AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998





                      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, 1998                
                                      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 30, 1998, there  were 252,050,043 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, 1998




                              INDEX TO FORM 10-Q

                                                                              
                                                                     Page
Part I.    FINANCIAL INFORMATION.


         Item 1.  Financial Statements.

                  Consolidated Statement of Income for the nine
                    months and quarters ended September 30, 1998
                    and 1997 .........................................  2

                  Consolidated Balance Sheet at September 30, 1998 and
                    December 31, 1997 ................................  3

                  Consolidated Statement of Shareholders' Equity for 
                    the nine months ended September 30, 1998 and 
                    1997 .............................................  4

                  Consolidated Condensed Statement of Cash Flows for
                    the nine months ended September 30, 1998 and 
                    1997 .............................................  5

                  Notes to Consolidated Financial Statements .........  6

         Item 2.  Management's Discussion and Analysis of Financial
                    Condition and Results of Operations .............. 11


Part II.   OTHER INFORMATION.


         Item 1.  Legal Proceedings .................................. 26

         Item 6.  Exhibits and Reports on Form 8-K ................... 26
 











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                                                  -1-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998




                        PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

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

                                      Nine Months Ended      Quarter Ended
                                        September 30,        September 30,  
                                      1998        1997      1998      1997 
Revenues 
 Premiums and other considerations. $ 2,685     $ 2,472   $   916   $   839 
 Net investment income ............   3,790       2,983     1,284     1,010 
 Finance charges ..................   1,002         950       344       315 
 Realized investment gains ........       6          25         1        11 
 Equity in earnings of Western
  National Corporation ............       -          39         -        13 
 Other ............................     141         134        44        47 
     Total revenues ...............    7,624      6,603     2,589     2,235 

Benefits and expenses
 Insurance and annuity benefits ...   3,847       3,197     1,337     1,074 
 Operating costs and expenses .....   1,144       1,049       374       357 
 Commissions ......................     783         648        279      224 
 Change in deferred policy
  acquisition costs and cost of
  insurance purchased .............    (150)        (71)      (66)      (20)
 Provision for finance receivable
  losses ..........................     153         187        53        56 
 Interest expense 
  Corporate .......................     138         117        46        40 
  Consumer Finance ................     376         343       130       117 
 Other charges 
  Year 2000 costs .................      37           9        20         3 
  Merger-related costs ............       -         272         -         - 
  Losses on sale of non-strategic   
   assets .........................       -         113         -         - 
  Litigation settlement ...........       -          50         -         - 
     Total benefits and expenses ..   6,328       5,914     2,173     1,851 

Earnings
Income before income tax expense,
  minority interest, and dividends
  on preferred securities .........   1,296         689       416       384 
 Income tax expense ...............     455         315        139      135 
 Income before minority interest
  and dividends on preferred 
  securities ......................     841         374       277       249 
 Minority interest in net income of
  Western National Corporation ....      11           -         -         - 

                                                  -2-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

 Net dividends on preferred 
  securities of subsidiaries ......      67          62        22        23 
     Net income ................... $   763     $   312   $   255   $   226 

 Net income per share
  Basic ........................... $  3.02     $  1.27   $  1.00   $   .92 
  Diluted ......................... $  2.95     $  1.27   $   .98   $   .91 



Item 1.  Financial Statements (continued).

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

                                                  September 30,  December 31,
                                                     1998           1997    
Assets 
 Investments 
  Fixed maturity securities (amortized cost:
    $58,855; $44,961) ...........................   $ 63,346       $47,747 
  Mortgage loans on real estate .................      3,335         3,272 
  Equity securities (cost: $96; $93) ............        117           116 
  Policy loans ..................................      2,284         2,156 
  Investment real estate ........................        239           233 
  Other long-term investments ...................        358           176 
  Short-term investments ........................      1,370           306 
      Total investments .........................     71,049        54,006 
 Assets held in Separate Accounts ...............     13,011        11,482 
 Finance receivables, net .......................      8,442         7,639 
 Deferred policy acquisition costs ..............      3,033         2,718 
 Cost of insurance purchased ....................        868           680 
 Goodwill .......................................      1,572           677 
 Other assets ...................................      4,222         2,835 
 Investment in Western National Corporation .....          -           583 
      Total assets ..............................   $102,197       $80,620 

Liabilities
 Insurance and annuity liabilities ..............   $ 61,651       $47,659 
 Liabilities related to Separate Accounts .......     13,011        11,482 
 Debt (short-term)
  Corporate ($1,440; $575) ......................      2,567         1,916 
  Consumer Finance ($3,756; $3,255) .............      8,083         7,266 
 Income tax liabilities .........................      1,946         1,380 
 Other liabilities ..............................      3,742         1,608 
      Total liabilities .........................     91,000        71,311 
Redeemable equity
 Company-obligated mandatorily redeemable
  preferred securities of subsidiaries
  holding solely company subordinated notes
    Non-convertible .............................      1,480         1,479 
    Convertible .................................        248           247 
      Total redeemable equity ...................      1,728         1,726 

                                                  -3-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

Shareholders' equity
 Convertible preferred stock (shares issued 
  and outstanding: 2,317,701) ...................         85            85 
 Common stock (shares issued: 269,298,493; 
  259,135,053; outstanding: 252,331,985; 
  243,206,215)...................................        928           326 
 Cost of treasury stock .........................       (719)         (621)
 Retained earnings ..............................      7,102         6,624 
 Accumulated other comprehensive income .........      2,073         1,169 
      Total shareholders' equity ................      9,469         7,583 
      Total liabilities and equity ..............   $102,197       $80,620 



Item 1.  Financial Statements (continued).

                         AMERICAN GENERAL CORPORATION
                Consolidated Statement of Shareholders' Equity
                                  (Unaudited)
                     (In millions, except per share data)

                                               Nine Months Ended
                                                 September 30,          
                                            1998              1997      
                                               Compre-           Compre-
                                               hensive           hensive
                                      Total    Income    Total   Income 
Convertible preferred stock
 Balance at beginning and end of 
  period ...........................  $   85             $   85 

Common stock
 Balance at beginning of period ....     326                572 
 Issuance for Western National
  Corporation acquisition ..........     580                  - 
 Valuation of stock options issued 
  for acquisition ..................      37                  - 
 Retirement of USLIFE treasury 
  shares ...........................       -               (346)
 Issuance of treasury shares .......     (15)                92 

 Balance at end of period ..........     928                318 

Cost of treasury stock
 Balance at beginning of period ....    (621)              (860)
 Share repurchases .................    (145)              (363)
 Retirement of USLIFE treasury 
  shares ...........................       -                346 
 Issuance for acquisition ..........       -                304 
 Issuance under employee benefit  
  plans and other ..................      47                 52 

 Balance at end of period ..........    (719)              (521)

Retained earnings

                                                  -4-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

 Balance at beginning of period ....   6,624              6,420 
 Net income ........................     763   $  763       312    $  312 
 Cash dividends (per share)
  Preferred stock ($1.93; $1.93) ...      (4)                (4)
  Common stock ($1.13; $1.05) ......    (281)              (244)

 Balance at end of period ..........   7,102              6,484 

Accumulated other comprehensive 
 income
  Balance at beginning of period....   1,169                627 
  Change in net unrealized gains  
   on securities, net of 
   reclassification adjustment .....     904      904       326       326 

  Balance at end of period .........   2,073                953 

   Comprehensive income ............           $1,667              $  638 

   Total shareholders' equity ......  $9,469             $7,319 



Item 1.  Financial Statements (continued).

