UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549

                               FORM 10-K


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

       For the fiscal year ended December 31, 2004

                                     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 1-7422

                        AMERICAN GENERAL FINANCE, INC.
            (Exact name of registrant as specified in its charter)

               Indiana                           35-1313922
      (State of incorporation)      (I.R.S. Employer Identification No.)

         601 N.W. Second Street, Evansville, IN                47708
        (Address of principal executive offices)            (Zip Code)

      Registrant's telephone number, including area code: (812) 424-8031


      Securities registered pursuant to Section 12(b) of the Act:  None


      Securities registered pursuant to Section 12(g) of the Act:  None


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, and (2) has been subject to such filing
requirements for the past 90 days. Yes  X  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ].  Not applicable.

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes     No  X

The registrant meets the conditions set forth in General Instructions I(1)(a)
and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced
disclosure format.

As the registrant is an indirect wholly owned subsidiary of American
International Group, Inc., none of the registrant's common stock is held by
non-affiliates of the registrant.

At March 7, 2005, there were 2,000,000 shares of the registrant's common
stock, $.50 par value, outstanding.
<PAGE> 2

                           TABLE OF CONTENTS

          Item                                                    Page

Part I     1.  Business . . . . . . . . . . . . . . . . . . . . . .  4

           2.  Properties . . . . . . . . . . . . . . . . . . . . . 17

           3.  Legal Proceedings  . . . . . . . . . . . . . . . . . 17

           4.  Submission of Matters to a Vote of Security
                 Holders  . . . . . . . . . . . . . . . . . . . . .  *

Part II    5.  Market for Registrant's Common Equity, Related
                 Stockholder Matters and Issuer Purchases of
                 Equity Securities  . . . . . . . . . . . . . . . . 18

           6.  Selected Financial Data  . . . . . . . . . . . . . . 18

           7.  Management's Discussion and Analysis of Financial
                 Condition and Results of Operations. . . . . . . . 19

          7A.  Quantitative and Qualitative Disclosures About
                 Market Risk  . . . . . . . . . . . . . . . . . . . 51

           8.  Financial Statements and Supplementary Data  . . . . 51

           9.  Changes in and Disagreements with Accountants
                 on Accounting and Financial Disclosure . . . . . . **

          9A.  Controls and Procedures  . . . . . . . . . . . . . . 94

          9B.  Other Information  . . . . . . . . . . . . . . . .  ***

Part III  10.  Directors and Executive Officers of the Registrant .  *

          11.  Executive Compensation . . . . . . . . . . . . . . .  *

          12.  Security Ownership of Certain Beneficial Owners
                 and Management and Related Stockholder Matters . .  *

          13.  Certain Relationships and Related Transactions . . .  *

          14.  Principal Accountant Fees and Services . . . . . . . 95

Part IV   15.  Exhibits and Financial Statement Schedules . . . . . 96


*   Items 4, 10, 11, 12, and 13 are not included, as the registrant
    meets the conditions set forth in General Instructions I(1)(a) and
    (b) of Form 10-K.

**  Item 9 is not included, as no information was required by Item 304
    of Regulation S-K.

*** Item 9B is not included because it is inapplicable.
<PAGE> 3

                         AVAILABLE INFORMATION

American General Finance, Inc. (AGFI) files annual, quarterly, and
current reports and other information with the Securities and Exchange
Commission (the SEC).  The SEC maintains a website that contains
annual, quarterly, and current reports and other information that
issuers (including AGFI) file electronically with the SEC.  The SEC's
website is www.sec.gov.

The following reports are available free of charge on our Internet
website www.agfinance.com as soon as reasonably practicable after we
file them with or furnish them to the SEC:

     *  our 2004 Current Reports on Form 8-K;
     *  our 2004 Quarterly Reports on Form 10-Q; and
     *  this Annual Report on Form 10-K for the year ended December
        31, 2004.

The information on our website is not incorporated by reference into
this report.  The website addresses listed above are provided for the
information of the reader and are not intended to be active links.
<PAGE> 4

                                PART I

Item 1.  Business.

                                GENERAL

American General Finance, Inc. will be referred to as "AGFI" or
collectively with its subsidiaries, whether directly or indirectly
owned, as the "Company" or "we".  AGFI was incorporated in Indiana in
1974 to become the parent holding company of American General Finance
Corporation (AGFC).  AGFC was incorporated in Indiana in 1927 as
successor to a business started in 1920.  Since August 29, 2001, AGFI
has been an indirect wholly owned subsidiary of American International
Group, Inc. (AIG), a Delaware corporation.  AIG is a holding company
which, through its subsidiaries, is engaged in a broad range of
insurance and insurance-related activities, financial services and
asset management in the United States and abroad.

AGFI is a financial services holding company whose principal
subsidiary is AGFC.  AGFC is also an SEC registrant.  AGFC is a
financial services holding company with subsidiaries engaged primarily
in the consumer finance and credit insurance businesses.  We conduct
the credit insurance business to supplement our consumer finance
business through Merit Life Insurance Co. (Merit) and Yosemite
Insurance Company (Yosemite), which are both wholly owned subsidiaries
of AGFC.

Effective January 1, 2003, we acquired 100% of the common stock of
Wilmington Finance, Inc. (WFI) in a purchase business combination.
WFI provides services for the origination of non-conforming
residential real estate loans for sale to investors.

At December 31, 2004, the Company had 1,444 branch offices in 45
states, Puerto Rico, and the U.S. Virgin Islands and approximately
9,100 employees.  Our executive offices are located in Evansville,
Indiana.


Selected Financial Information

Selected financial information of the Company was as follows:

                                       Years Ended December 31,
                                  2004           2003          2002
                                        (dollars in thousands)

Average net receivables        $17,658,922   $14,232,110   $12,409,908

Average borrowings             $16,300,928   $13,381,555   $11,471,189
<PAGE> 5

Item 1.  Continued


                                                At or for the
                                           Years Ended December 31,
                                        2004         2003        2002

Yield - finance charges as a
  percentage of average net
  receivables                          11.20%       12.46%      13.85%

Borrowing cost - interest
  expense as a percentage
  of average borrowings                 3.90%        4.08%       4.88%

Interest spread - yield
  less borrowing cost                   7.30%        8.38%       8.97%

Operating expenses as a
  percentage of average
  net receivables                       4.43%        4.82%       4.52%

Allowance ratio - allowance for
  finance receivable losses as
  a percentage of net finance
  receivables                           2.26%        3.04%       3.34%

Charge-off ratio - net charge-offs
  as a percentage of the average
  of net finance receivables at
  the beginning of each month
  during the period                     1.60%        2.19%       2.41%

Charge-off coverage - allowance
  for finance receivable losses
  to net charge-offs                    1.63x        1.50x       1.56x

Delinquency ratio - gross finance
  receivables 60 days or more
  past due as a percentage
  of gross finance receivables          2.31%        3.28%       3.67%

Return on average assets                2.46%        2.27%       2.48%

Return on average equity               23.01%       21.33%      24.49%

Ratio of earnings to fixed charges
  (refer to Exhibit 12 for
  calculations)                         2.06x        2.02x       1.85x

Debt to tangible equity ratio -
  debt to equity less goodwill
  and accumulated other
  comprehensive income (loss)           8.98x        8.88x       8.66x

Debt to equity ratio                    7.99x        7.86x       8.16x
<PAGE> 6

Item 1.  Continued


We have three business segments:  branch, centralized real estate, and
insurance.  We define our segments by type of financial service
product offered, nature of the production process, and method used to
distribute our products and to provide our services, as well as our
management reporting structure.

In prior years, we reported our centralized real estate business and
our branch business in our consumer finance business segment.  During
2004, we expanded our segment reporting to reflect our centralized
real estate business as a separate segment.  We also restated prior
periods so that these prior periods are shown on a comparable basis to
our new presentation.

Revenues, pretax income, and assets for our three business segments
and consolidated totals were as follows:

                                           At or for the
                                      Years Ended December 31,
                                 2004          2003           2002
                                       (dollars in thousands)

Branch:
  Revenues                    $ 1,785,721   $ 1,779,442   $ 1,801,708
  Pretax income                   494,773       448,817       458,918
  Assets                       11,305,399    11,016,603    11,614,069

Centralized real estate:
  Revenues                    $   566,400   $   309,453   $    64,579
  Pretax income                   151,016        89,054         6,341
  Assets                        8,410,635     3,948,498     1,858,919

Insurance:
  Revenues                    $   199,160   $   197,961   $   202,113
  Pretax income                    91,323        96,914        84,436
  Assets                        1,472,399     1,389,527     1,320,844

Consolidated:
  Revenues                    $ 2,459,162   $ 2,190,106   $ 1,999,838
  Pretax income                   693,671       575,408       492,168
  Assets                       22,235,772    17,006,164    15,484,286


See Note 22. of the Notes to Consolidated Financial Statements in Item
8. for reconciliations of segment totals to consolidated financial
statement amounts.


                        BRANCH BUSINESS SEGMENT

The branch business segment is the core of the Company's operations.
Through its 1,444 branch offices and its centralized support
operations, the 6,700 employees of the branch business segment
serviced over 1.8 million real estate loans, non-real estate loans,
and retail sales finance accounts totaling $11.7 billion at December
31, 2004.  Many of our customers are described as non-conforming, non-
prime, or subprime.
<PAGE> 7

Item 1.  Continued


Structure and Responsibilities

Branch personnel are responsible for originating real estate loans and
non-real estate loans, purchasing retail sales finance obligations
from retail merchants, offering credit and non-credit insurance and
ancillary products to the customers, and servicing these receivables.
Branch Managers have numerous responsibilities including hiring and
training the branch staff and supervising their work, establishing
retail merchant relationships, identifying portfolio acquisition
opportunities, maintaining finance receivable credit quality, and
generating branch profitability.

To ensure profitability and growth in our branch operations, we
continuously review the performance of our individual branches and the
markets they serve.  During 2004, we opened 45 branch offices and
closed 4 branch offices.


Products and Services

Real estate loans are secured by first or second mortgages on
residential real estate, generally have maximum original terms of 360
months, and are considered non-conforming.  These loans may be closed-
end accounts or open-end home equity lines of credit and may be fixed-
rate or adjustable-rate products.  The home equity lines of credit
generally have a predetermined period during which the borrower may
take advances.  After this draw period, all advances outstanding under
the line of credit convert to a fixed-term repayment period, generally
over an agreed upon period between 15 and 30 years.

Non-real estate loans are secured by consumer goods, automobiles, or
other personal property or are unsecured and generally have maximum
original terms of 60 months.

We purchase retail sales contracts and provide revolving retail
services arising from the retail sale of consumer goods and services
by retail merchants.  We also purchase private label receivables
originated by AIG Federal Savings Bank (AIG Bank), a non-subsidiary
affiliate, under a participation agreement.  Retail sales contracts
are closed-end accounts that represent a single purchase transaction.
Revolving retail and private label are open-end accounts that can be
used for financing repeated purchases from the same merchant.  Retail
sales contracts are secured by the real property or personal property
designated in the contract and generally have maximum original terms
of 60 months.  Revolving retail and private label are secured by the
goods purchased and generally require minimum monthly payments based
on outstanding balances.  We refer to retail sales contracts,
revolving retail, and private label collectively as "retail sales
finance".

We offer credit life, credit accident and health, credit related
property and casualty, credit involuntary unemployment, and non-credit
insurance and ancillary products to all eligible branch customers.
Affiliated as well as non-affiliated insurance and/or financial
services companies issue these products which are described under
"Insurance Business Segment".
<PAGE> 8

Item 1.  Continued


Customer Development

The Company solicits customers through a variety of channels including
direct mail, E-commerce and retail sales financing.

We solicit new prospects, as well as current and former customers,
through a variety of direct mail offers.  The Company's data warehouse
is a central, proprietary source of information regarding current and
former customers.  We use this information to tailor offers to
specific customer segments.  In addition to internal data, the Company
purchases prospect lists from major list vendors based on
predetermined selection criteria.  Types of direct mail solicitations
include invitations to apply, guaranteed loan offers, and live checks
which, if cashed by the customer, constitute non-real estate loans.

E-commerce has become another source of new customers.  The Company's
web site includes a brief, user-friendly credit application that is
automatically routed to the branch office nearest the consumer upon
completion.  E-commerce relationships exist with a variety of search
engines to drive prospects to the Company's website.  The Company's
web site also has a branch office locator feature so potential
customers can quickly and easily find the branch office nearest to
them and can contact branch personnel directly.

New customer relationships also begin through our alliances with
approximately 20,000 retail merchants across the United States, Puerto
Rico, and the U.S. Virgin Islands.  After a customer takes advantage
of the merchant's retail sales financing option, the Company purchases
that retail sales finance obligation.  We then contact the customer
using various marketing methods to invite the customer to discuss his
or her overall credit needs with our consumer lending specialists.
Any resulting loan may pay off the customer's retail sales finance
obligation and consolidate his or her debts with other creditors.

Our consumer lending specialists, who, where required, are licensed to
offer insurance and ancillary products, explain our credit and non-
credit insurance and ancillary products to the customer.  The customer
then determines whether to purchase any of these products.

The Company's growth strategy is to supplement our solicitation of
customers through direct mail, E-commerce, and retail sales financing
activities with portfolio acquisitions.  These acquisitions include
real estate loans, non-real estate loans, and retail sales finance
receivables originated by other lenders whose customers meet our
credit quality standards and profitability objectives.  A large amount
of our portfolio acquisitions comes from sellers with whom we have
previously done business.  Our branch and field operations management
also seek sources of potential portfolio acquisitions.
<PAGE> 9

Item 1.  Continued


Account Servicing

Establishing and maintaining customer relationships is very important
to us.  Branch personnel are in frequent contact with our real estate
loan and non-real estate loan customers through solicitation phone
calls to assess customers' current financial situations to determine
if they need additional funds.  Centralized support operations
personnel are in frequent contact with our retail sales finance
customers through solicitation or collection calls.  We view
collection efforts as opportunities to help our customers solve their
temporary financial problems and to maintain our customer
relationships.

We do not modify existing accounts, except in certain bankruptcy
situations.  However, we may renew a delinquent account if the
customer has sufficient income and it does not appear that the cause
of past delinquency will affect the customer's ability to repay the
new loan.  We subject all renewals, whether the customer's account is
current or delinquent, to the same credit risk underwriting process as
we would a new application for credit.

We may allow a deferment, which is a partial payment that extends the
term of an account.  The partial payment amount is usually the greater
of one-half of a regular monthly payment or the amount necessary to
bring the interest on the account current.  We limit a customer to two
deferments in a rolling twelve-month period unless we determine that
an exception is warranted and consistent with our credit risk
policies.

To accommodate a customer's preferred monthly payment pattern, we may
agree to a customer's request to change a payment due date on an
account.  We will not change an account's due date if the change will
affect the thirty day plus delinquency status of the account at month
end.

When two payments are past due on a real estate loan and it appears
that foreclosure may be necessary, we inspect the property as part of
assessing the costs, risks, and benefits associated with foreclosure.
Generally, we begin foreclosure proceedings when the fourth monthly
payment is past due.  When foreclosure is completed and we have
obtained title to the property, we obtain an unrelated party's
valuation of the property, which is either a full appraisal or a real
estate broker's or appraiser's estimate of the property's sale value
without the benefit of a full interior and exterior appraisal and
lacking sales comparisons.  We reduce finance receivables by the
amount of the real estate loan, establish a foreclosed real estate
owned asset at lower of loan balance or 85% of the valuation, and
charge off any loan amount in excess of that value to the allowance
for finance receivable losses.

Branch and centralized support operations personnel charge-off non-
real estate loans and retail sales finance obligations according to
our policy.  See Note 3. of the Notes to Consolidated Financial
Statements in Item 8. for our charge-off policy.  If recovery efforts
are feasible, we transfer charged-off accounts to our centralized
charge-off recovery operation for ultimate disposition.
<PAGE> 10

Item 1.  Continued


See Note 22. of the Notes to Consolidated Financial Statements in Item
8. for further information on the Company's branch business segment.


               CENTRALIZED REAL ESTATE BUSINESS SEGMENT

The centralized real estate business segment performs originating and
servicing activities for real estate loan customers that we obtain
through distribution channels other than our branches.  These
distribution channels include mortgage brokers, correspondent
relationships with mortgage lenders, and portfolio acquisitions from
various types of mortgage lenders as well as direct lending to
customers.  This segment includes the originating and servicing
operations of our WFI and MorEquity, Inc. (MorEquity) subsidiaries.
At December 31, 2004, the centralized real estate business segment had
approximately 1,600 employees.


Structure and Responsibilities

Our mortgage origination subsidiaries have entered into agreements
with AIG Bank whereby for fees these subsidiaries provide marketing,
certain origination processing services, loan servicing, and related
services for AIG Bank's origination and sale of non-conforming
residential real estate loans.  Our mortgage origination subsidiaries
and AIG Bank originated a combined $10.6 billion of real estate loans
during 2004 and $5.0 billion of real estate loans during 2003.  We
ultimately retained $4.5 billion of these real estate loans during
2004 and $1.9 billion of these real estate loans during 2003 and sold
the remainder in the secondary mortgage market to third party
investors.  For accounting purposes, we report as originations any
real estate loans we purchase from AIG Bank that were originated using
our mortgage origination subsidiaries' services rather than reporting
the transactions as portfolio acquisitions because the Company and AIG
Bank share a common parent.


Products and Services

WFI originates non-conforming residential real estate loans, primarily
through broker relationships (wholesale) and, to lesser extents,
directly to consumers (retail) and through correspondent relationships
and sells these loans to investors with servicing released to the
purchaser.  WFI had a national network of 19 wholesale, retail, and
correspondent production and sales offices at December 31, 2004.
During 2004, WFI originated real estate loans through approximately
5,000 brokers and sold them to more than 20 investors.  WFI's
investors include money center and regional banks, national finance
companies, investment banks, and our affiliates.
<PAGE> 11

Item 1.  Continued


MorEquity originates non-conforming residential real estate loans
primarily through refinancings of its existing real estate loan
customers and, to a lesser extent, through direct mail solicitations.
MorEquity also services approximately 52,000 real estate loans
totaling $8.4 billion at December 31, 2004 from a centralized
location.  These real estate loans were generated through:

     *  portfolio acquisitions from third party lenders;
     *  our mortgage origination subsidiaries;
     *  refinancing existing mortgages; or
     *  advances on home equity lines of credit.

See Note 22. of the Notes to Consolidated Financial Statements in Item
8. for further information on the Company's centralized real estate
business segment.


                        CREDIT RISK MANAGEMENT

A risk in all consumer lending and retail sales financing transactions
is the customer's unwillingness or inability to repay obligations.
Unwillingness to repay is usually evidenced in a consumer's historical
credit repayment record.  An inability to repay usually results from
lower income due to unemployment or underemployment, major medical
expenses, or divorce.  Occasionally, these types of events can be so
economically severe that the customer files for bankruptcy.  Because
we evaluate credit applications with a view toward ability to repay,
our customer's inability to repay occurs after our initial credit
evaluation and funding of an outstanding finance receivable.

In our branch business segment, we use credit risk scoring models at
the time of credit application to assess our risk of the applicant's
unwillingness or inability to repay.  We develop these models using
numerous factors, including past customer credit repayment experience,
and periodically revalidate them based on recent portfolio
performance.  We use different credit risk scoring models for
different types of loan and retail sales finance products.  We extend
credit to those customers who fit our risk guidelines as determined by
these models and, in some cases, manual underwriting.  Price and size
of the loan or retail sales finance transaction are in relation to the
estimated credit risk assumed.

