10-K405 1 h83029e10-k405.txt AMERICAN GENERAL CORPORATION - 12/31/2000 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 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 1-7981 AMERICAN GENERAL CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS ARTICLES OF INCORPORATION) TEXAS 74-0483432 (State of incorporation) (I.R.S. Employer Identification No.) 2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019-2155 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 522-1111 Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------------------------- ------------------------------------ ( New York Stock Exchange Common Stock, Par Value $.50 ( Pacific Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No _ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value based on published prices as of March 1, 2001 of American General's Common Stock held by non-affiliates was approximately $18.9 billion. As of March 1, 2001, there were 499,601,983 shares of American General's Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE
PART OF THE FORM 10-K DOCUMENT INTO WHICH INCORPORATED -------- ----------------------- Portions of American General's 2000 Annual Report to Shareholders Parts I, II, and IV Portions of American General's definitive Proxy Statement filed March 28, 2001, for the Annual Meeting of Shareholders to be held April 26, 2001 Part III
2000 FORM 10-K 2 -------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS GENERAL American General Corporation (American General) and its subsidiaries (collectively, the company or we) is a diversified financial services organization with assets in excess of $120 billion at December 31, 2000. We are a leading provider of retirement services, life insurance, consumer loans, and investments to over 12 million customers. American General was incorporated as a general business corporation in Texas in 1980 and is the successor to American General Insurance Company, an insurance company incorporated in Texas in 1926. On March 11, 2001, the company entered into an agreement to merge with Prudential plc in which American General will become a wholly owned indirect subsidiary of Prudential plc. Under the agreement, the company's shareholders will exchange each share of the company's common stock for either 3.6622 shares of Prudential plc ordinary shares or 1.8311 American depositary shares (ADSs), each of which evidences two Prudential ordinary shares. The Prudential ordinary shares will trade on the London Stock Exchange. The Prudential ADSs will be listed on the New York Stock Exchange. The transaction, which is subject to shareholder and regulatory approvals, is expected to be completed in third quarter 2001. Additional information regarding the merger agreement is included in our Current Report on Form 8-K filed on March 12, 2001. Much of the information provided in response to Item 1 is incorporated herein by reference to selected sections of our 2000 Annual Report to Shareholders (ARS). Portions of our 2000 ARS are provided as Exhibit 13 to this Form 10-K. BUSINESS DIVISIONS. During the three years ended December 31, 2000, we managed our business operations in three business divisions: retirement services, life insurance, and consumer finance. A description of each business division, including principal products, methods of distribution, and principal markets, is incorporated herein by reference to Note 19.1 of Notes to Financial Statements in our 2000 ARS. Financial information for each division is incorporated herein by reference to the sections "Retirement Services," "Life Insurance," "Consumer Finance," "Asset/Liability Management," "Capital Resources," and "Liquidity" of Management's Discussion and Analysis (MD&A) and Note 19.2 of Notes to Financial Statements in our 2000 ARS, and to Schedule III of Item 14 of this Form 10-K. In fourth quarter 2000, we announced the realignment of our organization into two strategic business groups - Financial Services and Asset Accumulation. Beginning in 2001, our Financial Services group will include the life insurance and consumer finance businesses, while the Asset Accumulation group will encompass our retirement services and asset management businesses. EMPLOYEES. As of December 31, 2000, we had approximately 15,900 full-time salaried employees. LIFE INSURANCE AND ANNUITY PRODUCTS INSURANCE DEPOSITS AND PREMIUMS. The following table lists deposits and premiums and other considerations of our retirement services and insurance companies for the past three years:
In millions 2000 1999 1998 ---------------------------------------------------------------------- Deposits* $12,300 $10,620 $ 8,210 ---------------------------------------------------------------------- Direct premiums and other considerations Individual life premiums $ 1,504 $ 1,480 $ 1,490 Insurance charges 1,118 967 863 Group and credit health premiums 588 620 621 Group and credit life premiums 422 382 360 Individual health premiums 121 138 157 Other premiums 453 436 226 ---------------------------------------------------------------------- Total direct premiums and other considerations 4,206 4,023 3,717 Reinsurance premiums assumed 65 303 373 Reinsurance premiums ceded (432) (554) (485) ---------------------------------------------------------------------- Premiums and other considerations $ 3,839 $ 3,772 $ 3,605 ----------------------------------------------------------------------
*Represents deposits received for interest-sensitive life insurance, annuity products, and mutual funds. 1 AMERICAN GENERAL 3 LIFE INSURANCE SALES AND IN FORCE. The following table summarizes the face amounts of life insurance sales and life insurance in force for the past three years:
In millions 2000 1999 1998 ------------------------------------------------------------------- Individual life insurance sales: Permanent (non-participating) Interest-sensitive $ 10,891 $ 10,957 $ 11,590 Guaranteed-cost 4,873 6,020 5,242 Term 37,351 33,590 24,059 Permanent (participating) 3,059 2,330 3,547 Group life insurance sales 14,870 12,298 15,284 Credit life insurance sales 11,177 8,682 7,872 ------------------------------------------------------------------- Total 82,221 73,877 67,594 Less: reinsurance assumed 40 46 394 ------------------------------------------------------------------- Total direct sales $ 82,181 $ 73,831 $ 67,200 ------------------------------------------------------------------- Individual life insurance in force (at December 31): Permanent (non-participating) Interest-sensitive $109,762 $108,082 $106,165 Guaranteed-cost 38,027 38,022 38,135 Term 135,585 118,695 104,465 Permanent (participating) 27,158 28,176 28,813 Group life insurance in force 65,435 61,440 56,555 Credit life insurance in force 18,839 17,302 13,198 ------------------------------------------------------------------- Total life insurance in force* $394,806 $371,717 $347,331 -------------------------------------------------------------------
* Before deductions for reinsurance ceded; includes reinsurance assumed. ANNUITY PRODUCTS. The following table summarizes annuity liabilities by product type for our retirement services and life insurance divisions at December 31:
In millions 2000 1999 1998 ------------------------------------------------------------------- Retirement Services division Fixed $ 38,602 $ 36,607 $ 34,024 Variable 20,059 21,566 14,771 Payout annuities 3,625 3,135 2,791 ------------------------------------------------------------------- Total annuity liabilities $ 62,286 $ 61,308 $ 51,586 ------------------------------------------------------------------- Life Insurance division Fixed $ 4,019 $ 4,666 $ 5,012 Variable 2,049 1,767 1,066 Payout annuities 2,061 2,158 2,114 ------------------------------------------------------------------- Total annuity liabilities $ 8,129 $ 8,591 $ 8,192 -------------------------------------------------------------------
Our retirement services division offers both tax-qualified and non-qualified fixed annuities. In 2000, minimum guaranteed interest crediting rates for these fixed annuities ranged from 3.0% to 5.5%; actual interest crediting rates ranged from 4.5% to 15.0%; and the weighted-average crediting rate was 5.4%. Our life insurance division also offers a variety of fixed annuity products. In 2000, minimum guaranteed interest crediting rates on these annuities ranged from 2.5% to 5.5%; actual interest crediting rates ranged from 2.5% to 15.0%; and the weighted-average crediting rate was 5.9%. Both our retirement services and life insurance divisions offer annuity accounts with a variable investment option. A key feature of variable annuities is that the investment risk lies predominantly with the policyholder, rather than with the company. When a variable investment option is selected, deposits are invested in a mutual fund in accordance with the policyholder's instructions and recorded as separate account assets. To reflect the policyholder's right to these assets, an equivalent separate account liability is established. INSURANCE AND ANNUITY RESERVING METHODS. Individual life insurance reserves are based on assumptions similar to those used to establish premium rates. Further information regarding reserving methods is incorporated herein by reference to Note 1.8 of Notes to Financial Statements in our 2000 ARS. REINSURANCE. Information regarding reinsurance is incorporated herein by reference to Notes 1.11 and 15 of Notes to Financial Statements in our 2000 ARS, and to Schedule IV of Item 14 of this Form 10-K. INVESTMENTS Information regarding our investments is incorporated herein by reference to the sections "Investments" and "Asset/Liability Management" of MD&A and Notes 1.2, 1.15, 3, and 14 of Notes to Financial Statements in our 2000 ARS, and to Schedule I of Item 14 of this Form 10-K. FACTORS AFFECTING PRICING OF PRODUCTS INSURANCE AND ANNUITY PRODUCTS. Our premium rates are based on assumptions which we believe are realistic, for future mortality, investment yields, expenses, and lapses. In addition, pricing is influenced by competition and our objectives for return on capital. Although a profit margin is included in the price of our products, the actual profitability of the products can be significantly affected by the difference between actual and assumed experience. CONSUMER FINANCE PRODUCTS. Pricing of our consumer finance products is influenced by such factors