that were real estate loans. Our Credit Strategy and Policy Committee evaluates our finance receivable portfolio monthly to determine the appropriate level of the allowance for finance receivable losses. We believe the amount of the allowance for finance receivable losses is the most significant estimate we make. In our opinion, the allowance is adequate to absorb losses inherent in our existing portfolio. The allowance as a percentage of net finance receivables at March 31, 2005 decreased when compared to March 31, 2004 primarily due to the improving economy and a higher proportion of net finance receivables that were real estate loans. Charge-off coverage, which compares the allowance for finance receivable losses to net charge-offs (annualized), improved for the three months ended March 31, 2005 when compared to the same period in 2004 primarily due to lower net charge-offs. 24 Insurance Losses and Loss Adjustment Expenses Insurance losses and loss adjustment expenses were as follows: Three Months Ended March 31, 2005 2004 (dollars in millions) Claims incurred $18.4 $22.4 Change in benefit reserves (1.3) (1.3) Total $17.1 $21.1 Amount change $(4.0) $ 0.7 Percent change (19)% 4% Insurance losses and loss adjustment expenses decreased for the three months ended March 31, 2005 when compared to the same period in 2004 due to lower credit insurance claims incurred, partially offset by higher non-credit insurance claims incurred. Provision for Income Taxes Three Months Ended March 31, 2005 2004 (dollars in millions) Provision for income taxes $ 68.9 $ 58.1 Amount change $ 10.8 $ 12.5 Percent change 19% 27% Pretax income $187.2 $159.9 Effective income tax rate 36.80% 36.30% Provision for income taxes increased for the three months ended March 31, 2005 when compared to the same period in 2004 primarily due to higher pretax income. Asset/Liability Management To reduce the risk associated with unfavorable changes in interest rates not offset by favorable changes in yield of our finance receivables, we monitor the anticipated cash flows of our assets and liabilities, principally our finance receivables and debt. We fund finance receivables with a combination of fixed-rate and floating-rate debt and equity. We base the mix of fixed-rate and floating-rate debt, in part, on the nature of the finance receivables being supported. We issue fixed-rate, long-term debt as the primary source of fixed- rate debt. AGFC also alters the nature of certain floating-rate funding by using swap agreements to create synthetic fixed-rate, long- term debt, to limit our exposure to market interest rate increases. Additionally, AGFC has swapped fixed-rate, long-term debt to floating- rate, long-term debt. Including the impact of interest rate swap agreements that effectively fix floating-rate debt or float fixed-rate debt, our floating-rate debt represented 42% of our borrowings at March 31, 2005 compared to 40% at March 31, 2004. Adjustable-rate net 25 finance receivables represented 18% of our net finance receivables at March 31, 2005 compared to 23% at March 31, 2004. Item 3. Quantitative and Qualitative Disclosures About Market Risk. The fair values of certain of our assets and liabilities are sensitive to changes in market interest rates. The impact of changes in interest rates would be reduced by the fact that increases (decreases) in fair values of assets would be partially offset by corresponding changes in fair values of liabilities. In aggregate, the estimated impact of an immediate and sustained 100 basis point increase or decrease in interest rates on the fair values of our interest rate- sensitive financial instruments would not be material to our financial position. The estimated increases (decreases) in fair values of interest rate- sensitive financial instruments were as follows: March 31, 2005 December 31, 2004 +100 bp -100 bp +100 bp -100 bp (dollars in thousands) Assets Net finance receivables, less allowance for finance receivable losses $(978,413) $1,125,718 $(866,793) $ 995,086 Fixed-maturity investment securities (75,515) 76,792 (85,646) 76,189 Swap agreements 99,160 (104,933) 87,699 (92,989) Liabilities Long-term debt (338,701) 372,146 (370,521) 388,726 Swap agreements 7,859 (8,824) 8,616 (9,180) We derived the changes in fair values by modeling estimated cash flows of certain of our assets and liabilities. The assumptions we used adjusted cash flows to reflect changes in prepayments and calls, but did not consider loan originations, debt issuances, or new investment purchases. Readers should exercise care in drawing conclusions based on the above analysis. While these changes in fair values provide a measure of interest rate sensitivity, they do not represent our expectations about the impact of interest rate changes on our financial results. This analysis is also based on our exposure at a particular point in time and incorporates numerous assumptions and estimates. It also assumes an immediate change in interest rates, without regard to the impact of certain business decisions or initiatives that we would likely undertake to mitigate or eliminate some or all of the adverse effects of the modeled scenarios. 