In our centralized real estate business segment, AIG Bank originates
real estate loans according to established underwriting criteria and,
for those loans retained by the Company, we individually review the
real estate loans as part of our due diligence.
<PAGE> 12

Item 1.  Continued


                         OPERATIONAL CONTROLS

We control and monitor our branch and centralized real estate business
segments through a variety of methods including the following:

     *  Our operational policies and procedures standardize various
        aspects of lending, collections, and business development
        processes.
     *  Our branch finance receivable systems control amounts, rates,
        terms, and fees of our customers' accounts; create loan
        documents specific to the state in which the branch operates;
        and control cash receipts and disbursements.
     *  Our headquarters accounting personnel reconcile bank accounts,
        investigate discrepancies, and resolve differences.
     *  Our credit risk management system reports are used by various
        personnel to compare branch lending and collection activities
        with predetermined parameters.
     *  Our executive information system is available to headquarters
        and field operations management to review the status of
        activity through the close of business of the prior day.
     *  Our branch field operations management structure is designed
        to control a large, decentralized organization with each
        succeeding level staffed with more experienced personnel.
     *  Our field operations compensation plan aligns the operating
        activities and goals with corporate strategies by basing the
        incentive portion of field personnel compensation on
        profitability and credit quality.
     *  Our internal audit department audits for operational policy
        and procedure and state law and regulation compliance.
        Internal audit reports directly to AIG to enhance
        independence.


                         CENTRALIZED SUPPORT

We continually seek to identify functions that could be more cost-
effective if centralized, thereby reducing costs and freeing our
lending specialists to concentrate on providing service to our
customers.  Our centralized operational functions include the
following:

     *  customer solicitations;
     *  payment processing;
     *  real estate loan approvals;
     *  real estate owned processing;
     *  collateral protection insurance tracking;
     *  retail sales finance approvals;
     *  revolving retail and private label collections;
     *  revolving retail and private label processing;
     *  merchant services; and
     *  charge-off recovery operations.
<PAGE> 13

Item 1.  Continued


                           SOURCES OF FUNDS

We fund our branch and centralized real estate business segments
principally through cash flows from operations, public and private
capital markets borrowings, and capital contributions from our parent.
Our ability to access capital is dependent upon internal and external
factors including our ability to maintain adequately strong operating
performance and debt credit ratings and the overall condition of the
capital markets.  Our principal funding sources through the capital
markets include:

     *  issuances of long-term debt in domestic and foreign markets;
     *  short-term borrowings in the commercial paper market;
     *  borrowings from banks under credit facilities; and
     *  securitizations.


                       INSURANCE BUSINESS SEGMENT

The insurance business segment markets its products to all eligible
branch customers.  Cash generated from operations is invested in
investment securities, commercial mortgage loans, investment real
estate, and policy loans and is also used to pay dividends.  At
December 31, 2004, the insurance business segment had $3.0 billion of
credit life insurance and $2.7 billion of non-credit life insurance in
force covering approximately 892,000 customer accounts and also had
$1.4 billion of investments.


Structure and Responsibilities

Merit is a life and health insurance company domiciled in Indiana and
licensed in 46 states, the District of Columbia, and the U.S. Virgin
Islands.  Merit principally writes or reinsures credit life, credit
accident and health, and non-credit insurance.

Yosemite is a property and casualty insurance company domiciled in
Indiana and licensed in 45 states.  Yosemite principally writes or
reinsures credit-related property and casualty and credit involuntary
unemployment insurance.

The 100 employees of the insurance business segment have numerous
responsibilities relating to the underwriting, compliance, and service
activities for the insurance companies and provide services to the
branch and centralized real estate business segments.


Products and Services

Our credit life insurance policies insure the life of the borrower in
an amount typically equal to the unpaid balance of the finance
receivable and provide for payment in full to the lender of the
finance receivable in the event of the borrower's death.  Our credit
accident and health insurance policies provide, to the lender, payment
of the installments on the finance receivable coming due during a
period of the borrower's disability due to illness or injury.  Our
credit-related property and casualty insurance policies are written to
protect the lender's interest in property pledged as collateral for
<PAGE> 14

Item 1.  Continued


the finance receivable.  Our credit involuntary unemployment insurance
policies provide, to the lender, payment of the installments on the
finance receivable coming due during a period of the borrower's
involuntary unemployment.  The borrower's purchase of credit life,
credit accident and health, credit-related property and casualty, or
credit involuntary unemployment insurance is voluntary with the
exception of lender-placed property damage coverage for property
pledged as collateral.  In these instances, our branch or centralized
real estate business segment personnel obtain property damage coverage
through Yosemite either on a direct or reinsured basis under the terms
of the lending agreement if the borrower does not provide evidence of
coverage with another insurance carrier.  Non-credit insurance
policies are primarily traditional life level term policies.  The
purchase of this coverage is voluntary.

The ancillary products we offer are home security and auto security
membership plans and home warranty service contracts.  These products
are generally not considered to be insurance policies.  Our insurance
business segment has no risk of loss on these products.  The
unaffiliated companies providing these membership plans and service
contracts are responsible for any required reimbursement to the
customer on these products.

Customers usually either finance premiums for insurance products and
contract fees for ancillary products as part of the finance receivable
or pay the premiums monthly with their finance receivable payment, but
they may pay the premiums and contract fees in cash to the insurer.
We do not offer single premium credit insurance products to our real
estate loan customers.


Reinsurance

Merit and Yosemite have entered into reinsurance agreements with other
insurance companies, including certain affiliated companies, for
reinsurance of various non-credit life, individual annuity, group
annuity, credit life, credit accident and health, credit-related
property and casualty, and credit involuntary unemployment insurance
where our insurance subsidiaries reinsure the risk of loss.  The
reserves for this business fluctuate over time and in some instances
are subject to recapture by the insurer.  At December 31, 2004,
reserves on the books of Merit and Yosemite for these reinsurance
agreements totaled $86.0 million.


Investments

We invest cash generated by our insurance business segment primarily
in bonds.  We invest in, but are not limited to, the following:

     *  bonds;
     *  commercial mortgage loans;
     *  short-term investments;
     *  limited partnerships;
     *  preferred stock;
     *  investment real estate;
     *  policy loans; and
     *  common stock.
<PAGE> 15

Item 1.  Continued


AIG subsidiaries manage substantially all of our insurance business
segment's investments on our behalf.

See Note 22. of the Notes to Consolidated Financial Statements in Item
8. for further information on the Company's insurance business
segment.


                             REGULATION

Branch and Centralized Real Estate

The Company's branch and centralized real estate business segments are
subject to various state and federal laws and regulations.  Applicable
federal laws include:

     *  the Equal Credit Opportunity Act (prohibits discrimination
        against credit-worthy applicants);
     *  the Fair Credit Reporting Act (governs the accuracy and use of
        credit bureau reports);
     *  the Truth in Lending Act (governs disclosure of applicable
        charges and other finance receivable terms);
     *  the Fair Housing Act (prohibits discrimination in housing
        lending);
     *  the Real Estate Settlement Procedures Act (regulates certain
        loans secured by real estate);
     *  the Federal Trade Commission Act; and
     *  the Federal Reserve Board's Regulations B, C, P, and Z.

In many states, federal law preempts state law restrictions on
interest rates and points and fees for first lien residential mortgage
loans.  The federal Alternative Mortgage Transactions Parity Act
preempts certain state law restrictions on variable rate loans in many
states.  The Company makes residential mortgage loans under the
provisions of these and other federal laws.  The Company is also
subject to federal laws governing practices and disclosures when
dealing with consumer or customer information.

Various state laws also regulate our branch and centralized real
estate segments.  The degree and nature of such regulation vary from
state to state.  The laws under which a substantial amount of our
business is conducted generally:

     *  provide for state licensing of lenders;
     *  impose maximum term, amount, interest rate, and other charge
        limitations;
     *  regulate whether and under what circumstances insurance and
        other ancillary products may be offered in connection with a
        lending transaction; and
     *  provide for consumer protection.

The federal government is considering, and a number of states,
counties, and cities have enacted or may be considering, laws or rules
that restrict the credit terms or other aspects of residential
mortgage loans that are typically described as "high cost mortgage
loans".  These laws or regulations, if adopted, may impose specific
statutory liabilities in cases of non-compliance and may also limit or
restrict the terms of covered loan transactions.  Additionally, some
<PAGE> 16

Item 1.  Continued


of these laws may restrict other business activities or business
dealings of affiliates of the Company under certain conditions.


Insurance

State authorities regulate and supervise our insurance business
segment.  The extent of such regulation varies by product and by
state, but relates primarily to the following:

     *  licensing;
     *  conduct of business;
     *  periodic examination of the affairs of insurers;
     *  form and content of required financial reports;
     *  standards of solvency;
     *  limitations on dividend payments and other related party
        transactions;
     *  types of products offered;
     *  approval of policy forms and premium rates;
     *  permissible investments;
     *  deposits of securities for the benefit of policyholders;
     *  reserve requirements for unearned premiums, losses, and other
        purposes; and
     *  claims processing.

The states in which we operate regulate credit insurance premium rates
and premium refund calculations.


                              COMPETITION

Branch and Centralized Real Estate

The consumer finance industry is highly competitive due to the large
number of companies offering financial products and services, the
sophistication of those products, the capital market resources of some
competitors, and the general acceptance and widespread usage of
available credit.  We compete with other consumer finance companies as
well as other types of financial institutions that offer similar
products and services.


Insurance

Our insurance business segment supplements our branch business
segment.  We believe that our insurance companies' abilities to market
insurance products through our distribution systems provide a
competitive advantage.
<PAGE> 17

Item 2.  Properties.


We generally conduct branch office operations, branch office
administration, other operations, and operational support in leased
premises.  Lease terms generally range from three to five years.

Our investment in real estate and tangible property is not significant
in relation to our total assets due to the nature of our business.
AGFC subsidiaries own two branch offices in Riverside and Barstow,
California, two branch offices in Hato Rey and Isabela, Puerto Rico,
and eight buildings in Evansville, Indiana.  These buildings primarily
include certain of our administrative offices, our centralized
services and support operations facilities, and one of our branch
offices.  Merit owns an office building in Houston, Texas that is
leased to third parties and affiliates and also owns a consumer
finance branch office in Terre Haute, Indiana that is leased to an
AGFC subsidiary.



Item 3.  Legal Proceedings.


Satellite Dish Operations Bankruptcy

In August 1999, a subsidiary of the Company, A.G. Financial Service
Center, Inc. (Financial Service Center) filed a voluntary petition to
reorganize under Chapter 11 of the United States Bankruptcy Code.  The
decision to reorganize was necessitated by the judgment rendered
against Financial Service Center by a Mississippi state court in May
1999 in the amount of $167 million.  The filing for reorganization
under Chapter 11 was limited to Financial Service Center.

The plan of reorganization was confirmed by the bankruptcy court in
February 2001, distributions under the plan were substantially
completed, and in September 2003 the court closed the case.  Certain
creditors appealed the 2001 confirmation of the plan.  In January
2005, the United States Court of Appeals for the Seventh Circuit
affirmed the confirmation of the plan of reorganization.  We do not
expect any further appeal.


Other

AGFI and certain of its subsidiaries are parties to various lawsuits
and proceedings, including certain purported class action claims,
arising in the ordinary course of business.  In addition, many of
these proceedings are pending in jurisdictions that permit damage
awards disproportionate to the actual economic damages alleged to have
been incurred.  Based upon information presently available, we believe
that the total amounts, if any, that will ultimately be paid arising
from these lawsuits and proceedings will not have a material adverse
effect on our consolidated results of operations or financial
position.  However, the continued occurrences of large damage awards
in general in the United States, including large punitive damage
awards that bear little or no relation to actual economic damages
incurred by plaintiffs in some jurisdictions, create the potential for
an unpredictable judgment in any given suit.
<PAGE> 18

                                PART II


Item 5.  Market for Registrant's Common Equity, Related Stockholder
         Matters and Issuer Purchases of Equity Securities.


No trading market exists for AGFI's common stock.  AGFI is an indirect
wholly owned subsidiary of AIG.  AGFI paid the following cash
dividends on its common stock:

Quarter Ended                2004          2003
                           (dollars in thousands)

March 31                   $ 24,000      $    895
June 30                        -           99,322
September 30                 29,998        67,002
December 31                    -           15,895

Total                      $ 53,998      $183,114


See Management's Discussion and Analysis in Item 7., and Note 17. of
the Notes to Consolidated Financial Statements in Item 8., regarding
limitations on the ability of AGFI and its subsidiaries to pay
dividends.



Item 6.  Selected Financial Data.


You should read the following selected financial data in conjunction
with the consolidated financial statements and related notes in Item
8. and Management's Discussion and Analysis in Item 7.

                           At or for the Years Ended December 31,
                  2004          2003         2002        2001         2000
                                   (dollars in thousands)

Total revenues $ 2,459,162  $ 2,190,106  $ 1,999,838  $ 1,998,498 $ 1,909,916

Net income (a)     478,054      366,103      346,826      228,257     207,938

Total assets    22,235,772   17,006,164   15,484,286   13,531,654  13,408,395

Long-term debt  14,679,501   10,862,218    9,566,256    6,301,433   5,670,670


(a)  Per share information is not included because all of AGFI's common stock
     is indirectly owned by AIG.
<PAGE> 19

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.


You should read Management's Discussion and Analysis of Financial
Condition and Results of Operations in conjunction with the
consolidated financial statements and related notes in Item 8.  With
this discussion and analysis, we intend to enhance the reader's
understanding of our consolidated financial statements in general and
more specifically our liquidity and capital resources, our asset
quality, and the results of our operations.

An index to our discussion and analysis follows:

     Topic                                                 Page

     Forward Looking Statements                              20

     Overview                                                21

     Basis of Reporting                                      21

     2004 Highlights                                         22

     2005 Outlook                                            22

     Critical Accounting Policies                            23

     Off-Balance Sheet Arrangements                          25

     Capital Resources                                       26

     Liquidity                                               27

     Finance Receivables                                     31

     Real Estate Owned                                       34

     Investments                                             35

     Asset/Liability Management                              35

     Net Income                                              36

     Finance Charges                                         38

     Insurance Revenues                                      40

     Other Revenues                                          41

     Interest Expense                                        42

     Operating Expenses                                      44

     Provision for Finance Receivable Losses                 45

     Insurance Losses and Loss Adjustment Expenses           48

     Provision for Income Taxes                              49

     Regulation                                              50

     Taxation                                                50
<PAGE> 20

Item 7.  Continued


                      FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K and our other publicly available
documents may include, and the Company's officers and representatives
may from time to time make, statements which may constitute "forward-
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995.  These statements are not historical
facts but instead represent only our belief regarding future events,
many of which are inherently uncertain and outside of our control.
These statements may address, among other things, the Company's
strategy for growth, product development, regulatory approvals, market
position, financial results and reserves.  The Company's actual
results and financial condition may differ from the anticipated
results and financial condition indicated in these forward-looking
statements.  The important factors, many of which are outside of our
control, which could cause the Company's actual results to differ,
possibly materially, include, but are not limited to, the following:

     *  changes in general economic conditions, including the interest
        rate environment in which we conduct business and the
        financial markets through which we access capital and invest
        cash flows from the insurance business segment;
     *  changes in the competitive environment in which we operate,
        including the demand for our products, customer responsiveness
        to our distribution channels and the formation of business
        combinations among our competitors;
     *  the effectiveness of our credit risk scoring models in
        assessing the risk of customer unwillingness or inability to
        repay;
     *  shifts in collateral values, contractual delinquencies, and
        credit losses;
     *  levels of unemployment and personal bankruptcies;
     *  our ability to access capital markets and maintain our credit
        rating position;
     *  changes in laws or regulations that affect our ability to
        conduct business or the manner in which we conduct business,
        such as licensing requirements, pricing limitations or
        restrictions on the method of offering products;
     *  the costs and effects of any litigation or governmental
        inquiries or investigations that are determined adversely to
        the Company;
     *  changes in accounting standards or tax policies and practices
        and the application of such new policies and practices to the
        manner in which we conduct business;
     *  our ability to integrate the operations of our acquisitions
        into our businesses;
     *  changes in our ability to attract and retain employees or key
        executives to support our businesses; and
     *  natural or accidental events such as fires or floods affecting
        our branches or other operating facilities.

We also direct readers to other risks and uncertainties discussed in
other documents we file with the SEC.  We are under no obligation to
(and expressly disclaim any such obligation to) update or alter any
forward-looking statement, whether written or oral, that we may make
from time to time, whether as a result of new information, future
events or otherwise.
<PAGE> 21

Item 7.  Continued


                               OVERVIEW

Our branch and centralized real estate business segments borrow money
at wholesale prices and lend money at retail prices.  Our branch
business segment also offers credit and non-credit insurance and
ancillary products to eligible customers.  Our insurance business
segment writes and reinsures credit and non-credit insurance products
for eligible customers of our branch business segment and invests
premiums received in various investments.


                          BASIS OF REPORTING

We prepared our consolidated financial statements using accounting
principles generally accepted in the United States (GAAP).  The
statements include the accounts of AGFI and its subsidiaries, all of
which are wholly owned.  We eliminated all intercompany items.  We
made estimates and assumptions that affect amounts reported in our
financial statements and disclosures of contingent assets and
liabilities.  Ultimate results could differ from our estimates.

At December 31, 2004, 89% of our assets were net finance receivables
less allowance for finance receivable losses.  Our finance charge
revenue is a function of the amount of average net receivables and the
yield on those average net receivables.  GAAP requires that we
recognize finance charges as revenue on the accrual basis using the
interest method.  The only areas of discretion we have are amortizing
unearned points and fees and deferred origination costs over the
lesser of the contractual or the estimated life based on prepayment
experience and determining the point of suspension of the accrual of
finance charge revenue.

At December 31, 2004, 96% of our liabilities were debt issued
primarily to support our net finance receivables.  Our interest
expense is a function of the amount of average borrowings and the
borrowing cost on those average borrowings.  GAAP requires that we
recognize interest on borrowings as expense on the accrual basis using
the interest method.  Interest expense includes the effect of our swap
agreements.

Our insurance revenues consist primarily of insurance premiums
resulting from our branch customers purchasing various credit and non-
credit insurance policies.  Insurance premium revenue is a function of
the premium amounts and policy terms.  GAAP dictates the methods of
insurance premium revenue recognition.

We invest cash generated by our insurance business segment primarily
in investment securities, which were 6% of our assets at December 31,
2004, and to a lesser extent in commercial mortgage loans, investment
real estate, and policy loans, which we include in other assets.  We
report the resulting investment revenue in other revenue.  GAAP
requires that we recognize interest on these investments as revenue on
the accrual basis using the interest method.  The only areas of
discretion we have are determining the classification of the
investment, the point of suspension of the accrual of this investment
revenue, and when we consider the investment security's decline in
fair value to be other than temporary and reduce it to its fair value.
<PAGE> 22

Item 7.  Continued


Our other revenue includes service fees we charge for marketing,
certain origination processing services, and loan servicing of real
estate loans under our agreements with AIG Federal Savings Bank (AIG
Bank).  As required by GAAP, we recognize these fees as revenue when
we perform the services.  Other revenue also includes net gain on sale
of real estate loans held for sale and net interest income on real
estate loans held for sale.  GAAP requires that we recognize the
difference between the sales price we receive when we sell a real
estate loan held for sale and our investment in that loan as a gain or
loss at the time of sale.  GAAP also requires that we recognize
interest as revenue on the accrual basis using the interest method
during the periods we hold real estate loans held for sale.  The only
discretion we have is determining the point of suspension of the
accrual of this interest revenue.


                            2004 HIGHLIGHTS

During 2004, net finance receivables increased $4.9 billion, or 32%,
to $20.2 billion at December 31, 2004.  The historically low interest
rate environment in the first half of the year contributed to
continued significant mortgage refinancing activity.  Real estate
loans increased $4.7 billion, or 43%, in 2004.  Aided by an improving
economy, we also experienced an improvement in our finance receivable
credit quality.  Our charge-off ratio improved to 1.60% for 2004
compared to 2.19% for 2003.  Our delinquency ratio improved to 2.31%
at December 31, 2004 from 3.28% at December 31, 2003.  AGFC issued
$5.7 billion of long-term debt during 2004 to support finance
receivable growth and replace maturing long-term debt.  During second
quarter 2004, we expanded our investor base by completing our first
Euro-denominated debt issuances to European investors.  Then in third
quarter 2004, we completed our first Sterling-denominated debt
issuance to United Kingdom investors.