as cost of borrowed funds, credit risk, competition, the expense of operations, and our target for return on capital. In addition, pricing is affected by state regulation of interest rates based on contractual terms and loan amounts, charges for individual loans, and insurance premium rates. COMPETITION Competition in life insurance and financial services markets and continuing consolidations in the industry may affect, among other matters, our corporate development 2000 FORM 10-K 2 4 PART I (Continued) activities, business growth, distribution methods, and the pricing of our products and services. On November 12, 1999, the Financial Services Modernization Act became federal law, eliminating regulatory barriers between banks, insurance companies, and securities firms which had existed for over 60 years. This act provides new opportunities and increased competition among diversified financial services companies and is expected to hasten the pace of consolidation in the financial services industry. Our retirement services and life insurance businesses operate in a highly competitive industry that consists of a large number of insurance companies, banks, mutual fund companies, and other financial institutions. No single competitor, nor any small group of competitors, dominates any of the markets in which we operate. Principal competitive factors include price, financial strength ratings, selection of products, quality of service, and investment management performance with respect to insurance, annuity, and mutual fund products. The consumer finance business is highly competitive due to the large number of companies offering financial products and services, the sophistication of those products, technological improvements, and general acceptance and widespread usage of available credit. We compete with other consumer finance companies and other types of financial institutions that offer similar products and services, including, but not limited to, industrial banks, industrial loan companies, mortgage banks, commercial banks, sales finance companies, savings and loan associations, federal savings banks, credit unions, and manufacturers and vendors of consumer goods. REGULATION INSURANCE. Our insurance companies are subject to state regulation in the jurisdictions in which they do business. Information concerning regulatory compliance is incorporated herein by reference to the sections "Capital Resources - Retirement Services and Life Insurance" and "Regulation and Other - Regulation" of MD&A in our 2000 ARS. Information regarding statutory accounting practices is incorporated herein by reference to Note 16 of Notes to Financial Statements in our 2000 ARS. Most states also regulate affiliated groups, such as American General and our subsidiaries, under insurance holding company laws. Additional information regarding dividend restrictions is incorporated herein by reference to Note 17.3 of Notes to Financial Statements in our 2000 ARS. All 50 states have laws requiring life insurance companies to pay assessments to state guaranty associations to protect the interests of policyholders of insolvent life insurance companies. A portion of these assessments can be recovered against the payment of future premium taxes; however, changes in state laws could decrease the amount available for recovery. Our probable costs related to state guaranty associations are immaterial. The Insurance Marketplace Standards Association (IMSA) was created in 1997 by the American Council of Life Insurers, the industry's largest trade association, to provide a framework by which participating life insurers design, implement, and monitor sales and marketing practices of high ethical content to benefit and protect consumers. Certification by IMSA signifies that a company has committed to maintain the standards set forth in IMSA's principles of ethical market conduct. Our principal retirement services and life insurance subsidiaries are certified by IMSA. REGISTERED PRODUCTS. Certain of our companies are subject to various federal securities laws and regulations related to investment companies. Separate accounts, which are maintained to fund variable life and annuity products, and mutual funds function as investment companies and, therefore, are subject to such laws and regulations, in particular the Investment Company Act of 1940. Variable life, annuity, and mutual fund products are marketed by licensed insurance agents who are registered representatives of the company's wholly owned broker-dealer subsidiaries. These broker-dealers are member firms of the National Association of Securities Dealers and subject to its rules and regulations. CONSUMER FINANCE. Our consumer finance companies are subject to various types of federal regulation including the Federal Consumer Credit Protection Act, the Truth in Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, certain Federal Trade Commission rules, and state laws that regulate the consumer loan and retail sales finance businesses. In addition, our thrift subsidiary, which engages in the consumer finance business and accepts insured deposits, is subject to regulation by and reporting requirements of the Federal Deposit Insurance Corporation. Both the company and our thrift subsidiary are subject to the examination, regulation, and reporting requirements of the Office of Thrift Supervision due to our status as a bank holding company. 3 AMERICAN GENERAL 5 Additionally, the federal government is considering and a number of states, counties, and cities have enacted or may be considering, laws or rules that restrict the credit terms or other aspects of certain loans that are typically described as "high cost mortgage loans." These restrictions may impose specific statutory liabilities in cases of non-compliance and may also limit activities or business dealings of affiliates of the company under certain conditions. PRIVACY. Federal and state laws and regulations have been enacted, and others are likely to be enacted in the near future, to protect the privacy of certain types of customer information. These laws and regulations include requirements for financial services companies to disclose their privacy policy and, in certain circumstances and with respect to certain types of information, to obtain customer consent before information could be shared with affiliates or third parties. We are monitoring both state and federal legislative and regulatory activities to ensure the company's continued adherence to privacy rules. TAXATION. Tax laws affect not only the way we are taxed but also the design of many of our products. Any changes in tax laws or regulations could adversely affect the sale and/or profitability of some of our products. ENVIRONMENTAL. Our principal exposure to environmental regulation arises from our ownership of investment real estate. Probable costs related to environmental cleanup are immaterial. ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT Information as of March 1, 2001 regarding the company's executive officers who currently make disclosure filings pursuant to Section 16 of the Securities Exchange Act of 1934 is as follows:
Present Principal Position with the Company and Name and Age Other Material Positions Held during Last Five Years ----------------------------------------------------------------------------------------------- ROBERT M. DEVLIN (60) Chairman (since 1997), President (1995-97 and since 1998), Chief Executive Officer (since 1996), and Director (since 1993), American General Corporation. Director, Cooper Industries, Inc. and Phillips Petroleum Company. JOHN A. GRAF (41) Senior Vice Chairman - Asset Accumulation (since 2000), Vice Chairman and Group Executive - Retirement Services (1999-2000), American General Corporation. President (1998-2000) and Chief Executive Officer (since 1999), The Variable Annuity Life Insurance Company, a subsidiary; Chairman and CEO (since 1998), American General Annuity Insurance Company, a subsidiary. Vice Chairman, Chief Marketing Officer and Chief Administrative Officer (1996-97), and Executive Vice President and Chief Marketing Officer (1993-96), Western National Life Insurance Company. RODNEY O. MARTIN JR. (48) Senior Vice Chairman - Financial Services (since 2000), Vice Chairman and Group Executive - Life Insurance (1998-2000), American General Corporation. Chairman (since 1998) and President and Chief Executive Officer (1997-99), American General Life Companies, a subsidiary; Senior Chairman (since 1999) and President and Chief Executive Officer (1996-99), American General Life Insurance Company, a subsidiary; President and Chief Executive Officer (1995-96), American General Life Insurance Company of New York, a subsidiary. FREDERICK W. GEISSINGER (55) Vice Chairman - Consumer Lending (since 1999), American General Corporation. President and Chief Executive Officer (since 1995), American General Finance, Inc., a subsidiary; Director and Chairman (1995-99), A.G. Financial Service Center, Inc. (formerly American General Financial Center), a subsidiary (see Part I, Item 3, "Satellite Dish" of this Form 10-K for additional information). RICHARD W. SCOTT (47) Vice Chairman - Investment Management (since 2000), Executive Vice President (1998-2000), and Chief Investment Officer (since 1998), American General Corporation. President and Chief Executive Officer (since 1998), American General Investment Management, L.P., a subsidiary. Vice Chairman and Chief Investment Officer (1996-98), General Counsel (1994-97), and Executive Vice President and Chief Investment Officer (1994-96), Western National Corporation. NICHOLAS R. RASMUSSEN (54) Executive Vice President, Chief Financial Officer, and Treasurer (since 1999), Senior Vice President - Corporate Development (1993-99), and Senior Vice President (1983-1999), American General Corporation. MARK S. BERG (42) Executive Vice President and General Counsel (since 1998), Corporate Secretary (since 1999), and Senior Vice President and General Counsel (1997-98), American General Corporation. Partner (1990-97), Vinson & Elkins L.L.P. JAMES P. CORCORAN (56) Executive Vice President - Government and Industry Relations (since 1999), American General Corporation. Partner (1998-99), Winston & Strawn, New York. Partner (1996-98), Cadwalader, Wickersham & Taft, New York. Partner (1992-96), Donovan, Leisure, Newton, & Irvine, New York.