                         AMERICAN GENERAL CORPORATION
                Consolidated Condensed Statement of Cash Flows
                                  (Unaudited)
                                 (In millions)

                                                        Nine Months Ended
                                                          September 30,    
                                                        1998        1997  
Operating activities
       Net cash provided by operating activities ...  $ 1,652     $ 1,251 

Investing activities 
 Investment purchases ..............................   (8,578)     (9,323)
 Investment dispositions and repayments ............    7,155       8,447 
 Finance receivable originations and purchases .....   (4,488)     (3,481)
 Finance receivable principal payments received ....    3,550       3,200 
 Disposition of non-strategic assets ...............        -       1,020 
 Net decrease (increase) in short-term investments .     (432)        213 
 Acquisitions ......................................     (591)       (283)
 Other, net ........................................     (174)       (116)
       Net cash used for investing activities ......   (3,558)       (323)

Financing activities
 Retirement Services and Life Insurance
   Policyholder account deposits ...................    3,473       2,290 
   Policyholder account withdrawals ................   (3,361)     (2,334)
      Net policyholder account deposits 
       (withdrawals) ...............................      112         (44)
   Short-term collateralized financings ............      897           - 
       Total Retirement Services and Life Insurance.    1,009         (44)

                                                  -5-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

 Consumer Finance
   Net increase (decrease) in short-term debt ......      501        (454)
   Long-term debt issuances ........................    1,129         485 
   Long-term debt redemptions ......................     (815)       (808)
        Total Consumer Finance .....................      815        (777)
 Corporate
   Net increase (decrease) in short-term debt ......      769         (79)
   Long-term debt redemptions ......................     (354)          - 
   Dividends on common and preferred stock .........     (285)       (248)
   Common stock repurchases ........................     (141)       (365)
   Issuance of preferred securities of subsidiaries.        -         498 
   Other, net ......................................       79         129 
        Total Corporate ............................       68         (65)
         Net cash provided by (used for)
          financing activities .....................    1,892        (886)

Net increase (decrease) in cash ....................      (14)         42 
Cash at beginning of period ........................      263         176 
Cash at end of period ..............................  $   249     $   218 

Supplemental disclosure of cash flow information:
 Cash paid during the period for
   Income taxes ....................................  $   258     $   292 
   Interest
    Corporate ......................................      145         110 
    Consumer Finance ...............................      391         378 
   Dividends on preferred securities of
    subsidiaries ...................................       82          74 



Item 1.  Financial Statements (continued).

                         AMERICAN GENERAL CORPORATION
                  Notes to Consolidated Financial Statements
                              September 30, 1998

1.   Accounting  Policies. The  accompanying unaudited  consolidated financial
     statements of American General Corporation and its subsidiaries (American
     General or the company)  have been prepared in accordance  with generally
     accepted  accounting principles for interim  periods.  In  the opinion of
     management, these  statements include all adjustments  that are necessary
     for a fair presentation of  the company's consolidated financial position
     at September 30,  1998, the  consolidated results of  operations for  the
     three  months and nine months ended September  30, 1998 and 1997, and the
     consolidated shareholders'  equity and  cash flows  for  the nine  months
     ended September 30, 1998 and 1997.

2.   New Accounting Standards.  During first quarter 1998, the company adopted
     Statement  of  Financial  Accounting  Standards  (SFAS)  130,  "Reporting
     Comprehensive  Income," which  establishes  standards  for reporting  and
     displaying  comprehensive  income and  its  components  in the  financial
     statements. American  General elected to report  comprehensive income and
     its  components in  the consolidated  statement of  shareholders' equity,
     which is included  herein.  Application of this  statement did not change

                                                  -6-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

     recognition or measurement of  net income and, therefore, did  not impact
     the company's consolidated results of operations or financial position.

     In June 1998, the  Financial Accounting Standards Board issued  SFAS 133,
     "Accounting  for Derivative  Instruments and  Hedging  Activities," which
     requires all derivative  instruments to  be recognized at  fair value  as
     either assets or  liabilities in the balance sheet.   Changes in the fair
     value of  a derivative instrument are to be reported as earnings or other
     comprehensive income,  depending upon the intended use  of the derivative
     instrument.  This statement  is effective for years beginning  after June
     15, 1999.  Adoption of SFAS 133 is not expected to have a material impact
     on  the  company's  consolidated   results  of  operations  or  financial
     position.

3.   Acquisitions.  

     Western  National.    On February  25,  1998,  the  company acquired  the
     remaining 54%  equity interest  of Western National  Corporation (Western
     National) for $1.2 billion.  The purchase price consisted of $580 million
     cash  and  10.2 million  shares  of American  General common  stock.   In
     addition, the company  issued options  to acquire 1.4  million shares  of
     American  General common stock to replace  outstanding options to acquire
     Western  National common  stock.    The  fair  value  of  these  options,
     excluding options surrendered  for $10  million cash pursuant  to a  pre-
     existing employment agreement, was $37 million.



Item 1.  Financial Statements (continued).

     Western  National's  results  of  operations  and  cash  flows have  been
     consolidated in  the company's financial statements  effective January 1,
     1998.   Earnings attributable to  minority interests through February 25,
     1998 have been reflected as a charge against consolidated income.  

     The  acquisition was  accounted for  using the  purchase method,  and the
     purchase price has been  allocated to Western National's specific  assets
     and  liabilities based on management's best estimate of their fair values
     at  the date  of acquisition.     Evaluation of  fair values  assigned to
     Western National's assets and liabilities (primarily related to insurance
     and  annuity liabilities) is  continuing, and allocation  of the purchase
     price  may be  adjusted when  additional information  is available.   The
     difference  between  the aggregate  purchase  price  and the  net  assets
     acquired  is attributed  to  goodwill,  which  will  be  amortized  on  a
     straight-line basis over 40 years.  

     Non-cash  activities related to the acquisition that are not reflected in
     the  consolidated condensed statement of  cash flows for  the nine months
     ended September 30, 1998 were as follows:







                                                  -7-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998



     (In millions)

     Fair value of assets acquired                    $ 7,169 
     Liabilities assumed                               (5,961)
     Issuance of common stock                            (580)
     Fair value of stock options issued                   (37)
       Net cash paid                                  $   591 

     Western  National  is  the  parent of  Western  National  Life  Insurance
     Company, which changed  its name  to American  General Annuity  Insurance
     Company (American General Annuity) effective May 1, 1998.