                             2005 OUTLOOK

We enter 2005 with net charge-offs and delinquency that are below or
within our targeted ranges.  The Federal Reserve raised interest rates
five times during 2004 totaling 125 basis points, and we expect
additional increases during 2005.  These increases will raise our
finance receivable yield as our adjustable-rate finance receivables
reprice to these market rates over time and as we generate new
business at higher rates.  Our borrowing cost on our debt will also
increase as our floating-rate debt reprices to higher market rates and
we issue new fixed-rate long-term debt at rates above our current
long-term debt portfolio rates.  We anticipate interest margin
compression along with rising market interest rates, but expect
finance receivable growth at higher rates to mitigate most of the net
income effect.  We also anticipate that the higher interest rate
environment will favorably impact our real estate loan liquidations
that had increased during the last several years.  Investment revenue
from our investment securities portfolio should also increase.
<PAGE> 23

Item 7.  Continued


                     CRITICAL ACCOUNTING POLICIES

We consider our most critical accounting policy to be the
establishment of an adequate allowance for finance receivable losses.
Our finance receivable portfolio consists of $20.2 billion of net
finance receivables due from approximately 1.9 million customer
accounts.  These accounts were originated or purchased and are
serviced by our branch or centralized real estate business segments.

To manage our exposure to credit losses, we use credit risk scoring
models for finance receivables that we originate through our branch
business segment.  In our centralized real estate business segment,
AIG Bank originates real estate loans according to established
underwriting criteria and we individually review the portion of these
real estate loans that are retained by the Company as part of our due
diligence.  We also perform due diligence investigations for finance
receivables that we purchase.  We utilize standard collection
procedures supplemented with data processing systems to aid branch,
centralized support operations, and centralized real estate personnel
in their finance receivable collection processes.

Despite our efforts to avoid losses on our finance receivables,
personal circumstances and national, regional, and local economic
situations affect our customers' abilities to repay their obligations.
Personal circumstances include lower income due to unemployment or
underemployment, major medical expenses, and divorce.  Occasionally,
these types of events can be so economically severe that the customer
files for bankruptcy.

Our Credit Strategy and Policy Committee evaluates our finance
receivable portfolio monthly.  Within our three main finance
receivable types are sub-portfolios, each consisting of a large number
of relatively small, homogenous accounts.  We evaluate these sub-
portfolios for impairment as groups.  None of our accounts are large
enough to warrant individual evaluation for impairment.  Our Credit
Strategy and Policy Committee considers numerous factors in estimating
losses inherent in our finance receivable portfolio, including the
following:

     *  prior finance receivable loss and delinquency experience;
     *  the composition of our finance receivable portfolio; and
     *  current economic conditions, including the levels of
        unemployment and personal bankruptcies.
<PAGE> 24

Item 7.  Continued


Our Credit Strategy and Policy Committee uses several ratios to aid in
the process of evaluating prior finance receivable loss and
delinquency experience.  Each ratio is useful, but each has its
limitations.  These ratios include:

     *  Delinquency ratio - gross finance receivables 60 days or more
        past due (customer has not made 3 or more contractual
        payments) as a percentage of gross finance receivables.
     *  Allowance ratio - allowance for finance receivable losses as a
        percentage of net finance receivables.
     *  Charge-off ratio - net charge-offs as a percentage of the
        average of net finance receivables at the beginning of each
        month during the period.
     *  Charge-off coverage - allowance for finance receivable losses
        to net charge-offs.

We use migration analysis as one of the tools to determine the
appropriate amount of allowance for finance receivable losses.
Migration analysis is a statistical technique that attempts to predict
the future amount of losses for existing pools of finance receivables.
This technique applies empirically measured historical movement of
like finance receivables through various levels of repayment,
delinquency, and loss categories to existing finance receivable pools.

We calculate migration analysis using three different scenarios based
on varying assumptions to evaluate a range of possible outcomes.  We
aggregate the results of our analysis for all segments of the
Company's portfolio to arrive at an estimate of future finance
receivable losses for the finance receivables existing at the time of
analysis.  We adjust the amounts determined by migration analysis for
management's best estimate of the effects of current economic
conditions, including the levels of unemployment and personal
bankruptcies, on the amounts determined from historical loss and
delinquency experience.
<PAGE> 25

Item 7.  Continued


If we had chosen to establish the allowance for finance receivable
losses at the highest and lowest levels produced by the various
migration analysis scenarios, our allowance for finance receivable
losses at December 31, 2004 and 2003 and provision for finance
receivable losses and net income for 2004 and 2003 would have changed
as follows:

                                               At or for the
                                          Years Ended December 31,
                                           2004              2003
                                            (dollars in millions)
Highest level:
  Increase in allowance for finance
    receivable losses                    $ 13.0              $ 30.1
  Increase in provision for finance
    receivable losses                      13.0                30.1
  Decrease in net income                   (8.4)              (19.6)

Lowest level:
  Decrease in allowance for finance
    receivable losses                    $(98.8)             $(67.4)
  Decrease in provision for finance
    receivable losses                     (98.8)              (67.4)
  Increase in net income                   64.2                43.8


The Credit Strategy and Policy Committee exercises its judgment, based
on quantitative analyses, qualitative factors, and each committee
member's experience in the consumer finance industry, when determining
the amount of the allowance for finance receivable losses.  If its
review concludes that an adjustment is necessary, we charge or credit
this adjustment to expense through the provision for finance
receivable losses.  We consider this estimate to be a critical
accounting estimate that affects the net income of the Company in
total and the pretax operating income of our branch and centralized
real estate business segments.  We document the adequacy of the
allowance for finance receivable losses, the analysis of the trends in
credit quality, and the current economic conditions considered by the
Credit Strategy and Policy Committee to support its conclusions.  See
Provision for Finance Receivable Losses for further information on the
allowance for finance receivable losses.


                    OFF-BALANCE SHEET ARRANGEMENTS

We do not have any material off-balance sheet arrangements as defined
by SEC rules.
<PAGE> 26

Item 7.  Continued


                   CAPITAL RESOURCES AND LIQUIDITY

Capital Resources

Our capital varies primarily with the amount of net finance
receivables.  The mix of debt and equity is based primarily upon
maintaining leverage that supports cost-effective funding.

                                             December 31,
                                       2004                2003
                                  Amount  Percent     Amount  Percent
                                         (dollars in millions)

Long-term debt                   $14,679.5     69%   $10,862.2     67%
Short-term debt                    4,299.1     20      3,467.1     22

Total debt                        18,978.6     89     14,329.3     89
Equity                             2,376.2     11      1,823.8     11

Total capital                    $21,354.8    100%   $16,153.1    100%

Net finance receivables          $20,167.9           $15,308.0
Debt to equity ratio                 7.99x               7.86x
Debt to tangible equity ratio        8.98x               8.88x


Reconciliations of equity to tangible equity were as follows:

                                               December 31,
                                            2004          2003
                                          (dollars in millions)

Equity                                    $2,376.2      $1,823.8
Goodwill                                    (224.7)       (224.7)
Accumulated other comprehensive
  (income) loss                              (37.4)         14.9

Tangible equity                           $2,114.1      $1,614.0


We issue a combination of fixed-rate debt, principally long-term, and
floating-rate debt, both long-term and short-term.  AGFC obtains most
of our fixed-rate funding through public issuances of long-term debt
with maturities generally ranging from three to ten years.  AGFC and
AGFI obtain floating-rate funding through sales and refinancing of
commercial paper and through issuances of long-term, floating-rate
debt.  We sell commercial paper, with maturities ranging from 1 to 270
days, to banks, insurance companies, corporations, and other
accredited investors.  At December 31, 2004, short-term debt included
$3.7 billion of commercial paper.  AGFC also sells extendible
commercial notes with initial maturities of up to 90 days, which AGFC
may extend to 390 days.  At December 31, 2004, short-term debt
included $552.9 million of extendible commercial notes.
<PAGE> 27

Item 7.  Continued


We maintain credit facilities to support the issuance of commercial
paper and to provide an additional source of funds for operating
requirements.  At December 31, 2004, credit facilities totaled $3.5
billion with remaining availability of $3.4 billion.  A total of $3.3
billion of these credit facilities are committed lending agreements
and include $1.8 billion of 364-day facilities and a $1.5 billion
multi-year facility.  See Note 11. of the Notes to Consolidated
Financial Statements in Item 8. for additional information on credit
facilities.

Our larger committed credit facilities at December 31, 2004 expire as
follows:

                           Committed Credit Facilities
                              (dollars in millions)

July 2005 (a)                       $1,750.0
July 2007                            1,500.0

Total                               $3,250.0


(a)  The agreement includes a provision that allows us to extend the
     maturity of any borrowings for one year past facility expiration.

We expect to replace or extend these credit facilities on or prior to
their expiration.

AGFI has historically paid dividends to (or received capital
contributions from) its parent to manage our leverage of debt to
tangible equity to a targeted amount, which is currently 9.0 to 1.
During third quarter 2004, AGFI executed a long-term, prepayable bank
loan that requires AGFI to maintain at least $1.3 billion in tangible
equity.  AGFI's ability to pay dividends is substantially dependent on
the receipt of dividends or other funds from its subsidiaries,
primarily AGFC.  Certain AGFC financing agreements effectively limit
the amount of dividends AGFC may pay.  Under the most restrictive
provision contained in these agreements, $1.3 billion of AGFC's
retained earnings was free from restriction at December 31, 2004.


Liquidity

Our sources of funds include operations, issuances of long-term debt,
short-term borrowings in the commercial paper market, borrowings from
banks under credit facilities, and securitizations.  AGFI has also
received capital contributions from its parent to support finance
receivable growth and maintain targeted leverage.
<PAGE> 28

Item 7.  Continued


We believe that our overall sources of liquidity will continue to be
sufficient to satisfy our foreseeable operational requirements and
financial obligations.  The principal factors that could decrease our
sources of liquidity are delinquent payments from our customers and an
inability to access capital markets.  The principal factors that could
increase our cash needs are significant increases in net originations
and purchases of finance receivables.  We intend to mitigate liquidity
risk by continuing to operate the Company utilizing the following
existing strategies:

     *  maintain a finance receivable portfolio comprised mostly of
        real estate loans, which generally represent a lower risk of
        customer non-payment;
     *  originate and monitor finance receivables with our credit risk
        management system;
     *  maintain an investment securities portfolio of predominantly
        investment grade, liquid securities; and
     *  maintain a capital structure appropriate to our asset base.

Principal sources and uses of cash were as follows:

                                          Years Ended December 31,
                                        2004        2003        2002
                                           (dollars in millions)
Principal sources of cash:
  Net issuances of debt               $4,445.3    $1,382.2    $1,766.1
  Operations                             787.4       817.3       568.8
  Capital contributions                   75.0          -         33.0

  Total                               $5,307.7    $2,199.5    $2,367.9


Principal uses of cash:
  Net originations and purchases
    of finance receivables            $5,128.8    $1,837.4    $1,885.3
  Dividends paid                          54.0       183.1       147.0

  Total                               $5,182.8    $2,020.5    $2,032.3


Net originations and purchases of finance receivables and net
issuances of debt increased in 2004 primarily due to increases in our
centralized real estate loan production.

Net cash from operations increased in 2003 primarily due to net sales
of real estate loans held for sale, higher finance charges, lower
interest expense, and routine operating activities.  Net issuances of
debt decreased in 2003 in response to the increase in net cash from
operations.

Dividends paid, less capital contributions received, reflect net
income retained by AGFI to maintain equity and total debt at our
current leverage target of 9.0 to 1 for debt to tangible equity.
<PAGE> 29

Item 7.  Continued


At December 31, 2004, material contractual obligations were as
follows:

                        Less than   From 1-3   From 4-5    Over 5
                         1 year      years      years      years      Total
                                        (dollars in millions)

Debt (a):
  Long-term debt        $ 1,548.8  $ 5,361.2  $ 2,897.8  $ 4,871.7  $14,679.5
  Short-term debt         4,299.1         -          -          -     4,299.1
Operating leases (b)         51.0       70.2       29.2        9.1      159.5

Total                   $ 5,898.9  $ 5,431.4  $ 2,927.0  $ 4,880.8  $19,138.1


(a)  With consistent execution of our business strategies, we expect
     to refinance maturities of our debt in the capital markets.  Any
     adverse changes in our operating performance or credit ratings
     could limit our access to capital markets to accomplish these
     refinancings.

(b)  Operating leases represent annual rental commitments for leased
     office space, automobiles, and data processing and related
     equipment.

AGFC anticipates issuing approximately $4 billion to $5 billion of
long-term debt during 2005, including refinancings of $1.5 billion of
maturing long-term debt.  The actual amount of debt issuances will
depend on economic and market conditions, receivable growth, and
acquisition opportunities.  We anticipate that these debt issuances
will occur primarily in the domestic capital markets as public long-
term debt and in the international capital markets we began accessing
in 2004.

To further diversify its funding sources, AGFC completed its first
foreign currency denominated debt issuances during 2004 as follows:

     *  In second quarter 2004, AGFC completed two concurrent issues
        totaling 1.0 billion Euro ($1.2 billion) in principal amount
        sold to European investors.
     *  In third quarter 2004, AGFC issued 350 million pounds Sterling
        ($622 million) in principal amount sold to United Kingdom
        investors.

In each case, we executed financial derivative transactions with a
non-subsidiary affiliate to effectively convert the related foreign
currency exposure into U.S. dollars.

In second quarter 2003, AGFC began issuing long-term debt under a
retail note program.  These senior, unsecured notes are sold by
brokers to individual investors for a minimum investment of $1,000 in
increments of $1,000.

Also in second quarter 2003, a consolidated special purpose subsidiary
of AGFI purchased $266.8 million of real estate loans from seven
subsidiaries of AGFC.  The AGFI subsidiary securitized $259.0 million
of these real estate loans and recorded $256.4 million of debt issued
<PAGE> 30

Item 7.  Continued


by the trust that purchased these real estate loans.  We recorded this
transaction as an "on balance sheet" secured financing.

Management believes that consistent execution of our business
strategies should result in continued profitability, strong credit
ratings, and investor confidence.  These results should allow
continued access to capital markets to issue our commercial paper and
long-term debt.  We have implemented programs and operating guidelines
to ensure adequate liquidity, to mitigate the impact of any inability
to access capital markets, and to provide contingent funding sources.
These programs and guidelines include the following:

     *  We manage our commercial paper as a percentage of total debt.
        At December 31, 2004 that percentage was 19% compared to 20%
        at December 31, 2003.
     *  We spread commercial paper maturities throughout upcoming
        weeks and months.
     *  We limit the amount of our commercial paper that can be held
        by any one investor.
     *  We maintain credit facilities to support the issuance of
        commercial paper and to provide an additional source of funds
        for operating requirements.  At December 31, 2004, we had $3.3
        billion of committed bank credit facilities.
     *  To access the domestic long-term debt markets, we had $5.9
        billion of long-term debt securities registered under the
        Securities Act of 1933 as of December 31, 2004.  We could
        issue these securities as traditional public term debt, retail
        notes, or equity index-linked notes, among other forms.
     *  We have established AGFC as an issuer in the international
        capital markets with our 2004 Euro and Sterling debt offerings
        described previously.
     *  We have the ability to sell, on a whole loan basis, or
        securitize a portion of our finance receivables to provide
        additional sources of liquidity for needs potentially not met
        through other funding sources.
     *  Collections from our finance receivable portfolio are also a
        source of funds.  We collected principal payments on our
        finance receivables totaling $7.5 billion in 2004, $7.1
        billion in 2003, and $6.3 billion during 2002.  We chose to
        reinvest most of these collections, plus additional amounts
        from borrowings, in new finance receivables during these
        periods, but such funds could be made available for other
        uses, if necessary.
     *  We have the ability to sell a portion of our insurance
        subsidiaries' investment securities and dividend, subject to
        certain limits, cash from the securities sales.
<PAGE> 31

Item 7.  Continued


                   ANALYSIS OF FINANCIAL CONDITION

Finance Receivables

Amount, number, and average size of net finance receivables originated
and renewed and purchased by type were as follows:

                                       Years Ended December 31,
                               2004              2003              2002
                         Amount   Percent  Amount   Percent  Amount   Percent

Originated and renewed

Amount (in millions):
  Real estate loans      $  7,934.1   63%  $  4,829.4   52%  $  2,572.7   37%
  Non-real estate loans     3,102.6   24      2,826.4   31      2,742.6   39
  Retail sales finance      1,624.3   13      1,611.0   17      1,642.3   24

  Total                  $ 12,661.0  100%  $  9,266.8  100%  $  6,957.6  100%

Number:
  Real estate loans          93,141    6%      73,427    5%      59,757    4%
  Non-real estate loans     812,339   49      774,464   48      766,582   46
  Retail sales finance      739,640   45      764,612   47      824,162   50

  Total                   1,645,120  100%   1,612,503  100%   1,650,501  100%

Average size (to nearest
  dollar):
    Real estate loans       $85,184           $65,771           $43,053
    Non-real estate loans     3,819             3,649             3,578
    Retail sales finance      2,196             2,107             1,993


Purchased

Amount (in millions):
  Real estate loans      $  1,239.1   96%  $    837.0   96%  $  2,355.2   92%
  Non-real estate loans        14.5    1          3.0    -        125.0    5
  Retail sales finance         36.3    3         30.5    4         84.0    3

  Total                  $  1,289.9  100%  $    870.5  100%  $  2,564.2  100%

Number:
  Real estate loans           7,372   42%      10,620   44%      39,158   38%
  Non-real estate loans       1,999   11        1,735    7       35,222   34
  Retail sales finance        8,435   47       11,926   49       28,176   28

  Total                      17,806  100%      24,281  100%     102,556  100%

Average size (to nearest
  dollar):
    Real estate loans      $168,078           $78,810           $60,146
    Non-real estate loans     7,258             1,759             3,548
    Retail sales finance      4,301             2,555             2,983


We had no sales in 2004, 2003, or 2002.
<PAGE> 32

Item 7.  Continued


Amount, number, and average size of total net finance receivables
originated, renewed, and purchased by type were as follows:

                                       Years Ended December 31,
                               2004              2003              2002
                         Amount   Percent  Amount   Percent  Amount   Percent

Originated, renewed,
  and purchased

Amount (in millions):
  Real estate loans      $  9,173.2   66%  $  5,666.4   56%  $  4,927.9   52%
  Non-real estate loans     3,117.1   22      2,829.4   28      2,867.6   30
  Retail sales finance      1,660.6   12      1,641.5   16      1,726.3   18

  Total                  $ 13,950.9  100%  $ 10,137.3  100%  $  9,521.8  100%

Number:
  Real estate loans         100,513    6%      84,047    5%      98,915    6%
  Non-real estate loans     814,338   49      776,199   47      801,804   46
  Retail sales finance      748,075   45      776,538   48      852,338   48

  Total                   1,662,926  100%   1,636,784  100%   1,753,057  100%

Average size (to nearest
  dollar):
    Real estate loans       $91,264           $67,419           $49,820
    Non-real estate loans     3,828             3,645             3,576
    Retail sales finance      2,220             2,114             2,025


Amount of purchased as a percentage of total originated, renewed, and
purchased was as follows:

                                          Years Ended December 31,
                                        2004        2003        2002

Real estate loans                         14%         15%          48%
Non-real estate loans                      -           -            4
Retail sales finance                       2           2            5

Total                                      9%          9%          27%


During the first half of 2004, the lowest interest rate environment
since the 1950s contributed to significant increases in originations
and liquidations of our real estate loans.  Our centralized real
estate business segment produced $4.5 billion of our real estate loan
originations during the year.  These real estate loan originations
increased the average size of our real estate loans originated in
2004.  Real estate loan purchases and average size of real estate
loans purchased also increased in 2004 primarily due to correspondent
relationships we have established.
<PAGE> 33

Item 7.  Continued


In 2003, the low interest rate environment contributed to increases in
both originations and liquidations of our real estate loans.  Our
centralized real estate loan production of $1.9 billion also increased
our real estate loan originations as well as the average size of real
estate loans originated in 2003.  We reduced real estate loan
acquisitions in 2003 because premiums on portfolios of real estate
loans produced by third party originators and required by sellers
reached levels unacceptable to us.

