AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-Q


(Mark One)

[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                       SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended               September 30, 1996             

                                      OR

[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                       SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________ to _____________________

                         Commission file number 1-7981


                        American General Corporation                         
   (Exact name of registrant as specified in its articles of incorporation)


                Texas                                     74-0483432          
    (State of Incorporation)                         (I.R.S. Employer 
                                                       Identification No.) 


    2929 Allen Parkway, Houston, Texas                     77019-2155         
(Address of principal executive offices)                 (Zip Code) 


                                 (713) 522-1111                             
             (Registrant's telephone number, including area code)

Indicate  by check  mark whether  the  registrant: (1)  has filed  all reports
required to be filed by Section 13 or 15(d) of the  Securities Exchange Act of
1934  during the  preceding 12  months (or  for such  shorter period  that the
registrant  was required to  file such reports),  and (2) has  been subject to
such filing requirements for the past 90 days.

Yes   X  .     No      . 

As of October  31, 1996, there were 203,365,331 shares  (excluding shares held
in  treasury  and by  a  subsidiary) of  American General's  Common  Stock and
2,317,701  shares  of  American   General's  7%  Convertible  Preferred  Stock
outstanding.
<PAGE>
 
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





                              INDEX TO FORM 10-Q

                                                                              
                                                                     Page
Part I.    FINANCIAL INFORMATION.


         Item 1.  Financial Statements.

                  Consolidated Statement of Income for the nine
                    months and quarter ended September 30, 1996 
                    and 1995 .........................................  2

                  Consolidated Balance Sheet at September 30, 1996
                    and December 31, 1995 ............................  3

                  Consolidated Condensed Statement of Cash Flows for
                    the nine months ended September 30, 1996 
                    and 1995 .........................................  4

                  Notes to Consolidated Financial Statements .........  5

         Item 2.  Management's Discussion and Analysis of Financial
                    Condition and Results of Operations ..............  9


Part II.   OTHER INFORMATION.


         Item 1.  Legal Proceedings .................................. 25

         Item 6.  Exhibits and Reports on Form 8-K ................... 25
 











<PAGE>
 






                                                  -1-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





                        PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

                         AMERICAN GENERAL CORPORATION
                       Consolidated Statement of Income
                                  (Unaudited)
                       (In millions, except share data)

                                     Nine Months Ended      Quarter Ended
                                       September 30,        September 30,  
                                      1996        1995      1996      1995 
Revenues 
 Premiums and other considerations. $ 1,478     $ 1,297   $   502   $   455 
 Net investment income ............   2,437       2,291       817       797 
 Finance charges ..................   1,093       1,113       359       384 
 Realized investment gains ........      57           8        25         5 
 Equity in earnings of Western
  National Corporation ............      27          31        10        10 
 Other ............................      65          78        12        22 
     Total revenues ...............   5,157       4,818     1,725     1,673 

Benefits and expenses
 Insurance and annuity benefits ...   2,302       2,173       764       757 
 Policyholder dividends ...........      68          66        23        25 
 Operating costs and expenses .....     830         726       278       250 
 Commissions ......................     401         388       138       128 
 Change in deferred policy 
  acquisition costs and cost of    
  insurance purchased .............     (49)       (128)      (13)      (39)
 Provision for finance receivable
  losses ..........................     301         261        90       114 
 Interest expense
  Corporate .......................      92         123        31        40 
  Consumer Finance ................     369         386       122       131 
     Total benefits and expenses ..   4,314       3,995     1,433     1,406 

Earnings
 Income before income tax expense..     843         823       292       267 
 Income tax expense ...............     305         277        110       78 
 Income before net dividends on 
  preferred securities of 
  subsidiaries ....................     538         546       182       189 
 Net dividends on preferred 
  securities of subsidiaries ......      29          10        10         8 
     Net income ................... $   509     $   536   $   172   $   181 

Net income per share .............. $  2.42     $  2.59   $   .82   $   .86 

Dividends paid per common share ... $   .98     $   .93   $   .33   $   .31 


                                                  -2-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996


Average fully diluted shares 
  outstanding (in thousands) ...... 213,935     208,163   213,437   211,817 





















































                                                  -3-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





Item 1.  Financial Statements (continued).

                         AMERICAN GENERAL CORPORATION
                          Consolidated Balance Sheet 
                                  (Unaudited)
                      (In millions, except share amounts)

                                                 September 30,  December 31, 
                                                     1996           1995     
Assets 
 Investments 
  Fixed maturity securities (amortized cost:
   $36,403; $34,590) ............................    $37,122       $37,213 
  Mortgage loans on real estate .................      3,153         3,041 
  Equity securities (cost: $109; $138) ..........        133           186 
  Policy loans ..................................      1,705         1,605 
  Investment real estate ........................        608           577 
  Other long-term investments ...................        180           179 
  Short-term investments ........................        189           103 
      Total investments .........................     43,090        42,904 
 Cash ...........................................        173           161 
 Finance receivables, net .......................      7,743         7,918 
 Investment in Western National Corporation .....        481           407 
 Deferred policy acquisition costs ..............      2,310         1,625 
 Cost of insurance purchased ....................        822           504 
 Acquisition-related goodwill ...................        562           577 
 Other assets ...................................      2,087         1,887 
 Assets held in Separate Accounts ...............      7,077         5,170 
      Total assets ..............................    $64,345       $61,153 

Liabilities
 Insurance and annuity liabilities ..............    $39,883       $37,983 
 Debt (short-term)
  Corporate ($755; $553) ........................      1,927         1,723 
  Consumer Finance ($2,701; $2,490) .............      7,331         7,470 
 Income tax liabilities .........................        898         1,268 
 Other liabilities ..............................      1,125         1,009 
 Liabilities related to Separate Accounts .......      7,077         5,170 
      Total liabilities .........................     58,241        54,623 

Redeemable equity
 Company-obligated mandatorily redeemable 
  preferred securities of subsidiaries 
  holding solely company subordinated notes
    Non-convertible .............................        486           485 
    Convertible .................................        245           244 
      Total redeemable equity ...................        731           729 

Shareholders' equity 
 Mandatorily convertible preferred stock
  (shares issued and outstanding:  2,317,701) ...         85             - 

                                                  -4-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996


 Common stock (shares issued:  220,122,120;
  outstanding:  203,624,209; 203,948,246) .......        398           364 
 Net unrealized gains on securities .............        290         1,100 
 Retained earnings ..............................      5,092         4,787 
 Cost of treasury stock .........................       (492)         (450)
      Total shareholders' equity ................      5,373         5,801 
      Total liabilities and equity ..............    $64,345       $61,153 
















































                                                  -5-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





Item 1.  Financial Statements (continued).