     Provident.  Effective April 30, 1998, the Retirement Services division of
     the company completed  the acquisition  of substantially all  of the  in-
     force  individual   annuity  business   of   Provident  Companies,   Inc.
     (Provident) in  a coinsurance  transaction  with a  ceding commission  of
     approximately  $32  million.   The  transaction  increased insurance  and
     annuity liabilities by $2.3 billion.



Item 1.  Financial Statements (continued).

4.   Calculation of Earnings Per Share.  The calculation  of basic and diluted
     earnings per share follows:

                                  Nine Months Ended         Quarter Ended   
    (In millions,                   September 30,           September 30,  
     except share data)            1998        1997        1998       1997 

     Net income ...........        $763        $312        $255        $226 
     Dividends on 
      convertible preferred 
      stock ...............          (4)         (4)         (1)         (1)
     Earnings available 
      to common 
      shareholders (a).....         759         308         254         225 
     Dividends on 
      dilutive securities
       Convertible preferred 
        securities of 
        subsidiary, net of
        tax ...............           8           -           3           3 
       Convertible preferred 
        stock .............           4           -           1           1 
     Earnings available 
      to common 
      shareholders assuming
      dilution (b) ........        $771        $308        $258        $229 

     Average shares 
      outstanding (a)...... 251,198,979    241,631,360 252,808,407 243,302,007 
     Dilutive securities

                                                  -8-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

       Convertible preferred 
        securities of 
        subsidiary ........   6,144,016           -   6,144,016   6,144,016 
       Convertible preferred 
        stock .............   2,317,701           -   2,317,701   2,317,701 
       Stock options ......   1,498,886     934,163   2,163,928   1,012,090 
     Average shares 
      outstanding assuming 
      dilution (b) ........ 261,159,582 242,565,523 263,434,052 252,775,814 

     Net income per share
       Basic ..............       $3.02       $1.27       $1.00       $ .92 
       Diluted ............       $2.95       $1.27       $ .98       $ .91 
 
     (a) Used to compute basic earnings per share.
     (b) Used to compute diluted earnings per share.




Item 1.  Financial Statements (continued).

5.   Investing Activities.  Cash flows related to investing activities were as
     follows:

                                                        Dispositions and
                                    Purchases              Repayments     
                                 Nine Months Ended      Nine Months Ended
     (In millions)                 September 30,          September 30,  
                                 1998        1997       1998        1997 

     Fixed maturity securities  $8,187      $9,047     $6,525      $7,563 
     Mortgage loans                238         220        541         595 
     Equity securities               2           2         39          70 
     Other                         151          54         50         219 
       Total                    $8,578      $9,323     $7,155      $8,447 

6.   Derivative Financial Instruments.  The company purchases options to enter
     into interest rate swap  agreements (swaptions) to limit its  exposure to
     reduced spreads  between investment  yields and interest  crediting rates
     should  interest  rates  decline  significantly  over prolonged  periods.
     During  the  nine months  ended September  30,  1998, swaptions  having a
     notional  amount of $2.9 billion  were purchased, and  swaptions having a
     notional  amount of $2.5 billion expired. Swaptions with a total notional
     amount of $3.4 billion and strike rates ranging from 4.00%  to 5.00% were
     outstanding at September 30,  1998.  These swaptions  expire in 1998  and
     1999.

     During the nine months ended September 30, 1998, the company entered into
     interest  rate swap  agreements  with a  total  notional amount  of  $255
     million.   In addition, American  General Annuity had  interest rate swap
     agreements  with a total notional  amount of $120  million outstanding at
     the  acquisition date, of which  $80 million is  outstanding at September
     30,  1998.   These  interest rate  swap agreements  were entered  into to
     convert specific investment securities or debt from a floating rate to  a

                                                  -9-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

     fixed rate basis.

     In August 1998,  the company entered into a treasury  rate lock agreement
     with  a notional  amount of  $123 million  to hedge  against the  risk of
     rising interest rates on  an anticipated debt issuance expected  to occur
     within the  next six months.   During third  quarter 1998, treasury  rate
     lock  agreements hedging  anticipated  debt issuances  were settled,  and
     related  settlement  costs of  $19 million  were  deferred and  are being
     recognized  as  an increase  to interest  expense over  the terms  of the
     related debt. 

     Derivative  financial instruments did not  have a material  effect on net
     investment income, interest expense, or net income during the nine months
     ended September 30, 1998 or 1997.








Item 1. Financial Statements (continued).

7.   Dollar Rolls.  American  General has entered into dollar  roll agreements
     as part  of its strategy to increase investment yields.  Dollar rolls are
     agreements  to  sell  mortgage-backed  securities  (MBSs) and  repurchase
     substantially  the same securities at  a specified price  and date in the
     future.   The dollar rolls are accounted for as short-term collateralized
     financings  and  are included  in  other liabilities.    American General
     Annuity had outstanding dollar  rolls of $520 million at  the acquisition
     date.   At September 30,  1998, the company  had outstanding  dollar roll
     agreements of  $1.4  billion,  which were  collateralized  by  MBSs  with
     approximately the equivalent fair value.   The average amount outstanding
     and  the weighted  average interest  rate on  dollar rolls  for  the nine
     months   ended  September   30,  1998  were   $977  million   and  5.26%,
     respectively.

8.   Comprehensive Income.  The components of the comprehensive income for the
     nine  months  and quarter  ended  September  30, 1998  and  1997 were  as
     follows:
                                  Nine Months Ended       Quarter Ended  
     (In millions)                  September 30,         September 30,   
                                   1998       1997      1998        1997  

     Net income ................. $  763     $  312    $  255      $  226
     Other comprehensive income -
       change in net unrealized
       gains on securities, net
       of reclassification
       adjustment ...............    904        326       573         420
         Comprehensive income ... $1,667     $  638    $  828      $  646

9.   Legal Contingencies.


                                                 -10-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

     Market Conduct.  In  recent years, various life insurance  companies have
     been  named as  defendants  in class  action  lawsuits relating  to  life
     insurance pricing and  sales practices,  and a number  of these  lawsuits
     have resulted in substantial settlements.  Certain of  American General's
     subsidiaries are defendants in such purported class action lawsuits filed
     since  1996, asserting  claims related  to pricing  and  sales practices.
     American General  believes it has  substantial defenses to  these alleged
     class actions  and continues to  assert them  in courts where  several of
     these cases  are pending.   At the same  time, the Company is  engaged in
     settlement discussions  and related  document  and deposition  discovery,
     directed  toward  resolving  these  matters  expeditiously.    Given  the
     uncertain nature of  litigation, the outcome  of these asserted  defenses
     and  discussions  cannot be  predicted at  this  time.   American General
     nevertheless believes  that  the ultimate  outcome  of all  such  pending
     litigation  should  not  have a  material  adverse  effect  on   American
     General's  consolidated   financial  position.    It   is  possible  that
     settlements or adverse  determinations in  one or more  of these  actions
     could have a material adverse effect on American General's consolidated 



Item 1. Financial Statements (continued).

     results  of operations for a given period.   No provision for any adverse
     determinations  in  this   pending  litigation  has  been   made  in  the
     consolidated financial statements because the amount of the loss, if any,
     from these actions cannot be reasonably estimated at this time.

