HOUSTON, July 30 /PRNewswire/ -- American General Corporation (NYSE: AGC),
one of the nation's largest diversified financial services organizations with
assets of $77 billion and market capitalization of $13 billion, today reported
a 12% increase in second quarter operating earnings per share to $.86 compared
to $.77 in the second quarter of 1996.  Operating earnings for the quarter
were $215 million compared to $193 million for the 1996 period, an 11 %
increase.
    As a result of the pooling of interests method used to account for the
company's $1.8 billion acquisition of USLIFE Corporation, past financial
results for American General have been restated to present the combined
operations of American General and USLIFE as if the acquisition had been in
effect for all periods presented.
    Year-to-date operating earnings increased 16% to $429 million or $1.73 per
share compared to $371 million or $1.49 per share for the six-month period in
1996.
    Following is a comparative table of second quarter and year-to-date
operating earnings for 1997 and 1996:

                        Quarter Ended June 30,       Six Months Ended June 30,
    Operating
     Earnings          1997     1996     Change     1997      1996     Change
      In Millions      $215     $193      + 11%     $429      $371      + 16%
      Per Share        $.86     $.77      + 12%    $1.73     $1.49      + 16%

    On July 10, 1997, the company announced that it would take a special
aftertax charge to net income of $353 million in the second quarter for change
of control costs and other acquisition-related expenses incurred in the USLIFE
acquisition, the disposition of non-strategic assets, and the settlement of
litigation.  As a result, the company reported a net loss of $124 million for
the second quarter.  Net income, which includes net realized gains and other
non-recurring items, was $163 million for the comparable 1996 period.  Year-
to-date net income was $86 million compared to $359 million for the six-month
period ending June 30, 1996.
    Commenting on the results, Robert M. Devlin, chairman and chief executive
officer, said, "The second quarter was the most active period in the company's
history -- we completed two acquisitions totaling $2.5 billion including the
largest acquisition in the company's 71-year history.  We also took decisive
actions to strategically realign our life insurance operations and to redeploy
capital through the disposition of non-strategic assets.  These actions
further our strategy of improving existing operations while expanding through
acquisitions.
    "While we are actively building for the future, we remain firmly focused
on current performance.  We achieved a 12% increase in operating earnings per
share, with gains in each of our business segments.  Consumer finance had a
solid quarter, with improved credit quality and a 31% increase in operating
earnings.  We are confident that this segment has reached a sustainable level
of operating performance.  Our retirement services segment had another
exceptional quarter, including 29% sales growth and record earnings.  Within
the life insurance segment, life insurance sales were up solidly, and future
operating results will further benefit from our expanded distribution and the
recently announced strategic realignment.
    "The first half of 1997 was an active period of mergers and acquisitions
in the financial services industry.  Our position as a leading industry
consolidator is a result of having the people, systems, and structure, as well
as the financial strength, necessary to execute our growth strategy in this
dynamic environment."

    Recent Corporate Events
    Home Beneficial Acquisition. On April 16, 1997, American General completed
its $665 million acquisition of Home Beneficial Corporation for $283 million
in cash and 9.5 million shares of American General common stock.  Adjusting
for excess capital of $300 million, the net purchase price was $365 million.
Consolidation of Home Beneficial into the Nashville-based career agency
division of the life insurance segment is expected to result in annualized
expense savings of $20 million.
    USLIFE Acquisition. On June 17, 1997, American General completed the $1.8
billion acquisition of USLIFE Corporation in an all-stock transaction through
the issuance of approximately 39 million common shares.  With the acquisition
of USLIFE, American General more than doubled its life insurance in force to
$324 billion and is now the nation's third largest writer of new individual
life insurance premium.  The integration of USLIFE is expected to result in
annualized expense savings of $50 million.
    Life Insurance Divisional Realignment. Following completion of the USLIFE
acquisition, the company realigned its life insurance segment into two
divisions based on distribution system and market focus.  The two divisions
are the independent producer division and the career agency division.  The
divisional structure is designed to support the company's expanded
distribution system while achieving operating efficiencies throughout its life
insurance segment.  This structure is expected to increase sales through
improved product development and enhanced customer service, and at the same
time, reduce operating expenses.
    Disposition of Non-strategic Assets. On July 10, 1997, the company
announced the disposition of certain non-strategic assets with a book value
totaling $1.1 billion including the sale of its land development business and
certain finance receivables.  The company is also engaged in a process for the
sale of its small Canadian life insurance subsidiary.  Proceeds from these
dispositions will be redeployed for internal growth, debt reduction, and
acquisitions.  These actions further the company's strategy to focus on
building its core business operations.
    Share Buyback Activity. During the quarter, American General completed an
accelerated share buyback transaction for 6.4 million of its common shares.
Year-to-date, the company has repurchased 9.5 million shares.