                         AMERICAN GENERAL CORPORATION
                Consolidated Condensed Statement of Cash Flows
                                  (Unaudited)
                                 (In millions)
                                                       Nine Months Ended
                                                         September 30,    
                                                        1996        1995  
Operating activities
       Net cash provided by operating activities ...  $ 1,477     $ 1,432 

Investing activities 
 Investment purchases ..............................   (6,853)     (5,842)
 Investment calls, maturities, and sales ...........    6,150       4,026 
 Finance receivable originations or acquisitions ...   (3,860)     (4,482)
 Finance receivable principal payments received ....    3,730       3,681 
 Finance receivables sold through securitization ...        -         100 
 Net (increase) decrease in short-term investments .      (83)         96 
 Investment in Western National Corporation ........     (126)          - 
 Acquisition of Independent ........................     (106)          - 
 Acquisition of Franklin Life ......................        -        (920)
 Other, net ........................................     (152)       (152)
       Net cash used for investing activities ......   (1,300)     (3,493)

Financing activities
 Retirement Services and Life Insurance
   Policyholder account deposits ...................    1,934       2,241 
   Policyholder account withdrawals ................   (1,793)     (1,264)
      Total Retirement Services and Life Insurance        141         977 
 Consumer Finance
   Net increase (decrease) in short-term debt ......      211        (186)
   Long-term debt issuances ........................       73       1,503 
   Long-term debt redemptions ......................     (426)       (842)
      Total Consumer Finance .......................     (142)        475 
 Corporate
   Net increase (decrease) in short-term debt ......      202        (256)
   Long-term debt issuances ........................        -         433 
   Long-term debt redemption .......................        -        (100)
   Issuance of preferred securities of subsidiaries, 
    net of commissions paid
     Non-convertible ...............................        -         485 
     Convertible ...................................        -         244 
   Common stock dividend payments ..................     (200)       (190)
   Preferred stock dividend payments ...............       (3)          - 
   Common stock purchases ..........................     (152)          - 
   Other, net ......................................      (11)          4 
      Total Corporate ..............................     (164)        620 
       Net cash provided by (used for)
        financing activities .......................     (165)      2,072 


                                                  -6-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996


Net increase in cash ...............................       12          11 
Cash at beginning of period ........................      161          45 
Cash at end of period ..............................  $   173     $    56 

Supplemental disclosure of cash flow information:
 Cash paid during the period for
   Income taxes ....................................  $   217     $   166 
   Interest
     Corporate .....................................       96         115 
     Consumer Finance ..............................      369         365 
   Dividends on preferred securities of
    subsidiaries ...................................       43          14 











































                                                  -7-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





Item 1.  Financial Statements (continued).

                         AMERICAN GENERAL CORPORATION
                  Notes to Consolidated Financial Statements
                              September 30, 1996

1.   Accounting  Policies. The  accompanying unaudited  consolidated financial
     statements of  American General  Corporation ("American General"  or "the
     company")  and its  subsidiaries  have been  prepared in  accordance with
     generally accepted  accounting principles  for interim periods.   In  the
     opinion  of   management,  these  statements   include  all  adjustments,
     consisting  only of normal recurring  accruals, that are  necessary for a
     fair  presentation of  the company's  consolidated financial  position at
     September  30, 1996, the consolidated results of operations for the three
     months  and nine  months  ended  September 30,  1996  and  1995, and  the
     consolidated cash flows for the nine months  ended September 30, 1996 and
     1995.

     To conform  with the 1996 presentation, certain items in the prior period
     have been reclassified.

2.   New  Accounting  Standard.    In  June  1996,  the  Financial  Accounting
     Standards Board (FASB) issued Statement of Financial Accounting Standards
     (SFAS) 125, "Accounting for  Transfers and Servicing of Financial  Assets
     and Extinguishments of Liabilities."   This statement provides accounting
     standards  for  determining whether  transfers  of  financial assets  are
     treated as sales  or secured borrowings.   The statement must be  applied
     prospectively to all applicable transactions occurring after December 31,
     1996;  however, application of certain  provisions may be delayed pending
     approval  by the  FASB.    Earlier  or  retroactive  application  is  not
     permitted.   The  company  does  not  anticipate  a  material  effect  on
     consolidated  results of  operations  and financial  position related  to
     adoption of this statement.

3.   Acquisitions.

     Western  National Corporation.   On September 17,  1996, American General
     acquired 7.25 million shares of Western National Corporation (WNC) Series
     A Participating Convertible  Preferred Stock.   AGC paid  a net  purchase
     price  of $126.1 million, which  reflected an agreed-upon  gross price of
     $130 million, or $17.92 per  share, less a 3% discount since  WNC did not
     incur customary stock issuance costs.  The acquisition increased American
     General's equity  ownership in WNC from  40% to 46.2% on  a fully diluted
     basis.    For accounting  purposes, the  acquisition  was recorded  on an
     equity  basis, using  the purchase  method.   Allocation of  the purchase
     price to WNC's  individual assets  and liabilities, based  on their  fair
     values as of the acquisition date, is in process.





                                                  -8-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





Item 1.  Financial Statements (continued).

     Independent  Insurance  Group,  Inc.   On  February  29,  1996,  American
     General, through its wholly-owned  subsidiary, AGC Life Insurance Company
     (AGC Life), acquired Independent  Insurance Group, Inc. (Independent) for
     $362  million.  Prior to closing, Independent shareholders could elect to
     exchange each share of Independent stock for $27.50 in cash, .7480  share
     of American General common stock,  or .7480 share of American  General 7%
     mandatorily  convertible preferred stock.  The  exchange ratio of $36.725
     per  share was  based on  the average  market price  of American  General
     common  stock during the  ten trading  days ending  on and  including the
     fifth  trading  day  prior to  closing.    The  consideration at  closing
     consisted of:   1) $139 million of  cash (38%), 2) 3.7  million shares of
     common stock (38%), and 3) 2.3 million shares of preferred stock (24%).

     The  acquisition was  accounted for  using the  purchase method,  and the
     results  of  operations of  Independent  were included  in  the company's
     consolidated  statement  of income  from the  date  of acquisition.   The
     acquired  assets and  liabilities  were reflected  in American  General's
     consolidated  balance sheet as of February 29, 1996, at management's best
     estimate of  their fair values.   Evaluation  of fair values  assigned to
     Independent's  assets and  liabilities, primarily  related  to investment
     real   estate,  insurance  reserves,   and  litigation   liabilities,  is
     continuing, and allocation  of the  purchase price may  be adjusted  when
     additional information is available.

     Noncash investing and financing activities related to the  acquisition of
     Independent  that  are  not   reflected  in  the  consolidated  condensed
     statement of cash flows for the nine months ended September 30, 1996 were
     as follows:

     (In millions)

     Fair value of assets acquired, excluding $34 million 
      of cash                                                      $ 1,358 
     Liabilities assumed                                            (1,029)
     Issuance of common treasury shares                               (138)
     Issuance of mandatorily convertible preferred stock               (85)
       Net cash paid for acquisition of Independent                $   106 

     Franklin  Life Insurance Company.  On January 31, 1995, American General,
     through AGC Life, acquired  American Franklin Company (AFC), the  holding
     company  of The  Franklin Life  Insurance Company  (Franklin Life).   The
     following   unaudited  proforma  information  presents  the  consolidated
     results of  operations of the company  and AFC for the  nine months ended
     September  30, 1995.   The  proforma information is  presented as  if the
     acquisition  and its permanent financing had been effective at January 1,
     1995.  This information  is intended for informational purposes  only and
     may not necessarily be indicative of American General's future results of
     operations.


