HOUSTON, Feb. 4 /PRNewswire/ -- American General Corporation (NYSE: AGC),
one of the nation's largest diversified financial services organizations with
assets of $66 billion and market capitalization of $8.5 billion, today
reported 1996 operating earnings of $645 million, up 20 percent from $537
million a year ago.  On a per share basis, operating earnings increased 18
percent to a record $3.07 from $2.60 in 1995.
    Net income, which includes net realized gains on investments, losses on
assets held for sale and associated costs, and other non-recurring items, was
$577 million or $2.75 per share compared to $545 million or $2.64 per share in
1995.
    Full-year and fourth quarter 1996 net income included an aftertax charge
of $93 million resulting from the company's decision to sell the bank credit
card and satellite dish loan portfolios of the consumer finance subsidiary.
As previously reported, fourth quarter and full-year 1995 operating earnings
and net income included an aftertax charge of $140 million or $.67 per share
to increase the allowance for loan losses at the consumer finance subsidiary.
    Fourth quarter operating earnings were $155 million or $.74 per share
compared to $6 million or $.03 per share in the 1995 period.  Net income for
the quarter was $68 million or $.33 per share compared to $9 million or $.05
per share in the 1995 period.
    Following is a comparative table of fourth quarter and full-year results
for 1996 and 1995:

                              Quarter Ended Dec. 31,   Year Ended Dec. 31,
     In Millions:                 1996        1995         1996       1995

     Pretax Operating Earnings  $  239      $    8       $1,001     $  808
     Operating Earnings            155           6          645        537
     Net Income                     68           9          577        545

     Per Share:
     Operating Earnings         $  .74      $  .03       $ 3.07     $ 2.60
     Net Income                    .33         .05         2.75       2.64
     Average Shares (in millions)
                                 212.6(a)    211.3        213.6(a)   208.9

    (a) Average shares outstanding increased due to the issuance of
convertible preferred securities and common stock in 1995 and 1996, partially
offset by share purchases under the company's share buyback program.

    Commenting on the results, Robert M. Devlin, president and CEO, said, "As
we look back, 1996 was a year of many challenges and accomplishments. Our
company achieved a significant milestone by reaching $1 billion in pretax
operating earnings.  The retirement services segment had another record year
in terms of earnings and sales.
    Our life insurance operations achieved record earnings and are well
positioned for continued internal growth as well as growth through
acquisition.  Specifically, we completed the acquisition of Independent Life
and Accident and announced an agreement to purchase Home Beneficial Life.
    In 1996, we also took decisive actions to improve our consumer finance
operations through programs designed to strengthen loan underwriting and
credit quality.  Today we are announcing our intent to sell two
underperforming receivables portfolios.  This sale will enable us to focus
on further enhancing our consumer finance operation.
    We enter 1997 with a solid capital base, committed to improving and
growing the operations through our proven operating skill and successful
corporate development activities.  We will continue to capitalize on the
strengths of our three operating segments to position them for accelerating
growth and profitability."

              American General Finance to Sell Bank Credit Card
                        and Satellite Dish Receivables

    Following a reassessment of the consumer finance non-branch operations,
the company reached a decision to segregate and offer for sale certain
underperforming receivables totaling $944 million.  These receivables consist
of bank credit card and satellite dish loans and include $69 million of
securitized receivables.  The company recorded a one-time aftertax charge of
$93 million during the fourth quarter to value these receivables at net
realizable value and to record associated costs. In addition, the company
engaged the investment banking firm of Smith Barney Inc. to conduct the sale
of these receivables.  The company will focus its future efforts on further
developing consumer and home equity loan and retail sales finance programs.

                        Corporate Financial Highlights

    The following financial highlights have been adjusted to exclude the
effect of Financial Accounting Standard 115 (as detailed in the attached
supplement).

     December 31, 1996 Compared to December 31, 1995
     -  Assets increased $5.9 billion to $65 billion, up 10 percent;
     -  Shareholders' equity increased $347 million to $5.1 billion, up
         7 percent;
     -  Book value increased to $24.78 per share, up 7 percent;
     -  Common market capitalization increased 18 percent to $8.5 billion;
         and
     -  Common stock price per share was $40-7/8, up 17 percent.