2000 FORM 10-K 4 6 PART I (Continued)
Present Principal Position with the Company and Name and Age Other Material Positions Held during Last Five Years ----------------------------------------------------------------------------------------------- DAVID W. ENTREKIN (39) Executive Vice President - Strategic Development (since 1999), Senior Vice President - Investor Relations (1998-99), Vice President - Investor Relations (1997-98), Director, Investor Relations (1996-97), and Senior Investment Manager, Investment Research (1994-96), American General Corporation. JOHN V. LAGRASSE (51) Executive Vice President and Chief Technology Officer (since 2000), American General Corporation. Executive Vice President - Information Technology (1998-2000) and Senior Vice President and Chief Systems Officer (1996-98), American General Life Companies, a subsidiary. Chief Information Officer (1986-96), Citicorp Life. GARY D. REDDICK (50) Executive Vice President - Administration and Insurance Operations and Assistant Secretary (since 2000), American General Corporation. Executive Vice President (1998-99 and since 2000), American General Life Companies, a subsidiary; Vice Chairman (1997-99) and Executive Vice President (1995-97), The Franklin Life Insurance Company, a subsidiary.
ITEM 2. PROPERTIES Our corporate headquarters is located in the American General Center, a complex of office buildings with 2.2 million square feet on a 46-acre tract near downtown Houston. American General and certain subsidiaries own all of the buildings and underlying land in the complex. We occupy approximately 52% of the total office space available in the American General Center. Our subsidiaries also own various other properties, including properties held for investment and the home office buildings of: (1) American General Finance, Inc. in Evansville, Indiana; (2) American General Life and Accident Insurance Company in Nashville, Tennessee; and (3) The Franklin Life Insurance Company in Springfield, Illinois. ITEM 3. LEGAL PROCEEDINGS SATELLITE DISH. In the mid-1990s, one of our subsidiaries, American General Financial Center (renamed A.G. Financial Service Center, Inc.) (Financial Service Center), provided financing for satellite dishes sold by independent unaffiliated dealers. On May 18, 1999, the Chancery Court of the First Judicial District of Jones County, Mississippi in a case captioned Clayton D. Smith, et al. v. Delta TV Corporation, Don Acy, US Electronics, American General Financial Center, Civil Action No. 96-0254 (the Clayton Smith matter), rendered a judgment awarding approximately $500,000 in compensatory damages and $167 million in punitive damages against Financial Service Center. The lawsuit was filed on November 15, 1996, by 29 individuals who had each purchased a satellite dish. Financial Service Center, together with certain other American General companies, were also named as defendants in other cases involving the financing of satellite dishes. In August 1999, Financial Service Center filed a voluntary petition to reorganize under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the Southern District of Indiana. The decision to reorganize was necessitated by the judgment rendered against Financial Service Center by the Mississippi state court. The filing for reorganization under Chapter 11 was limited to Financial Service Center and was intended to provide a fair and orderly process for managing the claims against Financial Service Center. Prior to the bankruptcy filing, Financial Service Center had assets of approximately $7 million. As part of the resolution process, settlement agreements were executed in January 2000 to settle the Clayton Smith matter and certain other claims. Accordingly, we recorded a charge of $57 million ($36 million aftertax) in fourth quarter 1999 to cover the proposed settlements and other litigation. On September 1, 2000, payment was made in connection with the final settlement of the Clayton Smith matter. In 2000, Financial Service Center filed a plan of reorganization to resolve the remaining claims in the bankruptcy. In January 2001, Financial Service Center and the creditors' committee in the bankruptcy entered into a settlement that has been approved by the bankruptcy court. The plan of reorganization was confirmed by the bankruptcy court in February 2001. Certain creditors have appealed the confirmation of the plan, but we do not expect their appeal to prevail. We expect our remaining recorded liability related to this matter to be sufficient to cover the costs of the plan of reorganization. WORKERS' COMPENSATION. Prior to our acquisition of USLIFE Corporation, one of its subsidiaries entered the workers' compensation reinsurance business in 1997. We discontinued writing new workers' compensation reinsurance business in 1998. Our largest contract was a quota 5 AMERICAN GENERAL 7 share reinsurance agreement with Superior National Insurance Group, Inc. and its affiliates (collectively, Superior National), effective May 1, 1998. On November 29, 1999, we initiated an arbitration proceeding to rescind this contract from its inception, based in part on misrepresentations and nondisclosures which we believe were made by Superior National. On March 3, 2000, the California Department of Insurance ordered seizure of Superior National's insurance subsidiaries as a result of their financial condition. On April 26, 2000, Superior National Insurance Group, Inc. filed a voluntary petition to reorganize under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the Central District of California. Through the arbitration with Superior National, which commenced in fourth quarter 2000, we plan to fully pursue all remedies. Although we believe, based on the advice of counsel, that the company will succeed in rescinding the contract, risks and uncertainties remain with respect to the ultimate outcome. In the unlikely event the company does not prevail in the arbitration, we do not expect the additional aftertax losses from our workers' compensation business to exceed $85 million, after recoveries from reinsurers. We believe that any ultimate loss related to our workers' compensation business will not have a material adverse effect on our results of operations and financial position. OTHER. The company is also party to various other lawsuits and proceedings arising in the ordinary course of business. These lawsuits and proceedings include certain class action claims and claims filed by individuals who excluded themselves from industrial life and market conduct settlements relating to life insurance pricing and sales practices. 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 that the total amounts that will ultimately be paid arising from these lawsuits and proceedings will not have a material adverse effect on the company's results of operations and financial position. However, it should be noted that the frequency of large damage awards, including large punitive damage awards that bear little or no relation to actual economic damages incurred by plaintiffs in some jurisdictions, continues to create the potential for an unpredictable judgment in any given suit. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of security holders during fourth quarter 2000. 2000 FORM 10-K 6 8 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS On January 23, 2001, we declared a two-for-one stock split effected in the form of a 100% common stock dividend, payable March 1, 2001 to holders of record on February 8, 2001. The distribution, which consisted of 269.3 million newly issued shares, has been reflected as of December 31, 2000 in the financial statements in our 2000 ARS and all selected financial data and disclosures presented herein. The distribution will have no impact on total shareholders' equity or results of operations. All share amounts have been restated to reflect the stock split on a retroactive basis. The quarterly high and low market prices of American General's common stock as quoted by the New York Stock Exchange and restrictions on retained earnings for the payment of dividends are incorporated herein by reference to Notes 20 and 17.3, respectively, of Notes to Financial Statements in our 2000 ARS. Common stock was owned by 35,181 shareholders of record and approximately 76,000 beneficial owners at February 28, 2001. The quarterly cash dividends paid on common stock are incorporated herein by reference to Note 20 of Notes to Financial Statements in our 2000 ARS. The common stock of American General is traded in the United States on the New York Stock Exchange and the Pacific Exchange, Inc. Our common stock is also traded on the London Stock Exchange and the SWX Swiss Exchange. On November 12, 1999, we issued 1,678,580 shares of American General common stock (valued at $66 million on November 12, 1999) in connection with our acquisition of North Central Life. These shares were issued to 30 individuals as consideration for the acquisition in exchange for those individuals' shares of Financial Life Companies, Inc., the parent company of North Central Life. The transaction did not involve a public offering of securities, and the shares issued were not registered under the Securities Act of 1933 based on section 4(2) of the Securities Act and Regulation D as they relate to private offerings. ITEM 6. SELECTED FINANCIAL DATA The following selected financial data is derived from the consolidated financial statements of the company. The data should be read in conjunction with the consolidated financial statements, related notes, and other financial information included or incorporated by reference herein.