Amount, number, and average size of net finance receivables by type
were as follows:

                                             December 31,
                               2004              2003              2002
                         Amount   Percent  Amount   Percent  Amount   Percent

Net finance receivables

Amount (in millions):
  Real estate loans      $ 15,742.3   78%  $ 11,038.2   72%  $  9,498.1   69%
  Non-real estate loans     3,043.6   15      2,932.1   19      2,958.9   21
  Retail sales finance      1,382.0    7      1,337.7    9      1,389.2   10

  Total                  $ 20,167.9  100%  $ 15,308.0  100%  $ 13,846.2  100%

Number:
  Real estate loans         229,882   12%     215,294   12%     218,615   11%
  Non-real estate loans     892,117   48      895,879   48      927,604   48
  Retail sales finance      729,666   40      743,850   40      805,734   41

  Total                   1,851,665  100%   1,855,023  100%   1,951,953  100%

Average size (to nearest
  dollar):
    Real estate loans       $68,480           $51,270           $43,446
    Non-real estate loans     3,412             3,273             3,190
    Retail sales finance      1,894             1,798             1,724


The amount of first mortgage loans was 89% of our real estate loan net
receivables at December 31, 2004, compared to 81% at December 31,
2003, and 74% at December 31, 2002.
<PAGE> 34

Item 7.  Continued


The largest concentrations of net finance receivables were as follows:

                                         December 31,
                        2004                 2003                 2002
                   Amount  Percent      Amount  Percent      Amount  Percent
                                     (dollars in millions)

California        $ 2,892.1     14%    $ 2,276.4     15%    $ 2,160.8     16%
Florida             1,233.9      6         936.4      6         840.2      6
Ohio                1,125.9      6         841.4      6         785.5      6
Illinois              992.1      5         835.2      5         786.6      6
Virginia              954.8      5         680.3      4         553.4      4
N. Carolina           904.5      4         883.9      6         887.2      6
Georgia               760.2      4         661.3      4         592.0      4
Indiana               743.4      4         639.2      4         598.8      4
Other              10,561.0     52       7,553.9     50       6,641.7     48

Total             $20,167.9    100%    $15,308.0    100%    $13,846.2    100%


We believe that our geographic diversification reduces the risk
associated with a recession in any one region.  In addition, 98% of
our finance receivables at December 31, 2004 were secured by real
property or personal property.  While finance receivables have some
exposure to further economic uncertainty, we believe that the
allowance for finance receivable losses is adequate to absorb losses
inherent in our existing portfolio.  See Analysis of Operating Results
for further information on allowance ratio, delinquency ratio, and
charge-off ratio and Note 3. of the Notes to Consolidated Financial
Statements in Item 8. for further information on how we estimate
finance receivable losses.


Real Estate Owned

Changes in the amount of real estate owned were as follows:

                                             At or for the
                                        Years Ended December 31,
                                       2004       2003       2002
                                         (dollars in millions)

Balance at beginning of year         $ 51.3      $ 49.0      $ 50.0
Properties acquired                    74.3        78.0        73.7
Properties sold or disposed of        (76.9)      (67.3)      (65.6)
Monthly writedowns                     (9.6)       (8.4)       (9.1)

Balance at end of year               $ 39.1      $ 51.3      $ 49.0

Real estate owned as a percentage
  of real estate loans                0.25%       0.46%       0.52%
<PAGE> 35

Item 7.  Continued


Changes in the number of real estate owned properties were as follows:

                                             At or for the
                                        Years Ended December 31,
                                       2004       2003       2002

Balance at beginning of year            987         951       1,006
Properties acquired                   1,385       1,451       1,418
Properties sold or disposed of       (1,527)     (1,415)     (1,473)

Balance at end of year                  845         987         951


Investments

Insurance investments by type were as follows:

                                             December 31,
                               2004              2003              2002
                          Amount  Percent   Amount  Percent   Amount  Percent
                                         (dollars in millions)

Investment securities     $1,378.4    97%   $1,307.5    96%   $1,227.2    95%
Commercial mortgage
  loans                       39.7     3        43.8     3        47.0     4
Investment real estate         7.1     -         7.1     1         7.0     1
Policy loans                   2.0     -         2.1     -         2.0     -

Total                     $1,427.2   100%   $1,360.5   100%   $1,283.2   100%


Investment securities are the majority of our insurance business
segment's investment portfolio.  Our investment strategy is to
optimize aftertax returns on invested assets, subject to the
constraints of liquidity, diversification, and regulation.


Asset/Liability Management

In an effort to reduce the risk associated with unfavorable changes in
interest rates not met by favorable changes in finance charge yields
of our finance receivables, we monitor the anticipated cash flows of
our assets and liabilities, principally our finance receivables and
debt.  Although finance receivable lives may change in response to
interest rate changes, for the quarter ending December 31, 2004, our
total receivable portfolio was experiencing an average life of 2.2
years.  For that same period, real estate loans had an average life of
3.0 years while non-real estate loans had an average life of 1.5 years
and retail sales finance receivables had an average life of 10 months.
The weighted-average life until maturity for our long-term debt was
3.6 years at December 31, 2004.

We fund finance receivables with a combination of fixed-rate and
floating-rate debt and equity.  Management determines the mix of
fixed-rate and floating-rate debt based, in part, on the nature of the
finance receivables being supported.
<PAGE> 36

Item 7.  Continued


The primary means by which we obtain fixed-rate debt is by issuing
fixed-rate, long-term debt.  To supplement fixed-rate debt issuances,
AGFC also alters the nature of certain floating-rate funding by using
swap agreements to create synthetic fixed-rate, long-term debt,
thereby limiting our exposure to market interest rate increases.
Additionally, AGFC has swapped fixed-rate, long-term debt to floating-
rate, long-term debt.  Including the impact of interest rate swap
agreements that effectively fix floating-rate debt or float fixed-rate
debt, our floating-rate debt represented 41% of our borrowings at
December 31, 2004 compared to 43% at December 31, 2003.  Adjustable-
rate net finance receivables represented 19% of our net finance
receivables at December 31, 2004 compared to 25% at December 31, 2003.



                    ANALYSIS OF OPERATING RESULTS

Net Income
                                         Years Ended December 31,
                                       2004        2003        2002
                                          (dollars in millions)

Net income                            $478.1      $366.1      $346.8
  Amount change                       $112.0      $ 19.3      $118.5
  Percent change                         31%          6%         52%

Return on average assets               2.46%       2.27%       2.48%
Return on average equity              23.01%      21.33%      24.49%
Ratio of earnings to fixed charges     2.06x       2.02x       1.85x


Net income for 2004 and 2002 included reductions in the provision for
income taxes resulting from favorable settlements of income tax audit
issues totaling $38.7 million in 2004 and $30.0 million in 2002.

The historically low interest rate environment during the first half
of 2004 contributed to further reductions in both our yield and
borrowing cost during 2004.  This low interest rate environment and
the expanding production capacity of our centralized real estate
services resulted in a significant increase in real estate loan
production during 2004.  Real estate loan average net receivables
increased to 76% of total average net receivables in 2004 compared to
71% in 2003.  As our centralized real estate business segment used its
production capacity to originate real estate loans for AIG Bank rather
than for itself, most of its revenue during 2004 was from fees charged
to AIG Bank for these services, rather than net gains on sales of real
estate loans held for sale and interest income on real estate loans
held for sale.  In addition to rising interest rates, the improving
economy contributed to significant improvements in our charge-off
ratio and delinquency ratio, which allowed us to decrease our
allowance for finance receivable losses.  Expansion of our centralized
real estate production capacity caused increases in our operating
expenses but, overall, operating expenses were well controlled.

A continued sluggish economy in the first half of 2003 and the low
interest rate environment contributed to decreases in both our yield
and borrowing cost during 2003.  Our acquisition of WFI, effective
January 1, 2003, caused increases in our other revenue and also
<PAGE> 37

Item 7.  Continued


increased our operating expenses during 2003.  Real estate loan
production of $1.9 billion from our centralized real estate business
segment more than offset the decrease in real estate loans acquired
from third party lenders.  We also continued to control operating
expenses during 2003.  The higher proportion of real estate loans in
our finance receivable portfolio resulted in net charge-offs that were
also well controlled.  This, plus the improving economy in the second
half of 2003, resulted in lower additions to the allowance for finance
receivable losses when compared to the prior year.

In 2002, a sluggish economy contributed to the decrease in our
borrowing cost; however, the low interest rate environment had the
anticipated effect of also reducing our yield.  We continued to invest
in business development programs, including new branch office openings
and a second customer solicitation center, but still controlled
operating expenses.

See Note 22. of the Notes to Consolidated Financial Statements in Item
8. for information on the results of the Company's business segments.

Our statements of income line items as percentages of each year's
average net receivables were as follows:

                                          Years Ended December 31,
                                          2004      2003      2002

Revenues
  Finance charges                        11.20%    12.46%    13.85%
  Insurance                               1.00      1.28      1.54
  Other:
    Service fee income from a
      non-subsidiary affiliate            1.13      0.35      0.02
    Miscellaneous                         0.60      1.30      0.70

Total revenues                           13.93     15.39     16.11

Expenses
  Interest expense                        3.60      3.84      4.51
  Operating expenses:
    Salaries and benefits                 2.82      2.90      2.55
    Other operating expenses              1.62      1.92      1.97
  Provision for finance
    receivable losses                     1.53      2.21      2.45
  Insurance losses and loss
    adjustment expenses                   0.43      0.48      0.67

Total expenses                           10.00     11.35     12.15

Income before provision for
  income taxes                            3.93      4.04      3.96

Provision for income taxes                1.22      1.47      1.17

Net income                                2.71%     2.57%     2.79%
<PAGE> 38

Item 7.  Continued


Factors that affected the Company's operating results were as follows:


Finance Charges

Finance charges by type were as follows:

                                       Years Ended December 31,
                                    2004         2003        2002
                                        (dollars in millions)

Real estate loans                 $ 1,163.3   $   970.6   $   902.9
Non-real estate loans                 628.0       612.5       616.1
Retail sales finance                  185.9       190.2       199.9

Total                             $ 1,977.2   $ 1,773.3   $ 1,718.9

Amount change                     $   203.9   $    54.4   $     6.4
Percent change                          11%          3%          -%

Average net receivables           $17,658.9   $14,232.1   $12,409.9
Yield                                11.20%      12.46%      13.85%


Finance charges increased due to the following:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)

Increase in average net
  receivables                        $ 381.2     $ 216.4     $ 84.0
Decrease in yield                     (181.8)     (162.0)     (77.6)
Increase in number of days               4.5          -          -

Total                                $ 203.9     $  54.4     $  6.4


Average net receivables by type were as follows:

                                             December 31,
                               2004              2003              2002
                         Amount   Percent  Amount   Percent  Amount   Percent
                                        (dollars in millions)

Real estate loans        $13,396.1    76%  $10,033.3    71%  $ 8,184.0    66%
Non-real estate loans      2,965.5    17     2,883.2    20     2,858.0    23
Retail sales finance       1,297.3     7     1,315.6     9     1,367.9    11

Total                    $17,658.9   100%  $14,232.1   100%  $12,409.9   100%
<PAGE> 39

Item 7.  Continued


Changes in average net receivables by type were as follows:

                                       Years Ended December 31,
                               2004              2003              2002
                                  Percent           Percent           Percent
                         Amount    Change  Amount    Change  Amount    Change
                                        (dollars in millions)

Real estate loans        $3,362.8     33%  $1,849.3     23%  $  827.2     11%
Non-real estate loans        82.3      3       25.2      1      (96.7)    (3)
Retail sales finance        (18.3)    (1)     (52.3)    (4)     (47.0)    (3)

Total                    $3,426.8     24%  $1,822.2     15%  $  683.5      6%


The historically low interest rate environment contributed to the
increase in originations of our real estate loans.  Real estate loan
production arising from our centralized real estate origination
services also increased real estate loan originations by $4.5 billion
during 2004 and $1.9 billion during 2003.

Yield by type were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002

Real estate loans                     8.68%       9.67%      11.03%
Non-real estate loans                21.18       21.24       21.56
Retail sales finance                 14.33       14.46       14.61

Total                                11.20       12.46       13.85


Changes in yield in basis points (bp) by type were as follows:

                                        Years Ended December 31,
                                       2004       2003       2002

Real estate loans                     (99) bp   (136) bp    (84) bp
Non-real estate loans                  (6)       (32)        (3)
Retail sales finance                  (13)       (15)        36

Total                                (126)      (139)       (75)


Yield decreased in both 2004 and 2003 primarily reflecting a lower
real estate loan yield resulting from the low interest rate
environment and the larger proportion of finance receivables that are
real estate loans.  We anticipate that yield will increase in 2005 in
response to the recent market interest rate increases and further
increases we expect in 2005.
<PAGE> 40

Item 7.  Continued


Insurance Revenues

Insurance revenues were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)

Earned premiums                      $175.8      $178.5      $189.0
Commissions                             1.0         3.1         2.2

Total                                $176.8      $181.6      $191.2

Amount change                        $ (4.8)     $ (9.6)     $ (4.2)
Percent change                         (3)%        (5)%        (2)%


Premiums earned by type were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)
Credit insurance:
  Life                               $ 33.5      $ 35.0      $ 37.6
  Accident and health                  42.9        45.1        47.7
  Property and casualty                40.7        42.9        41.0
  Involuntary unemployment             16.5        15.5        14.7
Non-credit insurance:
  Life                                 30.6        32.9        38.1
  Accident and health                   8.6         7.7         7.3
Premiums assumed under
  reinsurance agreements                3.0        (0.6)        2.6

Total                                $175.8      $178.5      $189.0


Premiums written by type were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)
Credit insurance:
  Life                               $ 30.0      $ 26.1      $ 23.3
  Accident and health                  38.5        39.7        40.5
  Property and casualty                37.9        34.3        39.3
  Involuntary unemployment             16.0        16.4        15.9
Non-credit insurance:
  Life                                 30.6        32.9        38.1
  Accident and health                   8.6         7.7         7.3
Premiums assumed under
  reinsurance agreements                3.0        (0.6)        2.6

Total                                $164.6      $156.5      $167.0


Earned premiums decreased for 2004 primarily due to lower credit life
and credit accident and health premium volume in prior years.
<PAGE> 41

Item 7.  Continued


Earned premiums decreased for 2003 primarily due to lower premium
volume in prior years.  Premium volume decreased due to fewer non-real
estate loan customers who historically have purchased the majority of
our insurance products.  Also, in April 2003, we terminated a
reinsurance agreement with a non-subsidiary affiliate and reversed
$3.6 million of annuity premiums and annuity reserve expense that we
previously recorded.


Other Revenues

Other revenues were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)

Service fee income from a
  non-subsidiary affiliate           $199.9      $ 49.5      $  3.1
Miscellaneous:
  Investment revenue                   92.0        82.2        85.9
  Net gain on sales of real estate
    loans held for sale                11.4        84.0          -
  Writedowns on real estate owned      (9.6)       (8.4)       (9.1)
  Net recovery on sales of real
    estate owned                        2.5         2.2         2.9
  Net interest income on real estate
    loans held for sale                 0.9        14.8          -
  Other                                 8.0        10.9         6.9

Total                                $305.1      $235.2      $ 89.7

Amount change                        $ 69.9      $145.5      $ (0.9)
Percent change                          30%        162%        (1)%


Other revenues increased for 2004 primarily due to higher service fee
income from a non-subsidiary affiliate and investment revenue,
partially offset by lower revenue on real estate loans held for sale.
In 2003, WFI entered into an agreement with AIG Bank whereby for fees
WFI provides marketing, certain origination processing services, loan
servicing, and related services for AIG Bank's origination and sale of
non-conforming residential real estate loans.  In 2004, MorEquity
entered into a similar agreement with AIG Bank.

Other revenues increased for 2003 primarily due to the acquisition of
WFI effective January 1, 2003 which resulted in net gain on sales of
real estate loans held for sale, higher service fee income from a non-
subsidiary affiliate, and net interest income on real estate loans
held for sale.
<PAGE> 42

Item 7.  Continued


Investment revenue was affected by the following:

                                       Years Ended December 31,
                                     2004        2003        2002
                                        (dollars in millions)

Average invested assets            $1,361.4    $1,302.5    $1,252.6
Investment portfolio yield            6.54%       6.56%       6.84%
Net realized losses on
  investments                      $    -      $   (8.4)   $   (4.4)


Interest Expense

The impact of using swap agreements to fix floating-rate debt or float
fixed-rate debt is included in interest expense and the related
borrowing statistics below.  Interest expense by type was as follows:

                                       Years Ended December 31,
                                    2004         2003        2002
                                        (dollars in millions)

Long-term debt                    $   531.7   $   447.9   $   432.8
Short-term debt                       104.6        98.8       126.5

Total                             $   636.3   $   546.7   $   559.3

Amount change                     $    89.6   $   (12.6)  $   (76.2)
Percent change                          16%        (2)%       (12)%

Average borrowings                $16,300.9   $13,381.6   $11,471.2
Borrowing cost                        3.90%       4.08%       4.88%


Interest expense increased (decreased) due to the following:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)

Increase in average borrowings       $ 119.1     $  93.2    $  45.5
Decrease in borrowing cost             (29.5)     (105.8)    (121.7)

Total                                $  89.6     $ (12.6)   $ (76.2)


Average borrowings by type were as follows:

                                             December 31,
                               2004              2003              2002
                         Amount   Percent  Amount   Percent  Amount   Percent
                                        (dollars in millions)

Long-term debt           $12,387.3    76%  $ 9,716.4    73%  $ 7,344.3    64%
Short-term debt            3,913.6    24     3,665.2    27     4,126.9    36

Total                    $16,300.9   100%  $13,381.6   100%  $11,471.2   100%
<PAGE> 43

Item 7.  Continued


Changes in average borrowings by type were as follows:

                                       Years Ended December 31,
                               2004              2003              2002
                                  Percent           Percent           Percent
                         Amount    Change  Amount    Change  Amount    Change
                                        (dollars in millions)

Long-term debt           $2,670.9     27%  $2,372.1     32%  $1,320.0     22%
Short-term debt             248.4      7     (461.7)   (11)    (490.3)   (11)
Deposits                       -       -         -       -      (63.1)  (100)

Total                    $2,919.3     22%  $1,910.4     17%  $  766.6      7%


AGFC issued $5.7 billion of long-term debt in 2004, compared to $2.7
billion in 2003 and $4.6 billion in 2002.  Long-term debt issuances in
2004 were higher than in 2003 primarily due to higher levels of
finance receivable growth and long-term debt refinancings in 2004.

In second quarter 2003, a consolidated special purpose subsidiary of
AGFI recorded $256.4 million of debt issued by a trust that purchased
$259.0 million of real estate loans as part of our securitization.  We
recorded the transaction as an "on balance sheet" secured financing.

Borrowing cost by type were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002

Long-term debt                        4.28%       4.61%       5.89%
Short-term debt                       2.68        2.70        3.06

Total                                 3.90        4.08        4.88


Changes in borrowing cost in basis points by type were as follows:

                                        Years Ended December 31,
                                       2004       2003       2002

Long-term debt                         (33) bp   (128) bp   (77) bp
Short-term debt                         (2)       (36)     (193)

Total                                  (18)       (80)     (105)


Federal Reserve actions from 2001 through June 2003 created the lowest
interest rate environment since the 1950s and resulted in lower long-
term debt rates as new issuances were at substantially lower rates
than long-term debt being refinanced.  In 2004, the Federal Reserve
raised the federal funds rate 125 basis points in five actions
beginning in June 2004.
<PAGE> 44

Item 7.  Continued


Operating Expenses

Operating expenses were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)

Salaries and benefits                $498.3      $413.4      $316.3
Other                                 284.0       272.9       245.2

Total                                $782.3      $686.3      $561.5

Amount change                        $ 96.0      $124.8      $ 10.7
Percent change                          14%         22%          2%

Operating expenses as a percentage
  of average net receivables          4.43%       4.82%       4.52%


Operating expenses increased in both 2004 and 2003 primarily due to
growth in our centralized real estate business segment and higher
salaries and benefits and advertising expenses.  The increase in
salaries and benefits for 2004 and 2003 reflected the acquisition of
WFI which resulted in the addition of approximately 500 WFI employees
effective January 1, 2003, 400 centralized real estate employees hired
during 2003, and 500 centralized real estate employees hired during
2004.  Competitive compensation and rising benefit costs also
contributed to higher salaries and benefits in 2004 and 2003.

The increase in operating expenses for 2003 also reflected higher
credit and collection and occupancy expenses.  The increase in credit
and collection expenses reflected higher credit investigation,
recording and releasing, and mortgage appraisal fees resulting from
higher real estate loan originations and renewals during 2003.