                                                  -9-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





Item 1.  Financial Statements (continued).

                                                       Proforma
                                                  Nine Months Ended
                                                  September 30, 1995 
     (In millions, except share data)

     Total revenues                                    $  4,898 
     Income before income tax expense                  $    841 
     Income before net dividends on
       preferred securities of subsidiaries            $    558 
     Net income                                        $    533 
     Net income per share                              $   2.56 
     Average fully diluted shares 
       outstanding (thousands)                          208,163 

     Included in net income above are aftertax realized gains of $5 million.

4.   Mandatorily  Convertible  Preferred  Stock.     In  connection  with  the
     acquisition of  Independent, American General issued  2.3 million shares,
     or $85 million, of  mandatorily convertible preferred stock.   Holders of
     the preferred stock are entitled  to receive annual cumulative  dividends
     of  7% and  have the  right to  vote, together  with holders  of American
     General common  stock, on the basis  of four-fifths of one  vote for each
     share of preferred stock.  The  preferred stock is non-callable for  four
     years, and each  share is mandatorily convertible into not  more than one
     share of American General common stock during the fifth year.

5.   Derivative Financial Instruments.  During the nine months ended September
     30, 1996, the company entered  into interest rate swap agreements  with a
     total  notional amount of  $44.5 million  to convert  specific investment
     securities  from a  floating to a  fixed-rate basis,  or vice  versa.  No
     other  transactions  involving   derivative  financial  instruments  were
     entered into during the period.  Derivative financial instruments related
     to investment securities did not have a material effect on net investment
     income  during  the  nine  months  ended  September  30,  1996  or  1995.
     Derivative  financial instruments related to debt securities did not have
     a  material effect  on the  weighted-average borrowing  rate  or reported
     interest expense during the nine months ended September 30, 1996 or 1995.

6.   Legal  Contingencies.  Two real  estate subsidiaries of  the company were
     defendants in a lawsuit  that alleged damages based  on lost profits  and
     related claims  arising from certain  loans and joint  venture contracts.
     On  July 16, 1993,  a judgment was  entered against  the subsidiaries for
     $47.3  million in compensatory damages and for $189.2 million in punitive
     damages.  On September 17, 1993, a Texas state district court reduced the
     previously-awarded  punitive damages  by  $60.0 million,  resulting in  a
     reduced  judgment in  the  amount of  $176.5  million plus  post-judgment
     interest.  On January 29, 1996, the Texas First Court of Appeals rendered
     a two-to-one decision  that affirmed  the trial court  judgment and  held
           

                                                 -10-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





Item 1.  Financial Statements (continued).

     both companies liable to pay the  punitive damages.  The company  intends
     to vigorously contest the matter through the appellate process.  Although
     substantial risks  and uncertainties remain with respect  to the ultimate
     outcome, legal  counsel has advised  the company that it  is not probable
     within  the meaning of SFAS  5, "Accounting for  Contingencies," that the
     company will ultimately  incur a  material liability  in connection  with
     this matter.  Accordingly, no provision has been made in the consolidated
     financial statements related to this contingency.

     In  April  1992, the  Internal Revenue  Service  (IRS) issued  Notices of
     Deficiency for the 1977-1981 tax years of certain insurance subsidiaries.
     The basis of  the dispute was the  tax treatment of  modified coinsurance
     agreements.   The  company elected  to pay  all related  assessments plus
     associated interest, totaling $59 million.  A claim for refund of tax and
     interest was disallowed by the IRS in January 1993.  On June 30,  1993, a
     suit for refund  was filed in the United States  Court of Federal Claims.
     On February 7, 1996, the court ruled in favor of the company on all legal
     issues  related to this contingency, and a  judgment was entered in favor
     of the company  on July 7, 1996.   The government has notified  the court
     that it will appeal this judgment; however, the company intends to pursue
     a full  refund of the amounts  paid.  Accordingly, no  provision has been
     made   in  the   consolidated  financial   statements  related   to  this
     contingency.

     American General and certain  of its subsidiaries are parties  to various
     other  lawsuits  and  proceedings  arising  in  the  ordinary  course  of
     business.  Many of these lawsuits and proceedings arise in jurisdictions,
     such as Alabama, that permit damage awards disproportionate to the actual
     economic damages  incurred.  Based upon  information presently available,
     the company believes that the total amounts that ultimately will be paid,
     if any, arising from these lawsuits and proceedings will have no material
     adverse effect  on the company's  consolidated results of  operations and
     financial  position.  However, it  should be noted  that the frequency of
     large damage  awards, including large  punitive damage awards,  that bear
     little or no relation  to actual economic damages incurred  by plaintiffs
     in  jurisdictions  like Alabama  continues  to increase  and  creates the
     potential for an unpredictable judgment in any given suit.

7.   Status of  Federal Tax Return Examinations.  The company and the majority
     of  its subsidiaries file a consolidated federal  income tax return.  The
     IRS is currently  examining the  company's tax returns  for 1988  through
     1992.   One  issue  from  prior  tax  returns has  been  the  subject  of
     litigation, as described in Note 6.







                                                 -11-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





Item 1.  Financial Statements (continued).

8.   Ratio  of Earnings  to Fixed  Charges and  Ratio of Earnings  to Combined
     Fixed Charges  and Preferred Stock Dividends.   The ratio of  earnings to
     fixed charges and  the ratio of  earnings to  combined fixed charges  and
     preferred stock dividends were as follows:

                                         Nine Months Ended   Quarter Ended
                                           September 30,     September 30,
                                          1996       1995     1996   1995 
     Ratio of Earnings to Fixed
      Charges:
       Consolidated operations .........  2.71       2.52    2.78    2.48 
       Consolidated operations, 
        corporate fixed charges only ...  8.39       6.74    8.52    7.04 
       American General Finance, Inc. ..  1.42       1.65    1.55    1.45 

     Ratio of Earnings to Combined
      Fixed Charges and Preferred
      Stock Dividends:
       Consolidated operations .........  2.46       2.45    2.52    2.33 
       Consolidated operations, 
        corporate fixed charges and 
        preferred stock dividends only .  5.87       6.09    5.91    5.53 





Item 2.   Management's Discussion  and  Analysis of  Financial  Condition  and
          Results of Operations.

This  item presents  specific comments  on material  changes to  the company's
consolidated results of  operations, capital resources, and  liquidity for the
periods  reflected in the interim financial statements filed with this report.
The  reader is presumed  to have  read or  have access  to the  company's 1995
Annual  Report  to Shareholders,  including  the  Management's Discussion  and
Analysis on pages 16  through 25 thereof, and the company's  Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1996 and June 30, 1996.

This  analysis should be read  in conjunction with  the consolidated financial
statements and related notes on pages 2 through 9 of this Quarterly Report  on
Form 10-Q.









                                                 -12-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





Item 2.   Management's  Discussion  and  Analysis of  Financial  Condition and
          Results of Operations (continued).