    Full-Year 1996 Results
    -  Revenues and deposits increased $540 million to $10.9 billion, up
        5 percent;
    -  Pretax operating earnings were $1.0 billion, up 24 percent;
    -  Operating earnings per share increased 18 percent to $3.07;
    -  Operating return on shareholders' equity was 13.2 percent, up from
        12.1 percent; and
    -  Dividends per common share were $1.30, up 5 percent.

    Corporate Development
    Corporate development is an important part of American General's strategy
that includes acquisitions, divestitures, and systems for improvement in
internal operations.  This strategy has produced a balanced network of
companies able to perform well over a long period of time and through all
phases of the business cycle.  Corporate development activities include a
disciplined approach to mergers and acquisitions, and the integration,
rationalization, and consolidation of acquired companies. Following is a
summary of corporate development activities during 1996.

    Life Insurance
    During the fourth quarter, American General announced a definitive
agreement to purchase Richmond, Virginia-based Home Beneficial Corporation
for a total consideration of $665 million.  Home Beneficial, a provider of
life insurance in six Mid Atlantic states, will be consolidated into American
General Life and Accident Insurance Company located in Nashville. Through the
combination of these two companies, the company expects to achieve increased
economies of scale which will result in annualized expense savings of
$20 million and the release of $300 million of capital. In February, American
General completed the $362 million acquisition of Independent Insurance Group,
Inc. The consolidation of Independent into American General Life and Accident
is on schedule and expected to result in annualized expense savings of
$75 million.
    Upon completion of the Home Beneficial acquisition during the first
quarter of 1997, American General will have acquired three life insurance
companies over the past two years for a total consideration of $2.2 billion.
American General will continue to pursue opportunities for additional
acquisitions during this period of extensive consolidation in the life
insurance industry.

    Consumer Finance
    American General Finance purchased $277 million of real estate secured
receivables in the fourth quarter.  Total year-to-date receivable purchases
were $946 million, including $754 million of real estate secured receivables.
These acquisitions are part of the company's strategy to rebalance its loan
portfolio to include a higher concentration of real estate secured
receivables, which now account for 49 percent of receivables compared to 35
percent a year ago.

    Western National
    During the third quarter, American General purchased 7.25 million common
equivalent shares of Western National Corporation for a total purchase price
of $130 million or $17.92 per share.  Coupled with the 40 percent interest
purchased in December 1994 for $274 million or $11.00 per share, the company's
equity interest increased to 46 percent.  Western National is a leading
provider of annuities marketed through banks and other financial institutions.

    Capital Management
    American General's active capital management program is designed to
minimize the aftertax cost of capital while maintaining financial strength
and flexibility.

    Share Buyback
    The company purchased 670,000 shares of its common stock in the open
market for a total cost of $26 million or $38.36 per share in the 1996 fourth
quarter.  Year-to-date purchases were 4.9 million shares for an aggregate cost
of $178 million.  Purchases under the program since its inception 10 years ago
total 103 million shares, or 34 percent of the shares then outstanding, for an
aggregate cost of $2.1 billion.

    Redeemable Preferred Equity
    The company completed a $500 million issue of 7.57 percent capital
securities due 2045 during the fourth quarter of 1996, the proceeds of which
were used to reduce debt.  As a result, the debt ratio declined to 20 percent
of corporate capitalization at year-end 1996.  The capital securities, along
with the company's monthly income preferred securities (MIPs) issued in 1995,
bring American General's redeemable preferred equity to 15 percent of
corporate capitalization.