     Other.   In addition to  those lawsuits or  proceedings disclosed herein,
     and in  the company's 1997 annual report  on Form 10-K, the  company is a
     party to various other  lawsuits and proceedings arising in  the ordinary
     course of  business.  Many  of these  lawsuits and  proceedings arise  in
     jurisdictions that  permit damage  awards disproportionate to  the actual
     economic damages  incurred.  Based upon  information presently available,
     the company believes that the total amounts that will ultimately be paid,
     if  any, arising  from these  lawsuits and  proceedings will  not have  a
     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 certain jurisdictions   continues to create the   potential
     for an unpredictable judgment in any given suit.

10.  Tax  Return Examinations.    American General  and  the majority  of  its
     subsidiaries file a consolidated federal income tax return.  The Internal
     Revenue  Service (IRS)  has completed  examinations of the  company's tax
     returns through  1988 and has raised  certain issues related to  1987 and
     1988  that the company  is currently contesting in  the United States Tax
     Court.  The IRS is currently examining the company's tax returns for 1989
     through  1996.    Although the  final  outcome  of  any issue  raised  is
     uncertain, the  company believes  that the ultimate  liability, including
     interest, will not exceed amounts  recorded in the consolidated financial
     statements.



                                                 -11-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998



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.
This  analysis should be read  in conjunction with  the consolidated financial
statements and related notes on pages 2 through 11 of this Quarterly Report on
Form 10-Q.



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


                                   OVERVIEW

American General reported financial highlights as follows:

                                 Nine Months Ended        Quarter Ended
(In millions,                      September 30,          September 30,  
except share data)                1998       1997        1998       1997 

Net income                     $    763   $    312    $    255   $    226 
Net income per share (diluted)     2.95       1.27         .98        .91 
Revenues and deposits            13,579     10,306       4,703      3,416 
Assets                          102,197     79,416            
Shareholders' equity              9,469      7,319 

As discussed below, the acquisitions of Home Beneficial Life on April 16, 1997
and American General Annuity on February  25, 1998 and charges recorded by the
company  for merger-related costs, losses on sale of non-strategic assets, and
litigation settlement in second quarter 1997 affected the comparability of the
company's year over year financial  results.  The reasons for any  significant
variations between the quarters ended September 30, 1998 and 1997 are the same
as  those  discussed  below for  the  respective  nine  month periods,  unless
otherwise noted.


                              BUSINESS DIVISIONS

To  facilitate  meaningful  period-to-period  comparisons,  earnings  of  each
business division include earnings  from its business operations and  earnings
on that  amount of equity  considered necessary  to support its  business, and
exclude  non-recurring  items and  net  realized investment  gains.   Division
earnings were as follows:







                                                 -12-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998



                                  Nine Months Ended        Quarter Ended
                                     September  30,         September 30,    
(In millions)                     1998        1997       1998        1997 

Retirement Services              $  340      $  186     $  111      $   59
Life Insurance                      490         424        167         146
Consumer Finance                    139         120         50          41
  Division earnings              $  969      $  730     $  328      $  246



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


                              Retirement Services

Retirement Services division results were as follows:

                                 Nine Months Ended        Quarter Ended
                                   September 30,          September 30,   
(In millions)                     1998        1997       1998        1997 

Earnings                        $   340     $   186   $    111     $    59
Assets
 Investments                     40,052      23,224           
 Separate Accounts               11,896      10,194
Sales
 Tax-qualified                    1,292       1,137        506         393
 Non-qualified                    1,843          80        762          29
Deposits
 Fixed
  Tax-qualified                   1,054       1,180        319         336
  Non-qualified                   1,719           -        693           -
 Variable (mainly tax-qualified)  1,816       1,292        664         430
Operating expenses                  167         115         60           4

Earnings.  Division earnings increased 83% for the nine months ended September
30, 1998  compared to the  same period  in 1997.   American General  Annuity's
operations, which were included in the division's results effective January 1,
1998,  increased division earnings by  $88 million.   Earnings attributable to
minority  interests  through  February  25,  1998  are reported  in  corporate
operations.    Asset  growth,  higher  investment  income  from  prepayment of
investments, and management of fixed investment spread also contributed to the
division's  profitability.   Asset growth,  excluding $13.1  billion and  $2.3
billion related to the acquisitions of American General Annuity and Provident,
respectively,  and  the  fair  value  adjustment  related  to  the  division's
securities,  was 14% from  September 30, 1997  to September 30,  1998, and 12%
from  December 31,  1997.   This  growth was  due to  an increase  in variable
deposits,  interest  credited to  fixed  account  deposits, and  stock  market
appreciation on assets held in Separate Accounts.



                                                 -13-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

Sales and  Deposits.  American  General Annuity, which  markets non-qualified,
single  premium  fixed  annuities primarily  through  financial  institutions,
contributed $1.8 billion to sales and total deposits in the  first nine months
of 1998.  Since these products are single premium annuities, sales and deposit
amounts are the same.   Excluding American General Annuity,  1998 year-to-date
sales were 12% higher and third quarter 1998 sales were 26% higher than in the
same periods in  1997.   Total deposits, excluding  American General  Annuity,
increased  14% for  year-to-date  1998  and 23%  in  third  quarter 1998,  and
variable account deposits increased 36% for year-to-date 1998 and 44% in third
quarter 1998, compared to the same periods in 1997, as a  result of new sales,
including capital transfers.  The division's Separate Account assets, which 



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

relate  to variable account options, increased $1.7 billion from September 30,
1997 to September 30, 1998 and $1.3 billion from December 31, 1997, reflecting
mainly variable deposit growth.  Separate Account assets declined $1.3 billion
from June  30,  1998,  due  to $1.8  billion  of  stock  market  depreciation,
partially  offset by  $.6  billion of  variable  account deposits  during  the
quarter.

Fixed  Investment Spread.   Investment  results and  crediting rates  on fixed
accounts were as follows:

                                    Nine Months Ended       Quarter Ended
                                       September 30,         September 30,   
(In millions)                        1998       1997       1998       1997 

Net investment income              $2,037     $1,274      $ 704      $ 429 
Investment yield                     7.99%      7.92%      7.91%      7.90%
Average crediting rate               5.90       6.14       5.88       6.11 
Fixed investment spread              2.09       1.78       2.03       1.79 

Net investment income increased 60% in 1998  as a result of growth in invested
assets and  an increase in  investment yield,  as well as  the acquisition  of
American  General Annuity  in  February  1998  and  income  on  the  Provident
investments acquired  in April 1998.   The increase  in yield relates  to more
active management  of the  company's investment portfolio  and higher  premium
income  on  investments  called  or  tendered  before  their  maturity  dates,
partially  offset by  lower  market rates  on  new investment  purchases.   In
response to  the effect  of declining market  rates on  investment yield,  the
company adjusted the rates credited  to policyholders.  The higher  yields and
reduced crediting rates increased  the investment spread on fixed  accounts by
31  basis points in the  nine months and 24 basis  points in the quarter ended
September 30, 1998 compared to the same periods in 1997.