Years Ended December 31, ------------------------------------------------------ In millions, except per share data 2000 1999 1998 1997 1996 -------------------------------------------------------------------------------------------------------------------- Revenues $ 11,063 $ 10,679 $ 10,251 $ 8,927 $ 8,714 Net income 1,003(b) 1,131(c) 764(d) 542(e) 653(f) Net income per common share(a) Basic 2.01(b) 2.26(c) 1.51(d) 1.11(e) 1.33(f) Diluted 1.98(b) 2.20(c) 1.48(d) 1.10(e) 1.32(f) Assets(g) 120,094 115,447 105,107 80,620 74,134 Debt Corporate 3,259 3,120 2,743 1,916 2,102 Consumer Finance 10,833 10,206 8,863 7,266 7,630 Redeemable equity 2,067 1,924 1,728 1,726 1,227 Shareholders' equity(g) 7,820 6,420 8,871 7,583 6,844 Cash dividends per common share(a) .88 .80 .75 .70 .65
--------------- (a) Restated for two-for-one stock split effective March 1, 2001. (b) Includes litigation settlements and other charges of $207 million aftertax ($.41 per share). (c) Includes $36 million ($.07 per share) aftertax litigation settlements. (d) Includes $246 million ($.47 per share) aftertax litigation settlements and $42 million ($.08 per share) aftertax Y2K costs. (e) Includes $247 million ($.49 per share) aftertax merger-related costs, $73 million ($.15 per share) aftertax loss on sale of non-strategic assets, and $33 million ($.07 per share) aftertax litigation settlement. (f) Includes $111 million ($.22 per share) aftertax loss on sale of non-strategic assets and $32 million ($.07 per share) aftertax write-down of USLIFE group insurance business. (g) Includes fair value adjustment related to securities. Additional information is incorporated herein by reference to the section "Investments - Fair Value of Securities" of MD&A in American General's 2000 ARS. 7 AMERICAN GENERAL 9 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference to "Management's Discussion and Analysis" on pages 22-37 in our 2000 ARS. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK American General's exposure to market risk is primarily related to changes in interest rates. Quantitative and qualitative disclosures about our market risk resulting from changes in interest rates are incorporated herein by reference to "Asset/Liability Management" of MD&A in our 2000 ARS. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The company's financial statements and supplementary data are incorporated herein by reference to pages 38-58 in our 2000 ARS. The ratios of earnings to fixed charges are incorporated herein by reference to Exhibit 12 of Item 14 of this Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 2000 FORM 10-K 8 10 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information appearing in the section "Election of Directors - Information About the Nominees" in American General's definitive Proxy Statement filed March 28, 2001 (2001 Proxy Statement) is incorporated herein by reference. Information regarding the company's executive officers is included in Part I, Item 1A of this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information appearing in the sections "Election of Directors - The Board of Directors" and "Executive Compensation" in our 2001 Proxy Statement is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information appearing in the section "Security Ownership" in our 2001 Proxy Statement is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information appearing in the section "Certain Relationships and Transactions" in our 2001 Proxy Statement is incorporated herein by reference. 9 AMERICAN GENERAL 11 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Documents filed as part of this report.
Page Reference ---------------------------------- 2000 Form 10-K Annual Report ------------------------------------------------------------------------------------------------ 1. Financial Statements Report of Ernst & Young LLP, Independent Auditors - 59 Consolidated Financial Statements Income Statement - 38 Balance Sheet - 39 Statements of Shareholders' Equity and Comprehensive Income - 40 Statement of Cash Flows - 41 Notes to Financial Statements - 42-58 2. Financial Statement Schedules Schedule I - Summary of Investments - Other than Investments in Affiliates 14 - Schedule II - Condensed Financial Information of Registrant 15-17 - Schedule III - Supplementary Insurance Information 18 - Schedule IV - Reinsurance 19 - Schedule V - Valuation and Qualifying Accounts 20 -
All other financial statement schedules have been omitted because they are inapplicable. (continued on next page) 2000 FORM 10-K 10 12 PART IV (Continued) 3. Exhibits
Filed Herewith(*), Nonapplicable (NA), or Incorporated by Reference to ---------------------------------------- American General Exhibit Registration No. or Number Exhibit Report ------------------------------------------------------------------------------------------------------------------------------------ 2.1 Agreement and Plan of Merger, dated as of March 11, 2001, by and 2.01 Form 8-K filed among the company, Prudential plc, Holborn Delaware Partnership, March 12, 2001 and Ascend Merger Corp. 3.1 Restated Articles of Incorporation of American General 4.1 33-33115 Corporation 3.2 Articles of Amendment to the Restated Articles of Incorporation 4 Form 10-Q for First of American General Quarter 1998 3.3 Amended and Restated Bylaws of American General Corporation 3 Form 10-Q for Third Quarter 2000 4.1 There have not been filed as exhibits to this Form 10-K certain NA NA long-term debt instruments, none of which relates to authorized indebtedness that exceeds 10% of the consolidated assets of the company. The company hereby agrees to furnish a copy of any such instrument to the Commission upon request. 10.1 American General Corporation 1984 Stock and Incentive Plan 10.1 Form 10-Q for Second Quarter 1998 10.2 Amendment to American General Corporation 1984 Stock and 10.2 Form 10-K Incentive Plan (January 2000) for 1999 10.3 American General Corporation 1994 Stock and Incentive Plan 10.2 Form 10-Q for Second Quarter 1998 10.4 Amendment to American General Corporation 1994 Stock and 10.4 Form 10-K Incentive Plan (January 1999) for 1999 10.5 Amendment to American General Corporation 1994 Stock and 10.5 Form 10-K Incentive Plan (January 2000) for 1999 10.6 Amendment to American General Corporation 1994 Stock and 10.1 Form 10-Q for Third Incentive Plan (November 2000) Quarter 2000 10.7 American General Corporation 1997 Stock and Incentive Plan 10.3 Form 10-Q for Second Quarter 1998 10.8 Amendment to American General Corporation 1997 Stock and 10.7 Form 10-K Incentive Plan (January 1999) for 1999 10.9 Amendment to American General Corporation 1997 Stock and 10.2 Form 10-Q for Third Incentive Plan (November 2000) Quarter 2000 10.10 American General Corporation 1999 Stock and Incentive Plan 10.4 Form 10-K for 1998 10.11 Amendment to American General Corporation 1999 Stock and 10.9 Form 10-K Incentive Plan (January 1999) for 1999 10.12 Amendment to American General Corporation 1999 Stock and 10.3 Form 10-Q for Third Incentive Plan (November 2000) Quarter 2000 10.13 Amended and Restated American General Corporation Deferred 10.13* NA Compensation Plan (12/11/00) (continued on next page)
11 AMERICAN GENERAL 13