    Segment Reporting
    American General reports its financial results in three business segments
and a category for corporate operations.  Following is a comparative table of
fourth quarter and full-year earnings for 1996 and 1995 by business segment:

                              Quarter Ended Dec. 31,   Year Ended Dec. 31,
    In Millions:                  1996      1995          1996     1995
       Retirement Services        $ 50      $ 42          $225     $204
       Consumer Finance             26       (92)          128       85
       Life Insurance              101        83           397      348
       Segment Earnings           $177      $ 33          $750     $637

    Retirement Services
    VALIC, with $30 billion in assets, is a leading provider of tax-deferred
retirement services and employer-sponsored retirement programs to employees of
educational, health care, public sector, and other not-for-profit
organizations.  VALIC has 1.5 million customer accounts serviced by a sales
force of over 1,000 retirement planning specialists.

    Performance Highlights
    The following performance highlights compare the results for the year
ending Dec. 31, 1996 with the comparable 1995 period:

    -  Sales increased 19 percent to $1.3 billion;
    -  Assets increased 13 percent or $3.5 billion to $30 billion;
    -  Segment earnings increased 10 percent to $225 million; and
    -  Return on equity was 15.7 percent compared to 15.3 percent.

    Full-Year Results
    VALIC reported record 1996 operating earnings of $225 million, a
10 percent increase over 1995.  The increase was a result of higher investment
income and strong asset growth.  Assets (excluding the effect of SFAS 115)
increased $3.5 billion for the year to $30 billion at Dec. 31, 1996.  Sales
increased 19 percent in 1996, led mainly by the Portfolio Director variable
annuity series of products.  For the year, VALIC's sales force increased
14 percent and the number of active accounts increased 11 percent.
    Total fixed and variable premium deposits were $2.9 billion, an increase
of 13 percent from the prior year.  Variable premium deposits accounted for
45 percent of total premium deposits compared to 33 percent in 1995 reflecting
strong demand for equity-based products during 1996. The Portfolio Director
product series, supported by the Portfolio Optimizer asset allocation service,
accounted for 62 percent of 1996 premium.  The growth in variable premium
deposits combined with market appreciation accounted for a 57 percent increase
in separate account assets to $7.1 billion at Dec. 31, 1996.

    Fourth Quarter Results
    VALIC reported record fourth quarter earnings of $50 million compared to
$42 million for the 1995 period.  Sales increased 27 percent to $359 million
compared to the year-ago quarter and total premium deposits were up 15 percent
to $800 million.  The increase in sales and deposits primarily resulted from
VALIC's recent introduction of the portfolio Director 2 variable annuity and
continued strong market demand for equity-based products.  The surrender ratio
increased to 5.4 percent compared to 4.8 percent in the prior year period, but
remained within pricing assumptions.  Assets increased $1.1 billion in the
quarter to $30 billion.

    Consumer Finance
    American General Finance is a leading provider of consumer and home equity
loans and other credit-related products.  The company ranks among the nation's
largest consumer finance companies with a nationwide network of 1,400 branch
offices, 2.6 million customer accounts, and finance receivables of
$7.6 billion.

    Performance Highlights
    The following performance highlights compare the results for the year
ending Dec. 31, 1996 with the comparable 1995 period:
    -  Segment earnings increased to $128 million from $85 million;
    -  Finance receivables decreased $785 million to $7.6 billion;
    -  Total delinquencies were 3.83 percent compared to 4.13 percent; and
    -  Operating return on equity improved to 10.1 percent from
       6.7 percent.

    Full-Year Results
    As a result of the decision to sell the bank credit card and satellite
dish receivables, the company recorded a one-time, non-operating aftertax
charge of $93 million during the fourth quarter to value these receivables
at net realizable value and to record associated costs.  The decline in
finance receivables for 1996 resulted from the reclassification of these
receivables to assets held for sale.
    American General Finance reported 1996 operating earnings of $128 million
compared to $85 million in 1995.  Earnings for the 1995 period included an
aftertax charge of $140 million to increase the allowance for loan losses
resulting from a rise in delinquencies and charge offs beginning in the third
quarter of 1995.  During 1996, the company successfully managed a shift in its
receivable portfolio toward a higher concentration of real estate secured
loans.  As a result, real estate secured receivables represented 49 percent of
receivables at year end compared to 35 percent a year ago.
    Yield on finance receivables was 17.9 percent for 1996 compared to 18.0
percent a year ago.  At Dec. 31, 1996, delinquencies, which exclude the
reclassified receivables, were 3.83 percent of receivables.  The delinquency
ratio was 4.28 percent in the 1996 third quarter and 4.13 percent at year-end
1995.  The decline was the result of the fourth quarter reclassification of
certain receivables to assets held for sale and a modest improvement in
delinquencies in the quarter.  Excluding the reclassified receivables,
delinquencies at year-end 1995 would have been 3.88 percent.   The charge off
rate was 5.47 percent of receivables for the year compared to 3.77 percent for
1995.  Excluding the reclassified receivables, the 1996 charge off rate would
have been 4.72 percent compared to 3.26 percent in 1995.  The record level of
personal bankruptcies industry-wide adversely affected charge offs in 1996.
    During 1996, the consumer finance segment implemented a number of actions
to improve credit quality including the establishment of higher underwriting
standards and revisions to the field office incentive compensation system.