The decrease in operating expenses as a percentage of average net
receivables for 2004 reflected higher average net receivables and
continued emphasis on controlling operating expenses, partially offset
by growth in our centralized real estate business segment.  The
increase in operating expenses as a percentage of average net
receivables for 2003 reflected the acquisition of WFI and growth in
its operations.

Approximately $204.7 million of the Company's operating expenses for
2004 and $112.4 million for 2003 were directly related to our
centralized real estate business segment.
<PAGE> 45

Item 7.  Continued


Provision for Finance Receivable Losses

                                             At or for the
                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)
Provision for finance
  receivable losses                  $270.2      $313.8      $303.6
  Amount change                      $(43.6)     $ 10.2      $ 14.3
  Percent change                      (14)%          3%          5%

Net charge-offs                      $280.2      $310.8      $297.6
Charge-off ratio                      1.60%       2.19%       2.41%
Charge-off coverage                   1.63x       1.50x       1.56x

60 day+ delinquency                  $474.2      $515.4      $523.3
Delinquency ratio                     2.31%       3.28%       3.67%

Allowance for finance
  receivable losses                  $456.0      $466.0      $463.0
Allowance ratio                       2.26%       3.04%       3.34%


Charge-offs, recoveries, net charge-offs, and charge-off ratio by type
were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)

Real estate loans:
  Charge-offs                        $ 71.3      $ 68.7      $ 58.6
  Recoveries                           (5.9)       (4.2)       (4.5)
  Net charge-offs                    $ 65.4      $ 64.5      $ 54.1
  Charge-off ratio                     .50%        .65%        .67%

Non-real estate loans:
  Charge-offs                        $206.5      $229.2      $225.3
  Recoveries                          (30.2)      (28.2)      (27.2)
  Net charge-offs                    $176.3      $201.0      $198.1
  Charge-off ratio                    5.95%       6.97%       6.94%

Retail sales finance:
  Charge-offs                        $ 49.4      $ 55.3      $ 54.9
  Recoveries                          (10.9)      (10.0)       (9.5)
  Net charge-offs                    $ 38.5      $ 45.3      $ 45.4
  Charge-off ratio                    2.97%       3.44%       3.31%

Total:
  Charge-offs                        $327.2      $353.2      $338.8
  Recoveries                          (47.0)      (42.4)      (41.2)
  Net charge-offs                    $280.2      $310.8      $297.6
  Charge-off ratio                    1.60%       2.19%       2.41%
<PAGE> 46

Item 7.  Continued


Changes in net charge-offs by type were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)

Real estate loans                    $  0.9      $10.4        $ 4.0
Non-real estate loans                 (24.7)       2.9         24.3
Retail sales finance                   (6.8)      (0.1)         5.0

Total                                $(30.6)     $13.2        $33.3


The improvement in net charge-offs for 2004 reflected lower non-real
estate loan and retail sales finance net charge-offs primarily due to
the improving economy.  Real estate loan net charge-offs increased in
2004 and 2003 primarily due to increases in real estate loan average
net receivables of $3.4 billion, or 33%, in 2004 and $1.8 billion, or
23%, in 2003.

Changes in charge-off ratios in basis points by type were as follows:

                                        Years Ended December 31,
                                       2004       2003       2002

Real estate loans                      (15) bp     (2) bp    (1) bp
Non-real estate loans                 (102)         3       107
Retail sales finance                   (47)        13        46

Total                                  (59)       (22)       15


The improvement in the charge-off ratio for 2004 and 2003 was
primarily due to the improving economy which began in the second half
of 2003 and a higher proportion of average net receivables that were
real estate loans.
<PAGE> 47

Item 7.  Continued


Delinquency based on contract terms in effect and delinquency ratio by
type were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)

Real estate loans:
  Delinquency                        $286.6      $306.7      $300.0
  Delinquency ratio                   1.83%       2.79%       3.19%

Non-real estate loans:
  Delinquency                        $152.6      $167.4      $178.7
  Delinquency ratio                   4.54%       5.16%       5.42%

Retail sales finance:
  Delinquency                        $ 35.0      $ 41.3      $ 44.6
  Delinquency ratio                   2.32%       2.79%       2.87%

Total:
  Delinquency                        $474.2      $515.4      $523.3
  Delinquency ratio                   2.31%       3.28%       3.67%


Changes in delinquency from the prior year end by type were as
follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)

Real estate loans                    $(20.1)     $  6.7       $48.2
Non-real estate loans                 (14.8)      (11.3)        7.2
Retail sales finance                   (6.3)       (3.3)        2.8

Total                                $(41.2)     $ (7.9)      $58.2


Delinquency at December 31, 2004 and 2003 was favorably impacted by
the improving economy which began in the second half of 2003.  Real
estate loan delinquency increased in 2003 primarily due to an increase
in real estate loans of $1.5 billion.

Changes in delinquency ratio from the prior year end in basis points
by type were as follows:

                                        Years Ended December 31,
                                       2004       2003       2002

Real estate loans                      (96) bp    (40) bp   (12) bp
Non-real estate loans                  (62)       (26)       18
Retail sales finance                   (47)        (8)       31

Total                                  (97)       (39)       (4)
<PAGE> 48

Item 7.  Continued


The improvement in the delinquency ratio at December 31, 2004 and 2003
reflected the improving economy and a higher proportion of net finance
receivables that were real estate loans.

Our Credit Strategy and Policy Committee evaluates our finance
receivable portfolio monthly to determine the appropriate level of the
allowance for finance receivable losses.  We believe the amount of the
allowance for finance receivable losses is the most significant
estimate we make.  In our opinion, the allowance is adequate to absorb
losses inherent in our existing portfolio.  The decrease in the
allowance for finance receivable losses at December 31, 2004 when
compared to December 31, 2003 was due to net decreases to the
allowance for finance receivable losses through the provision for
finance receivable losses in 2004 totaling $10.0 million.  These
decreases were in response to our lower levels of delinquency and the
lower levels of both unemployment and personal bankruptcies in the
United States.

The allowance as a percentage of net finance receivables decreased
during 2004 and 2003 primarily due to the improving economy and a
higher proportion of net finance receivables that were real estate
loans.

Charge-off coverage, which compares the allowance for finance
receivable losses to net charge-offs, improved in 2004 primarily due
to lower net charge-offs.  Charge-off coverage declined slightly in
2003 primarily due to a higher proportion of net finance receivables
that were real estate loans.


Insurance Losses and Loss Adjustment Expenses

Insurance losses and loss adjustment expenses were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)

Claims incurred                      $80.7       $ 75.3       $85.3
Change in benefit reserves            (4.0)        (7.5)       (2.0)

Total                                $76.7       $ 67.8       $83.3

Amount change                        $ 8.9       $(15.5)      $(4.8)
Percent change                         13%        (19)%        (5)%
<PAGE> 49

Item 7.  Continued


Losses incurred by type were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)
Credit insurance:
  Life                               $ 19.7      $ 20.7      $ 21.9
  Accident and health                  19.2        16.5        26.5
  Property and casualty                14.7        11.0         7.0
  Involuntary unemployment              2.1         2.9         2.2
Non-credit insurance:
  Life                                  7.7         6.8        12.0
  Accident and health                   5.3         4.6         4.5
Losses incurred under
  reinsurance agreements                8.0         5.3         9.2

Total                                $ 76.7      $ 67.8      $ 83.3


Insurance losses and loss adjustment expenses increased in 2004
primarily due to higher claims incurred and less benefit reserves
released.  The increase in claims incurred in 2004 reflected property
losses in Florida associated with the 2004 hurricanes.

Insurance losses and loss adjustment expenses decreased in 2003
primarily due to lower claims incurred and more benefit reserves
released.  Benefit reserves were released due to lower premium volume
in prior years.  Also, in April 2003, we terminated a reinsurance
agreement with a non-subsidiary affiliate and reversed $3.6 million of
annuity reserve expense and annuity premiums that we previously
recorded.


Provision for Income Taxes
                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in millions)

Provision for income taxes           $215.6      $209.3      $145.3
  Amount change                      $  6.3      $ 64.0      $ 17.0
  Percent change                         3%         44%         13%

Pretax income                        $693.7      $575.4      $492.2
Effective income tax rate            31.08%      36.38%      29.53%


Provision for income taxes increased slightly during 2004 due to
higher pretax income, partially offset by a lower effective income tax
rate.  During fourth quarter 2004, we reduced the provision for income
taxes by $38.7 million resulting from a favorable settlement of income
tax audit issues.  This decreased the effective income tax rate for
2004.

Provision for income taxes increased during 2003 due to a higher
effective income tax rate and higher taxable income.  During fourth
quarter 2002, we reduced the provision for income taxes by $30.0
million resulting from a favorable settlement of income tax audit
issues.  This decreased the effective income tax rate for 2002.
<PAGE> 50

Item 7.  Continued


                        REGULATION AND OTHER

Regulation

The regulatory environment of the branch, centralized real estate, and
insurance business segments is described in Item 1.


Taxation

We monitor federal and state tax legislation and respond with
appropriate tax planning.
<PAGE> 51

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.


The fair values of certain of our assets and liabilities are sensitive
to changes in market interest rates.  The impact of changes in
interest rates would be reduced by the fact that increases (decreases)
in fair values of assets would be partially offset by corresponding
changes in fair values of liabilities.  In aggregate, the estimated
impact of an immediate and sustained 100 basis point increase or
decrease in interest rates on the fair values of our interest rate-
sensitive financial instruments would not be material to our financial
position.

The estimated increases (decreases) in fair values of interest rate-
sensitive financial instruments were as follows:

                               December 31, 2004        December 31, 2003
                             +100 bp        -100 bp   +100 bp       -100 bp
                                         (dollars in thousands)
Assets
Net finance receivables,
  less allowance for
  finance receivable
  losses                     $(899,688)  $1,025,476   $(490,884)  $ 542,491
Fixed-maturity investment
  securities                   (85,646)      76,189     (77,750)     82,802
Swap agreements                 87,699      (92,989)       -           -

Liabilities
Long-term debt                (371,877)     390,104    (287,934)    298,965
Swap agreements                  8,616       (9,180)     (1,195)      1,555


At each year end, we derived the changes in fair values by modeling
estimated cash flows of certain of our assets and liabilities.  The
assumptions we used adjusted cash flows to reflect changes in
prepayments and calls but did not consider loan originations, debt
issuances, or new investment purchases.

Readers should exercise care in drawing conclusions based on the above
analysis.  While these changes in fair values provide a measure of
interest rate sensitivity, they do not represent our expectations
about the impact of interest rate changes on our financial results.
This analysis is also based on our exposure at a particular point in
time and incorporates numerous assumptions and estimates.  It also
assumes an immediate change in interest rates, without regard to the
impact of certain business decisions or initiatives that we would
likely undertake to mitigate or eliminate some or all of the adverse
effects of the modeled scenarios.



Item 8.  Financial Statements and Supplementary Data.


We present the Report of Management's Responsibility,
PricewaterhouseCoopers LLP Report of Independent Registered Public
Accounting Firm, and the related consolidated financial statements on
the following pages.
<PAGE> 52

                 REPORT OF MANAGEMENT'S RESPONSIBILITY



The Company's management is responsible for the integrity and fair
presentation of our consolidated financial statements and all other
financial information presented in this report.  We prepared our
consolidated financial statements using accounting principles
generally accepted in the United States (GAAP).  We made estimates and
assumptions that affect amounts recorded in the financial statements
and disclosures of contingent assets and liabilities.

The Company's management is responsible for establishing and
maintaining an internal control structure and procedures for financial
reporting.  We designed these systems to provide reasonable assurance
that assets are safeguarded from loss or unauthorized use, that
transactions are recorded according to GAAP under management's
direction and that financial records are reliable to prepare financial
statements.  We support the internal control structure with careful
selection, training and development of qualified personnel.  The
Company's employees are subject to AIG's Code of Conduct designed to
assure that all employees perform their duties with honesty and
integrity.  In second quarter 2004, AIG adopted the AIG Director,
Executive Officer, and Senior Financial Officer Code of Business
Conduct and Ethics, which covers such directors and officers of AIG
and its subsidiaries.  We do not allow loans to executive officers.
The aforementioned systems include a documented organizational
structure and policies and procedures that we communicate throughout
the Company.  Our internal auditors report directly to AIG to
strengthen independence.  They continually monitor the operation of
our internal controls and report their findings to the Company's
management, AIG's management, and AIG's internal audit department.  We
take prompt action to correct control deficiencies and improve the
systems.  The Company's management assesses any changes to our
internal control structure quarterly.  Based on these assessments,
management has concluded that the internal control structure and the
procedures for financial reporting have functioned effectively and
that the consolidated financial statements fairly present our
consolidated financial position and the results of our operations for
the periods presented.
<PAGE> 53

       REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Shareholder and Board of Directors
of American General Finance, Inc.:


In our opinion, the consolidated financial statements listed in the
index appearing under Items 15(a)(1) and (2) on page 96 present
fairly, in all material respects, the financial position of American
General Finance, Inc. and its subsidiaries (the "Company") at December
31, 2004 and 2003, and the results of their operations and their cash
flows for each of the three years in the period ended December 31,
2004 in conformity with accounting principles generally accepted in
the United States of America.  In addition, in our opinion, the
financial statement schedule at and for each of the three years in the
period ended December 31, 2004 listed in the index appearing under
Item 15(d) on page 97 presents fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements.  These financial statements
and financial statement schedule are the responsibility of the
Company's management.  Our responsibility is to express an opinion on
these financial statements and financial statement schedule based on
our audits.  We conducted our audits of these statements in accordance
with the standards of the Public Company Accounting Oversight Board
(United States).  Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.



/s/  PricewaterhouseCoopers LLP


Chicago, Illinois
March 1, 2005
<PAGE> 54

            American General Finance, Inc. and Subsidiaries
                      Consolidated Balance Sheets




                                                         December 31,
                                                     2004            2003
                                                    (dollars in thousands)
Assets

Net finance receivables (Notes 3. and 5.):
  Real estate loans                               $15,742,238    $11,038,140
  Non-real estate loans                             3,043,602      2,932,120
  Retail sales finance                              1,382,018      1,337,701

Net finance receivables                            20,167,858     15,307,961
Allowance for finance receivable
  losses (Note 6.)                                   (456,031)      (466,031)
Net finance receivables, less allowance
  for finance receivable losses                    19,711,827     14,841,930

Investment securities (Note 7.)                     1,378,362      1,307,472
Cash and cash equivalents                             160,610        145,462
Other assets (Note 8.)                                984,973        711,300

Total assets                                      $22,235,772    $17,006,164


Liabilities and Shareholder's Equity

Long-term debt (Notes 9. and 12.)                 $14,679,501    $10,862,218
Short-term debt (Notes 10. and 12.)                 4,299,085      3,467,096
Insurance claims and policyholder
  liabilities (Note 13.)                              422,957        438,362
Other liabilities (Note 14.)                          414,441        376,739
Accrued taxes                                          43,546         37,952

Total liabilities                                  19,859,530     15,182,367

Shareholder's equity:
  Common stock (Note 15.)                               1,000          1,000
  Additional paid-in capital                          996,305        920,276
  Accumulated other comprehensive
    income (loss) (Note 16.)                           37,413        (14,947)
  Retained earnings (Note 17.)                      1,341,524        917,468

Total shareholder's equity                          2,376,242      1,823,797

Total liabilities and shareholder's equity        $22,235,772    $17,006,164





See Notes to Consolidated Financial Statements.
<PAGE> 55

            American General Finance, Inc. and Subsidiaries
                   Consolidated Statements of Income




                                             Years Ended December 31,
                                         2004          2003          2002
                                              (dollars in thousands)

Revenues
  Finance charges                     $1,977,202    $1,773,277    $1,718,873
  Insurance                              176,840       181,642       191,230
  Other:
    Service fee income from a
      non-subsidiary affiliate           199,856        49,547         3,094
    Miscellaneous                        105,264       185,640        86,641

Total revenues                         2,459,162     2,190,106     1,999,838

Expenses
  Interest expense                       636,304       546,716       559,291
  Operating expenses:
    Salaries and benefits                498,295       413,358       316,262
    Other operating expenses             284,053       272,945       245,257
  Provision for finance receivable
    losses                               270,158       313,830       303,585
  Insurance losses and loss
    adjustment expenses                   76,681        67,849        83,275

Total expenses                         1,765,491     1,614,698     1,507,670

Income before provision for income
  taxes                                  693,671       575,408       492,168

Provision for Income Taxes
  (Note 18.)                             215,617       209,305       145,342

Net Income                            $  478,054    $  366,103    $  346,826





See Notes to Consolidated Financial Statements.
<PAGE> 56

            American General Finance, Inc. and Subsidiaries
            Consolidated Statements of Shareholder's Equity




                                             Years Ended December 31,
                                         2004          2003          2002
                                              (dollars in thousands)

Common Stock
  Balance at beginning of year        $    1,000    $    1,000    $    1,000
  Balance at end of year                   1,000         1,000         1,000

Additional Paid-in Capital
  Balance at beginning of year           920,276       920,276       880,594
  Capital contributions from
    parent and other                      76,029          -           39,682
  Balance at end of year                 996,305       920,276       920,276

Accumulated Other Comprehensive
  Income (Loss)
    Balance at beginning of year         (14,947)      (68,938)      (61,687)
    Change in net unrealized
      gains (losses):
        Investment securities              2,876        10,673        23,792
        Swap agreements                   49,484        43,318       (31,391)
        Minimum pension liability           -             -              348
    Balance at end of year                37,413       (14,947)      (68,938)

Retained Earnings
  Balance at beginning of year           917,468       734,479       534,652
  Net income                             478,054       366,103       346,826
  Common stock dividends                 (53,998)     (183,114)     (146,999)
  Balance at end of year               1,341,524       917,468       734,479

Total Shareholder's Equity            $2,376,242    $1,823,797    $1,586,817





See Notes to Consolidated Financial Statements.
<PAGE> 57
<TABLE>

               American General Finance, Inc. and Subsidiaries
                    Consolidated Statements of Cash Flows


<CAPTION>
                                                      Years Ended December 31,
                                                    2004        2003        2002
                                                       (dollars in thousands)
<S>                                              <C>         <C>         <C>
Cash Flows from Operating Activities
Net Income                                       $  478,054  $  366,103  $  346,826
Reconciling adjustments:
  Provision for finance receivable losses           270,158     313,830     303,585
  Depreciation and amortization                     178,392     197,232     153,211
  Deferral of finance receivable
    origination costs                               (84,651)    (71,401)    (60,215)
  Deferred income tax benefit                       (73,047)     (2,372)    (58,601)
  Origination of real estate loans held
    for sale                                       (124,398) (1,789,108)       -
  Sales and principal collections of real
    estate loans held for sale                      135,825   1,885,122        -
  Change in other assets and other liabilities       73,048     (49,944)    (59,970)
  Change in insurance claims and
    policyholder liabilities                        (15,405)    (33,986)    (23,240)
  Change in taxes receivable and payable            (31,017)     (4,688)    (33,546)
  Other, net                                        (19,539)      6,538         756
Net cash provided by operating activities           787,420     817,326     568,806

Cash Flows from Investing Activities
  Finance receivables originated or purchased   (12,581,889) (8,948,036) (8,184,075)
  Principal collections on finance receivables    7,453,077   7,110,628   6,298,802
  Acquisition of Wilmington Finance, Inc.              -        (93,189)       -
  Acquisition of First Horizon                         -           -       (208,666)
  Investment securities purchased                  (582,957)   (504,561)   (806,989)
  Investment securities called and sold             500,474     413,554     713,653
  Investment securities matured                      15,356      23,335      42,475
  Change in premiums on finance receivables
    purchased and deferred charges                  (27,297)     (1,008)    (88,465)
  Other, net                                        (15,376)    (25,305)    (13,023)
Net cash used for investing activities           (5,238,612) (2,024,582) (2,246,288)

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt        5,791,112   2,947,613   4,638,983
  Repayment of long-term debt                    (2,177,763) (1,656,863) (1,394,998)
  Change in short-term debt                         831,989      91,422  (1,477,846)
  Capital contributions from parent                  75,000        -         33,000
  Dividends paid                                    (53,998)   (183,114)   (146,999)
Net cash provided by financing activities         4,466,340   1,199,058   1,652,140

Increase (decrease) in cash and cash equivalents     15,148      (8,198)    (25,342)
Cash and cash equivalents at beginning of year      145,462     153,660     179,002
Cash and cash equivalents at end of year         $  160,610  $  145,462  $  153,660

<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE> 58

            American General Finance, Inc. and Subsidiaries
            Consolidated Statements of Comprehensive Income




                                              Years Ended December 31,
                                          2004          2003          2002
                                               (dollars in thousands)


Net Income                              $ 478,054     $ 366,103    $ 346,826

Other comprehensive gain (loss):

  Changes in net unrealized gains
    (losses):
      Investment securities                 4,406         8,040       32,220
      Swap agreements                      23,341        (6,773)    (151,142)
      Minimum pension liability              -             -             535

  Income tax effect:
    Investment securities                  (1,543)       (2,802)     (11,288)
    Swap agreements                        (8,170)        2,369       52,900
    Minimum pension liability                -             -            (187)

  Changes in net unrealized gains
    (losses), net of tax                   18,034           834      (76,962)

  Reclassification adjustments
    for realized losses included
    in net income:
      Investment securities                    19         8,361        4,400
      Swap agreements                      52,789        73,418      102,848

  Income tax effect:
    Investment securities                      (6)       (2,926)      (1,540)
    Swap agreements                       (18,476)      (25,696)     (35,997)

  Realized losses included
    in net income, net of tax              34,326        53,157       69,711

Other comprehensive gain (loss),
  net of tax                               52,360        53,991       (7,251)


Comprehensive income                    $ 530,414     $ 420,094    $ 339,575





See Notes to Consolidated Financial Statements.
<PAGE> 59

            American General Finance, Inc. and Subsidiaries
              Notes to Consolidated Financial Statements
                           December 31, 2004



Note 1.  Nature of Operations

American General Finance, Inc. will be referred to as "AGFI" or
collectively with its subsidiaries, whether directly or indirectly
owned, as the "Company" or "we".  Since August 29, 2001, AGFI has been
an indirect wholly owned subsidiary of American International Group,
Inc. (AIG).  AIG is a holding company which, through its subsidiaries,
is engaged in a broad range of insurance and insurance-related
activities, financial services and asset management in the United
States and abroad.