Filed Herewith(*), Nonapplicable (NA), or Incorporated by Reference to ---------------------------------------- American General Exhibit Registration No. or Number Exhibit Report --------------------------------------------------------------------------------------------------------------------------------- 10.14 Amended and Restated Restoration of Retirement Income Plan for 10.14* NA Certain Employees Participating in the Restated American General Retirement Plan (Restoration of Retirement Income Plan) (12/31/98) 10.15 Amended and Restated American General Supplemental Thrift Plan 10.15* NA (12/31/98) 10.16 Employment Agreement between American General and Robert M. 10.12 Form 10-K Devlin for 1997 10.17 First Amendment to Employment Agreement between American General 10.3 Form 10-Q for First and Robert M. Devlin Quarter 1998 10.18 Second Amendment to Employment Agreement between American General 10.1 Form 10-Q for First and Robert M. Devlin Quarter 2000 10.19 Letter Amendment to Employment Agreement and Split Dollar 10.19* NA Agreement between American General Corporation, Prudential plc, and Robert M. Devlin 10.20 Form of Employment Agreement between American General and each of 10.3 Form 10-Q for First the following executive officers: Frederick W. Geissinger, John Quarter 2000 A. Graf, Rodney O. Martin Jr., and Richard W. Scott 10.21 Letter Amendment to Employment Agreement and Split Dollar 10.21* NA Agreement between American General Corporation, Prudential plc, and Frederick W. Geissinger 10.22 Letter Amendment to Employment Agreement and Split Dollar 10.22* NA Agreement between American General Corporation, Prudential plc, and John A. Graf 10.23 Letter Amendment to Employment Agreement between American General 10.23* NA Corporation, Prudential plc, and Rodney O. Martin Jr. 10.24 Supplemental Executive Retirement Agreement between American 10.15 Form 10-K General and Robert M. Devlin for 1997 10.25 First Amendment to Supplemental Executive Retirement Agreement 10.6 Form 10-Q for First between American General and Robert M. Devlin Quarter 1998 10.26 Second Amendment to Supplemental Executive Retirement Agreement 10.2 Form 10-Q for First between American General and Robert M. Devlin Quarter 2000 10.27 Form of Supplemental Executive Retirement Agreement between 10.4 Form 10-Q for First American General and each of the following executive officers: Quarter 2000 Frederick W. Geissinger and Rodney O. Martin Jr. 10.28 First Amendment to Supplemental Executive Retirement Agreement 10.28* NA between American General and Rodney O. Martin Jr. 10.29 Form of Supplemental Executive Retirement Agreement between 10.5 Form 10-Q for First American General and each of the following executive officers: Quarter 2000 John A. Graf and Richard W. Scott 10.30 American General Corporation Supplemental Executive Retirement 10.1 Form 10-Q for Third Plan Quarter 1998 10.31 Form of Change in Control Severance Agreement for Executive 10.32 Form 10-K Officers for 1999
(continued on next page) 2000 FORM 10-K 12 14 PART IV (Continued)
Filed Herewith(*), Nonapplicable (NA), or Incorporated by Reference to ---------------------------------------- American General Exhibit Registration No. or Number Exhibit Report ------------------------------------------------------------------------------------------------------------------------------------ 10.32 Forms of Split-Dollar Agreement and Assignment of Life Insurance 10.9 Form 10-Q for First Policy as Collateral Agreement Quarter 1998 10.33 American General Corporation Performance-Based Plan for Executive 10.33* NA Officers, Amended and Restated Effective January 29, 1998 10.34 American General Corporation Retirement Plan for Directors (as 10.34* NA amended and restated 1/29/98) 10.35 American General Corporation Benefit Trust Agreement 10.35* NA 10.36 Western National Corporation 1993 Stock and Incentive Plan, as 10.18 to WNC NA amended annual report on Form 10-K for 1995 11 Computation of Earnings per Share (included in Note 18 of Notes NA NA to Financial Statements in American General's 2000 Annual Report to Shareholders) 12 Computation of Ratio of Earnings to Fixed Charges and Ratio of 12* NA Earnings to Combined Fixed Charges and Preferred Stock Dividends 13 Portions of American General's 2000 Annual Report to Shareholders 13* NA that are expressly incorporated herein by reference in this Form 10-K. Other sections of the Annual Report furnished for the information of the Commission are not deemed "filed" as part of this Form 10-K. 21 Subsidiaries of American General 21* NA 23 Consent of Ernst & Young LLP, Independent Auditors 23* NA 24 Powers of attorney for the directors signing this Form 10-K 24* NA Any Exhibit not included with this Form 10-K will be furnished to any shareholder of record on written request and payment of up to $.25 per page plus postage. Such requests should be directed to American General Corporation, Investor Relations, P.O. Box 3247, Houston, Texas 77253-3247.
(b) Reports on Form 8-K. The following reports on Form 8-K were filed after September 30, 2000: 1. Current Report on Form 8-K dated November 1, 2000, with respect to authorization for issuance of $250 million of American General's 7 1/2% Notes Due 2010. 2. Current Report on Form 8-K dated December 7, 2000, with respect to the pricing of the public offering of 4,000,000 8.05% Trust Preferred Securities of American General Capital III at $25 per security. 3. Current Report on Form 8-K dated March 12, 2001, with respect to the Agreement and Plan of Merger, dated as of March 11, 2001, entered into by and among American General; Prudential plc, a public limited company incorporated in England and Wales; Holborn Delaware Partnership (HDP), a Delaware general partnership and a wholly owned indirect subsidiary of Prudential plc; and Ascend Merger Corp., a Texas corporation and a wholly owned subsidiary of HDP. AMERICAN GENERAL 13 15 AMERICAN GENERAL CORPORATION SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN AFFILIATES In millions
At December 31, 2000 ----------------------------------------------------- Amount Cost Shown in or Consolidated Amortized Fair Balance Type of Investment Cost Value Sheet ------------------------------------------------------------------------------------------------------------------- Fixed maturity securities Bonds and notes U.S. government obligations $ 623 $ 665 $ 665 States and political subdivisions 710 731 731 Foreign governments 549 574 574 Mortgage-backed securities 13,652 13,964 13,964 Public utilities 3,794 3,879 3,879 All other corporates 45,062 44,243 44,243 Redeemable preferred stocks 70 76 76 ------------------------------------------------------------------------------------------------------------------- Total fixed maturity securities 64,460 64,132 64,132 ------------------------------------------------------------------------------------------------------------------- Equity securities Common stocks 680 680 680 Perpetual preferred stocks 152 151 151 ------------------------------------------------------------------------------------------------------------------- Total equity securities 832 831 831 ------------------------------------------------------------------------------------------------------------------- Mortgage loans on real estate* 3,920 3,920 Investment real estate* Investment properties 152 152 Acquired in satisfaction of debt 62 62 Policy loans 2,433 2,433 Other long-term investments 92 92 Short-term investments 671 671 ------------------------------------------------------------------------------------------------------------------- Total investments $72,622 $ 72,293 -------------------------------------------------------------------------------------------------------------------
* Net of applicable allowance for losses. See Schedule V of this Form 10-K. 2000 FORM 10-K 14 16 PART IV (Continued) AMERICAN GENERAL CORPORATION SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT INCOME STATEMENT OF AMERICAN GENERAL CORPORATION (PARENT ONLY) In millions
For the Years Ended December 31, -------------------------------------------------------- 2000 1999 1998 ---------------------------------------------------------------------------------------------------------------------- Revenues Dividends - affiliated $ 557 $ 682 $ 793 Interest income - affiliated 216 217 198 Net investment gains (losses) - (1) 67 Other income Affiliated 55 53 42 Other - 8 3 ---------------------------------------------------------------------------------------------------------------------- Total revenues 828 959 1,103 ---------------------------------------------------------------------------------------------------------------------- Expenses Operating costs and expenses Affiliated 17 17 6 Other 144 140 120 Interest expense Affiliated(a) 200 187 181 Other 224 196 179 Litigation settlements(b) 10 - 56 ---------------------------------------------------------------------------------------------------------------------- Total expenses 595 540 542 ---------------------------------------------------------------------------------------------------------------------- Income before income tax benefit and equity in undistributed net income of subsidiaries 233 419 561 Income tax benefit 111 94 81 Equity in undistributed net income of subsidiaries (net of dividends paid to parent) 659 618 122 ---------------------------------------------------------------------------------------------------------------------- Net income $1,003 $1,131 $ 764 ----------------------------------------------------------------------------------------------------------------------
