11-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________ FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 _____________________ [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from _______ to ______ Commission file number 1-7981 Full title of the Plan: AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN Name of the issuer of the securities held pursuant to the Plan and the address of its principal executive office: AMERICAN GENERAL CORPORATION 2929 Allen Parkway Houston, Texas 77019 AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN AUDITED FINANCIAL STATEMENTS AND SCHEDULES DECEMBER 31, 1999 Audited Financial Statements Report of Independent Auditors . . . . . . . . . . . . . . . . . 1 Statements of Net Assets Available for Benefits . . . . . . . . . 2 Statements of Changes in Net Assets Available for Benefits . . . 3 Notes to Financial Statements . . . . . . . . . . . . . . . . . . 4 Schedules Schedule H, Line 4 (i) - Schedule of Assets Held for Investment Purposes at End of Year. . . . . . . . . . . . . . . . . . . . . 11 Schedule H, Line 4 (j) - Schedule of Reportable Transactions . . 12 Report of Independent Auditors Administrative Board American General Agents' and Managers' Thrift Plan We have audited the accompanying statements of net assets available for benefits of the American General Agents' and Managers' Thrift Plan (the Plan) as of December 31, 1999 and 1998, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1999 and 1998, and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes at end of year as of December 31, 1999, and reportable transactions for the year then ended are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. ERNST & YOUNG LLP Houston, Texas June 9, 2000 AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS In thousands December 31, 1999 1998 Assets Investments (See Note C) . . . . . . . . . . $148,655 $154,048 Receivables Employer contributions . . . . . . . . . . 135 25 Participant contributions . . . . . . . . . 136 26 Interfund transfers . . . . . . . . . . . . 213 167 Other . . . . . . . . . . . . . . . . . . . 11 291 Total receivables . . . . . . . . . . . . 495 509 Total assets . . . . . . . . . . . . . 149,150 154,557 Liabilities Payables Forfeitures . . . . . . . . . . . . . . . . 365 58 Interfund tranfers . . . . . . . . . . . . 213 167 Other . . . . . . . . . . . . . . . . . . . 454 521 Total liabilities . . . . . . . . . . . 1,032 746 Net assets available for benefits . . . . . . $148,118 $153,811 The accompanying notes are an integral part of these financial statements. AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS In thousands Years Ended December 31, 1999 1998 Additions to net assets Investment income Dividends . . . . . . . . . . . . . . . . $ 2,703 $ 2,666 Interest . . . . . . . . . . . . . . . . . 1,161 1,073 Net appreciation (depreciation) in fair value of investments (See Note C) . . . . (1,304) 41,657 Total investment income . . . . . . . 2,560 45,396 Contributions Company's . . . . . . . . . . . . . . . . 1,320 1,243 Participants' . . . . . . . . . . . . . . 8,826 8,402 Total contributions . . . . . . . . . 10,146 9,645 Total additions . . . . . . . . . 12,706 55,041 Deductions from net assets Benefits American General Corporation common stock . . . . . . . . . . . . . . . . . 1,885 2,113 Cash . . . . . . . . . . . . . . . . . . . 15,890 14,572 Forfeitures . . . . . . . . . . . . . . . 609 450 Participant loan origination fees . . . . 15 15 Total deductions . . . . . . . . . 18,399 17,150 Net increase (decrease) . . . . . . (5,693) 37,891 Net assets available for benefits Beginning of year . . . . . . . . . 153,811 115,920 End of year . . . . . . . . . . . . $148,118 $153,811 The accompanying notes are an integral part of these financial statements. AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS NOTE A--SIGNIFICANT ACCOUNTING POLICIES The American General Agents' and Managers' Thrift Plan (the Plan) financial statements are prepared in conformity with accounting principles generally accepted in the United States. Investments in American General Corporation (American General) common stock are reported at fair value based on published market prices. Fair values of other investments are reported as follows: 1) investment in American General Life and Accident Insurance Company (AGLA or the Company) deposit administration group annuity contract, at contract value (see Note E); 2) investments in the American General Series Portfolio Company (AGSPC) Stock Index and Growth Funds, the Putnam OTC & Emerging Growth Fund, the Templeton Foreign Fund, and the Vanguard Fixed Income Securities Fund, at net asset value; and 3) short-term investments, at cost which approximates fair value. AGSPC is an open-end management investment company (mutual fund) whose investment advisor is The Variable Annuity Life Insurance Company (VALIC). VALIC and AGLA are wholly owned subsidiaries of American General. Participant notes are recorded as plan investments at amortized values. Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded as income on ex-dividend dates, and interest income is recorded using the accrual method of accounting. Contributions are recorded as additions to net assets on the date the contributions become payable to the Plan. Interfund transfers are recorded at the market value of the amount transferred. Benefits paid to participants are recorded upon distribution at the market value of the assets distributed. The preparation of financial statements requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities, (2) disclosures of contingent assets and liabilities, and (3) the reported amounts of additions and deductions during the reporting periods. Actual results could differ from those estimates. Statement of Position ("SOP") 99-3, effective for plan years ending after December 15, 1999, was adopted by the Plan's management in 1999. SOP 99-3 required various changes to the reporting of certain defined contribution benefit plan investments and other financial disclosure matters; therefore, certain prior year amounts have been reclassified to conform with current year presentation. NOTE B--DESCRIPTION OF THE PLAN The following description of the Plan provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE B--DESCRIPTION OF THE PLAN--Continued General The Plan, sponsored by American General, is a defined contribution plan offered to eligible agents and managers (sales employees) of AGLA, a wholly owned subsidiary of American General. Effective January 1, 1999, the Plan's eligibility requirements were changed from the earlier of completion of one year of service or attainment of age 35 to 30 days of service. The Plan provides for participant elective salary deferrals (participant pretax contributions) in accordance with Section 401(k) of the Internal Revenue Code of 1986, as amended (IRC). The Plan is subject to certain provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Substantially all of the costs of administering the Plan are paid by American General and the Company. The Plan's investments are held in a bank-administered trust fund. Investment Options Participants may direct their employee contributions in one of seven funds or a combination of each fund. These funds invest in: 1) shares of American General common stock (Stock Fund); 2) a deposit administration group annuity contract issued by AGLA (Cash Fund); 3) shares of the AGSPC Stock Index Fund (Equity Index Fund); 4) shares of the Putnam OTC & Emerging Growth Fund (Small-Cap Fund); 5) shares of the AGSPC Growth Fund (Large-Cap Blend Fund, formally called Mid-Cap Fund); 6) shares of the Templeton Foreign Fund (International Fund); and 7) shares of the Vanguard Fixed Income Fund (Bond Fund). The Company's contributions are invested solely in the Stock Fund; however, participants age 60 or older can direct the investment of their employer matching contributions into any of the available funds. Amounts which have not yet been used to purchase investments in either the Stock, Cash, Equity Index, Small-Cap, Large-Cap Blend, International, or Bond Funds are temporarily invested in short-term investments. Income from these short-term investments is allocated to Plan participants based on current contributions. Contributions Sales employees who elect to participate contribute, on a pretax basis, a basic amount equal to three percent of base pay. Participants may also make additional pretax contributions in an amount ranging from one to thirteen percent of base pay, subject to the contribution limitations discussed below. The Company contributes an amount equal to one-third of the basic contribution. Participants may change their contribution rate and investment election for future contributions, as well as transfer all or part of their employee account balances among funds, no more than once each month. All changes except transfers are effective on the first day of the first pay period of each month. Transfers are effective on the last business day of the month the request is received. AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE B--DESCRIPTION OF THE PLAN--Continued Contribution Limitations For 1999 and 1998, the total amount of participant pretax contributions is limited to $10,000. Additionally, the total amount of annual participant and company contributions (including forfeitures) must not exceed the lesser of 25 percent of compensation or $30,000. During 1999 and 1998, the total amount of base pay that can be used in determining contributions under the Plan is $160,000. ERISA and the IRC provide that qualified plans cannot discriminate in favor of highly compensated individuals. Certain highly compensated individuals may be required to receive