HOUSTON, Dec. 16 /PRNewswire/ -- American General (NYSE: AGC) today
announced that certain of its life insurance subsidiaries have entered into
agreements to resolve market conduct class action lawsuits. The company also
announced that in conjunction with the proposed resolution, it will take a
non-recurring aftertax charge to net income of approximately $246 million, or
$.94 per share, in the fourth quarter of 1998.
The lawsuits against American General's life insurance subsidiaries are
similar to those brought against numerous other life insurance organizations
nationwide. The proposed settlements, subject to court approvals, would
resolve the class action claims relating to certain industry sales practices
that occurred predominantly during the 1980s and early 1990s. While American
General does not agree with the claims made in the lawsuits and has actively
defended itself against them, it has decided, like many of its peers, to
settle the lawsuits rather than to continue to engage in a time-consuming and
costly defense. American General believes that the proposed settlements are
in the best interests of its policyholders, shareholders, and sales
professionals.
The non-recurring charge covers the cost of policyholder benefits and all
other anticipated expenses resulting from the proposed resolution, as well as
other administrative and legal costs. The proposed settlements will not have
a material impact on the company's financial condition or business operations.
In commenting on the announcement, Robert M. Devlin, chairman, president and
chief executive officer, said, "The life insurance industry has faced a
continuing challenge from litigation directed at market conduct issues.
Through this settlement, American General has sought to resolve these issues
in the best interests of its key constituencies. American General has and
will continue to conduct its business with the highest standards of ethical
business practice and fairness. We have every confidence that we will
continue to achieve our performance objectives."
American General's life insurance subsidiaries included in the settlements
are All American Life Insurance Company, American Franklin Life Insurance
Company, American General Life Insurance Company, American General Life
Insurance Company of New York, American General Life and Accident Insurance
Company, The Franklin Life Insurance Company, The Old Line Life Insurance
Company, and The United States Life Insurance Company in the City of New York.
American General's life companies rank among the nation's top 10 life
insurance organizations based on individual life insurance premium in force.
American General Financial Group is one of the nation's largest
diversified financial services organizations, with assets of $102 billion and
market capitalization of $18 billion. Headquartered in Houston, it is a
leading provider of retirement services, life insurance, and consumer loans to
over 12 million customers. American General common stock is listed on the New
York, Pacific, London, and Swiss stock exchanges.
All statements, trend analyses, and other information contained in this
press release and elsewhere (such as filings by the company with the
Securities and Exchange Commission, press releases, presentations by the
company or its management, or oral statements) relative to markets for the
company's products and trends in the company's operations or financial
results, as well as other statements including words such as "anticipate,"
"believe," "plan," "estimate," "expect," "intend," and other similar
expressions, constitute forward-looking statements under the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are made
based upon management's current expectations and beliefs concerning future
developments and their potential effects upon the company. There can be no
assurance that future developments affecting the company will be those
anticipated by management. Actual results may differ materially from those
included in the forward-looking statements.
These forward-looking statements involve risks and uncertainties
including, but not limited to, the following: (1) changes in general economic
conditions, including the performance of financial markets and interest rates;
(2) customer responsiveness to both new products and distribution channels;
(3) competitive, regulatory, or tax changes that affect the cost of or demand
for the company's products; (4) the company's ability or the ability of its
vendors to achieve Year 2000 readiness for significant systems and operations
on a timely basis; (5) adverse litigation results or resolution of litigation,
including market conduct litigation; and (6) the company's failure to achieve
anticipated levels of earnings or operational efficiencies related to recently
acquired companies, as well as other cost-saving initiatives. Investors are
also directed to other risks and uncertainties discussed in documents filed by
the company with the Securities and Exchange Commission. The company
undertakes no obligation to update or revise any forward-looking information,
whether as a result of new information, future developments, or otherwise.
SOURCE American General Corporation
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CONTACT:
investors, David W. Entrekin, Senior Vice
President -- Investor Relations, 713-831-1346, or media, John E.
Pluhowski, Director -- Corporate Communications, 713-831-1149,
both of American General
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