(a) Includes $171 million, $155 million, and $150 million in 2000, 1999, and 1998, respectively, related to subordinated debentures issued in conjunction with the issuances of preferred securities of subsidiaries. Additional information is incorporated herein by reference to Note 11 of Notes to Financial Statements in American General's 2000 ARS. (b) Represents a portion of administrative and legal costs related to settlements of class action lawsuits involving American General's subsidiaries. Additional information is incorporated herein by reference to Note 17.2 of Notes to Financial Statements in American General's 2000 ARS. 15 AMERICAN GENERAL 17 AMERICAN GENERAL CORPORATION SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED) BALANCE SHEET OF AMERICAN GENERAL CORPORATION (PARENT ONLY) In millions
At December 31, ----------------------------------- 2000 1999 1998 ------------------------------------------------------------------------------------------------- Assets Investments Subsidiaries, at equity $11,275 $ 9,581 $11,507 Other - - 7 Cash 3 1 - Receivables from subsidiaries 100 31 337 Indebtedness from subsidiaries 2,605 2,595 2,604 Other 169 133 129 ------------------------------------------------------------------------------------------------- Total assets $14,152 $12,341 $14,584 ------------------------------------------------------------------------------------------------- Liabilities Short-term debt $ 1,921 $ 1,932 $ 1,607 Long-term debt(a) Senior(b) 1,348 1,198 1,147 Subordinated, held by subsidiaries(c) 2,316 2,221 2,018 Indebtedness to subsidiaries 327 327 426 Liability for litigation settlements(d) 253 130 366 Federal income taxes 4 (6) 8 Other 163 119 141 ------------------------------------------------------------------------------------------------- Total liabilities 6,332 5,921 5,713 ------------------------------------------------------------------------------------------------- Shareholders' equity Convertible preferred stock - 85 85 Common stock 887 962 939 Retained earnings 8,294 7,732 7,007 Accumulated other comprehensive income (loss)(e) (304) (1,278) 1,599 Cost of treasury stock(f) (1,057) (1,081) (759) ------------------------------------------------------------------------------------------------- Total shareholders' equity 7,820 6,420 8,871 ------------------------------------------------------------------------------------------------- Total liabilities and equity $14,152 $12,341 $14,584 -------------------------------------------------------------------------------------------------
(a) The five-year schedule of debt maturities is as follows: 2001 - $3 million; 2002 - $35 million; 2003 - $100 million; 2004 - $149 million; and 2005 - $294 million. (b) The principal amount of American General senior notes held by subsidiaries was $10 million at December 31, 2000, 1999, and 1998. (c) Includes $2.3 billion, $2.2 billion, and $2.0 billion in 2000, 1999, and 1998, respectively, of subordinated debentures issued in conjunction with the issuances of preferred securities of subsidiaries. Additional information is incorporated herein by reference to Note 11 of Notes to Financial Statements in American General's 2000 ARS. (d) Represents liability for settlements of industrial life class action lawsuits of $159 million at December 31, 2000, and market conduct class action lawsuits of $94 million, $130 million, and $310 million at December 31, 2000, 1999, and 1998, respectively, assumed from American General's life insurance subsidiaries; the parent company had a related receivable from subsidiaries in 1998. Additional information is incorporated herein by reference to Note 17.2 of Notes to Financial Statements in American General's 2000 ARS. (e) Includes fair value adjustment related to securities. Additional information is incorporated herein by reference to the section "Investments - Fair Value of Securities" of MD&A in American General's 2000 ARS. (f) Includes 1,399,228 shares, at a cost of $8 million in 2000, 1999, and 1998, which are held by a subsidiary. 2000 FORM 10-K 16 18 PART IV (Continued) AMERICAN GENERAL CORPORATION SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED) STATEMENT OF CASH FLOWS OF AMERICAN GENERAL CORPORATION (PARENT ONLY) In millions
For the Years Ended December 31, --------------------------------- 2000 1999 1998 ------------------------------------------------------------------------------------------------- Operating activities Net income $1,003 $1,131 $ 764 Reconciling adjustments Equity in undistributed net income of subsidiaries (net of dividends paid to parent) (659) (618) (122) Other, net 120 78 93 ------------------------------------------------------------------------------------------------- Net cash provided by operating activities 464 591 735 ------------------------------------------------------------------------------------------------- Investing activities Net (increase) decrease in indebtedness from subsidiaries (10) 9 (870) Net increase (decrease) in indebtedness to subsidiaries - (99) 66 Capital contributions to subsidiaries (45) (257) (152) Return of capital from subsidiaries 4 4 10 Acquisitions (17) (20) - Net decrease in other investments - 7 75 Other, net (4) (2) 9 ------------------------------------------------------------------------------------------------- Net cash used for investing activities (72) (358) (862) ------------------------------------------------------------------------------------------------- Financing activities Net increase (decrease) in short-term debt (11) 325 1,032 Long-term debt issuances 906 356 - Long-term debt redemptions (416) (103) (357) Common stock repurchases (455) (425) (195) Dividends on common stock (440) (400) (375) Other, net 26 15 22 ------------------------------------------------------------------------------------------------- Net cash provided by (used for) financing activities (390) (232) 127 ------------------------------------------------------------------------------------------------- Net increase in cash 2 1 - Cash at beginning of year 1 - - ------------------------------------------------------------------------------------------------- Cash at end of year $ 3 $ 1 $ - -------------------------------------------------------------------------------------------------
17 AMERICAN GENERAL 19 AMERICAN GENERAL CORPORATION SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION In millions
At December 31, For the Years Ended December 31, ---------------------- ---------------------------------------------------------------- Amorti- zation Premiums of Deferred Insurance and Insurance Deferred Policy and Other Net and Policy Other Acquisition Annuity Consider- Investment Annuity Acquisition Operating Division Costs(a)(b) Liabilities(c) ations Income(d) Benefits Costs(b)(e) Expenses ------------------------------------------------------------------------------------------------------------------------------- 2000 Retirement Services $2,694 $42,203 $ 631 $3,218 $2,552 $101 $ 277 Life Insurance 3,752 25,942 3,014 2,198 2,860 539 867 Consumer Finance 12 522 193 84 89 9 10 Other(f) - (358) 1 (47) (1) 2 850 ------------------------------------------------------------------------------------------------------------------------------- Consolidated $6,458 $68,309 $3,839 $5,453 $5,500 $651 $2,004 ------------------------------------------------------------------------------------------------------------------------------- 1999 Retirement Services $2,338 $39,714 $ 568 $2,972 $2,377 $126 $ 212 Life Insurance 3,800 26,300 3,022 2,199 2,846 524 921 Consumer Finance 11 465 181 78 86 8 10 Other(f) 1 (78) 1 (17) 4 1 849 ------------------------------------------------------------------------------------------------------------------------------- Consolidated $6,150 $66,401 $3,772 $5,232 $5,313 $659 $1,992 ------------------------------------------------------------------------------------------------------------------------------- 1998 Retirement Services $1,328 $36,792 $ 320 $2,753 $2,114 $113 $ 169 Life Insurance 2,871 25,680 3,113 2,240 2,959 558 968 Consumer Finance 10 441 172 76 86 8 10 Other(f) - (69) - 26 - 1 888 ------------------------------------------------------------------------------------------------------------------------------- Consolidated $4,209 $62,844 $3,605 $5,095 $5,159 $680 $2,035 -------------------------------------------------------------------------------------------------------------------------------
