-----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, DcMfq5mRBjsK3N0PAxSukY8c9dB349HqIyUFktSekQNQk6j1e2A7Z/e8iveuu2tb fEgLfj7ptSqbCWa7033bIw== 0000005103-99-000050.txt : 19990628 0000005103-99-000050.hdr.sgml : 19990628 ACCESSION NUMBER: 0000005103-99-000050 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990625 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN GENERAL CORP /TX/ CENTRAL INDEX KEY: 0000005103 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 740483432 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-07981 FILM NUMBER: 99652803 BUSINESS ADDRESS: STREET 1: 2929 ALLEN PKWY CITY: HOUSTON STATE: TX ZIP: 77019 BUSINESS PHONE: 7135221111 11-K 1 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 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 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 -1- 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. -2- 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. -3- 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. -4- 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. -5- 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. -6- 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. -7- 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. -8- 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. -9- 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. -10- 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. -11- 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. -12- 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. -13- 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. -14- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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 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 -----END PRIVACY-ENHANCED MESSAGE-----