    Additional Corporate Financial Highlights
    The following corporate financial highlights compare the results for the
second quarter and six months of 1997 with the comparable restated 1996
periods:

    June 30, 1997 Compared to June 30, 1996
    -- Assets increased $6.6 billion to $77.4 billion, up 9%;
    -- Separate account assets increased 50% to $9.7 billion;
    -- Corporate capitalization increased $821 million to $10.2 billion, up
       9%; and
    -- Common stock price per share was $47.75, up 3l%.

    Six Months 1997 Results
    -- Revenues and deposits increased $386 million to $6.9 billion, up 6%;
    -- Pretax operating earnings increased 16% to $666 million;
    -- Operating earnings per share increased 16% to $1.73; and
    -- Operating return on shareholders' equity was 13.5%, up from 12.4%.

    Segment Reporting
    American General reports its financial results in three business segments
and a category for corporate items.  The restatement required by the pooling
of interests method used to account for the USLIFE acquisition affects the
life insurance segment and corporate but does not affect the retirement
services or consumer finance segments.  Following is a comparative table of
second quarter and six-month earnings for 1997 and 1996 by business segment:

                        Quarter Ended June 30,       Six Months Ended June 30,
    In Millions:       1997     1996     Change     1997      1996     Change
     Retirement
      Services          $64      $58       + 8%     $127      $118       + 7%
     Life Insurance     143      140       + 2       285       267       + 7
     Consumer Finance    40       31       + 31       79        59       + 34
      Segment Earnings $247     $229       + 8%     $491      $444       + 10%

    Retirement Services.  VALIC, with $33 billion in assets, is a leading
provider of retirement plans and employer-sponsored retirement programs to
employees of educational, health care, public sector, and other not-for-profit
organizations.  VALIC has 1.7 million participant accounts serviced by a sales
force of over 1,000 retirement planning specialists.
    Life Insurance.  American General is the third largest writer of new
individual life insurance premiums in the United States.  This segment
consists of two divisions: the independent producer division comprised of
American General Life, Franklin Life, United States Life, All American Life,
and Old Line Life; and the career agency division comprised of American
General Life and Accident.  Combined, these divisions have assets of $34
billion, life insurance in force of $324 billion, and serve over eight million
customers through more than 36,000 agents.
    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 1,343 branch offices, 2.3 million customer accounts, and finance
receivables of $7.4 billion.

    Retirement Services
    Performance Highlights. The following performance highlights compare the
results for the quarter ending June 30, 1997 with the comparable 1996 period:

    -- Sales increased 29% to $347 million;
    -- Segment earnings increased 8% to a record $64 million;
    -- Assets increased 16% or $4.5 billion to $33 billion; and,
    -- Return on equity increased to 16.9% from 16.6%.