AGFI is a financial services holding company whose principal
subsidiary is American General Finance Corporation (AGFC).  AGFC is
also a financial services holding company with subsidiaries engaged
primarily in the consumer finance and credit insurance businesses.  At
December 31, 2004, the Company had 1,444 branch offices in 45 states,
Puerto Rico and the U.S. Virgin Islands and approximately 9,100
employees.

We have three business segments:  branch, centralized real estate, and
insurance.  We define our segments by type of financial service
product offered, nature of the production process, and method used to
distribute our products and to provide our services, as well as our
management reporting structure.

In our branch business segment, we:

     *  originate real estate loans secured by first or second
        mortgages on residential real estate, which may be closed-end
        accounts or open-end home equity lines of credit;
     *  originate secured and unsecured non-real estate loans;
     *  purchase retail sales contracts and provide revolving retail
        services arising from the retail sale of consumer goods and
        services by retail merchants; and
     *  purchase private label receivables originated by AIG Federal
        Savings Bank (AIG Bank) under a participation agreement.

To supplement our lending and retail sales financing activities, we
purchase portfolios of real estate loans, non-real estate loans, and
retail sales finance receivables originated by other lenders.  We also
offer credit and non-credit insurance and ancillary products to all
eligible branch customers.
<PAGE> 60

Notes to Consolidated Financial Statements, Continued


In our centralized real estate business segment, we:

     *  provide, for fees, marketing, certain origination processing
        services, loan servicing, and related services for AIG Bank;
     *  originate real estate loans for transfer to the centralized
        real estate servicing center;
     *  originate real estate loans for sale to investors with
        servicing released to the purchaser; and
     *  service a portfolio of real estate loans generated through:
            *  portfolio acquisitions from third party lenders;
            *  our mortgage origination subsidiaries;
            *  refinancing existing mortgages; or
            *  advances on home equity lines of credit.

We fund our branch and centralized real estate business segments
principally through cash flows from operations, public and private
capital markets borrowings, and capital contributions from our parent.
Our ability to access capital is dependent upon internal and external
factors including our ability to maintain adequately strong operating
performance and debt credit ratings and the overall condition of the
capital markets.  Our principal funding sources through the capital
markets include:

     *  issuances of long-term debt in domestic and foreign markets;
     *  short-term borrowings in the commercial paper market;
     *  borrowings from banks under credit facilities; and
     *  securitizations.

In our insurance business segment, we principally write and reinsure
credit life, credit accident and health, credit-related property and
casualty, credit involuntary unemployment, and non-credit insurance
covering our customers and the property pledged as collateral through
products that principally the branch business segment offers to its
customers.  We also monitor our finance receivables to determine that
the collateral is adequately protected.  See Note 22. for further
information on the Company's business segments.

At December 31, 2004, the Company had $20.2 billion of net finance
receivables due from approximately 1.9 million customer accounts and
$5.7 billion of credit and non-credit life insurance in force covering
approximately 892,000 customer accounts.



Note 2.  Acquisitions

Effective January 1, 2003, we acquired 100% of the common stock of
Wilmington Finance, Inc. (WFI), a majority owned subsidiary of WSFS
Financial Corporation, in a purchase business combination.  The
purchase price was $120.8 million, consisting of $25.8 million for net
assets and $95.0 million for intangibles.  The majority of the
tangible assets acquired were real estate loans held for sale.  We
included the results of WFI's operations in our financial statements
beginning January 1, 2003, the effective date of the acquisition.  We
finalized an independent valuation of the intangibles in second
quarter 2003 and recorded $54.2 million as goodwill and $40.8 million
as other intangibles.  We include goodwill and other intangibles in
other assets.  Other intangibles primarily consisted of broker
<PAGE> 61

Notes to Consolidated Financial Statements, Continued


relationships and non-compete agreements and had an initial weighted-
average amortization period of 9 years.  WFI originates non-conforming
residential real estate loans, primarily through broker relationships
(wholesale) and, to lesser extents, directly to consumers (retail) and
through correspondent relationships, and sells these loans to
investors with servicing released to the purchaser.  Effective July 1,
2003, WFI and AIG Bank entered into an agreement whereby for fees, WFI
provides marketing, certain origination processing services, loan
servicing, and related services for AIG Bank's origination and sale of
non-conforming residential real estate loans.  WFI provides the
Company with other sources of revenue through its servicing fees and
net gain on sales of real estate loans held for sale.  The acquisition
of WFI significantly affected our other revenues, operating expenses,
and pretax income for 2003 and 2004.

On September 16, 2002, we acquired the majority of the assets of First
Horizon Money Centers, a consumer financial services subsidiary of
First Tennessee Bank National Association, in a purchase business
combination.  The fair value of the assets acquired totaled $208.7
million, representing real estate loans, non-real estate loans, and
retail sales finance receivables.  We also acquired certain branch
office locations by assuming the branch office leases and hired
certain branch office personnel.  We included the acquisition of First
Horizon in our consolidated financial statements since the date of
acquisition.  The acquisition did not have a significant effect on our
operations.



Note 3.  Summary of Significant Accounting Policies

                       BASIS OF PRESENTATION

We prepared our consolidated financial statements using accounting
principles generally accepted in the United States (GAAP).  The
statements include the accounts of AGFI and its subsidiaries, all of
which are wholly owned.  We eliminated all intercompany items.  We
made estimates and assumptions that affect amounts reported in our
financial statements and disclosures of contingent assets and
liabilities.  Ultimate results could differ from our estimates.  To
conform to the 2004 presentation, we reclassified certain items in
prior periods.


                        BRANCH AND CENTRALIZED
                     REAL ESTATE BUSINESS SEGMENTS

Finance Receivables

We carry finance receivables at amortized cost which includes accrued
finance charges on interest bearing finance receivables, unamortized
deferred origination costs, and unamortized net premiums and discounts
on purchased finance receivables.  They are net of unamortized finance
charges on precomputed receivables and unamortized points and fees.

Although a significant portion of insurance claims and policyholder
liabilities originate from the finance receivables, our policy is to
report them as liabilities and not net them against finance
<PAGE> 62

Notes to Consolidated Financial Statements, Continued


receivables.  Finance receivables relate to the financing activities
of our branch and centralized real estate business segments, and
insurance claims and policyholder liabilities relate to the
underwriting activities of our insurance business segment.

We determine delinquency on finance receivables contractually.  We
advance the due date on a customer's account when the customer makes a
partial payment of 90% or more of the scheduled contractual payment.
We do not advance the due date on a customer's account further if the
customer makes an additional partial payment of 90% or more of the
scheduled contractual payment and has not yet paid the deficiency
amount from a prior partial payment.


Revenue Recognition

We recognize finance charges as revenue on the accrual basis using the
interest method.  We amortize premiums and discounts on purchased
finance receivables as a revenue adjustment using the interest method.
We defer the costs to originate certain finance receivables and the
revenue from nonrefundable points and fees on loans and amortize them
to revenue using the interest method over the lesser of the
contractual term or the estimated life based upon prepayment
experience.  If a finance receivable liquidates before amortization is
completed, we charge or credit any unamortized premiums, discounts,
origination costs, or points and fees to revenue at the date of
liquidation.  We recognize late charges, prepayment penalties, and
deferment fees as revenue when received.

We stop accruing finance charges when the fourth contractual payment
becomes past due for loans and retail sales contracts and when the
sixth contractual payment becomes past due for revolving retail and
private label.  We reverse amounts previously accrued upon suspension.
After suspension, we recognize revenue for loans and retail sales
contracts only to the extent of any additional payments we receive.


Allowance for Finance Receivable Losses

We establish the allowance for finance receivable losses primarily
through the provision for finance receivable losses charged to
expense.  We believe the amount of the allowance for finance
receivable losses is the most significant estimate we make.  Our
Credit Strategy and Policy Committee evaluates our finance receivable
portfolio monthly.  Within our three main finance receivable types are
sub-portfolios, each consisting of a large number of relatively small,
homogenous accounts.  We evaluate these sub-portfolios for impairment
as groups.  None of our accounts are large enough to warrant
individual evaluation for impairment.  Our Credit Strategy and Policy
Committee considers numerous factors in estimating losses inherent in
our finance receivable portfolio, including the following:

     *  prior finance receivable loss and delinquency experience;
     *  the composition of our finance receivable portfolio; and
     *  current economic conditions including the levels of
        unemployment and personal bankruptcies.
<PAGE> 63

Notes to Consolidated Financial Statements, Continued


Our policy is to charge off each month to the allowance for finance
receivable losses non-real estate loans on which payments received in
the prior six months have totaled less than 5% of the original loan
amount and retail sales finance that are six installments past due.
Generally, we start foreclosure proceedings on real estate loans when
four monthly installments are past due.  When foreclosure is completed
and we have obtained title to the property, we obtain an unrelated
party's valuation of the property, which is either a full appraisal or
a real estate broker's or appraiser's estimate of the property's sale
value without the benefit of a full interior and exterior appraisal
and lacking sales comparisons.  We reduce finance receivables by the
amount of the real estate loan, establish a real estate owned asset
valued at lower of loan balance or 85% of the valuation, and charge
off any loan amount in excess of that value to the allowance for
finance receivable losses.  We occasionally extend the charge-off
period for individual accounts when, in our opinion, such treatment is
warranted and consistent with our credit risk policies.  We increase
the allowance for finance receivable losses for recoveries on accounts
previously charged off.

We may renew a delinquent account if the customer has sufficient
income and it does not appear that the cause of past delinquency will
affect the customer's ability to repay the new loan.  We subject all
renewals, whether the customer's account is current or delinquent, to
the same credit risk underwriting process as we would a new
application for credit.

We may allow a deferment, which is a partial payment that extends the
term of an account.  The partial payment amount is usually the greater
of one-half of a regular monthly payment or the amount necessary to
bring the interest on the account current.  We limit a customer to two
deferments in a rolling twelve-month period unless we determine that
an exception is warranted and consistent with our credit risk
policies.


Real Estate Owned

We acquire real estate owned through foreclosure on real estate loans.
We record real estate owned in other assets, initially at lower of
loan balance or 85% of the unrelated party's valuation, which
approximates the fair value less the estimated cost to sell.  If we do
not sell a property within one year of acquisition, we reduce the
carrying value by five percent of the initial value each month
beginning in the thirteenth month.  We continue the writedown until
the property is sold or the carrying value is reduced to ten percent
of the initial value.  We charge these writedowns to other revenues.
We record the sale price we receive for a property less the carrying
value and any amounts refunded to the customer as a recovery or loss
in other revenues. We do not profit from foreclosures in accordance
with the American Financial Services Association's Voluntary Standards
for Consumer Mortgage Lending.  We only attempt to recover our
investment in the property, including expenses incurred.
<PAGE> 64

Notes to Consolidated Financial Statements, Continued


Customer Relationships

Customer relationships, included in other assets, are intangible
assets we acquire by assigning a portion of the purchase price on
certain portfolio acquisitions to the customer relationships.  In
those instances, we expect our relationships with the customers to
last beyond the terms of the finance receivables we purchased.  We
charge customer relationships to expense in equal amounts generally
over six years.  If the required impairment testing suggests that
customer relationships are impaired, we reduce customer relationships
to an amount that results in the carrying value of the customer
relationships approximating fair value.


Real Estate Loans Held for Sale

We carry real estate loans held for sale, included in other assets, at
lower of amortized cost or market value.  We include the sales price
we receive less the carrying value of the real estate loan in other
revenues.

We accrue interest income due from the borrower on real estate loans
held for sale from the date of loan funding until the date of sale to
the investor and include it in other revenues.  Upon sale, we collect
from the investor any accrued interest income not paid by the
borrower.

We record the fees we receive from AIG Bank for providing services for
its investment in real estate loans held for sale in other revenues
when we provide the services.


                       INSURANCE BUSINESS SEGMENT

Revenue Recognition

We recognize credit insurance premiums on closed-end real estate loans
and revolving finance receivables as revenue when billed monthly.  We
defer credit insurance premiums collected in advance in unearned
premium reserves which we include in insurance claims and policyholder
liabilities.  We recognize unearned premiums on credit life insurance
as revenue using the sum-of-the-digits or actuarial methods, except in
the case of level-term contracts, for which we recognize unearned
premiums as revenue using the straight-line method over the terms of
the policies.  We recognize unearned premiums on credit accident and
health insurance as revenue using an average of the sum-of-the-digits
and the straight-line methods.  We recognize unearned premiums on
credit-related property and casualty and credit involuntary
unemployment insurance as revenue using the straight-line method over
the terms of the policies.  We recognize non-credit life insurance
premiums as revenue when collected but not before their due dates.  We
recognize commissions on ancillary products as other revenue when
received.
<PAGE> 65

Notes to Consolidated Financial Statements, Continued


Policy Reserves

Policy reserves for credit life, credit accident and health, and
credit-related property and casualty and credit involuntary
unemployment insurance equal related unearned premiums.  We base claim
reserves on Company experience.  We estimate reserves for losses and
loss adjustment expenses for credit-related property and casualty
insurance based upon claims reported plus estimates of incurred but
not reported claims.  We accrue liabilities for future life insurance
policy benefits associated with non-credit life contracts when we
recognize premium revenue and base the amounts on assumptions as to
investment yields, mortality, and surrenders.  We base annuity
reserves on assumptions as to investment yields and mortality.  We
base insurance reserves assumed under reinsurance agreements where we
assume the risk of loss on various tabular and unearned premium
methods.


Acquisition Costs

We defer insurance policy acquisition costs, principally commissions,
reinsurance fees, and premium taxes.  We include them in other assets
and charge them to expense over the terms of the related policies or
reinsurance agreements.


                         INVESTMENT SECURITIES

Valuation

We currently classify all investment securities as available-for-sale
and record them at fair value.  We adjust related balance sheet
accounts as if the unrealized gains and losses on investment
securities had been realized, and record the adjustment, net of tax,
in accumulated other comprehensive income (loss) in shareholder's
equity.  If the fair value of an investment security classified as
available-for-sale declines below its cost and we consider the decline
to be other than temporary, we reduce the investment security to its
fair value, and recognize a realized loss.


Revenue Recognition

We recognize interest on interest bearing fixed maturity investment
securities as revenue on the accrual basis using the interest method.
We amortize any premiums or discounts as a revenue adjustment using
the interest method.  We stop accruing interest revenue when the
collection of interest becomes uncertain.  We record dividends as
revenue on ex-dividend dates.  We recognize income on mortgage-backed
securities as revenue using a constant effective yield based on
estimated prepayments of the underlying mortgages.  If actual
prepayments differ from estimated prepayments, we calculate a new
effective yield and adjust the net investment in the security
accordingly.  We record the adjustment, along with all investment
revenue, in other revenues.  We recognize the pretax operating income
from our investments in limited partnerships as revenue quarterly.
<PAGE> 66

Notes to Consolidated Financial Statements, Continued


Realized Gains and Losses on Investment Securities

We specifically identify realized gains and losses on investment
securities and include them in other revenues.


                                OTHER

Other Invested Assets

Commercial mortgage loans, investment real estate, and insurance
policy loans are part of our insurance business segment's investment
portfolio and we include them in other assets.  We recognize interest
on commercial mortgage loans and insurance policy loans as revenue on
the accrual basis using the interest method.  We stop accruing revenue
when collection of interest becomes uncertain.  We recognize pretax
operating income from the operation of our investment real estate as
revenue monthly.  We include other invested asset revenue in other
revenues.


Cash Equivalents

We consider all short-term investments having a maturity date within
three months of its purchase date to be cash equivalents.


Goodwill

On January 1, 2002, we adopted Statement of Financial Accounting
Standards (SFAS) 142, "Goodwill and Other Intangible Assets."  During
the first quarter of each year, we test the branch, centralized real
estate, and insurance business segments for goodwill impairment.
Impairment is the condition that exists when the carrying value of
goodwill exceeds its implied fair value.  We assess the fair value of
the underlying business using a projected ten-year earnings stream,
discounted using the Treasury "risk free" rate.  The "risk free" rate
is the yield on ten-year U.S. Treasury Bills as of December 31 of the
prior year.  If the required impairment testing suggests that goodwill
is impaired, we reduce goodwill to an amount that results in the
carrying value of the underlying business approximating fair value.


Income Taxes

We recognize income taxes using the asset and liability method.  We
establish deferred tax assets and liabilities for temporary
differences between the financial reporting basis and the tax basis of
assets and liabilities, using the tax rates expected to be in effect
when the temporary differences reverse.

We provide a valuation allowance for deferred tax assets if it is
likely that we will not realize some portion of the deferred tax
asset.  We include an increase or decrease in a valuation allowance
resulting from a change in the realizability of the related deferred
tax asset in income.
<PAGE> 67

Notes to Consolidated Financial Statements, Continued


Derivative Financial Instruments

We recognize all derivatives on our consolidated balance sheet at
their fair value.  We designate them as either a hedge of the
variability of cash flows that we will receive or pay in connection
with a recognized asset or liability (a "cash flow" hedge), as a hedge
of the fair value of a recognized asset or liability (a "fair value"
hedge), or as derivatives that do not qualify as either a cash flow or
fair value hedge.

We record changes in the fair value of a derivative that is effective
as - and that we designate and qualifies as - a cash flow hedge, to
the extent that the hedge is effective, in other comprehensive income,
until earnings are affected by the variability of cash flows of the
hedged transaction.  We record changes in the fair value of a
derivative that is effective as - and that we designate and qualifies
as - a fair value hedge, along with changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk, in
current period earnings.  We record changes in the fair value of a
derivative that does not qualify as either a cash flow or fair value
hedge in current period earnings.

We formally document all relationships between derivative hedging
instruments and hedged items, as well as our risk-management
objectives and strategies for undertaking various hedge transactions
and our method to assess ineffectiveness.  We link all derivatives
that we designate as cash flow or fair value hedges to assets and
liabilities on the balance sheet.  We also formally assess (both at
the hedge's inception and at least quarterly thereafter) whether the
derivatives that we use in hedging transactions have been effective in
offsetting changes in the cash flows or fair value of hedged items and
whether we expect those derivatives to remain effective in future
periods.  We typically use regression analyses or other statistical
analyses to assess the effectiveness of our hedges.