Separate   Account   Fees.     Separate   Account   fees  include   mortality,
administrative, and  investment  advisory  fees.   These  fees  increased  $37
million, or 47%, for the first nine months of 1998 compared to the same period
in 1997, due to growth in Separate Account assets.



                                                 -14-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

Surrenders.   Policyholder surrenders are  influenced by both  competition and
market performance.  The  division's rate of policyholder surrenders  for tax-
qualified accounts was 5.70% of average reserves for the first  nine months of
1998 (5.63% for the quarter) compared to 4.66% (4.81% for the quarter) for the
same  period in 1997.    The higher level of  surrenders in 1998 was primarily
due  to increased  competition from  other variable  investment  products. The
policyholder  surrender  rate  for  non-qualified accounts,  which  relate  to
American General  Annuity s  fixed annuity  business,  was 11.39%  of  average
reserves for the first nine months and 11.00% for the third quarter of 1998.



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

Operating Expenses.   Operating expenses  increased $52 million  for the  nine
months and  $20 million for the  quarter ended September 30,  1998 compared to
the same periods  of 1997 due  to the addition  of American General  Annuity's
operating  expenses and  the increase  in expenses  to support  the division's
growth  in  deposits.   The  ratio  of operating  expenses  to  average assets
decreased  from .48% in 1997  to .43% in 1998,  reflecting growth in assets in
excess  of growth in operating  expenses and American  General Annuity's lower
overall expense ratio.


                                Life Insurance

Life Insurance division results were as follows:

                                     Nine Months Ended      Quarter Ended
                                      September 30,        September 30,   
(In millions)                        1998       1997       1998       1997 

Earnings                           $   490    $   424    $   167    $   146
Premiums and other considerations    2,344      2,254        793        764
Net investment income                1,675      1,561        561        527
Insurance and annuity benefits       2,233      2,171        765        726
Operating expenses                     532        541        163        185
Assets                              35,914     34,656
Insurance and annuity liabilities   25,421     25,396

Earnings.  Division earnings  for the nine months and quarter  ended September
30, 1998 increased 16% and 15%,  respectively, compared to the same periods in
1997.  The increases  were  primarily due  to  higher investment  income  from
improved  investment margins, the acquisition of Home Beneficial Life in April
1997, and expense savings  from consolidation of recently acquired  companies,
partially offset  by higher  death claims  and startup  costs for  new product
initiatives. 

Premiums  and Deposits.  Premiums  and other considerations,  as well as sales
and deposits of individual life insurance and annuities, were as follows:





                                                 -15-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998


                                    Nine Months Ended       Quarter Ended
(In millions)                         September 30,         September 30,  
                                    1998        1997      1998        1997 

Premiums and other considerations  $2,344      $2,254    $  793      $  764
Individual life insurance
 Sales                                456         390       136         133
 Deposits                             953         859       312         294
Annuities
 Sales                                358         308       113         114
 Deposits                             413         372       126         121



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

Premiums and  other considerations increased 4%  for the first nine  months of
1998 compared to  the same period of 1997 primarily due  to the acquisition of
Home Beneficial Life  in April 1997 and  growth in sales  of group and  credit
insurance.  Individual life  insurance sales and  deposits for the first  nine
months of  1998 exceeded comparable 1997 amounts by 17% and 11%, respectively,
primarily due to sales  of recently introduced variable and  indexed universal
life  products, as  well as  the division s  recent entry  into the  corporate
executive  benefits markets.   Sales of corporate  executive benefits products
can fluctuate significantly quarter to quarter due to large case size.

Annuity sales increased 16% and  decreased 1% for the nine months  and quarter
ended September  30, 1998, respectively, compared  to the same periods  in the
prior year.  Annuity deposits increased 11% and 4% for the comparable periods.
The  increases  in  year-to-date sales  and  deposits  were  primarily due  to
recently introduced variable  annuity products, partially offset by a decrease
in sales of fixed annuities.
 
Investment  Spread.  Investment results  and interest crediting  rates were as
follows:

                                    Nine Months Ended      Quarter Ended
                                      September 30,        September 30,   
                                    1998        1997      1998        1997 

Investment yield                    8.48%       8.10%     8.53%       8.04%
Average crediting rate              5.98        6.05      5.99        6.05 
Investment spread                   2.50        2.05      2.54        1.99 

Net investment income increased 7%  in the first nine months of  1998 compared
to 1997, primarily due to  more active management of the company s  investment
portfolio, lower  investment expenses, asset  growth from the  Home Beneficial
Life  acquisition,  and  an increase  in  premiums  on  investments called  or
tendered  before  their  maturity  dates.  Spreads  increased  due  to  higher
investment yields, as well as management of crediting rates.

Mortality and Persistency.  Death claims and premium termination rates were as
follows:

                                                 -16-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

                                 Nine Months Ended        Quarter Ended
                                   September 30,          September 30,  
                                  1998       1997        1998       1997 

Death claims (in millions)      $  751     $  678      $  247     $  225 
Death claims per $1,000
 in force                       $ 3.63     $ 3.35      $ 3.58     $ 3.29 
Premium termination rate         12.69%     13.37%      13.58%     13.76%



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

Death claims, included in insurance and annuity benefits, increased 11% in the
first nine months  of 1998 and 9%  in the third quarter, compared  to the same
periods of 1997, reflecting  the acquisition of Home Beneficial  Life and less
favorable mortality experience in 1998.  Death claims per $1,000 in force also
reflected the trend  of marketing to older, more affluent  policyholders.  The
lower  premium termination  rate  in 1998  compared  to 1997  reflected  lower
terminations  in  ancillary  lines  of  business.     Overall,  mortality  and
persistency experience was within pricing assumptions.

Operating Expenses.   Operating expenses  decreased $9 million  for the  first
nine months of 1998 and $22 million for the third quarter compared to the same
periods in 1997, primarily due to cost savings  from the ongoing consolidation
and  integration of  acquired companies.   These  cost savings  were partially
offset by startup costs  to introduce new products in 1998, as  well as higher
expenses to support increased group sales.  In addition, 1998 results included
Home Beneficial's operating expenses  for nine months compared to  five months
in 1997.   The ratio of operating expenses to direct premiums and deposits was
15.95%  compared  to 17.05%  for the  first  nine months    of 1998  and 1997,
respectively, and 14.86% compared  to 17.20% in  third quarter 1998 and  1997,
respectively.  The lower ratios for 1998 reflected both decreases in operating
expenses and increases  in life  insurance premiums and  deposits.   Operating
expenses and the corresponding ratios, from  period to period, may be affected
by the amount and mix of products sold. 