    Second Quarter Results.  VALIC reported continued strong sales growth in
the second quarter, up 29% over the prior year period.  Year-to-date sales
growth totaled 38% and reflects solid demand for VALIC's leading Portfolio
Director variable annuity product, which accounted for 72% of total premium
for the six-month period.  The trend towards equity-based products continued
with variable premium deposits accounting for 51% of total premium deposits in
the quarter.  The strong sales combined with the increase in the equity market
led to a 53% increase in separate account assets compared to the prior year.
Separate account assets at the end of the second quarter totaled $8.9 billion.
    VALIC's ongoing strategy of selective expansion in key markets led to a
10% increase in its field force of retirement planning specialists over the
prior year.  This increase contributed to an 11 % rise in the number of
participants, which now totals over one million.  Premium deposits increased
24% to $860 million, while assets increased 16% over the prior year.  The
surrender ratio declined to 5.1% from 5.2% a year ago and remains well below
the industry average.
    Earnings increased 8% to a record $64 million in the second quarter due to
higher income generated from the growth in assets and continued emphasis on
cost control.  Return on equity for the quarter increased to 16.9% as compared
to 16.6% in the 1996 second quarter as a result of the increased contribution
of variable products which require less capital.
    Life Insurance
    Performance Highlights. The following performance highlights compare the
results for the quarter ending June 30, 1997 with the comparable 1996 period:

    -- Annualized premium life sales increased 11 % to $141 million;
    -- Segment earnings increased 2% to $143 million;
    -- Total deposits increased 3% to $401 million; and,
    -- Return on equity was 10.0% compared to 10.2%.

    Second Quarter Results.  The life insurance segment reported second
quarter operating earnings of $143 million compared to $140 million a year
ago.  This increase resulted from additional operating earnings in the
company's career agency division generated from the acquisition of Home
Beneficial.
    Annualized premium life sales increased 11% to $141 million in the
quarter.  The increased sales primarily reflect strong gains in the
independent producer division and incremental sales from acquired companies in
the career agency division.  Improved sales in the independent producer
division primarily resulted from the successful introduction of products for
the corporate executive benefit markets.  At the end of the quarter, life
insurance in force was $324 billion, a 7% increase from a year ago.
    Consolidation and integration of recently acquired companies into the
career agency division is on schedule.  These activities have resulted in
an 11% reduction in home and field office personnel compared to the prior
year.  Additional consolidation activities over the next 12 months will
include the rationalization of sales offices and certain field office system
conversions.
    In the independent producer division, the company is developing
centralized units which will focus on product development, operations support,
and insurance administration.  These units will support the marketing and
distribution activities of this division, resulting in improved operating
efficiencies through the elimination of redundant facilities and personnel.

    Consumer Finance
    Performance Highlights. The following performance highlights compare the
results for the quarter ending June 30, 1997 with the comparable 1996 period:

    -- Segment earnings increased 31% to $40 million;
    -- Delinquency ratio improved to 3.73% from 3.99%;
    -- Charge off ratio improved to 3.68% from 5.33%; and
    -- Return on equity improved to 13.4% from 9.6%.

    Second Quarter Results.  Consumer finance reported $40 million in
operating earnings, a 31% increase over the prior year period.  During the
quarter, overall credit quality improved compared to the prior year and the
first quarter of 1997.  The improved credit quality resulted from the
company's strategic decision to sell underperforming receivables and actions
taken to strengthen underwriting and increase the percentage of higher
quality, real estate-secured loans.
    Charge offs declined to 3.68% of receivables for the quarter compared to
5.33% in the prior year period and 3.83% in the first quarter of 1997.  Also,
the delinquency ratio improved to 3.73% at the end of the quarter compared to
3.99% a year ago and 3.76% at the end of the 1997 first quarter.  The
improvement relative to 1996 is due to the sale of the underperforming
receivable portfolios and a reduction in delinquencies and charge offs in the
core branch office portfolio.
    At the end of the second quarter 1997, the allowance for loan losses was
$385 million or 5.20% of finance receivables, and remains toward the high end
of the company's historic range of charge off coverage.  The improvement in
charge offs led to an increase in risk-adjusted spread to 6.45% in the quarter
from 5.91% in the prior year period.
    The receivables portfolio at quarter end totaled $7.4 billion and
consisted of 52% real estate-secured loans, up from 39% a year ago.  The
company's ongoing efforts to optimize the branch office network and reduce
expenses led to the closing of 36 marginal branches and the opening of 7 new
branches during the quarter.  The company is focusing its marketing efforts on
generating additional loan volume through its core branch office network and
15,000 retail merchant relationships.