                      CONSOLIDATED RESULTS OF OPERATIONS

                                   Nine Months Ended       Quarter Ended 
(In millions,                        September 30,         September 30,  
except share data)                 1996         1995      1996       1995 

Net income                        $ 509        $ 536     $ 172      $ 181 
Net income per share              $2.42        $2.59     $ .82      $ .86 

Net income for the nine months and quarter ended September  30, 1996 decreased
5% compared to  the same periods in the prior year.   This decrease was due to
lower  earnings in  the  Consumer Finance  segment,  partially offset  by  the
contribution from two  recently acquired  subsidiaries in  the Life  Insurance
segment (Franklin Life in first quarter 1995 and Independent in first  quarter
1996), as  well as  growth in  the Retirement Services  segment (formerly  the
Retirement  Annuities  segment).   Net  income  also  included  a $32  million
increase in net realized investment gains  for the nine months ended September
30, 1996  compared to the same period in 1995,  and a $13 million increase for
the quarters then  ended.  Additionally,  net income reflected an  $18 million
aftertax loss in the current quarter  on certain assets held for sale, related
to a small  life insurance subsidiary and  a portfolio of  commercial mortgage
loans.

Net income per share for the nine months  and quarter ended September 30, 1996
decreased 7% and 5%, respectively, compared to the same periods of 1995.   Net
income  per share  for the year-to-date  period decreased to  a greater degree
than net income, due to the issuances of convertible preferred securities of a
subsidiary  in  June  1995  and  mandatorily  convertible  preferred  stock in
February 1996.


                               BUSINESS SEGMENTS

The company reports its business operations in  three segments.  To facilitate
meaningful period-to-period comparisons of business segment results,  earnings
of each segment include  income from its  business operations and earnings  on
that  amount of  equity  considered necessary  to  support its  business,  and
exclude  net realized investment gains, non-recurring items, and the effect of
accounting changes.









                                                 -13-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996





Item 2.   Management's  Discussion  and  Analysis of  Financial  Condition and
          Results of Operations (continued).

Segment earnings were as follows:

                                 Nine Months Ended        Quarter Ended 
                                   September 30,          September 30,   
(In millions)                    1996         1995      1996         1995 

Retirement Services             $ 175        $ 162     $  57        $  54 
Consumer Finance                  102          177        43           55 
Life Insurance                    296          265       105           95 
 Total segment earnings         $ 573        $ 604     $ 205        $ 204 


A  discussion  of  each  segment's  results  follows.   The  reasons  for  any
significant  variations between the quarters ended September 30, 1996 and 1995
are the same  as those discussed below for the  respective nine month periods,
unless otherwise noted.

Retirement Services

                                 Nine Months Ended        Quarter Ended
                                  September 30,           September 30,   
($ in millions)                  1996        1995        1996       1995  

Segment earnings               $   175     $   162     $    57    $    54 
Assets                         $29,078     $25,905     $29,078    $25,905 
Deposits
 Fixed                         $ 1,180     $ 1,279     $   368    $   374 
 Variable                      $   917     $   579     $   324    $   203 
Net investment income          $ 1,235     $ 1,184     $   413    $   405 
Investment spread - 
 fixed accounts                   1.82%       1.84%       1.78%      1.84%

Segment earnings for the nine months ended September 30, 1996, compared to the
same period  of  1995, increased  $13  million, or  8%,  primarily due  to  an
increase  in  fixed investment  margin  (net investment  income  less interest
credited to policyholders), resulting  from asset growth over the  past twelve
months.

Assets  (excluding  the  fair  value  adjustment  related  to  fixed  maturity
securities)  increased  $3.4  billion, or  13%,  from  September  30, 1995  to
September 30, 1996 and $2.5 billion, or 9%, from December 31, 1995, reflecting
strong sales  and an increase in total deposits.  The increase in deposits for
the first nine  months of 1996 compared to the same period of 1995 reflects an
increase in variable account deposits, partially offset by a decrease in fixed
deposits, due to policyholders' preference for equity-based investments.  




                                                 -14-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996




Item 2.   Management's  Discussion  and Analysis  of  Financial  Condition and
          Results of Operations (continued).

Assets and  liabilities related  to Separate  Accounts increased  $2.3 billion
from September 30,  1995 to September 30, 1996 and $1.8  billion from December
31, 1995, reflecting both  increased sales and the accumulation  of investment
returns due to the strong performance of the stock market.

Net investment income, the primary component of revenues, increased 4% for the
first nine  months of  1996 compared  to the same  period of  1995, reflecting
growth in invested assets, partially offset by a decrease in investment yield.
Investment  yield for the  nine months ended  September 30,  1996 decreased 17
basis points  compared to the nine  months ended September 30,  1995 (23 basis
points  for  the comparable  quarters).   A  corresponding reduction  of rates
credited to policyholders  resulted in a decrease in investment spread of only
2 basis  points for  year-to-date 1996  compared to  year-to-date 1995,  and a
decrease of 6 basis points for the comparable quarters.  The relatively stable
investment  spread, combined with growth in invested assets, contributed to an
increase in fixed investment margin.

The ratio of  operating expenses to  average assets improved  to .51% for  the
nine months ended September 30, 1996 from .53% for the same period in 1995 due
to an  increase  in average  assets,  which more  than  offset a  $10  million
increase  in operating expenses related to growth  in the business.  The ratio
of  policyholder  surrenders to  average  fixed  deferred annuity  liabilities
increased to 5.20% for the first nine months of 1996 compared to 4.09% for the
same  period in  1995.  The  surrender ratio  decreased from  5.18% for second
quarter 1996 to  4.99% for third quarter 1996.   The year-to-date increase was
primarily  due  to   policyholders'  increased  preference  for   equity-based
investments,  lower  fixed  interest  crediting  rates,  and  an  increase  in
systematic withdrawals.

Consumer Finance

                                Nine Months Ended        Quarter Ended
                                  September 30,          September 30,    
($ in millions)                  1996       1995       1996         1995  

Segment earnings               $   102    $   177    $    43      $    55 
Finance receivables            $ 8,208    $ 8,445    $ 8,208      $ 8,445 
Yield on finance receivables     18.02%     18.04%     17.80%       18.21%
Loss-adjusted yield on
 finance receivables             12.62%     15.05%     12.43%       14.99%
Operating expenses             $   381    $   337    $   122      $   118 
Operating expense ratio           6.17%      5.35%      5.93%        5.62%








                                                 -15-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996




Item 2.   Management's  Discussion  and Analysis  of  Financial  Condition and
          Results of Operations (continued).

Segment earnings for  the nine months ended  September 30, 1996  decreased $75
million,  or 42%,  from the same  period a year  ago, due to  increases in the
provision for finance receivable  losses and operating expenses, as well  as a
decrease in finance charge revenues.  For third quarter 1996, segment earnings
decreased $12  million, or 21%, compared  to third quarter 1995.   The quarter
decline was primarily a result of decreased finance charge revenues and higher
income  tax expense  (due  to  a  non-recurring  favorable  state  income  tax
adjustment  in third  quarter 1995),  partially offset  by a  decrease in  the
provision for finance receivable losses.