26 Item 4. Controls and Procedures. (a) Evaluation of disclosure controls and procedures The conclusions of our principal executive officer and principal financial officer about the effectiveness of the Company's disclosure controls and procedures based on their evaluation of these controls and procedures as of March 31, 2005 are as follows: The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company is recorded, processed, summarized and reported within required timeframes. The Company's disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to the Company's management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Company's management, including its principal executive officer and principal financial officer, evaluates the effectiveness of our disclosure controls and procedures as of the end of each quarter. Based on an evaluation of the disclosure controls and procedures as of March 31, 2005, the Company's principal executive officer and principal financial officer have concluded that the disclosure controls and procedures have functioned effectively and that the condensed consolidated financial statements fairly present our consolidated financial position and the results of our operations for the periods presented. (b) Changes in internal control over financial reporting There was no change in the Company's internal control over financial reporting during the three months ended March 31, 2005, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. PART II - OTHER INFORMATION Item 1. Legal Proceedings. See Note 7. of the Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. The Company had no unregistered sales of equity securities. 27 Item 3. Defaults Upon Senior Securities. The Company had no defaults upon senior securities. Item 4. Submission of Matters to a Vote of Security Holders. The Company did not submit any matters to a vote of security holders. Item 5. Other Information. The Company had no other information to report. Item 6. Exhibits. Exhibits are listed in the Exhibit Index beginning on page 29 herein. 28 Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN GENERAL FINANCE CORPORATION (Registrant) Date: May 5, 2005 By /s/ Donald R. Breivogel, Jr. Donald R. Breivogel, Jr. Senior Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) 29 Exhibit Index Exhibit (12) Computation of Ratio of Earnings to Fixed Charges (31.1) Rule 13a-14(a)/15d-14(a) Certifications (31.2) Rule 13a-14(a)/15d-14(a) Certifications (32) Section 1350 Certifications EX-12 2 x12c0305.txt AGFC EXHIBIT 12 FOR PERIOD ENDED 3/31/05 30 Exhibit 12 AMERICAN GENERAL FINANCE CORPORATION AND SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (Unaudited) Three Months Ended March 31, 2005 2004 (dollars in thousands) Earnings: Income before provision for income taxes $187,239 $159,920 Interest expense 192,829 135,556 Implicit interest in rents 4,588 4,717 Total earnings $384,656 $300,193 Fixed charges: Interest expense $192,829 $135,556 Implicit interest in rents 4,588 4,717 Total fixed charges $197,417 $140,273 Ratio of earnings to fixed charges 1.95 2.14 EX-31.1 3 x311c0305.txt AGFC EXHIBIT 31.1 FOR PERIOD ENDED 3/31/05 31 Exhibit 31.1 Certifications I, Frederick W. Geissinger, President and Chief Executive Officer, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of American General Finance Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 32 b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 5, 2005 /s/ Frederick W. Geissinger Frederick W. Geissinger President and Chief Executive Officer EX-31.2 4 x312c0305.txt AGFC EXHIBIT 31.2 FOR PERIOD ENDED 3/31/05 33 Exhibit 31.2 Certifications I, Donald R. Breivogel, Jr., Senior Vice President and Chief Financial Officer, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of American General Finance Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 34 b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 5, 2005 /s/ Donald R. Breivogel, Jr. Donald R. Breivogel, Jr. Senior Vice President and Chief Financial Officer EX-32 5 x32c0305.txt AGFC EXHIBIT 32 FOR PERIOD ENDED 3/31/05 35 Exhibit 32 Certifications In connection with the Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 of American General Finance Corporation as filed with the Securities and Exchange Commission on the date hereof (the Report), each of, Frederick W. Geissinger, President and Chief Executive Officer of the Company, and Donald R. Breivogel, Jr., Senior Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Frederick W. Geissinger Frederick W. Geissinger President and Chief Executive Officer /s/ Donald R. Breivogel, Jr. Donald R. Breivogel, Jr. Senior Vice President and Chief Financial Officer Date: May 5, 2005 -----END PRIVACY-ENHANCED MESSAGE-----