    Fourth Quarter Results
    Consumer finance segment earnings, which exclude the 1996 charge, were
$26 million in the fourth quarter compared to a $92 million loss in the 1995
period.  Earnings for the fourth quarter of 1995 included an after-tax charge
of $140 million to increase the allowance for loan losses.
    The charge off rate for the quarter was 5.69 percent of receivables
compared to 5.37 percent for the third quarter and 6.04 percent for the fourth
quarter of 1995.  Excluding the reclassified receivables, the fourth quarter
1996 charge off rate would have been 4.94 percent compared to 5.51 percent in
the 1995 period.  The allowance for loan losses was $395 million.  The
allowance totaled 5.18 percent of receivables compared to 5.85 percent at
year-end 1995.  This decrease reflects the reclassification of receivables to
assets held for sale and the higher percentage of lower risk real estate
secured receivables.

    Life Insurance
    American General is the largest writer of individual life insurance
premiums in the United States among shareholder owned companies.  The
principal operating companies in this segment are American general Life,
Franklin Life, and American General Life and Accident.  Combined, these
companies have assets of $25 billion, life insurance in force of $150 billion,
and serve over five million customers through 15,000 agents.

    Performance Highlights
    The following performance highlights compare the results for the year
ending Dec. 31, 1996 with the comparable 1995 period:

    -  Revenues were $3.3 billion, up 12 percent;
    -  Segment earnings increased 14 percent to $397 million;
    -  Total assets increased 8 percent to $25 billion; and
    -  Return on equity improved to 10.3 percent from 10.2 percent.

    Full-Year Results
    The life insurance segment reported record operating earnings of
$397 million compared to $348 million for 1995, a 14 percent increase. The
current period results include the operations of Independent Life acquired on
Feb. 29, 1996.  Companies acquired over the past two years accounted for 37
percent of operating earnings.  This record level of earnings reflects the
success of the company's corporate development activities and the ability to
effectively integrate acquired companies.
    During the year, the life insurance segment launched a number of
initiatives to increase sales and improve operations.  Significant progress
has been made in consolidating the operations of Independent Life.  Annualized
expense savings from the consolidation are expected to be $75 million.  New
strategic marketing alliances were formed with major mutual fund companies and
brokerage firms.  Future life insurance sales will benefit from the marketing
of products through these new distribution arrangements.  Several life
insurance products were introduced to meet changing market demand, and a new
variable annuity product was developed and will be offered in early 1997.

    Fourth Quarter Results
    The life insurance segment reported record fourth quarter earnings of
$101 million, a 22 percent increase over the prior year.  Earnings during the
1995 period were $83 million.  Annualized life insurance sales were
$82 million compared to $80 million a year ago.