Total  finance receivables at September  30, 1996 decreased  $202 million from
December 31, 1995  and $237 million  from September  30, 1995.   All lines  of
receivables, except for real estate-secured consumer loans, decreased compared
to  December  31, 1995  and  September 30,  1995, due  to  management's action
program to improve  credit quality.   Real estate-secured  loans increased  to
$3.4 billion at September 30, 1996 from $2.9 billion at  December 31, 1995 and
September  30,  1995,  primarily  due  to  purchases  of  real  estate-secured
receivable portfolios totaling $476 million in second and third quarter 1996.

Finance charge revenues decreased $20 million year-to-date and $25 million for
third quarter  1996, compared  to  the same  periods in  1995.   The  decrease
resulted from lower  average receivables  combined with declines  in yield  on
finance receivables of 2 basis points  and 41 basis points, respectively,  for
the  nine months  and quarter ended  September 30,  1996 compared  to the same
periods of 1995.   The yield declines  reflected lower yields in all  lines of
business, with the change in the portfolio mix  to a higher proportion of real
estate-secured loans  and an  increase in  finance receivables delinquent  90+
days for which accrual of finance charges has been suspended.

The  Consumer  Finance  segment's  strategy  in  recent  years  has emphasized
improvement of loss-adjusted yield  (yield less net charge off  percentage) by
extending credit to  customers with risk characteristics  somewhat higher than
those traditionally serviced by  the company.  As expected,  growth in higher-
yielding  finance receivables  adversely  affected  credit  quality;  however,
delinquencies  and charge offs  sharply increased to  greater than anticipated
levels  beginning in third quarter 1995.   As a result, loss-adjusted yield on
finance  receivables decreased  243  basis points  in  the nine  months  ended
September 30, 1996, and 256  basis points in the quarter then  ended, compared
to the same periods in 1995.

In response to this unanticipated increase in delinquencies and charge offs, a
comprehensive review of  the loan  portfolio was initiated  in fourth  quarter
1995.  This review,  which consisted of extensive internal  analysis, together
with  credit   loss  development   projections  supplied  by   outside  credit
consultants, indicated  a need  for an increase  in the allowance  for finance
receivable losses.  A $216 million increase was recorded in fourth quarter  




                                                 -16-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996



Item 2.   Management's  Discussion  and Analysis  of  Financial Condition  and
          Results of Operations (continued).

1995.  In addition, the company adopted an action program for improving credit
quality that  included raising  underwriting standards,  expanding the  use of
credit  scoring, slowing  branch  expansion, stressing  collections, improving
branch  office  training, and  rebalancing  the  finance receivable  portfolio
credit risk.   Strategies for  rebalancing the portfolio  credit risk  include
slowing growth, de-emphasizing some  higher-yielding loans, and increasing the
proportion of real estate-secured receivables.

Information regarding the  provision for finance receivable losses  and charge
offs was as follows:

                                   Nine Months Ended       Quarter Ended
                                     September 30,         September 30,  
($ in millions)                    1996         1995      1996       1995 

Provision for finance 
 receivable losses                $ 301        $ 261     $  90      $ 114 

Charge offs, net of recoveries    $ 328        $ 181     $ 107      $  64 
Net charge offs as percentage
 of average finance receivables    5.40%        2.99%     5.37%      3.22%

Compared to  the same periods  of 1995, the  provision for finance  receivable
losses recorded in the income statement increased $40 million, or 16%, for the
nine months  ended September 30, 1996  and decreased $24 million,  or 20%, for
the quarter then ended.  The  $40 million increase was due to higher  year-to-
date  net  charge offs,  partially offset  by a  $27  million decrease  in the
allowance  provided for  finance receivable  losses in  the nine  months ended
September 30, 1996 compared to an  $80 million increase during the same period
in 1995.  The  $24 million decrease for the  quarter was due to a  $17 million
decrease  in the  allowance provided  for finance  receivable losses  in third
quarter  1996 versus a  $50 million increase in  third quarter 1995, partially
offset by  the increase in net charge  offs.  Net charge  offs of $107 million
for third quarter 1996  were flat compared to the quarter ended June 30, 1996,
while the  ratio of net charge  offs to average finance  receivables was 5.37%
compared to 5.33% in second quarter 1996.















                                                 -17-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996



Item 2.   Management's  Discussion  and Analysis  of  Financial Condition  and
          Results of Operations (continued).

Information regarding  delinquencies and the allowance  for finance receivable
losses was as follows:

                                  September 30,  December 31,  September 30,
($ in millions)                       1996           1995          1995     

Allowance for finance receivable
 losses                              $ 465          $ 492         $ 306 
Allowance as percentage of 
 finance receivables                  5.67%          5.85%         3.62%
Delinquencies                        $ 380          $ 386         $ 351 
Delinquencies as percentage of
 finance receivables                  4.28%          4.13%         3.75%

The  allowance  for  finance  receivable losses  decreased  $27  million  from
December  31, 1995  to September 30,  1996, and  decreased as  a percentage of
finance receivables  by 18  basis points.   Delinquencies as  a percentage  of
finance receivables increased from 3.99%  at June 30, 1996.  In  third quarter
1996,  certain private label and credit card  portfolios, which the company is
no  longer marketing,  had higher  delinquency ratios.   However,  delinquency
ratios  have remained relatively  stable for real  estate-secured loans, which
represented 42% of total  finance receivables at September 30,  1996, compared
to 35% at December  31, 1995.  Based on analysis of  the receivables portfolio
and management's focus on rebalancing  the portfolio's credit risk, management
believes  that the allowance for  finance receivable losses  is adequate given
the current level of delinquencies and net charge offs.

Operating expenses increased $44  million, or 13%,  for the nine months  ended
September 30,  1996, compared  to the  same period in  1995, and  increased 82
basis points,  from  5.35%  to  6.17%,  as a  percentage  of  average  finance
receivables.  The increase reflects lower deferrals of loan origination costs,
increased collection efforts associated  with the higher levels of  delinquent
receivables, and higher year-to-date expenses  to support branch expansion and
account growth that  occurred in 1994  and 1995.   Operating expenses for  the
nine  months ended  September 30,  1996 included  $9 million  of non-recurring
expenses related to  marketing initiatives that have either  been restructured
or discontinued based on the comprehensive review  of operations.  This review
and the  decrease in finance  receivables during 1996 resulted  in a workforce
reduction of approximately 800 positions through third quarter 1996.

Management believes  the improvement  programs implemented  in  late 1995  and
throughout  1996, which  emphasize  continued  improvements  in  underwriting,
intensified collections, increased emphasis  on real estate-secured loans, and
investment  in risk  management  technology, will  address the  overall credit
quality  issues.  However, delinquencies have remained at higher than expected






                                                 -18-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996



Item 2.   Management's  Discussion  and Analysis  of  Financial Condition  and
          Results of Operations (continued).

levels, indicating that charge  offs may continue above historical  levels for
the  near  term,  rather  than  moderating  during  fourth  quarter  1996,  as
previously expected.    In addition,  adverse changes  in credit  fundamentals
within the consumer finance market, including the recent increase in the level
of personal bankruptcies, could negatively impact expected results.

