HOUSTON, July 10 /PRNewswire/ -- American General Corporation (NYSE: AGC)
today announced several strategic initiatives to position its life insurance
operations for the future and dispose of non-strategic assets.  These
initiatives are an important component of the company's recently announced
realignment of its life insurance operations into a divisional structure based
on distribution system and market focus, and will enable the company to
maximize the benefits of the recent USLIFE Corporation (NYSE: USH)
acquisition.
    To implement these initiatives, the company will take a special after tax
charge to net income in the second quarter of 1997 aggregating approximately
$350 million, which includes $193 million of previously disclosed charges and
also includes the settlement of certain litigation against a subsidiary.
    In commenting on the announcement, Robert M. Devlin, chairman and chief
executive officer, said, "These strategic actions solidify American General's
position as one of the leading consolidators in the financial services
industry.  We are following through on our commitment to quickly and
effectively integrate USLIFE into American General.
    "The acquisition of USLIFE provides a unique opportunity for the company
to capitalize on the marketing strengths of our combined organizations while
eliminating costs and inefficiencies.  These initiatives will enable American
General to take advantage of our greatly expanded marketing and distribution
network, build a platform for future acquisitions, and achieve significant
operating efficiencies in our life insurance operation.
    "Our continuing strategic review of operations has led to the disposition
of certain non-strategic assets.  These actions will sharpen our focus on core
businesses leading to better utilization of capital and improving growth and
profitability.
    "The acquisition of USLIFE combined with our efforts to streamline the
organization demonstrate our dedication to meeting the financial security
needs of American General's 12 million customers and creating greater value
for our shareholders."

    USLIFE Integration Initiatives
    On June 17, 1997, the company completed the $1.8 billion acquisition of
USLIFE Corporation, the largest in American General's 71-year history.  This
acquisition positioned American General as the nation's third largest writer
of new individual life insurance premium with over 25,000 agents and more than
$300 billion of life insurance in force.  In addition, the acquisition created
the opportunity to realize significant marketing and operating synergies
through the development of a divisional structure which permits shared
products and administrative services while retaining the distinct marketing
attributes of the individual companies.  The new divisional structure is
designed to facilitate the integration of USLIFE and achieve maximum benefit
from the acquisition.
    The integration of USLIFE is expected to produce annualized expense
savings of $50 million.  In addition, the formation of the new divisional
structure is expected to generate further expense savings.  In conjunction
with these initiatives, the company will take a restructuring charge in the
second quarter consisting primarily of costs associated with severance and the
elimination of redundant facilities.  The aggregate after tax charge relating
to the company's integration initiatives, divisional realignment, USLIFE
change of control costs, and acquisition expenses will be approximately $250
million, which includes the $167 million of acquisition-related expenses
previously disclosed in the May 19, 1997 Joint Proxy Statement/Prospectus sent
to shareholders of American General and USLIFE in connection with their
approval of the merger.

    Sale of Non-Strategic Assets
    In addition to acquisitions and consolidations, a key aspect of American
General's growth strategy is the divestiture of non-strategic and
underperforming assets.  The objective of these divestitures is to redeploy
the capital proceeds to generate higher returns for shareholders.
    During the second quarter, the company took significant action related to
this process by completing negotiations for the sale of its land development
business.  These non-strategic assets include master-planned residential
communities located throughout the United States with an aggregate book value
of $349 million as of May 31, 1997.  This transaction is expected to be
completed in the third quarter of 1997.
    In addition, the company is currently engaged in a process for the sale of
its small Canadian life insurance subsidiary which lacks synergy with the
company's other life insurance operations.
    As previously announced, American General's consumer finance operation
sold receivables consisting of satellite dish loans, bank credit card loans,
and certain revolving-credit home improvement loans with an aggregate book
value of $752 million as of May 31, 1997.  The sale of these portfolios
completes the company's plan to dispose of non-strategic assets at its
consumer finance operation and supports the strategy of concentrating
marketing efforts on home equity and direct consumer loans and retail sales
finance programs generated through the 1,373 branch office network.  These
actions have improved the segment's overall credit quality and profitability.
    In connection with the disposition of non-strategic assets, the company
will take an after tax charge of approximately $70 million in the second
quarter, which includes the previously announced $26 million charge on the
sale of its bank credit card loan portfolio.

    Litigation Resolution
    In the second quarter, a real estate subsidiary of the company agreed to
settle pending litigation brought by Avia Development Group.  This case was on
appeal from a judgment of $176 million in actual and punitive damages, plus
additional post-judgment interest, entered by a state district court on
September 17, 1993.  The company will record an after tax charge in the
quarter of approximately $30 million to resolve this litigation.
    American General Corporation is one of the nation's largest diversified
financial services organizations with assets of $75 billion and shareholders'
equity of $6.2 billion.  Headquartered in Houston, it is a leading provider of
retirement services, life insurance, and consumer loans to 12 million
customers.  American General common stock is listed on the New York, Pacific,
London, and Swiss stock exchanges.
    Certain information included in this press release is 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 the Securities and Exchange Commission.

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