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:
*Represents deposits received for interest-sensitive life insurance, annuity products, and mutual funds.
1 AMERICAN GENERAL
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:
* 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:
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 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
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.
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:
2000 FORM 10-K 4 PART I (Continued)
ITEM 2.
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.
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
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.
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
PART II
ITEM 5.
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.
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.
- ---------------
(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
ITEM 7.
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.
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.
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.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
2000 FORM 10-K 8
PART III
ITEM 10.
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.
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.
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.
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
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report.
All other financial statement schedules have been omitted because they are inapplicable.
(continued on next page)
2000 FORM 10-K 10 PART IV (Continued)
3. Exhibits
11 AMERICAN GENERAL
(continued on next page)
2000 FORM 10-K 12 PART IV (Continued)
(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
AMERICAN GENERAL CORPORATION
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN AFFILIATES
In millions
* Net of applicable allowance for losses. See Schedule V of this Form 10-K.
2000 FORM 10-K 14 PART IV (Continued)
AMERICAN GENERAL CORPORATION
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
INCOME STATEMENT OF AMERICAN GENERAL CORPORATION (PARENT ONLY)
In millions
(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
AMERICAN GENERAL CORPORATION
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)
BALANCE SHEET OF AMERICAN GENERAL CORPORATION (PARENT ONLY)
In millions
(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 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
17 AMERICAN GENERAL
AMERICAN GENERAL CORPORATION
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
In millions
(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 PART IV (Continued)
AMERICAN GENERAL CORPORATION
SCHEDULE IV - REINSURANCE
In millions
19 AMERICAN GENERAL
AMERICAN GENERAL CORPORATION
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
In millions
(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
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
EXHIBIT INDEX
(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.