Life Insurance

                                  Nine Months Ended       Quarter Ended 
                                    September 30,         September 30,  
($ in millions)                   1996         1995      1996       1995 

Segment earnings                 $  296       $  265    $  105     $   95 
Premiums                         $1,270       $1,098    $  432     $  386 
Net investment income            $1,146       $1,033    $  387     $  360 
Insurance and annuity benefits   $1,361       $1,255    $  447     $  443 
Operating expense ratio           16.15%       12.84%    16.91%     12.58%

Results  for the  first nine  months of  1996 for  the Life  Insurance segment
reflect the operations for Franklin Life, acquired January 31, 1995, and seven
months of operations for  Independent, acquired February 29, 1996.   Increases
in  segment  earnings of  $31 million,  or  12%, segment  revenues (consisting
principally  of premiums and net  investment income) of  $294 million, or 13%,
and insurance  and annuity benefits of $106 million, or 8%, were primarily due
to the acquisitions.

The ratio of operating expenses  to direct premiums and deposits for  the nine
months  and quarter ended  September 30, 1996  increased compared to  the same
periods of 1995, reflecting  Independent's higher overall expense ratio  and a
lower level of annuity deposits.

Information regarding sales and deposits was as follows:

                                 Nine Months Ended         Quarter Ended 
                                   September 30,           September 30,  
(In millions)                    1996         1995        1996       1995 

Sales
 Life insurance                  $ 228        $ 267       $  75      $  84
 Annuities                       $ 238        $ 452       $  75      $ 130
Deposits
 Life insurance                  $ 506        $ 494       $ 167      $ 165
 Annuities                       $ 330        $ 532       $ 103      $ 161








                                                 -19-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996



Item 2.   Management's  Discussion  and Analysis  of  Financial Condition  and
          Results of Operations (continued).

Life  insurance  sales for  the  first  nine months  of  1996  were 15%  below
comparable  1995 sales  due to  price competition  in higher-end  products and
disruptions related to major changes in field administration systems.  Annuity
sales  for the nine months ended September  30, 1996 were 47% below comparable
prior year sales, primarily due to increasingly competitive market conditions.
The lower  1996 sales resulted in  a reduction in the  deferral of acquisition
costs for the nine months ended September 30, 1996 compared to the same period
in 1995.   Annuity deposits for  such periods decreased  38% due to  the lower
sales.

Selected balance sheet information was as follows:

                                              September 30,   December 31,
(In millions)                                     1996            1995     

Invested assets                                 $ 19,809       $ 19,444
Cost of insurance purchased                     $    822       $    504
Insurance and annuity liabilities               $ 18,702       $ 17,403

Excluding  the fair value adjustment related to fixed maturity securities, the
Life Insurance  segment's  invested assets  increased  $1.3 billion,  cost  of
insurance  purchased  increased  $175   million,  and  insurance  and  annuity
liabilities increased $1.3  billion from  December 31, 1995  to September  30,
1996, primarily due to the acquisition of Independent.

Guaranty  Associations.   State  guaranty fund  expense included  in operating
costs and expenses  was $6 million  and $4 million for  the nine months  ended
September  30,  1996  and  1995,  respectively.    Amounts  assessed  American
General's life insurance  and annuity  subsidiaries by state  life and  health
insurance  guaranty funds resulting  from past  industry insolvencies  were $9
million during  the first nine months of 1996, compared to $15 million for the
same period in 1995.  These assessments are expected to be partially recovered
against the payment of future premium taxes.

At September 30, 1996,  the accrued liability for anticipated  assessments was
$49 million, compared to $51 million at December 31, 1995.  Receivables of $43
million  and $44 million were recorded at  September 30, 1996 and December 31,
1995,  respectively, for  expected recoveries  against the  payment of  future
premium taxes.


                                  INVESTMENTS

Invested assets consist primarily of fixed maturity securities, mortgage loans
on real estate, policy loans, and investment real estate.  The company reviews
invested assets  on a  regular basis and  records write-downs for  declines in
fair value below cost that are considered other than temporary.




                                                 -20-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996



Item 2.   Management's  Discussion  and Analysis  of  Financial Condition  and
          Results of Operations (continued).

Fair Value of Securities (SFAS 115).  An increase in market interest rates and
resulting decreases in bond values during the first nine months of 1996 caused
a $795  million decrease  in shareholders'  equity related  to the  fair value
adjustment  to fixed  maturity  securities  under  SFAS 115,  "Accounting  for
Certain Investments in Debt and Equity Securities," during 1996.

The  components  of  the  adjustment  to  report  fixed  maturity  and  equity
securities at fair value  at September 30, 1996 and December 31, 1995, and the
change, were as follows:

                                   September 30,   December 31,
(In millions)                          1996            1995        Change 

Fair value adjustment to fixed 
 maturity securities                  $   719        $ 2,623      $(1,904)
Adjusted by:
  Decrease in DPAC/CIP                   (309)        (1,061)         752 
  Increase in deferred income taxes      (153)          (586)         433 
Equity in WNC's unrealized gains           17             93          (76)
Net unrealized gains on fixed
  maturity securities                     274          1,069         (795)
Net unrealized gains on equity
  securities                               16             31          (15)
     Net unrealized gains on
       securities                     $   290        $ 1,100      $  (810)

Accounting  rules do  not  permit adjustment  to fair  value of  the insurance
liabilities  supported by  these  securities, thereby  creating volatility  in
shareholders' equity  as interest rates change.   Care should  be exercised in
drawing conclusions based  on balance  sheet amounts that  are only  partially
adjusted to fair value.

Fixed  Maturity Securities.    Fixed maturity  securities  represented 86%  of
invested  assets at  September  30, 1996.    Information regarding  the  fixed
maturity securities  portfolio, which included bonds  and redeemable preferred
stocks, at September 30, 1996 was as follows:

                                 September 30,              Average Credit
(In millions)                        1996           %           Rating    

Investment grade                   $ 24,990         67%          A   
Mortgage-backed                      10,661         29           AAA 
Below investment grade                1,471          4           BB- 
 Total fixed maturities            $ 37,122        100%          AA- 







                                                 -21-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996



Item 2.   Management's  Discussion  and Analysis  of  Financial Condition  and
          Results of Operations (continued).

Collateralized  mortgage obligations  (CMOs)  are purchased  to diversify  the
portfolio risk characteristics from  primarily corporate credit risk to  a mix
of credit and cash flow risk.  CMOs represented 88% and 90% of mortgage-backed
securities at September 30, 1996 and December 31, 1995, respectively.

At September 30, 1996, below investment grade fixed maturity securities, those
rated  below BBB-, were $1.5 billion compared  to $1.4 billion at December 31,
1995.  These investments  represented 4% of total fixed maturity securities at
both  balance sheet  dates.   Net  income from  below  investment grade  fixed
maturity  securities, including realized investment  gains and losses, was $69
million  and  $61  million  for  the  first nine  months  of  1996  and  1995,
respectively.

Non-performing  fixed maturity  securities,  defined as  securities for  which
payment  of interest  is  sufficiently uncertain  as  to preclude  accrual  of
interest,  represented  .01% or  less of  total  fixed maturity  securities at
September 30, 1996 and December 31, 1995.