refunds of any contributions in excess of the IRC Sections 401(k) and (m) limits and all earnings attributable to such contributions. Highly compensated individuals are not allowed to make additional contributions if such contributions will adversely affect the Plan's nondiscrimination test under Sections 401(k) and (m). In 1999 and 1998, no refunds of contributions were necessary to comply with these laws. Participant Accounts Each participant's account is credited with the participant's and the Company's contributions and an allocation of Plan earnings. Allocation of Plan earnings are based on participants' account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Vesting Participants are immediately vested in their contributions plus the earnings thereon. Participants become 100 percent vested in the remainder of their account after five years of service (as defined in the Plan document). Payment of Benefits Upon termination of service, and if consented to by the participant (required only if the total value, both vested and nonvested, of the account exceeded $5,000 in 1999 or 1998, and the participant is under age 65), a participant will receive a distribution equal to the vested value of his or her account. For years beginning after December 31, 1996, distributions must begin by April 1 of the calendar year following the later of either the calendar year in which the employee reaches age 70-1/2, or the calendar year in which the employee retires. AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE B--DESCRIPTION OF THE PLAN--Continued Participant Loans Participants may borrow from their fund accounts, in a single loan, a minimum of $1,000 and up to a maximum equal to the lesser of $50,000 or 50% of the participant's vested account balance. Loan terms range from 12 to 58 months. Loans are secured by the vested balance in the participant's account and bear interest at a rate commensurate with prevailing rates as determined from time to time. Principal and interest are paid to the participant's account through payroll deductions. Early loan payoff is allowed. Forfeitures Participants terminating employment forfeit their nonvested interest in the Company's contributions on the earlier of (1) the distribution of the entire nonforfeitable portion of their account or (2) upon incurring a period of severance equal to five consecutive one-year breaks in service. Forfeitures are available to reduce future Company contributions. Participants who terminate and are reemployed with the Company before incurring five consecutive one-year breaks in service are entitled to their nonvested or forfeited amounts, subject to certain provisions as stated in the Plan document. NOTE C--INVESTMENTS The following presents investments that represent 5 percent or more of the Plan's net assets. In thousands December 31, 1999 1998 American General Corporation common stock . . . . . . . . . . . . . . . $120,353* $131,564* American General Life and Accident Insurance Company deposit administration group annuity contract . . . . . . . . . . . . . 15,332 14,139 *Nonparticipant-directed (See Note D) AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE C--INVESTMENTS--Continued The Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated(depreciated) in value as follows: In thousands Years Ended December 31, 1999 1998 Mutual funds . . . . . . . . . . $ 2,603 $ 305 Common stock . . . . . . . . . . (3,847) 41,346 Corporate bonds . . . . . . . . (60) 6 $(1,304) $41,657 NOTE D--NONPARTICIPANT-DIRECTED INVESTMENTS Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows: In thousands December 31, 1999 1998 Net assets AGC common stock fund . . . . . . . . . $119,646 $131,364 Years Ended December 31, 1999 1998 Changes in net assets Contributions . . . . . . . . . . . . . . . $ 7,109 $ 6,631 Dividends . . . . . . . . . . . . . . . . . 2,546 2,573 Interest . . . . . . . . . . . . . . . . . 21 15 Net appreciation(depreciation) . . . . . . (3,847) 41,346 Benefits paid to participants . . . . . . . . (14,115) (12,785) Interfund transfers . . . . . . . . . . . . . (2,949) (1,281) Other expenses . . . . . . . . . . . . . . . . (483) (182) $(11,718) $36,317 The Stock Fund contains both participant and nonparticipant-directed contributions with earnings not separately determinable; therefore, the Stock Fund is considered a total nonparticipant-directed investment option. AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE E--INVESTMENT CONTRACT WITH INSURANCE COMPANY The Plan maintains an investment contract with AGLA. The deposit administration group annuity contract is valued at contract value, which approximates fair value, and represents contributions under the contract, plus interest at the contract rate, less funds used to pay benefits. The guaranteed minimum rate of the contract is reset annually by AGLA. The contract had a guaranteed minimum