                               Consumer Finance

Consumer Finance division results were as follows:

                                 Nine Months Ended        Quarter Ended
                                   September 30,          September 30,  
($ in millions)                   1998       1997        1998       1997 

Earnings                        $  139     $  120      $   50     $   41 
Average finance receivables      8,308      7,483       8,679      7,447 
Yield on finance receivables     16.11%     16.96%      15.75%     16.83%
Borrowing cost                    6.62       6.80        6.55       6.90 
Interest spread                   9.49      10.16        9.20       9.93 
Operating expenses              $  355     $  335      $  120     $  110 

Earnings.  Division earnings increased 16% for the nine months and 21% for the
quarter ended  September  30, 1998,  compared  to the  same  periods of  1997,

                                                 -17-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

primarily due  to improved credit quality  and an increase  in average finance
receivables.

Finance Receivables.  Average  finance receivables increased 11% in  the first
nine  months of  1998 compared  to  the same  period of  1997 and  17%  in the
comparable third  quarter periods.   These increases were  due to higher  loan
production and bulk  purchases of real estate secured loans, which reflect the
company's  program to improve credit  quality by increasing  the proportion of
real estate secured loans.




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

Credit Quality.  Charge offs, the allowance for finance receivable losses, and
delinquencies were as follows:

                                 Nine Months Ended        Quarter Ended
                                   September 30,          September 30,  
($ in millions)                   1998       1997        1998       1997 

Charge offs                     $  161      $ 202      $   53     $   61 
  Annualized % of average
   finance receivables            2.58%      3.59%       2.44%      3.27%

                                    September 30,         December 31,
                                  1998       1997             1997    
Allowance for finance
 receivable losses              $  365     $  380             $  373     
  % of finance receivables        4.15%      5.05%              4.65%    
Delinquencies                   $  353     $  312             $  310     
  % of finance receivables        3.75%      3.83%              3.60%    

The decreases in the charge off and delinquency ratios in 1998 compared to the
same periods  in  1997 reflect  the positive  impact of  the company's  credit
quality improvement program, which  included an increase in the  proportion of
real  estate secured loans and higher underwriting standards.  The increase in
the delinquency  ratio from  year-end 1997  was due to  the effect  of general
economic  conditions and the maturing of purchased real estate portfolios that
were  primarily  new originations  when  purchased.    The  current  allowance
reflects the  improvement in charge-off  experience and credit  quality, while
also providing coverage for recent growth in receivables.

Interest  Spread.    The interest  spread  between  yield  and borrowing  cost
decreased 67 basis points for  the nine months of 1998 and 73 basis points for
the third quarter of 1998, compared to the same  periods in 1997.  The decline
in spread reflected lower yields from the increased proportion of  real estate
secured loans,  which generally  have a  higher  level of  credit quality  and
therefore  lower yields,  partially offset  by reduced  borrowing cost.   Risk
adjusted spreads have improved in both year-to-date and third quarter 1998.

Operating Expenses.   Operating expenses  as a percentage  of average  finance
receivables decreased  to 5.69% for the  first nine months of  1998 from 6.00%

                                                 -18-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

for the same  period of 1997, and to 5.50% from 6.05% for the comparable third
quarter periods, due  to the  increase in average  finance receivables,  which
more than offset the increase in operating expenses.


                                  INVESTMENTS

Invested assets consist primarily of fixed maturity securities, mortgage loans
on real estate, and policy loans.















































                                                 -19-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998




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

Fair  Value  of  Securities.    A decrease  in  interest  rates  and resulting
increases  in bond  values in  the first  nine months  of 1998  caused  a $1.6
billion increase in the fair value adjustment to fixed maturity securities and
a  related  $905  million positive  adjustment  to  shareholders'  equity from
December 31,  1997.  The components of the adjustment to report fixed maturity
and equity securities  at fair value  at September 30,  1998 and December  31,
1997, and the 1998 change, were as follows:

                                   September 30,  December 31,
(In millions)                          1998           1997      Change   

Fair value adjustment to fixed 
 maturity securities                 $ 4,491       $ 2,844     $ 1,647 
Decrease in deferred policy
 acquisition costs and cost of
 insurance purchased                  (1,305)       (1,062)       (243)
Increase in deferred income taxes     (1,127)         (628)       (499)
Net unrealized gains
 Fixed maturity securities             2,059         1,154         905 
 Equity securities                        14            15          (1)
   Net unrealized gains on
     securities                      $ 2,073       $ 1,169     $   904 

Fixed Maturity Securities.   At September 30, 1998, fixed  maturity securities
included $47.1  billion of corporate  bonds, $13.9 billion  of mortgage-backed
securities, and  $2.2 billion of  bonds issued by governmental  agencies.  The
average credit rating of the fixed maturity securities was A+ at September 30,
1998 and December  31, 1997.  Average credit ratings  by category at September
30, 1998 were as follows:

                                  September 30,            Average Credit
 (In millions)                         1998          %          Rating       

Investment grade                     $46,108        72%         A   
Mortgage-backed                       13,935        22          AAA 
Below investment grade                 3,303         6          BB- 
 Total fixed maturity 
  securities                         $63,346       100%         A+  

Below Investment Grade.  Below investment grade securities have credit ratings
below BBB-.  Below investment  grade securities were 5% of invested  assets at
September 30, 1998 and 4% at December 31, 1997.   The company invests in below
investment grade securities  to enhance  the overall yield  of the  portfolio.
Investment  income from below investment grade securities was $228 million for
the nine months ended September 30, 1998 and $126 million for the  same period
in 1997.  Realized investment gains (losses) were immaterial.




                                                 -20-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998




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

Non-Performing.   Bonds are  deemed to be  non-performing when the  payment of
interest is sufficiently  uncertain as to preclude accrual of  interest.  Non-
performing bonds were  less than 0.1%  of total  fixed maturity securities  at
September 30, 1998 and December 31, 1997.

Mortgage Loans.   Mortgage loans on real estate, consisting primarily of loans
on  office and  retail  properties,  represented  5%  of  invested  assets  at
September 30, 1998 and 6% at  December 31, 1997.  Mortgage loan  statistics at
September 30, 1998 and December 31, 1997 were as follows:

                                     September 30,       December 31,
     (In millions)                        1998               1997    

     Mortgage loans                    $ 3,372             $ 3,326 
     Allowance for losses                  (37)                (54)
       Mortgage loans, net             $ 3,335             $ 3,272 

     Allowance for losses                  1.1%                1.6%
     Delinquent loans (60+ days)       $    33             $    20 
       % of mortgage loans                 1.0%                 .6%
     Restructured loans                $    87             $   115 
       % of mortgage loans                 2.6%                3.5%
     Yield on restructured loans           8.0%                8.6%

Watch List.  At September 30, 1998, $85 million of mortgage  loans were on the
company's watch  list, compared to  $128 million  at December 31,  1997.   The
decrease was  due to  loans that were  no longer  undercollateralized or  were
reinstated,  refinanced,  or  repaid.   While  the  watch  list  loans may  be
predictive  of  future delinquent  loans, the  company  does not  anticipate a
significant effect on operations, liquidity, or capital from these loans.