Mortgage  Loans.  Mortgage loans on real  estate totaled 7% of invested assets
at September 30,  1996.  Information regarding the mortgage  loan portfolio at
September 30, 1996 was as follows:

                                September 30,    Non-Performing Loans
(In millions)                       1996           Amount        % 

Commercial                         $ 3,171         $ 179        5.6%
Residential                             65             4        5.7 
Allowance for losses                   (83)          (25)
  Total mortgage loans             $ 3,153         $ 158 

Non-performing mortgage loans  include loans  delinquent 60 days  or more  and
commercial loans that have been restructured.  These loans represented 5.6% of
total commercial loans at September 30, 1996, compared to 5.5% at December 31,
1995.   The increase in non-performing  loans was a result  of the Independent
acquisition.

At  September 30, 1996, $298  million of performing  commercial mortgage loans
were included on the company's watch list because they  were either delinquent
30-59 days, the borrower was in bankruptcy, or the loan was potentially under-
collateralized.  This  amount compares to  $251 million at  June 30, 1996  and
$263  million at December 31, 1995.  The increase in the watch list amount was
primarily due to the  addition of a potentially under-collateralized  loan for
$27 million and loans related to the Independent acquisition.  While the watch
list loans may be predictive of higher non-performing loans in the future, the
company  does not anticipate a significant effect on operations, liquidity, or
capital from these loans.





                                                 -22-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996



Item 2.   Management's  Discussion  and Analysis  of  Financial Condition  and
          Results of Operations (continued).

Investment  Real Estate.  Investment real estate totaled 1% of invested assets
at September 30, 1996 and December 31, 1995.  The breakdown of investment real
estate was as follows:

                                        September 30,     December 31,
(In millions)                               1996              1995    

Land development projects                  $  353            $  366 
American General Center, Houston              119               115 
Income-producing real estate                   69                56 
Foreclosed real estate                         90                75 
Allowance for losses                          (23)              (35)
  Total investment real estate             $  608            $  577 

The decreases in land  development projects and the allowance for  losses were
due to sales.  The American General Center, Houston balance increased due to a
land acquisition  in third quarter  1996, while  income-producing real  estate
increased related to the  acquisition of Independent.  Foreclosed  real estate
primarily  increased  due  to  foreclosures  totaling  $14  million  in  1996,
partially offset by sales of foreclosed properties.

American General's principal exposure  to environmental regulation arises from
its   ownership  of  investment  real  estate.    Probable  costs  related  to
environmental cleanup are immaterial.

Realized Investment Gains. Realized investment gains (losses) were as follows:

                                      Nine Months Ended     Quarter Ended 
                                        September 30,       September 30, 
(In millions)                         1996         1995     1996     1995 

Sales of fixed maturity securities   $ (24)       $ (11)   $  10    $   - 
Calls of fixed maturity securities      20           14        2        7 
Sales of equity securities              34            2        -        2 
Calls of equity securities              16            3       10        3 
Write-downs/reserve increases           (4)         (29)       1      (17)
Other                                   15           29        2       10 
  Total realized investment gains    $  57        $   8    $  25    $   5 

Write-downs and reserve increases were primarily related to mortgage loans for
the nine  months ended September  30, 1996 and  to investment real  estate and
mortgage loans in the comparable prior period.









                                                 -23-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996



Item 2.   Management's  Discussion  and Analysis  of  Financial Condition  and
          Results of Operations (continued).


                               CAPITAL RESOURCES

Corporate  Debt.  Corporate debt  is incurred primarily  to fund acquisitions,
the share buyback program,  and capital needs of subsidiaries.  Corporate debt
increased $204 million from December 31, 1995 to September 30, 1996, primarily
due to  short-term debt used to  finance the purchase of  additional shares of
Western  National Corporation stock and  the company's common  stock under the
share  buyback  program.   Interest expense  on  corporate debt  decreased $31
million,  or 25%, for the nine months ended September 30, 1996 compared to the
same period in 1995, primarily due to higher average short-term  borrowings in
the first nine  months of 1995  due to the  initial financing of the  Franklin
Life  acquisition.  The company issued preferred securities of subsidiaries in
1995 to refinance a portion of this and other short-term debt.

The ratio  of corporate debt  to corporate capital  (excluding the  fair value
adjustment  related to fixed maturity  securities) was 24.8%  at September 30,
1996, compared  to 24.0% at December 31, 1995.  Management expects to maintain
the ratio at or below 25% during the remainder of 1996.

Consumer Finance Debt.   The  capital of American  General's Consumer  Finance
segment varies directly  with the amount  of finance receivables  outstanding.
The mix of  capital between debt and equity is  based primarily on maintaining
leverage  that  supports  cost-effective   funding.    Consumer  finance  debt
decreased $139  million from December 31,  1995 to September 30,  1996, due to
the decline in finance  receivables, and increased $234 million from  June 30,
1996,  due to a $276 million  finance receivable portfolio purchase.  Interest
expense on  Consumer Finance debt decreased  $17 million, or 5%,  for the nine
months ended September 30, 1996 compared to the same period in 1995, primarily
due to the lower average borrowings.

Shareholders'  Equity.   Shareholders' equity  decreased from $5.8  billion at
December 31, 1995 to $5.4 billion at September 30, 1996, primarily due  to the
$810  million decrease in net unrealized gains on securities, partially offset
by issuances of stock in connection  with the acquisition of Independent.  The
issuances consisted of 3.7 million shares of common stock from treasury, which
increased  shareholders' equity  by $138  million, and  2.3 million  shares of
American General  7% mandatorily convertible preferred  stock, which increased
shareholders' equity by $85 million.

Due to the requirements of certain accounting rules, shareholders  equity will
be subject to future volatility from the effects of interest rate fluctuations
on the fair value of fixed maturity securities (see "Investments  - Fair Value
of Securities (SFAS 115)" on page 18).







                                                 -24-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996



Item 2.   Management's  Discussion  and Analysis  of  Financial Condition  and
          Results of Operations (continued).


                                   LIQUIDITY

Management believes that the  overall sources of cash and  liquidity available
to the company and its subsidiaries  will continue to be sufficient to satisfy
its foreseeable financial obligations.

Parent Company Cash Flows
                                                   Nine Months Ended 
                                                     September 30,    
(In millions)                                      1996         1995  

Net cash provided by operating activities         $ 404        $ 153 
Dividends paid by Life Insurance and
 Retirement Services segments                     $ 301        $  96 
Dividends paid by Consumer Finance segment        $ 139        $ 113 

Dividends  from  subsidiaries are  the primary  source  of cash  for operating
requirements  of  the  company and  are  used  to  fund interest  obligations,
dividends  to shareholders, acquisitions, and to buy back the company's common
stock.  The company's insurance subsidiaries are restricted by state insurance
laws as to the amounts they  may pay as dividends without prior notice  to, or
in  some  cases  prior   approval  from,  their  respective  state   insurance
departments.   Certain non-insurance subsidiaries are  similarly restricted by
long-term debt agreements.  These restrictions  have not affected, and are not
expected to affect, the ability of the company to meet its cash obligations.  
During  the first  nine  months of  1996,  the Life  Insurance and  Retirement
Services  segments  paid  $321  million  of  cash  dividends  to  AGC  Life, a
subsidiary of  American General.  Of this amount,  $20 million was used by AGC
Life  to repay  intercompany borrowings,  and the  remaining $301  million was
dividended to American  General.  During  the first nine  months of 1995,  the
Life  Insurance and  Retirement Services  segments paid  $213 million  of cash
dividends to AGC Life, of  which $117 million was used to  reduce intercompany
borrowings, and $96  million was paid  to American General.   The increase  in
dividends  paid  by the  Life Insurance  and  Retirement Services  segments is
primarily attributable  to cash dividends paid  by Franklin Life in  the first
nine months of 1996.