(a) Includes fair value adjustment related to securities. Additional information is incorporated herein by reference to the section "Investments - Fair Value of Securities" of MD&A in American General's 2000 ARS. (b) Includes cost of insurance purchased. (c) Includes unearned premiums, other policy claims and benefits payable, and other policyholder funds, which are not significant relative to insurance and annuity liabilities. (d) Represents earnings and related expenses on those investments considered necessary to support each division's business operations. (e) Net of accretion of interest. (f) Represents consumer finance non-insurance operations, corporate operations, goodwill amortization, minority interests, and interdivision eliminations. 2000 FORM 10-K 18 20 PART IV (Continued) AMERICAN GENERAL CORPORATION SCHEDULE IV - REINSURANCE In millions
Percentage of Ceded to Assumed Amount Gross Other from Other Net Assumed Description Amount Companies Companies Amount to Net --------------------------------------------------------------------------------------------------------------- 2000 Life insurance in force at year end $393,743 $128,777 $1,063 $266,029 .4% Premiums and other considerations for the year Life insurance and annuities $ 3,421 $ 331 $ 17 $ 3,107 .6% Accident and health insurance 710 98 21 633 3.3 Property-liability insurance 75 3 27 99 27.0 --------------------------------------------------------------------------------------------------------------- Total premiums and other considerations $ 4,206 $ 432 $ 65 $ 3,839 1.7% --------------------------------------------------------------------------------------------------------------- 1999 Life insurance in force at year end $369,346 $ 94,450 $2,371 $277,267 .9% Premiums and other considerations for the year Life insurance and annuities $ 3,182 $ 250 $ 17 $ 2,949 .5% Accident and health insurance 758 294 251 715 35.1 Property-liability insurance 83 10 35 108 32.5 --------------------------------------------------------------------------------------------------------------- Total premiums and other considerations $ 4,023 $ 554 $ 303 $ 3,772 8.0% --------------------------------------------------------------------------------------------------------------- 1998 Life insurance in force at year end $344,857 $ 65,643 $2,474 $281,688 .9% Premiums and other considerations for the year Life insurance and annuities $ 2,832 $ 205 $ 116 $ 2,743 4.2% Accident and health insurance 778 277 225 726 31.0 Property-liability insurance 107 3 32 136 23.3 --------------------------------------------------------------------------------------------------------------- Total premiums and other considerations $ 3,717 $ 485 $ 373 $ 3,605 10.3% ---------------------------------------------------------------------------------------------------------------
19 AMERICAN GENERAL 21 AMERICAN GENERAL CORPORATION SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS In millions
Additions ----------------------------------- Charged to Balance at Provision for Charged to Balance at Beginning Finance Receivable Investment Deduc- Other End of Description of Year Losses (Gains)/Losses tions(a) Adjustments Year ----------------------------------------------------------------------------------------------------------------------- 2000 Allowance for losses on: Finance receivables $396 $206 $ - $206 $ (13)(b) $383 Mortgage loans on real estate 26 - - 9 - 17 Investment real estate 10 - 3 1 - 12 Restructuring liability 14 - - 10(c) - 4 Valuation allowance on deferred tax asset 448 - - - (261)(d) 187 ----------------------------------------------------------------------------------------------------------------------- Total $894 $206 $ 3 $226 $(274) $603 ----------------------------------------------------------------------------------------------------------------------- 1999 Allowance for losses on: Finance receivables $382 $207 $ - $207 $ 14(b) $396 Mortgage loans on real estate 34 - (3) 5 - 26 Investment real estate 14 - - 4 - 10 Restructuring liability 30 - - 16(c) - 14 Valuation allowance on deferred tax asset 69 - - 2 381(d) 448 ----------------------------------------------------------------------------------------------------------------------- Total $529 $207 $ (3) $234 $ 395 $894 ----------------------------------------------------------------------------------------------------------------------- 1998 Allowance for losses on: Finance receivables $373 $212 $ - $220 $ 17(b) $382 Mortgage loans on real estate 54 - (15) 5 - 34 Investment real estate 18 - 3 7 - 14 Restructuring liability 62 - - 32(c) - 30 Valuation allowance on deferred tax asset 68 - - - 1 69 ----------------------------------------------------------------------------------------------------------------------- Total $575 $212 $(12) $264 $ 18 $529 -----------------------------------------------------------------------------------------------------------------------
(a) Resulting from write-offs of uncollectible receivables, mortgage loan payoffs, sales of real estate, foreclosures of real estate, and utilization of net loss carryforwards, unless otherwise noted. (b) Relates to allowance for acquired/(sold) receivables. (c) Restructuring costs related to the integration of USLIFE into the company's operations and the concurrent realignment of the life insurance division. (d) Relates to unrealized losses on fixed maturity securities not expected to be realized; reported in other comprehensive income within shareholders' equity. 2000 FORM 10-K 20 22 AMERICAN GENERAL CORPORATION SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, on March 28, 2001. AMERICAN GENERAL CORPORATION By: /s/ Nicholas R. Rasmussen ---------------------------------------- Nicholas R. Rasmussen (Executive Vice President, Chief Financial Officer, and Treasurer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 28, 2001. Robert M. Devlin* ----------------------------------------------------------------- Robert M. Devlin (Chairman, President, and Chief Executive Officer - Principal Executive Officer) /s/ Nicholas R. Rasmussen ----------------------------------------------------------------- Nicholas R. Rasmussen (Executive Vice President, Chief Financial Officer, and Treasurer - Principal Financial Officer and Principal Accounting Officer) J. Evans Attwell* ----------------------------------------------------------------- J. Evans Attwell (Director) Brady F. Carruth* ----------------------------------------------------------------- Brady F. Carruth (Director) W. Lipscomb Davis Jr.* ----------------------------------------------------------------- W. Lipscomb Davis Jr. (Director) J. Edward Easler II* ----------------------------------------------------------------- J. Edward Easler II (Director) Larry D. Horner* ----------------------------------------------------------------- Larry D. Horner (Director) Richard J.V. Johnson* ----------------------------------------------------------------- Richard J.V. Johnson (Director) Morris J. Kramer* ----------------------------------------------------------------- Morris J. Kramer (Director) Michael E. Murphy* ----------------------------------------------------------------- Michael E. Murphy (Director) Michael J. Poulos* ----------------------------------------------------------------- Michael J. Poulos (Director) Robert E. Smittcamp* ----------------------------------------------------------------- Robert E. Smittcamp (Director) Anne M. Tatlock* ----------------------------------------------------------------- Anne M. Tatlock (Director) *By: /s/ Mark S. Berg ----------------------------------------------------------------- Mark S. Berg (Attorney-in-fact) 21 AMERICAN GENERAL 23 EXHIBIT INDEX