                               CAPITAL RESOURCES

Corporate  Capital.  American  General's target capital  structure consists of
25% corporate debt, 15%  redeemable equity, and 60% shareholders' equity.   At
September 30,  1998, corporate capital  totaling $11.7 billion,  excluding the
fair  value adjustment on securities, consisted of $2.6 billion corporate debt
(22%), $1.7 billion  redeemable equity (15%),  and $7.4 billion  shareholders'
equity (63%).

On  February 25, 1998,  American General issued 10.2  million shares of common
stock and paid  $580 million cash to complete the  $1.2 billion acquisition of
Western National.  The cash portion of the purchase price was financed through
short-term borrowings.   Additionally, the company  issued options to  acquire
1.4 million shares  of American General common stock with  an average exercise
price of $24.75  to replace  outstanding options to  acquire Western  National
common stock.  The fair value of these options,  excluding options surrendered


                                                 -21-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998





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

for $10 million cash pursuant to  a pre-existing employment agreement, was $37
million.   In  connection with  the acquisition,  the company  assumed Western
National's long-term debt of $148 million.

The ratings assigned by rating agencies serve as an indicator  of an insurance
company's financial strength  and ability  to meet its  future obligations  to
policyholders.  During third quarter 1998,  Standard & Poor s (S&P) raised the
financial  strength rating  for  American General  Annuity  to AA+  from  AA-,
consistent with S&P s ratings for American General s other principal insurance
companies.

Consumer  Finance.   The Consumer  Finance division's capital  varies directly
with  the amount of  total finance receivables.   The capital  mix of consumer
finance debt  and equity is  based primarily  upon maintaining  leverage at  a
level that supports cost-effective funding.

Consumer  finance capital of $9.4 billion at  September 30, 1998 included $8.1
billion  of consumer  finance debt,  which was  not guaranteed  by the  parent
company, and $1.3 billion of  equity.  The Consumer Finance division's  target
ratio of debt to tangible net  worth, a standard measure of financial  risk in
the consumer finance  industry, is 7.50 to 1.  The  ratio was 7.56 and 7.52 at
September 30, 1998 and December 31, 1997, respectively.


                                   LIQUIDITY

The  company's overall  liquidity is  based on  cash  flows from  the business
divisions  and its  ability to  borrow in  both the  long-term  and short-term
markets  at  competitive rates.    At  September  30,  1998, the  company  had
committed and unused credit facilities of $5.0 billion.   The company believes
that  its  overall sources  of  liquidity will  continue  to be  sufficient to
satisfy its foreseeable financial obligations.

Parent Company.  The parent company received $729 million of dividends, net of
capital  contributions,  from  subsidiaries   during  the  nine  months  ended
September  30,  1998 compared  to $165  million  (excluding dividends  paid to
USLIFE  Corporation prior  to its  acquisition  by the  company) for  the same
period in  1997.  Net dividends were  low in 1997 because  the company was re-
evaluating the capital  requirements for  its business divisions.   While  the
subsidiaries  are restricted in  the amount of  dividends they may  pay to the
parent  company,  these  restrictions  are  not expected  to  affect  American
General's  ability to  meet  its  cash  obligations.   In  1998,  the  company
repurchased 2.2 million  shares of its common  stock for a total  cost of $145
million, of  which 1.0 million shares at a cost  of $67 million were purchased
in the third quarter.




                                                 -22-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998






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

Retirement Services and Life Insurance.  Principal  sources (uses) of cash for
the Retirement Services and Life Insurance divisions were as follows:

                                                  Nine Months Ended 
                                                    September 30,   
(In millions)                                     1998        1997  

Operating activities                             $1,639      $1,512  
Fixed policyholder account deposits, 
 net of withdrawals                                 112         (44) 
Variable account deposits, net of 
 withdrawals                                      2,090       1,501  
Short-term collateralized financings                897           -  

Operating  cash flows for the Retirement Services and Life Insurance divisions
increased $127 million in  the first nine months of 1998  compared to the same
period of 1997,  primarily due to the acquisition of  American General Annuity
in first quarter 1998  and Home Beneficial Life  in second quarter 1997.   The
1998  increase  in net  fixed  policyholder account  deposits  was due  to the
acquisition  of  American  General  Annuity,  which  primarily  markets  fixed
annuities, partially offset by an increase in the fixed account withdrawals in
the Life  Insurance division.  The  increase in net variable  account deposits
for 1998 compared to  1997 related to policyholders seeking higher  returns in
equity-based investments, including the  company's Separate Accounts.  Because
the  investment risk on variable  accounts lies solely  with the policyholder,
deposits and  withdrawals related to Separate Accounts are not included in the
company's  consolidated   condensed  statement   of  cash   flows.  Short-term
collateralized  financings relate  to dollar roll  agreements entered  into in
1998.

Major  uses of cash were the net  purchase of investments necessary to support
increases in insurance  and annuity liabilities, and net dividends paid to the
parent.   The subsidiaries in these  divisions paid dividends, net  of capital
contributions,  of $572  million in  the first  nine months  of 1998  and $221
million for the  same period of 1997.  The 1998  net dividends are net of $188
million  of capital contributions made  by an intermediate  holding company to
the  Retirement  Services  division in  second  quarter  1998  to support  the
Provident acquisition.

Consumer Finance.  Principal sources  (uses) of cash for the Consumer  Finance
division were as follows:
                                                  Nine Months Ended 
                                                    September 30,   
(In millions)                                     1998        1997  

Operating activities                              $ 350       $ 422  
Increase (decrease) in borrowings                   815        (777) 

                                                 -23-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

Cash provided  by operating activities decreased  in the first  nine months of
1998 since 1997 included operations related to non-strategic assets sold in 


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

second quarter 1997.  Cash provided by borrowings increased in the nine months
ended September 30, 1998 compared to the  same period in 1997 due to growth in
receivables.

Other major  uses of cash were  to fund finance receivables  and net dividends
paid to  the parent company.   Net cash used  to fund finance  receivables was
$938  million  for the  nine months  ended September  30,  1998, up  from $281
million for the same period in 1997.  Net dividends paid to the parent company
totaled $18 million in  the first nine months of 1998  compared to $87 million
for the same period in 1997.


                                   YEAR 2000

Internal Systems.  American  General has numerous technology systems  that are
managed on a decentralized basis.   The company's Year 2000  readiness efforts
are  therefore being  undertaken by  its key  business units  with centralized
oversight.   Each business unit  has developed and  is implementing a  plan to
minimize the risk of a significant negative impact on its operations.