                                                 -25-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996


Item 2.   Management's  Discussion and  Analysis  of  Financial Condition  and
          Results of Operations (continued).

Segment Cash Flows
                                                    Nine Months Ended 
                                                      September 30,     
(In millions)                                      1996           1995  

Life Insurance and Retirement Services
 Net cash provided by operating activities        $1,237         $1,126
 Net cash provided by fixed policyholder
   account deposits, net of withdrawals           $  141         $  977
 Variable account deposits, net of withdrawals    $1,337         $  846
Consumer Finance
 Net cash provided by operating activities        $  477         $  492

Net  cash  flows  generated by  the  Life  Insurance  and Retirement  Services
segments  include cash provided by  operating activities and  cash provided by
fixed policyholder account  deposits, net  of withdrawals.   The $111  million
increase in  cash provided by  operating activities  was primarily  due to  an
increase  in  premiums  and net  investment  income,  partially  offset by  an
increase  in insurance  and  annuity benefits  and  operating expenses.    The
decrease  of $836  million  in cash  provided  by fixed  policyholder  account
deposits, net  of withdrawals, was  primarily due to  policyholders' increased
demand  for variable accounts.  Variable account deposits, net of withdrawals,
related  to  Separate  Accounts that  are  not  included  in the  consolidated
condensed  statement of cash flows,  increased $491 million  in the first nine
months of 1996 compared to the same period of 1995.

The Consumer Finance segment's cash provided by operating activities decreased
$15 million for  the first  nine months  of 1996  compared to  the first  nine
months of 1995, primarily due to higher operating expenses.

Investing  Activities.   Cash flows  related to  investing activities  were as
follows:
                                                        Calls, Maturities,
                                     Purchases              and Sales     
                                 Nine Months Ended      Nine Months Ended
(In millions)                      September 30,          September 30,  
                                 1996         1995       1996       1995 
Fixed maturity securities       $6,470       $5,619     $5,569     $3,498 
Mortgage loans                     311          147        313        229 
Equity securities                    1           21        160        123 
Other                               71           55        108        176 
  Total                         $6,853       $5,842     $6,150     $4,026 










                                                 -26-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996


Item 2.   Management's  Discussion and  Analysis  of  Financial Condition  and
          Results of Operations (continued).

Income Taxes Paid.  In  the first nine months of 1996, the company paid income
taxes of $217 million  compared to $166 million  for the same period  in 1995.
The increase in  income taxes paid primarily was due to  a tax refund received
in 1995 resulting from the 1994 capital gains offset program.

Credit  Facilities.   Committed credit  facilities are maintained  by American
General and certain of its subsidiaries to support the issuance of  commercial
paper and  to provide an additional source of cash for operating requirements.
Effective September 26, 1996,  the company completed the resyndication  of two
credit facilities,  increasing  the  facilities  to  $2.8  billion  from  $2.4
billion.   At  September 30,  1996, committed  credit facilities  totaled $3.5
billion; there were no outstanding borrowings under these facilities.

Share Buyback.   During the first  nine months of 1996,  the company purchased
4.2 million shares of its  common stock at a cost of $152 million, pursuant to
its share buyback program.


                          FORWARD-LOOKING STATEMENTS

The statements contained  in this filing on Form 10-Q  that are not historical
facts  are  forward-looking  statements  within  the  meaning of  the  Private
Securities Litigation Reform Act.   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:  changes in general economic  conditions, including the performance
of  financial markets, interest rates, and the level of personal bankruptcies;
competitive, regulatory,  or tax changes that affect the cost of or demand for
the company's products; adverse litigation results; and failure to achieve the
company's anticipated levels of  expense savings from cost-saving initiatives.
The Consumer Finance segment's future results also could be adversely affected
if finance  receivable volume  is lower  than anticipated  or if,  despite the
company's   initiatives  to   improve  credit   quality,  finance   receivable
delinquencies and net charge offs  increase or remain at current levels  for a
longer  period than anticipated by management.  Investors are also directed to
other risks and uncertainties discussed in documents filed by the company with
the Securities and Exchange Commission.















                                                 -27-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996


                          PART II.  OTHER INFORMATION

Item 1. Legal Proceedings.

In addition to those  lawsuits or proceedings disclosed in  the company's 1995
Form 10-K,  American General  and certain of  its subsidiaries are  parties to
various  other  lawsuits and  proceedings arising  in  the ordinary  course of
business.  Many of these lawsuits and proceedings arise in jurisdictions, such
as  Alabama, that permit damage awards disproportionate to the actual economic
damages incurred.   Based  upon information  presently available,  the company
believes that the total amounts that ultimately will be paid,  if any, arising
from these lawsuits and  proceedings will have no  material adverse effect  on
the  company's  consolidated results  of  operations  and financial  position.
However, it  should  be noted  that  the  frequency of  large  damage  awards,
including large punitive  damage awards, that  bear little or  no relation  to
actual economic damages incurred by  plaintiffs in jurisdictions like  Alabama
continues  to increase and creates the potential for an unpredictable judgment
in any given suit.

Item 6.  Exhibits and Reports on Form 8-K.

a.   Exhibits.

     Exhibit 11     Computation of Earnings per Share.

     Exhibit 12     Computation of Ratio of Earnings to Fixed
                    Charges and Ratio of Earnings to Combined
                    Fixed Charges and Preferred Stock Dividends.

     Exhibit 27     Financial Data Schedule.

b.   Reports on Form 8-K.

     Current Report  on Form 8-K dated  October 24, 1996, with  respect to the
     issuance of a  press release announcing  implementation of the  company's
     plan of  succession for  the Office  of the Chairman  and election  of an
     additional director.


















                                                 -28-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996


                                    SIGNATURE





Pursuant  to the  requirements of  the Securities  Exchange Act  of 1934,  the
Registrant has  duly caused this  report to  be signed  on its  behalf by  the
undersigned, thereunto duly authorized. 

AMERICAN GENERAL CORPORATION 
(Registrant)




By: PAMELA J. PENNY               
    Pamela J. Penny
    Vice President and Controller 
    (Duly Authorized Officer and 
    Chief Accounting Officer) 





Date:  November 14, 1996




























                                                 -29-
<PAGE>



                  AMERICAN GENERAL CORPORATION
                            FORM 10-Q
             For the Quarter Ended September 30, 1996


                                 EXHIBIT INDEX



   Exhibit

     11             Computation of Earnings per Share.

     12             Computation of Ratio of Earnings to Fixed
                    Charges and Ratio of Earnings to Combined
                    Fixed Charges and Preferred Stock Dividends.

     27             Financial Data Schedule.










































                                                 -30-
<PAGE>