    Corporate Operations
    Corporate operations include income, interest, and other expenses not
directly associated with business segment operations.  Following is a
comparative table of fourth quarter and full-year corporate operations (after-
tax) for 1996 and 1995:

                                        Quarter Ended       Year Ended
                                         December 31,      December 31,
    In Millions:                        1996     1995     1996     1995

    Interest on Corporate Debt        $ (20)   $ (21)   $ (87)   $(103)
    Dividends on Preferred
    Securities                          (11)      (9)     (40)     (19)
    Equity in Earnings of
    Western National                      9        8       27       29
    Other                                 -       (5)      (5)      (7)
    Subtotal                            (22)     (27)    (105)    (100)
    Realized Investment Gains             6        3       43        8
    Losses on Assets Held for Sale      (93)       -     (111)       -
    Total Corporate Operations        $(109)   $ (24)   $(173)   $ (92)

    The losses on assets held for sale reflects third quarter 1996 charges of
$18 million related to the potential sale of a small life insurance subsidiary
and certain mortgage loans, and the fourth quarter 1996 charge of $93 million
associated with the reclassification of certain consumer finance receivables
to assets held for sale.
    The decrease in interest on corporate debt during 1996 reflects the
repayment of debt from the proceeds of preferred securities issuances. The
decline in interest on corporate debt was offset by an increase in dividends
on preferred securities.  The increase in realized investment gains resulted
from gains on the sale of securities within the investment portfolio.
    American General Corporation is one of the nation's largest diversified
financial services organizations.  Headquartered in Houston, it is a leading
provider of retirement services, consumer loans, and life insurance.  American
General common stock is listed on the New York, Pacific, London, and Swiss
stock exchanges.
    Certain information included in this press release in forward looking and
involves risks and uncertainties, including general economic and competitive
conditions that could significantly impact expected results.  Investors are
also directed to other risks and uncertainties discussed in documents filed by
the company with Securities and Exchange Commission.

                         AMERICAN GENERAL CORPORATION
                             Comparative Results
               (In millions, except per share data) (Unaudited)
                                   Quarter ended          Year ended
                                    December 31,          December 31,
                                  1996       1995       1996       1995

    1.  Revenues and Deposits   $  2,810   $  2,658   $ 10,900   $ 10,360
        Business Segment Earnings:
    2.    Retirement Services   $     50   $     42   $    225   $    204
    3.    Consumer Finance            26        (92)       128         85
    4.    Life Insurance             101         83        397        348
    5.  Total Business Segment
         Earnings                    177         33        750        637
        Corporate Operations:
    6.    Interest on
           Corporate Debt            (20)       (21)       (87)      (103)
    7.    Dividends on Preferred
           Securities                (11)        (9)       (40)       (19)
    8.    Expenses Not Allocated
           to Segments               (14)       (11)       (38)       (40)
    9.    Earnings on Corporate
           Assets                     14          6         33         33
    10.    Equity in Earnings of
           Western National
           Corporation                 9          8         27         29
    11.    Realized Investment Gains   6          3         43          8
    12.    Losses on Assets Held
           for Sale                  (93)        --       (111)        --
    13.  Total Corporate
         Operations                 (109)       (24)      (173)       (92)
    14.  Net Income             $     68   $      9   $    577   $    545
    15.  Net Income Per Share   $    .33   $    .05   $   2.75   $   2.64
    16.  Average Shares
          Outstanding              212.6      211.3      213.6      208.9
    17.  Operating Earnings (a) $    155   $      6   $    645   $    537
    18.  Operating Earnings
          Per Share (a)              .74        .03       3.07       2.60

                                                   At December 31,
                                                  1996        1995
   19.  Assets                                 $ 66,254    $ 61,153
   20.  Shareholders' Equity                      5,621       5,801
   21.  Book Value Per Share                      27.38       28.42
   22.  Market Price Per Share                    40.88       34.88

        Excluding Fair Value Adjustment
         Related to Securities (SFAS 115) (b):
   23.  Assets                                 $ 65,411    $ 59,498
   24.  Shareholders' Equity                      5,079       4,732
   25.  Book Value Per Share                      24.78       23.24

    (a) Operating earnings exclude aftertax realized investment gains
(losses), non-recurring items, and one-time accounting changes.
    (b) Under Financial Accounting Standard 115, American General classifies
all fixed maturity and equity securities as available-for-sale and records
them at fair value.  The company adjusts related balance sheet accounts and
shareholders' equity as if the associated unrealized gains (losses) had been
realized at the balance sheet date.

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