rate of 6.00% for 1999 and 1998. Any earnings in excess of the guaranteed minimum rate are credited to the participants. The effective earned yield is calculated based on the calendar year. The effective earned yield of the investment contract for 1999 and 1998 was 6.54% and 6.52%, respectively. NOTE F--PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue their contributions at any time and to withdraw from the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. NOTE G--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 Benefits processed and approved for payment, but not paid as of December 31, are recorded on Form 5500 but not in the financial statements. The following is a reconciliation of net assets available for benefits per the financial statements to Form 5500: In thousands December 31, 1999 1998 Net assets available for benefits per the financial statements . . . . . . . . . . $148,118 $153,811 Benefits payable to withdrawing participants . . . (1,386) (2,075) Net assets available for benefits per Form 5500 . . . . . . . . . . . . . . . . . $146,732 $151,736 AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE G--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500--Continued The following is a reconciliation of benefits paid to participants per the financial statements to Form 5500: In thousands Year Ended December 31, 1999 Benefits paid to participants per the financial statements American General Corporation common stock . . . $ 1,885 Cash . . . . . . . . . . . . . . . . . . . . . 15,890 Total benefits paid to participants per the financial statements . . . . . . . . . 17,775 Benefits payable to withdrawing participants at year end . . . . . . . . . . . . . . . . . . . . 1,386 Benefits payable to withdrawing participants at beginning of year . . . . . . . . . . . . . . . . (2,075) Benefits paid to participants per Form 5500 . . . . . . . . . . . . . . . . . $17,086 NOTE H--FEDERAL INCOME TAXES Based on a favorable determination letter dated July 14, 1999, the Internal Revenue Service has ruled the Plan, as restated and amended, is qualified under Section 401(a) of the IRC and, therefore, exempt under Section 501(a) from federal income taxes. AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN SCHEDULE H, LINE 4 (i) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR AT DECEMBER 31, 1999 EIN: 74-0483432 PN: 002 In thousands, except share amounts Fair Issuer Description Cost Value American General 1,586,202 shares of $52,911 $120,353 Corporation* common stock American General Life Deposit administration ** 15,332 & Accident Insurance group annuity contract Company* Putnam 99,494 shares of Putnam OTC ** 3,682 & Emerging Growth Fund Participant Notes* Loans issued at interest ** 3,106 rates between 8.25% and 11.25% American General Series 42,318 shares of AGSPC ** 1,881 Portfolio Company* Stock Index Fund American General Series 70,451 shares of AGSPC ** 1,656 Porfolio Company* Growth Fund Templeton 113,131 shares of Templeton ** 1,269 Foreign Fund State Street Bank Short-term investments ** 819 & Trust Company* in money-market fund Vanguard 68,692 shares of Vanguard ** 557 Fixed Income Securities Fund $52,911 $148,655 *Party in interest **Cost not required for participant-directed investments AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN SCHEDULE H, LINE 4 (j) - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1999 EIN: 74-0483432 PN: 002 In thousands Current Value of Identity of Cost Asset on Net Party Purchase Selling of Transaction Gain Involved Description Price Price Asset Date (Loss) Category (iii) - Series of non-participant directed transactions in excess of 5% of net assets available for benefits State Street S/T Investments $14,562 $ - $14,562 $14,562 $ - Bank & Trust Company State Street S/T Investments - 14,679 14,679 14,679 - Bank & Trust Company (A) Company Stock 5,882 - 5,882 5,882 - (A) Company Stock - 13,178 5,202 13,178 7,976 (A) Parties involved are not presented, as permitted by Section 25250.103-6 (d)(1)(i) of the Department of Labor's Rules and Regulations. Note: Includes both participant-directed and nonparticipant-directed transactions. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the American General Agents' and Managers' Thrift Plan Administrative Board has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. AMERICAN GENERAL AGENTS' AND MANAGERS' THRIFT PLAN June 22, 2000 ELIZABETH A. DOBBS Elizabeth A. Dobbs, Vice President-Benefits & Payroll Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 Nos. 33-39201 and 333-13401) pertaining to the American General Agents' and Managers' Thrift Plan of our report dated June 9, 2000, with respect to the financial statements and schedules of the American General Agents' and Managers' Thrift Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1999. ERNST & YOUNG LLP Houston, Texas June 22, 2000