    Corporate
    Corporate includes operating items such as income, interest, and other
expenses not directly associated with business segment operations, and non-
operating items such as realized investment gains and other non-recurring
items.  Following is a comparative table of second quarter and six-month
corporate operations (aftertax) for 1997 and 1996:

                        Quarter Ended June 30,       Six Months Ended June 30,

    In Millions:           1997        1996             1997           1996
     Interest on
      Corporate Debt       $(27)       $(28)            $(51)          $(55)
     Dividends on
      Preferred
      Securities            (22)         (9)             (39)           (19)
     Equity in Earnings
      of Western National     8           7               17             12
     Other Corporate          9          (6)              11            (11)
       Total Corporate
        Operations         $(32)       $(36)            $(62)          $(73)
     Realized Investment
      Gains                 $14          $2              $10            $20
     Non-recurring Items  $(353)       $(32)           $(353)          $(32)

    The decrease in interest on corporate debt during 1997, offset by an
increase in dividends on preferred securities, reflects the repayment of debt
from the proceeds of preferred securities issuances.  Higher earnings on
corporate assets led to the improvement in the other corporate category.  The
increase in realized investment gains during the quarter resulted from gains
on the sale of securities within the investment portfolio.  The non-recurring
items in the 1997 periods relate primarily to previously disclosed change of
control costs for the USLIFE acquisition, the disposition of non-strategic
assets, costs associated with the life segment divisional realignment, and
settlement of litigation.  The 1996 non-recurring item relates to charges
taken by the USLIFE group health operation.
    American General Corporation is one of the nation's largest diversified
financial services organizations with assets of $77 billion and shareholders'
equity of $6.7 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.

    American General Corporation
    Comparative Results(a)
    (In millions, except per share data) (Unaudited)

                                    Quarter ended          Six months ended
                                       June 30,                June 30,
                                   1997       1996        1997          1996

    1. Revenues and Deposits     $3,487     $3,263      $6,890        $6,504

       Business Segment Earnings:
    2.  Retirement Services         $64        $58        $127          $118
    3.  Life Insurance              143        140         285           267
    4.  Consumer Finance             40         31          79            59
    5.  Total Business Segment
         Earnings                   247        229         491           444

       Corporate Operations:
    6.  Interest on Corporate
         Debt                       (27)       (28)        (51)          (55)
    7.  Dividends on Preferred
         Securities of
         Subsidiaries               (22)        (9)        (39)          (19)
    8.  Expenses Not Allocated
         to Segments                (15)       (14)        (31)          (25)
    9.  Earnings on Corporate
         Assets                      24          8          42            14
    10. Equity in Earnings of
         Western National
         Corporation                  8          7          17            12
    11. Total Corporate Operations  (32)       (36)        (62)          (73)

    12. Operating Earnings(b)       215        193         429           371

    13. Realized Investment Gains    14          2          10            20
    14. Non-recurring Items        (353)       (32)       (353)          (32)
    15. Net Income                $(124)      $163         $86          $359
    16. Operating Earnings
         per Share(b)               .86        .77        1.73          1.49
    17. Net Income Per Share       (.49)       .65         .36          1.44
    18. Average Shares
         Outstanding              251.6      254.1       250.7         252.7

                                      At June 30,
                                   1997       1996
    19. Assets                  $77,387    $70,794
    20. Shareholders' Equity      6,746      6,445
    21. Book Value Per Share      27.50      26.17
    22. Market Price Per Share    47.75      36.38

       Excluding Fair Value Adjustment Related
       To Securities (SFAS 115)(c):
    23. Assets                  $76,574    $70,380
    24. Shareholders' Equity      6,226      6,179
    25. Book Value Per Share      25.41      25.10

    (a) As a result of using the pooling of interests method to account for
        the USLIFE acquisition, the consolidated financial results have been
        restated to present the combined operations of American General and
        USLIFE as if the acquisition had been in effect for all periods
        presented.
    (b) Operating earnings exclude aftertax realized investment gains
        (losses), non-recurring items, and one-time accounting changes.
    (c) 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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