While the  specifics  of  the plans  vary,  the plans  include  the  following
activities: (1) perform  an inventory of the  company's information technology
and  non-information  technology  systems;  (2)  assess  which  items  in  the
inventory may expose  the company to business  interruptions due to Year  2000
issues;  (3) reprogram or  replace systems that  are not Year  2000 ready; (4)
test systems to prove that they will function into the next century as they do
currently; and  (5) return  the systems  to operations.   As of  September 30,
1998, the inventory and assessment activities are  substantially complete, and
the  company is progressing with activities (3)  and (4).  The company expects
to  substantially complete  the remaining  activities for critical  systems by
December 31, 1998.   However, activities  (3) through (5) for  certain systems
will continue in 1999.

Third Party Relationships.   The company has relationships with  various third
parties who  must also be  Year 2000 ready.   These third parties  provide (or
receive)  resources  and  services  to  (or  from)  the  company  and  include
organizations  with which the  company exchanges  information.   Third parties
include vendors of hardware, software, and information services; providers  of
infrastructure services  such as voice  and data communications  and utilities
for office facilities; investors;  customers; distribution channels; and joint
venture  partners.  Third  parties differ  from internal  systems in  that the
company exercises less, or no, control  over Year 2000 readiness.  The company
has developed  a plan to assess  and attempt to mitigate  the risks associated
with the potential  failure of third parties  to achieve Year  2000 readiness.
The  plan includes the following  activities: (1) identify  and classify third
party  dependencies; (2) research,  analyze, and document  Year 2000 readiness
for  critical third  parties;  and (3)  test  critical hardware  and  software
products  and  electronic  interfaces.     As  of  September  30,   1998,  the

                                                 -24-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998

identification and classification activities are substantially complete.  




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

The company expects  to substantially  complete the research  and analysis  of
critical third  parties  Year 2000 readiness by December 31, 1998.  Due to the
various  stages of third parties   Year 2000 readiness,  the company s testing
activities will extend through 1999.

Contingency Plans.  The  company has commenced contingency planning  to reduce
the risk of Year 2000-related business failures.   The contigency plans, which
address  both internal  systems  and third  party  relationships, include  the
following  activities: (1) evaluate  the consequences  of failure  of business
processes  with  significant exposure  to Year  2000  risk; (2)  determine the
probability of  a Year-2000 related  failure for  those processes that  have a
high   consequence  of  failure;  (3)  develop  an  action  plan  to  complete
contingency  plans for those processes that  rank high in both consequence and
probability of  failure; and (4) complete  the applicable action   plans.  The
company  has substantially completed evaluation activities as of September 30,
1998 and is proceeding with the subsequent activities.  The company expects to
substantially complete all contingency planning activities by April 30, 1999.

Risks and  Uncertainties.  Based on  its plans to make  internal systems ready
for  Year  2000,  to deal  with  third  party  relationships, and  to  develop
contingency  actions, the  company believes  that it  will experience  at most
isolated and minor disruptions of business processes following the turn of the
century.  Such disruptions are not  expected to have a material effect on  the
company s  future results  of operations,  liquidity, or  financial condition.
However, due  to  the magnitude  and  complexity of  this  project, risks  and
uncertainties exist and  the company is not able to  predict a most reasonably
likely  worst case scenario.  If conversion  of the company s internal systems
is not  completed on  a timely  basis (due  to non-performance  by significant
third-party  vendors, lack  of qualified  personnel to  perform the  Year 2000
work,  or other unforseen circumstances in completing the company s plans), or
if  critical third  parties fail to  achieve Year  2000 readiness  on a timely
basis,  the Year  2000 issues  could  have a  material adverse  impact on  the
company s operations following the turn of the century.

Costs.  Through September 30, 1998, the  company has incurred and expensed $53
million  (pretax)  related  to  Year  2000  readiness, including  $37  million
incurred  during  the  first  nine months  of  1998.    The company  currently
anticipates that it will  incur future costs of  approximately $30 million  to
$40 million (pretax)  for additional internal staff,  third-party vendors, and
other  expenses to achieve Year 2000 readiness.   In addition, the company has
elected to accelerate  the planned replacement  of certain systems as  part of
the Year 2000 plans.   Costs of the replacement systems are  being capitalized
and amortized over their useful lives, in accordance with the company s normal
accounting policies.  The total of  such capitalizable costs is expected to be
less than $10 million.



                                                 -25-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998



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


                          FORWARD-LOOKING STATEMENTS

All statements, trend analyses, and other information contained in this report
and elsewhere  (such as other filings  by the company with  the Securities and
Exchange  Commission, press  releases,  presentations by  the  company or  its
management, or oral statements) relative to markets for the company's products
and trends in the company's operations  or financial results, as well as other
statements   including  words   such  as   "anticipate,"  "believe,"   "plan,"
"estimate,"  "expect," "intend,"  and  other similar  expressions,  constitute
forward-looking statements under the  Private Securities Litigation Reform Act
of 1995. Forward-looking statements are  made based upon management's  current
expectations and  beliefs concerning  future developments and  their potential
effects upon the  company. There can be no assurance  that future developments
affecting  the company will be those anticipated by management. 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: (1) changes in general economic conditions,
including  the  performance  of  financial markets  and  interest  rates;  (2)
customer  responsiveness to both  new products and  distribution channels; (3)
competitive, regulatory, or tax changes that affect the cost of  or demand for
the  company's  products;  (4) the  company's  ability  to  achieve Year  2000
readiness for critical systems and operations  on a timely basis; (5)  adverse
litigation  results  or resolution  of  litigation,  including market  conduct
litigation; and (6)  the company's  failure to achieve  anticipated levels  of
earnings or  operational efficiencies related to  recently acquired companies,
as well as other cost-saving initiatives. Investors are also directed to other
risks and uncertainties discussed in other documents filed by the company with
the Securities and Exchange Commission.  The company undertakes no  obligation
to update  or revise any forward-looking  information, whether as a  result of
new information, future developments, or otherwise.



















                                                 -26-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998


                          PART II.  OTHER INFORMATION

Item 1. Legal Proceedings.

Reference  is  made  to Note  9  to  the  Registrant's Unaudited  Consolidated
Financial  Statements in  Part  I of  this  Form 10-Q  for  the quarter  ended
September 30, 1998.

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

a.   Exhibits.

     Exhibit 10.1   American   General   Corporation  Supplemental   Executive
                    Retirement Plan

     Exhibit 11     Computation of Earnings per Share  (included in Note 4  of
                    Notes to Financial Statements)

     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.

     None.




























                                                 -27-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998



                                    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, on November 12, 1998.

AMERICAN GENERAL CORPORATION 
(Registrant)




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

































                                                 -28-
<PAGE>



                AMERICAN GENERAL CORPORATION
                          FORM 10-Q
             For the Quarter Ended September 30, 1998




                                 EXHIBIT INDEX


   Exhibit


     10.1           American   General   Corporation  Supplemental   Executive
                    Retirement Plan

     11             Computation  of Earnings per Share (included  in Note 4 of
                    Notes to Financial Statements)

     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




































                                                 -29-
<PAGE>