We discontinue hedge accounting prospectively when:

     *  the derivative is no longer effective in offsetting changes in
        the cash flows or fair value of a hedged item;
     *  we sell, terminate, or exercise the derivative and/or the
        hedged item or they expire; or
     *  we change our objectives or strategies and designating the
        derivative as a hedging instrument is no longer appropriate.

When we determine that a derivative no longer qualifies as an
effective cash flow hedge of an existing hedged item and discontinue
hedge accounting, we will continue to carry the derivative on the
balance sheet at its fair value and amortize the cumulative other
comprehensive income adjustment to earnings when earnings are affected
by the original forecasted transaction.  When we determine that a
derivative no longer qualifies as an effective fair value hedge and
discontinue hedge accounting, we will continue to carry the derivative
on the consolidated balance sheet at its fair value, cease to adjust
the hedged asset or liability for changes in fair value, and begin to
amortize the cumulative basis adjustment on the hedged item into
earnings over the remaining life of the hedged item using the level-
yield method.  In all situations in which we discontinue hedge
accounting and the derivative remains outstanding, we will carry the
<PAGE> 68

Notes to Consolidated Financial Statements, Continued


derivative at its fair value on the consolidated balance sheet, and
recognize changes in the fair value of the derivative in current
period earnings.


Fair Value of Financial Instruments

We estimate the fair values disclosed in Note 24. using discounted
cash flows when quoted market prices or values obtained from
independent pricing services are not available.  The assumptions we
use, including the discount rate and estimates of future cash flows,
significantly affect the valuation techniques employed.  In certain
cases, we cannot verify the estimated fair values by comparison to
independent markets or realize the estimated fair values in immediate
settlement of the instruments.



Note 4.  Recent Accounting Pronouncements

In December 2003, the Accounting Standards Executive Committee issued
Statement of Position No. 03-3 (SOP 03-3) "Accounting for Certain
Loans or Debt Securities Acquired in a Transfer".  SOP 03-3 addresses
accounting for differences between contractual cash flows and cash
flows expected to be collected from an investor's initial investment
in loans acquired in a transfer if those differences are attributable,
at least in part, to credit quality.  SOP 03-3 limits the yield that
may be accreted (accretable yield) to the excess of the investor's
estimate of undiscounted expected principal, interest, and other cash
flows (cash flows expected at acquisition to be collected) over the
investor's initial investment in the loan.  SOP 03-3 requires that the
excess of contractual cash flows over cash flows expected to be
collected (nonaccretable difference) not be recognized as an
adjustment of yield, loss accrual, or valuation allowance.  Subsequent
increases in cash flows expected to be collected generally should be
recognized prospectively through adjustment of the loan's yield over
its remaining life.  Decreases in cash flows expected to be collected
should be recognized as impairment.  SOP 03-3 is effective for loans
acquired in fiscal years beginning after December 15, 2004.  In
addition, SOP 03-3 should be applied prospectively for fiscal years
beginning after December 15, 2004 for decreases in cash flows expected
to be collected on loans acquired in fiscal years beginning on or
before December 15, 2004.  The AcSEC has encouraged early adoption of
SOP 03-3 by affected companies.  We have determined that adoption of
SOP 03-3 will have no effect on our results of operations or financial
position in future periods due to immateriality.
<PAGE> 69

Notes to Consolidated Financial Statements, Continued


Note 5.  Finance Receivables

Components of net finance receivables by type were as follows:

                                            December 31, 2004
                              Real         Non-real      Retail
                             Estate         Estate        Sales
                              Loans          Loans       Finance     Total
                                         (dollars in thousands)

Gross receivables           $15,664,295  $3,359,288  $1,511,684  $20,535,267
Unearned finance charges
  and points and fees          (128,899)   (387,504)   (144,521)    (660,924)
Accrued finance charges         101,475      39,812      14,942      156,229
Deferred origination costs       30,168      30,047        -          60,215
Premiums, net of discounts       75,199       1,959         (87)      77,071

Total                       $15,742,238  $3,043,602  $1,382,018  $20,167,858


                                            December 31, 2003
                              Real         Non-real      Retail
                             Estate         Estate        Sales
                              Loans          Loans       Finance     Total
                                         (dollars in thousands)

Gross receivables           $10,980,168  $3,244,772  $1,480,724  $15,705,664
Unearned finance charges
  and points and fees          (137,473)   (388,009)   (154,494)    (679,976)
Accrued finance charges          83,356      40,590      11,911      135,857
Deferred origination costs       20,149      28,917        -          49,066
Premiums, net of discounts       91,940       5,850        (440)      97,350

Total                       $11,038,140  $2,932,120  $1,337,701  $15,307,961


Real estate loans are secured by first or second mortgages on
residential real estate and generally have maximum original terms of
360 months.  These loans may be closed-end accounts or open-end home
equity lines of credit and may be fixed-rate or adjustable-rate
products.  Non-real estate loans are secured by consumer goods,
automobiles or other personal property, or are unsecured and generally
have maximum original terms of 60 months.  Retail sales contracts are
secured principally by consumer goods and automobiles and generally
have maximum original terms of 60 months.  Revolving retail and
private label are secured by the goods purchased and generally require
minimum monthly payments based on outstanding balances.  At December
31, 2004, 98% of our net finance receivables were secured by the real
and/or personal property of the borrower, compared to 97% at December
31, 2003.  At December 31, 2004, real estate loans accounted for 78%
of the amount and 12% of the number of net finance receivables
outstanding, compared to 72% of the amount and 12% of the number of
net finance receivables outstanding at December 31, 2003.
<PAGE> 70

Notes to Consolidated Financial Statements, Continued


Contractual maturities of net finance receivables by type at December
31, 2004 were as follows:

             Real          Non-Real         Retail
            Estate          Estate           Sales
             Loans           Loans          Finance          Total
                             (dollars in thousands)

2005      $   298,343     $   797,498     $   362,182     $ 1,458,023
2006          358,805       1,013,257         293,232       1,665,294
2007          379,837         714,403         148,373       1,242,613
2008          400,482         319,066          79,533         799,081
2009          412,325         104,957          43,109         560,391
2010+      13,892,446          94,421         455,589      14,442,456

Total     $15,742,238     $ 3,043,602     $ 1,382,018     $20,167,858


Company experience has shown that customers will renew, convert or pay
in full a substantial portion of finance receivables prior to
maturity.  Contractual maturities are not a forecast of future cash
collections.

Principal cash collections and such collections as a percentage of
average net receivables by type were as follows:

                                        Years Ended December 31,
                                      2004        2003        2002
                                         (dollars in thousands)
Real estate loans:
  Principal cash collections       $4,120,397  $3,871,805  $2,953,426
  % of average net receivables         30.76%      38.59%      36.09%

Non-real estate loans:
  Principal cash collections       $1,751,537  $1,595,152  $1,614,216
  % of average net receivables         59.01%      55.33%      56.48%

Retail sales finance:
  Principal cash collections       $1,581,143  $1,643,671  $1,731,160
  % of average net receivables        121.88%     124.94%     126.56%


Unused credit limits extended by AIG Bank (whose private label finance
receivables are fully participated to the Company) and the Company to
their customers were $3.5 billion at December 31, 2004 and December
31, 2003.  Company experience has shown that the funded amounts have
been substantially less than the credit limits.  All unused credit
limits, in part or in total, can be cancelled at the discretion of AIG
Bank and the Company.
<PAGE> 71

Notes to Consolidated Financial Statements, Continued


Geographic diversification of finance receivables reduces the
concentration of credit risk associated with a recession in any one
region.  The largest concentrations of net finance receivables were as
follows:

                   December 31, 2004          December 31, 2003
                 Amount        Percent      Amount        Percent
                              (dollars in thousands)

California      $ 2,892,123         14%    $ 2,276,408         15%
Florida           1,233,843          6         936,435          6
Ohio              1,125,911          6         841,380          6
Illinois            992,101          5         835,156          5
Virginia            954,835          5         680,288          4
N. Carolina         904,490          4         883,866          6
Georgia             760,154          4         661,307          4
Indiana             743,377          4         639,201          4
Other            10,561,024         52       7,553,920         50

Total           $20,167,858        100%    $15,307,961        100%


Finance receivables on which we stopped accruing revenue totaled
$361.3 million at December 31, 2004 and $397.9 million at December 31,
2003.  Our accounting policy for revenue recognition on revolving
retail and private label finance receivables provides for the accrual
of revenue up to the date of charge-off at six months past due.
Revolving retail and private label finance receivables more than 90
days contractually delinquent totaled $10.9 million at December 31,
2004 and $12.1 million at December 31, 2003.  We accrued $.7 million
of revenue on these finance receivables during 2004 and $.8 million
during 2003.
<PAGE> 72

Notes to Consolidated Financial Statements, Continued


Note 6.  Allowance for Finance Receivable Losses

Changes in the allowance for finance receivable losses were as
follows:

                                        Years Ended December 31,
                                     2004         2003         2002
                                         (dollars in thousands)

Balance at beginning of year       $ 466,031   $ 463,031    $ 448,251
Provision for finance receivable
  losses                             270,158     313,830      303,585
Allowance related to net
  acquired receivables                  -           -           8,780
Charge-offs                         (327,125)   (353,273)    (338,802)
Recoveries                            46,967      42,443       41,217

Balance at end of year             $ 456,031   $ 466,031    $ 463,031


We estimated our allowance for finance receivable losses using SFAS 5,
"Accounting for Contingencies."  We based our allowance for finance
receivable losses primarily on historical loss experience using
migration analysis applied to sub-portfolios of large numbers of
relatively small homogenous accounts.  We adjusted the amounts
determined by migration analysis for management's best estimate about
the effects of current economic conditions, including the levels of
unemployment and personal bankruptcies, on the amounts determined from
historical loss experience.

We used the Company's internal data of net charge-offs and delinquency
by sub-portfolio as the basis to determine the historical loss
experience component of our allowance for finance receivable losses.
We used monthly bankruptcy statistics, monthly unemployment
statistics, and various other monthly or periodic economic statistics
published by departments of the federal government and other economic
statistics providers to determine the economic component of our
allowance for finance receivable losses.  There were no significant
changes in the kinds of observable data we used to measure these
components during 2004 or 2003.

See Note 3. for information on the determination of the allowance for
finance receivable losses.
<PAGE> 73

Notes to Consolidated Financial Statements, Continued


Note 7.  Investment Securities

Fair value and amortized cost of investment securities by type at
December 31 were as follows:

                                     Fair Value            Amortized Cost
                                 2004          2003      2004          2003
                                           (dollars in thousands)
Fixed maturity investment
  securities:
  Bonds:
    Corporate securities       $  789,802  $  583,264  $  753,949  $  548,838
    Mortgage-backed securities    131,115     158,184     126,773     151,240
    State and political
      subdivisions                368,264     330,857     346,476     314,111
    Other                          56,535     208,963      54,555     203,011
Total                           1,345,716   1,281,268   1,281,753   1,217,200
Preferred stocks                    9,788       9,296       9,177       9,275
Other long-term investments        22,709      16,727      20,398      18,388
Common stocks                         149         181          90          90

Total                          $1,378,362  $1,307,472  $1,311,418  $1,244,953


Unrealized gains and losses on investment securities by type at
December 31 were as follows:

                                  Unrealized Gains        Unrealized Losses
                                 2004          2003      2004          2003
                                           (dollars in thousands)
Fixed-maturity investment
  securities:
  Bonds:
    Corporate securities       $41,542        $37,591  $ 5,689        $ 3,165
    Mortgage-backed securities   4,692          7,129      350            185
    State and political
      subdivisions              21,918         16,932      130            186
    Other                        2,032         10,029       52          4,077
Total                           70,184         71,681    6,221          7,613
Preferred stocks                   639             51       28             30
Other long-term investments      2,547           -         236          1,661
Common stocks                       59             91     -              -

Total                          $73,429        $71,823  $ 6,485        $ 9,304
<PAGE> 74

Notes to Consolidated Financial Statements, Continued


Our unrealized losses on investment securities and the related
investment securities' fair value by type and length of time in a
continuous unrealized loss position at December 31, 2004 were as
follows:

                            Less Than         12 Months
                            12 Months          or More            Total
                         Fair  Unrealized  Fair  Unrealized  Fair  Unrealized
                         Value   Losses    Value   Losses    Value   Losses
                                        (dollars in thousands)

Fixed-maturity
  investment securities:
  Bonds:
    Corporate securities $ 79,228  $1,453  $26,526   $4,236  $105,754  $5,689
    Mortgage-backed
      securities           44,430     350     -        -       44,430     350
    State and political
      subdivisions         12,903      74    3,807       56    16,710     130
    Other                   7,052      52     -        -        7,052      52
Total                     143,613   1,929   30,333    4,292   173,946   6,221
Preferred stocks             -       -         900       28       900      28
Other long-term
  investments               1,367     236     -        -        1,367     236

Total                    $144,980  $2,165  $31,233   $4,320  $176,213  $6,485


The fair values of investment securities sold or redeemed and the
resulting realized gains, realized losses, and net realized losses
were as follows:

                                        Years Ended December 31,
                                     2004         2003         2002
                                         (dollars in thousands)

Fair value                         $515,830     $436,889     $756,128

Realized gains                     $  5,443     $ 10,583     $  9,147
Realized losses                       5,462       18,944       13,547

Net realized losses                $    (19)    $ (8,361)    $ (4,400)


Contractual maturities of fixed-maturity investment securities at
December 31, 2004 were as follows:
                                            Fair         Amortized
                                            Value           Cost
                                           (dollars in thousands)
Fixed maturities, excluding
  mortgage-backed securities:
    Due in 1 year or less                $   49,811     $   48,902
    Due after 1 year through 5 years        147,331        135,408
    Due after 5 years through 10 years      427,164        405,736
    Due after 10 years                      590,295        564,934
Mortgage-backed securities                  131,115        126,773

Total                                    $1,345,716     $1,281,753
<PAGE> 75

Notes to Consolidated Financial Statements, Continued


Actual maturities may differ from contractual maturities since
borrowers may have the right to prepay obligations.  The Company may
sell investment securities before maturity to achieve corporate
requirements and investment strategies.

Other long-term investments consist of six limited partnerships.
These limited partnerships provide diversification and have high
yielding, long-term financial objectives.  These limited partnerships
invest primarily in private equity investments, high yielding
securities, and mezzanine investments within a variety of industries.
At December 31, 2004, our total commitments for these six limited
partnerships were $34.3 million, consisting of $22.1 million funded
and $12.2 million unfunded.

Bonds on deposit with insurance regulatory authorities had carrying
values of $11.0 million at December 31, 2004 and $11.1 million at
December 31, 2003.



Note 8.  Other Assets

Components of other assets were as follows:

                                               December 31,
                                           2004            2003
                                          (dollars in thousands)

Goodwill                                 $224,721        $224,721
Swap agreements fair values               217,014            -
Income tax assets (a)                     208,401         126,939
Fixed assets                               84,609          90,634
Prepaid expenses and deferred
  charges                                  61,804          84,114
Other insurance investments                60,541          73,809
Real estate owned                          39,130          51,255
Other                                      88,753          59,828

Total                                    $984,973        $711,300


(a)   The components of net deferred tax assets are detailed in Note
      18.

Changes in goodwill by business segment were as follows:

                                          Centralized
                               Branch     Real Estate    Insurance     Total
                                          (dollars in thousands)

Balance at December 31, 2002  $149,781     $   -        $ 12,104     $161,885

Acquisitions                      -          62,836         -          62,836

Balance at December 31, 2003  $149,781       62,836     $ 12,104     $224,721

Balance at December 31, 2004  $149,781     $ 62,836     $ 12,104     $224,721
<PAGE> 76

Notes to Consolidated Financial Statements, Continued


During first quarter 2003, 2004, and 2005, we determined that the
required impairment testing for the Company's goodwill and other
intangible assets did not require a write-down of any such assets.



Note 9.  Long-term Debt

Carrying value and fair value of long-term debt at December 31 were as
follows:

                       Carrying Value               Fair Value
                    2004           2003        2004           2003
                                (dollars in thousands)

Long-term debt   $14,679,501   $10,862,218  $14,793,704   $11,152,447


Weighted average interest rates on long-term debt were as follows:

                 Years Ended December 31,        December 31,
                  2004     2003     2002         2004    2003

Long-term debt    4.28%    4.61%    5.89%       4.47%    4.35%


Contractual maturities of long-term debt at December 31, 2004 were as
follows:

                        Carrying Value
                    (dollars in thousands)

2005                      $ 1,548,786
2006                        2,989,896
2007                        2,371,264
2008                        1,260,317
2009                        1,637,513
2010-2014                   4,871,725

Total                     $14,679,501


In second quarter 2003, a consolidated special purpose subsidiary of
AGFI recorded $256.4 million of debt issued by a trust that purchased
$259.0 million of real estate loans as part of our securitization.  We
recorded the transaction as an "on balance sheet" secured financing.
The remaining balance of this secured debt at December 31, 2004 was
$98.4 million.

At December 31, 2004, we had $5.9 billion of long-term debt securities
registered under the Securities Act of 1933 that had not yet been
issued.

An AGFI debt agreement contains restrictions on consolidated retained
earnings for certain purposes (see Note 17.).
<PAGE> 77

Notes to Consolidated Financial Statements, Continued


Note 10.  Short-term Debt

AGFI and AGFC issue commercial paper with terms ranging from 1 to 270
days.  The weighted average maturity of our commercial paper at
December 31, 2004 was 32 days.

Included in short-term debt are extendible commercial notes that AGFC
sells with initial maturities of up to 90 days which AGFC may extend
to 390 days.  At December 31, 2004, extendible commercial notes
totaled $552.9 million.

Information concerning short-term debt was as follows:

                                            At or for the
                                       Years Ended December 31,
                                    2004         2003         2002
                                        (dollars in thousands)

Average borrowings               $3,913,604   $3,665,145   $4,126,866
Weighted average interest
  rate, at year end:
    Money market yield                2.30%        1.06%        1.45%
    Semi-annual bond
      equivalent yield                2.31%        1.07%        1.45%



Note 11.  Liquidity Facilities

We maintain credit facilities to support the issuance of commercial
paper and to provide an additional source of funds for operating
requirements.  At December 31, 2004, AGFC had committed credit
facilities totaling $3.3 billion consisting of $1.8 billion of 364-day
facilities and a $1.5 billion multi-year facility, including
facilities under which AGFI is an eligible borrower for up to $460
million.  The annual commitment fees for the facilities are based upon
AGFC's long-term credit ratings and averaged 0.07% at December 31,
2004.

At December 31, 2004, AGFI and certain of its subsidiaries also had
uncommitted credit facilities totaling $170.0 million which could be
increased depending upon lender ability to participate its loans under
the facilities.

Outstanding borrowings under all facilities totaled $60.0 million at
December 31, 2004 and December 31, 2003.  AGFC does not guarantee any
borrowings of AGFI.
<PAGE> 78

Notes to Consolidated Financial Statements, Continued


Note 12.  Derivative Financial Instruments

Our principal borrowing subsidiary is AGFC.  AGFC uses derivative
financial instruments in managing the cost of its debt and is neither
a dealer nor a trader in derivative financial instruments.  AGFC's
derivative financial instruments consist of interest rate, foreign
currency, and equity-indexed swap agreements.

We design our interest rate and foreign currency swap agreements to
qualify as cash flow hedges or fair value hedges.  While our equity-
indexed swap agreements mitigate economic exposure of related equity-
indexed debt, these swap agreements do not qualify as cash flow or
fair value hedges under GAAP.  At December 31, 2004, equity-indexed
debt was immaterial.

AGFC uses interest rate, foreign currency, and equity-indexed swap
agreements in conjunction with specific debt issuances in order to
achieve net U.S. dollar, fixed or floating interest exposure at costs
not materially different from costs we would have incurred by issuing
debt for the same net exposure without using derivatives.
Accordingly, AGFC's swap agreements did not have a material effect on
the Company's net income in any of the three years ended December 31,
2004.