Filed Herewith(*), Nonapplicable (NA), or Incorporated by Reference to ---------------------------------------- American General Exhibit Registration No. or Number Exhibit Report ------------------------------------------------------------------------------------------------------------------------------------ 2.1 Agreement and Plan of Merger, dated as of March 11, 2001, by and 2.01 Form 8-K filed among the company, Prudential plc, Holborn Delaware Partnership, March 12, 2001 and Ascend Merger Corp. 3.1 Restated Articles of Incorporation of American General 4.1 33-33115 Corporation 3.2 Articles of Amendment to the Restated Articles of Incorporation 4 Form 10-Q for First of American General Quarter 1998 3.3 Amended and Restated Bylaws of American General Corporation 3 Form 10-Q for Third Quarter 2000 4.1 There have not been filed as exhibits to this Form 10-K certain NA NA long-term debt instruments, none of which relates to authorized indebtedness that exceeds 10% of the consolidated assets of the company. The company hereby agrees to furnish a copy of any such instrument to the Commission upon request. 10.1 American General Corporation 1984 Stock and Incentive Plan 10.1 Form 10-Q for Second Quarter 1998 10.2 Amendment to American General Corporation 1984 Stock and 10.2 Form 10-K Incentive Plan (January 2000) for 1999 10.3 American General Corporation 1994 Stock and Incentive Plan 10.2 Form 10-Q for Second Quarter 1998 10.4 Amendment to American General Corporation 1994 Stock and 10.4 Form 10-K Incentive Plan (January 1999) for 1999 10.5 Amendment to American General Corporation 1994 Stock and 10.5 Form 10-K Incentive Plan (January 2000) for 1999 10.6 Amendment to American General Corporation 1994 Stock and 10.1 Form 10-Q for Third Incentive Plan (November 2000) Quarter 2000 10.7 American General Corporation 1997 Stock and Incentive Plan 10.3 Form 10-Q for Second Quarter 1998 10.8 Amendment to American General Corporation 1997 Stock and 10.7 Form 10-K Incentive Plan (January 1999) for 1999 10.9 Amendment to American General Corporation 1997 Stock and 10.2 Form 10-Q for Third Incentive Plan (November 2000) Quarter 2000 10.10 American General Corporation 1999 Stock and Incentive Plan 10.4 Form 10-K for 1998 10.11 Amendment to American General Corporation 1999 Stock and 10.9 Form 10-K Incentive Plan (January 1999) for 1999 10.12 Amendment to American General Corporation 1999 Stock and 10.3 Form 10-Q for Third Incentive Plan (November 2000) Quarter 2000 10.13 Amended and Restated American General Corporation Deferred 10.13* NA Compensation Plan (12/11/00) 10.14 Amended and Restated Restoration of Retirement Income Plan for 10.14* NA Certain Employees Participating in the Restated American General Retirement Plan (Restoration of Retirement Income Plan) (12/31/98) 10.15 Amended and Restated American General Supplemental Thrift Plan 10.15* NA (12/31/98) 10.16 Employment Agreement between American General and Robert M. 10.12 Form 10-K Devlin for 1997 (continued on next page)
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Filed Herewith(*), Nonapplicable (NA), or Incorporated by Reference to ---------------------------------------- American General Exhibit Registration No. or Number Exhibit Report ------------------------------------------------------------------------------------------------------------------------------------ 10.17 First Amendment to Employment Agreement between American General 10.3 Form 10-Q for First and Robert M. Devlin Quarter 1998 10.18 Second Amendment to Employment Agreement between American General 10.1 Form 10-Q for First and Robert M. Devlin Quarter 2000 10.19 Letter Amendment to Employment Agreement and Split Dollar 10.19* NA Agreement between American General Corporation, Prudential plc, and Robert M. Devlin 10.20 Form of Employment Agreement between American General and each of 10.3 Form 10-Q for First the following executive officers: Frederick W. Geissinger, John Quarter 2000 A. Graf, Rodney O. Martin Jr., and Richard W. Scott 10.21 Letter Amendment to Employment Agreement, Split Dollar Agreement 10.21* NA and Change in Control Severance Agreement between American General Corporation, Prudential plc, and Frederick W. Geissinger 10.22 Letter Amendment to Employment Agreement, Split Dollar Agreement 10.22* NA and Change in Control Severance Agreement between American General Corporation, Prudential plc, and John A. Graf 10.23 Letter Amendment to Employment Agreement, Split Dollar Agreement 10.23* NA and Change in Control Severance Agreement between American General Corporation, Prudential plc, and Rodney O. Martin Jr. 10.24 Supplemental Executive Retirement Agreement between American 10.15 Form 10-K General and Robert M. Devlin for 1997 10.25 First Amendment to Supplemental Executive Retirement Agreement 10.6 Form 10-Q for First between American General and Robert M. Devlin Quarter 1998 10.26 Second Amendment to Supplemental Executive Retirement Agreement 10.2 Form 10-Q for First between American General and Robert M. Devlin Quarter 2000 10.27 Form of Supplemental Executive Retirement Agreement between 10.4 Form 10-Q for First American General and each of the following executive officers: Quarter 2000 Frederick W. Geissinger and Rodney O. Martin Jr. 10.28 First Amendment to Supplemental Executive Retirement Agreement 10.28* NA between American General and Rodney O. Martin Jr. 10.29 Form of Supplemental Executive Retirement Agreement between 10.5 Form 10-Q for First American General and each of the following executive officers: Quarter 2000 John A. Graf and Richard W. Scott 10.30 American General Corporation Supplemental Executive Retirement 10.1 Form 10-Q for Third Plan Quarter 1998 10.31 Form of Change in Control Severance Agreement for Executive 10.32 Form 10-K Officers for 1999 10.32 Forms of Split-Dollar Agreement and Assignment of Life Insurance 10.9 Form 10-Q for First Policy as Collateral Agreement Quarter 1998 10.33 American General Corporation Performance-Based Plan for Executive 10.33* NA Officers, Amended and Restated Effective January 29, 1998 10.34 American General Corporation Retirement Plan for Directors (as 10.34* NA amended and restated 1/29/98) 10.35 American General Corporation Benefit Trust Agreement 10.35* NA 10.36 Western National Corporation 1993 Stock and Incentive Plan, as 10.18 to WNC NA amended annual report on Form 10-K for 1995 11 Computation of Earnings per Share (included in Note 18 of Notes NA NA to Financial Statements in American General's 2000 Annual Report to Shareholders) (continued on next page)
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Filed Herewith(*), Nonapplicable (NA), or Incorporated by Reference to ---------------------------------------- American General Exhibit Registration No. or Number Exhibit Report ------------------------------------------------------------------------------------------------------------------------------------ 12 Computation of Ratio of Earnings to Fixed Charges and Ratio of 12* NA Earnings to Combined Fixed Charges and Preferred Stock Dividends 13 Portions of American General's 2000 Annual Report to Shareholders 13* NA that are expressly incorporated herein by reference in this Form 10-K. Other sections of the Annual Report furnished for the information of the Commission are not deemed "filed" as part of this Form 10-K. 21 Subsidiaries of American General 21* NA 23 Consent of Ernst & Young LLP, Independent Auditors 23* NA 24 Powers of attorney for the directors signing this Form 10-K 24* NA Any Exhibit not included with this Form 10-K will be furnished to any shareholder of record on written request and payment of up to $.25 per page plus postage. Such requests should be directed to American General Corporation, Investor Relations, P.O. Box 3247, Houston, Texas 77253-3247.
(b) Reports on Form 8-K. The following reports on Form 8-K were filed after September 30, 2000: 1. Current Report on Form 8-K dated November 1, 2000, with respect to authorization for issuance of $250 million of American General's 7 1/2% Notes Due 2010. 2. Current Report on Form 8-K dated December 7, 2000, with respect to the pricing of the public offering of 4,000,000 8.05% Trust Preferred Securities of American General Capital III at $25 per security. 3. Current Report on Form 8-K dated March 12, 2001, with respect to the Agreement and Plan of Merger, dated as of March 11, 2001, entered into by and among American General; Prudential plc, a public limited company incorporated in England and Wales; Holborn Delaware Partnership (HDP), a Delaware general partnership and a wholly owned indirect subsidiary of Prudential plc; and Ascend Merger Corp., a Texas corporation and a wholly owned subsidiary of HDP.