Notional amounts of our swap agreements and weighted average receive
and pay rates were as follows:

                                           At or for the
                                      Years Ended December 31,
                                 2004           2003           2002
                                       (dollars in thousands)

Notional amount                $3,656,186    $2,495,000    $2,940,000

Weighted average receive rate       3.72%         2.19%         2.28%
Weighted average pay rate           4.45%         4.70%         5.24%


Notional amount maturities of our swap agreements and the respective
weighted average interest rates at December 31, 2004 were as follows:

                Notional       Weighted Average
                 Amount         Interest Rate
              (dollars in
               thousands)

2005           $  525,000           5.25%
2006              350,000           3.32
2007              750,000           3.23
2008              801,000           4.96
2010              622,300           4.29
2011              607,886           5.40

Total          $3,656,186           4.45%
<PAGE> 79

Notes to Consolidated Financial Statements, Continued


Changes in the notional amounts of our swap agreements were as
follows:

                                      Years Ended December 31,
                                  2004          2003          2002
                                       (dollars in thousands)

Balance at beginning of year   $2,495,000    $2,940,000    $2,500,000
New contracts                   2,081,186          -        1,050,000
Expired contracts                (920,000)     (445,000)     (610,000)

Balance at end of year         $3,656,186    $2,495,000    $2,940,000


New contracts in 2004 include in notional amounts interest rate swap
agreements of $256.9 million and foreign currency swap agreements
totaling 1.0 billion Euro ($1.2 billion) and 350 million pounds
Sterling ($622 million).

AGFC is exposed to credit risk if counterparties to derivative
financial instruments do not perform.  AGFC limits this exposure by
entering into agreements with counterparties having high credit
ratings and by basing the amounts and terms of these agreements on
their credit ratings.  AGFC regularly monitors counterparty credit
ratings throughout the term of the agreements.  At December 31, 2004,
AGFC had notional amounts of $3.1 billion in swap agreements with a
non-subsidiary affiliate that is highly rated due to credit support
from its parent.

AGFC's credit exposure on derivative financial instruments is limited
to the fair value of the agreements that are favorable to the Company.
At December 31, 2004, the swap agreements were recorded at fair values
of $217.0 million in other assets and $25.7 million in other
liabilities.  AGFC does not expect any counterparty to fail to meet
its obligation; however, non-performance would not have a material
impact on the Company's consolidated results of operations or
financial position.

AGFC's exposure to market risk is mitigated by the offsetting effects
of changes in the value of the agreements and of the related debt
being hedged.  At December 31, 2004, we expect to reclassify $15.5
million of net realized losses on swap agreements from accumulated
other comprehensive income (loss) to income during the next twelve
months.
<PAGE> 80

Notes to Consolidated Financial Statements, Continued


Note 13.  Insurance

Components of insurance claims and policyholder liabilities were as
follows:

                                                 December 31,
                                             2004            2003
                                            (dollars in thousands)

Finance receivable related:
  Unearned premium reserves                $154,461        $165,627
  Benefit reserves                           23,504          18,788
  Claim reserves                             30,052          30,264

  Subtotal                                  208,017         214,679

Non-finance receivable related:
  Benefit reserves                          192,315         200,992
  Claim reserves                             22,625          22,691

  Subtotal                                  214,940         223,683

Total                                      $422,957        $438,362


Our insurance subsidiaries enter into reinsurance agreements both
between themselves and with other insurers, including affiliated
insurance companies.  Insurance claims and policyholder liabilities
included the following amounts assumed from other insurers:

                                                 December 31,
                                             2004            2003
                                            (dollars in thousands)

Affiliated insurance companies             $ 53,688        $ 55,184
Non-affiliated insurance companies           32,289          38,352

Total                                      $ 85,977        $ 93,536


Our insurance subsidiaries' business reinsured to others was not
significant during any of the last three years.

Our insurance subsidiaries file financial statements prepared using
statutory accounting practices prescribed or permitted by each
insurance company's state of domicile.  These are comprehensive bases
of accounting other than GAAP.
<PAGE> 81

Notes to Consolidated Financial Statements, Continued


Reconciliations of statutory net income to GAAP net income were as
follows:

                                           Years Ended December 31,
                                          2004       2003      2002
                                            (dollars in thousands)

Statutory net income                    $90,110    $88,607    $78,149

Change in deferred policy
  acquisition costs                      (5,179)    (8,550)    (8,678)
Reserve changes                          (3,765)    (6,758)     2,919
Amortization of interest
  maintenance reserve                    (1,130)    (1,262)    (1,456)
Deferred income tax benefit                  58      6,537      8,299
Other, net                                1,000     (1,612)    (5,623)

GAAP net income                         $81,094    $76,962    $73,610


Reconciliations of statutory equity to GAAP equity were as follows:

                                                 December 31,
                                             2004            2003
                                            (dollars in thousands)

Statutory equity                           $  962,287    $  861,589

Reserve changes                                64,622        69,550
Net unrealized gains                           64,634        64,181
Deferred policy acquisition costs              51,616        56,924
Decrease in carrying value
  of affiliates                               (34,501)      (28,603)
Deferred income taxes                         (29,675)      (31,015)
Goodwill                                       12,104        12,104
Asset valuation reserve                         8,228         6,178
Interest maintenance reserve                     (670)          453
Other, net                                     (2,025)        1,286

GAAP equity                                $1,096,620    $1,012,647
<PAGE> 82

Notes to Consolidated Financial Statements, Continued


Note 14.  Other Liabilities

Components of other liabilities were as follows:

                                               December 31,
                                           2004            2003
                                          (dollars in thousands)

Accrued interest                         $ 158,872       $114,590
Uncashed checks, reclassified from
  cash                                     119,879        101,122
Salary and benefit liabilities              37,828         26,206
Swap agreements fair values                 25,689         75,679
Other                                       72,173         59,142

Total                                    $ 414,441       $376,739



Note 15.  Capital Stock

AGFI has two classes of authorized capital stock:  special shares and
common shares.  AGFI may issue special shares in series.  The board of
directors determines the dividend, liquidation, redemption,
conversion, voting and other rights prior to issuance.  Par value,
shares authorized, and shares issued and outstanding at December 31,
2004 and 2003 were as follows:

                                                      Shares
                                              Issued and Outstanding
                       Par       Shares            December 31,
                      Value    Authorized      2004            2003

Special Shares          -      25,000,000         -              -
Common Shares         $0.50    25,000,000    2,000,000      2,000,000



Note 16.  Accumulated Other Comprehensive Income (Loss)

Components of accumulated other comprehensive income (loss) were as
follows:

                                               December 31,
                                           2004            2003
                                          (dollars in thousands)

Net unrealized gains on investment
  securities                             $43,515         $ 40,639
Net unrealized losses on swap
  agreements                              (6,102)         (55,586)

Accumulated other comprehensive
  income (loss)                          $37,413         $(14,947)
<PAGE> 83

Notes to Consolidated Financial Statements, Continued


Note 17.  Retained Earnings

AGFI's ability to pay dividends is substantially dependent on the
receipt of dividends or other funds from its subsidiaries.  State law
restricts the amounts our insurance subsidiaries may pay as dividends
without prior notice to, or in some cases prior approval from, the
Indiana Department of Insurance.  At December 31, 2004, the maximum
amount of dividends which our insurance subsidiaries may pay in 2005
without prior approval was $96.2 million.  At December 31, 2004, our
insurance subsidiaries had statutory capital and surplus of $962.3
million.  Merit Life Insurance Co. (Merit), a wholly owned subsidiary
of AGFC, had $52.7 million of accumulated earnings at December 31,
2004 for which no federal income tax provisions have been required.
Merit would be liable for federal income taxes on such earnings if
they were distributed as dividends or exceeded limits prescribed by
tax laws.  If such earnings were to become taxable at December 31,
2004, the federal income tax would approximate $18.4 million.  During
2004, the federal government enacted a tax law change that provides a
temporary opportunity to reduce or eliminate this potential federal
income tax liability.  For U.S. life insurance companies that have
these accumulated earnings for which no federal income tax has been
provided, dividends paid during 2005 and 2006 will first be applied to
reduce these accumulated earnings balances.  Merit has the capability
and expects to pay a dividend of at least $52.7 million during 2005
that would eliminate this accumulated earnings balance and, therefore,
this potential $18.4 million federal income tax liability.

Certain AGFI financing agreements effectively limit the amount of
dividends AGFI may pay.  Under the most restrictive provision
contained in these agreements, $1.0 billion of the retained earnings
of AGFI was free from restriction at December 31, 2004.



Note 18.  Income Taxes

The life insurance subsidiaries of AGFC file separate federal income
tax returns.  AGFI and all other AGFI subsidiaries file a consolidated
federal income tax return with AIG.  We provide federal income taxes
as if AGFI and the other AGFI subsidiaries file separate tax returns
and pay AIG accordingly under a tax sharing agreement.

Components of provision for income taxes were as follows:

                                        Years Ended December 31,
                                     2004         2003         2002
                                         (dollars in thousands)
Federal:
  Current                          $284,729     $197,903     $197,226
  Deferred                          (73,047)      (2,324)     (60,601)
Total federal                       211,682      195,579      136,625
State                                 3,935       13,726        8,717

Total                              $215,617     $209,305     $145,342
<PAGE> 84

Notes to Consolidated Financial Statements, Continued


Reconciliations of the statutory federal income tax rate to the
effective tax rate were as follows:

                                         Years Ended December 31,
                                      2004         2003         2002

Statutory federal income tax rate    35.00%       35.00%       35.00%

Contingency reduction                (5.57)         -          (6.10)
State income taxes                    2.05         2.39         1.11
Nontaxable investment income          (.71)       (2.53)        (.64)
Amortization of other intangibles      .36         1.33          -
Other, net                            (.05)         .19          .16

Effective income tax rate            31.08%       36.38%       29.53%


We reduced the provision for income taxes by $38.7 million in 2004 and
$30.0 million in 2002 resulting from favorable settlements of income
tax audit issues.  These reductions decreased the effective income tax
rates for 2004 and 2002.

The Internal Revenue Service (IRS) has completed examinations of AIG's
tax returns through 1990.  The IRS has also completed examinations of
our previous parent company's tax returns through 1999.

Components of deferred tax assets and liabilities were as follows:

                                                December 31,
                                            2004            2003
                                           (dollars in thousands)
Deferred tax assets:
  Allowance for finance receivable
    losses                                $154,821        $149,472
  Deferred intercompany revenue             67,871            -
  Goodwill                                   4,801           5,356
  Deferred insurance commissions             4,279           4,275
  Insurance reserves                         3,407           3,100
  Swap agreements                            3,285           8,049
  Other                                     26,953          18,108

Total                                      265,417         188,360

Deferred tax liabilities:
  Loan origination costs                    21,127          16,684
  Fixed assets                               5,961           8,342
  Other                                     29,928          36,680

Total                                       57,016          61,706

Net deferred tax assets                   $208,401        $126,654


During second quarter 2004, we reclassified $36.5 million of our
deferred tax liability to accrued taxes.

No valuation allowance was considered necessary at December 31, 2004
and 2003.
<PAGE> 85

Notes to Consolidated Financial Statements, Continued


Note 19.  Lease Commitments, Rent Expense, and Contingent Liabilities

Annual rental commitments for leased office space, automobiles and
data processing equipment accounted for as operating leases, excluding
leases on a month-to-month basis, were as follows:

                            Lease Commitments
                         (dollars in thousands)

2005                            $ 51,015
2006                              40,244
2007                              29,941
2008                              20,585
2009                               8,666
subsequent to 2009                 9,054

Total                           $159,505


Taxes, insurance and maintenance expenses are obligations of the
Company under certain leases.  In the normal course of business,
leases that expire will be renewed or replaced by leases on other
properties.  Future minimum annual rental commitments will probably
not be less than the amount of rental expense incurred in 2004.
Rental expense totaled $54.1 million in 2004, $53.7 million in 2003,
and $51.5 million in 2002.

AGFI and certain of its subsidiaries are parties to various lawsuits
and proceedings, including certain purported class action claims,
arising in the ordinary course of business.  In addition, many of
these proceedings are pending in jurisdictions that permit damage
awards disproportionate to the actual economic damages alleged to have
been incurred.  Based upon information presently available, we believe
that the total amounts, if any, that will ultimately be paid arising
from these lawsuits and proceedings will not have a material adverse
effect on our consolidated results of operations or financial
position.  However, the continued occurrences of large damage awards
in general in the United States, including large punitive damage
awards that bear little or no relation to actual economic damages
incurred by plaintiffs in some jurisdictions, create the potential for
an unpredictable judgment in any given suit.



Note 20.  Consolidated Statements of Cash Flows

Supplemental disclosure of certain cash flow information was as
follows:

                                        Years Ended December 31,
                                     2004         2003         2002
                                         (dollars in thousands)

Interest paid                      $575,106     $547,647     $547,676
Income taxes paid                   320,356      213,848      238,632
<PAGE> 86

Notes to Consolidated Financial Statements, Continued


In third quarter 2004, AGFI received a non-cash capital contribution
from its parent of $1.0 million reflecting certain computer equipment
that we previously leased from a non-subsidiary affiliate.  In fourth
quarter 2002, AGFI received a non-cash capital contribution from its
parent of $7.3 million reflecting AIG's assumption of certain benefit
obligations effective January 1, 2002.



Note 21.  Benefit Plans

The Company's employees participate in various benefit plans sponsored
by AIG, including a noncontributory qualified defined benefit
retirement plan, various stock option, incentive and purchase plans,
and a 401(k) plan.

AIG's U.S. plans do not separately identify projected benefit
obligations and plan assets attributable to employees of participating
affiliates.  AIG's projected benefit obligations exceeded the plan
assets at December 31, 2004 by $502.7 million.



Note 22.  Segment Information

We have three business segments:  branch, centralized real estate, and
insurance.  We define our segments by type of financial service
product offered, nature of the production process, and method used to
distribute our products and to provide our services, as well as our
management reporting structure.

In prior years, we reported our centralized real estate business and
our branch business in our consumer finance business segment.  During
2004, we expanded our segment reporting to reflect our centralized
real estate business as a separate segment.  We also restated prior
periods so that these prior periods are shown on a comparable basis to
our new presentation.

In our branch business segment, we:

     *  originate real estate loans secured by first or second
        mortgages on residential real estate, which may be closed-end
        accounts or open-end home equity lines of credit;
     *  originate secured and unsecured non-real estate loans;
     *  purchase retail sales contracts and provide revolving retail
        services arising from the retail sale of consumer goods and
        services by retail merchants; and
     *  purchase private label receivables originated by AIG Bank
        under a participation agreement.

To supplement our lending and retail sales financing activities, we
purchase portfolios of real estate loans, non-real estate loans, and
retail sales finance receivables originated by other lenders.  We also
offer credit and non-credit insurance and ancillary products to all
eligible branch customers.
<PAGE> 87

Notes to Consolidated Financial Statements, Continued


In our centralized real estate business segment, we:

     *  provide, for fees, marketing, certain origination processing
        services, and loan servicing and related services for AIG
        Bank;
     *  originate real estate loans for transfer to the centralized
        real estate servicing center;
     *  originate real estate loans for sale to investors with
        servicing released to the purchaser; and
     *  service a portfolio of real estate loans generated through:
            *  portfolio acquisitions from third party lenders;
            *  our mortgage origination subsidiaries;
            *  refinancing existing mortgages; or
            *  advances on home equity lines of credit.

In our insurance business segment, we principally write and reinsure
credit life, credit accident and health, credit-related property and
casualty, credit involuntary unemployment, and non-credit insurance
covering our customers and the property pledged as collateral through
products that principally the branch business segment offers its
customers.  We also monitor our finance receivables to determine that
the collateral is adequately protected.

We evaluate the performance of the segments based on pretax operating
earnings.  The accounting policies of the segments are the same as
those disclosed in Note 3., except for the following:

     *  segment finance charge revenues are not reduced for the
        amortization of the deferred origination costs;
     *  segment operating expenses are not reduced for the deferral of
        origination costs;
     *  segment finance receivables exclude deferred origination
        costs; and
     *  segment investment revenues exclude realized gains and losses
        and certain investment expenses.

We intend intersegment sales and transfers to approximate the amounts
segments would earn if dealing with independent third parties.

The following tables display information about the Company's segments
as well as reconciliations of the segment totals to the consolidated
financial statement amounts.  The adjustments in the reconciliations
include the following:

     *  amortization of deferred origination costs, realized gains
        (losses) on investments, and certain investment expenses for
        revenues;
     *  deferral of origination costs for operating expenses;
     *  realized gains (losses) and certain other investment revenue
        for pretax income; and
     *  goodwill, deferred origination costs, other assets, and
        corporate assets that are not considered pertinent to
        determining segment performance for assets.  Corporate assets
        include cash, prepaid expenses, deferred charges, and fixed
        assets.

Adjustments for operating expenses and pretax income in 2003 and 2002
also included pension expense.
<PAGE> 88

Notes to Consolidated Financial Statements, Continued


At or for the year ended December 31, 2004:

                                      Centralized                     Total
                          Branch      Real Estate    Insurance      Segments
                                        (dollars in thousands)
Revenues:
  External:
    Finance charges      $ 1,713,536   $  358,536   $     -       $ 2,072,072
    Insurance                    763         -         176,077        176,840
    Other                     (9,142)     206,845       93,562        291,265
  Intercompany                80,564        1,019      (70,479)        11,104
Interest expense             382,545      196,737         -           579,282
Operating expenses           650,942      204,676       29,802        885,420
Provision for finance
  receivable losses          257,461       13,971         -           271,432
Pretax income                494,773      151,016       91,323        737,112
Assets                    11,305,399    8,410,635    1,472,399     21,188,433


At or for the year ended December 31, 2003:

                                      Centralized                     Total
                          Branch      Real Estate    Insurance      Segments
                                        (dollars in thousands)
Revenues:
  External:
    Finance charges      $ 1,709,762   $  163,167   $     -       $ 1,872,929
    Insurance                    881         -         180,761        181,642
    Other                    (10,920)     133,773       88,633        211,486
  Intercompany                79,719       12,513      (71,433)        20,799
Interest expense             400,716       99,488         -           500,204
Operating expenses           623,479      112,376       31,811        767,666
Provision for finance
  receivable losses          306,430        8,535         -           314,965
Pretax income                448,817       89,054       96,914        634,785
Assets                    11,016,603    3,948,498    1,389,527     16,354,628


At or for the year ended December 31, 2002:

                                      Centralized                     Total
                          Branch      Real Estate    Insurance      Segments
                                        (dollars in thousands)
Revenues:
  External:
    Finance charges      $ 1,738,868   $   64,604   $     -       $ 1,803,472
    Insurance                    994         -         190,236        191,230
    Other                    (16,678)        (379)      87,746         70,689
  Intercompany                78,524          354      (75,869)         3,009
Interest expense             477,578       36,107         -           513,685
Operating expenses           572,658        9,841       33,681        616,180
Provision for finance
  receivable losses          292,554       12,290         -           304,844
Pretax income                458,918        6,341       84,436        549,695
Assets                    11,614,069    1,858,919    1,320,844     14,793,832
<PAGE> 89

Notes to Consolidated Financial Statements, Continued


Reconciliations of segment totals to consolidated financial statement
amounts were as follows:

                                           At or for the
                                      Years Ended December 31,
                                 2004          2003           2002
                                       (dollars in thousands)
Revenues
Segments                      $ 2,551,281   $ 2,286,856   $ 2,068,400
Corporate                         (20,292)      (18,862)       (7,197)
Adjustments                       (71,827)      (77,888)      (61,365)

Consolidated revenue          $ 2,459,162   $ 2,190,106   $ 1,999,838


Interest Expense
Segments                      $   579,282   $   500,204   $   513,685
Corporate                          57,022        46,512        45,606

Consolidated interest
  expense                     $   636,304   $   546,716   $   559,291


Operating Expenses
Segments                      $   885,420   $   767,666   $   616,180
Corporate                         (29,570)      (14,772)        2,227
Adjustments                       (73,502)      (66,591)      (56,888)

Consolidated operating
  expenses                    $   782,348   $   686,303   $   561,519


Provision for Finance
  Receivable Losses
Segments                      $   271,432   $   314,965   $   304,844
Corporate                          (1,274)       (1,135)       (1,259)

Consolidated provision for
  finance receivable losses   $   270,158   $   313,830   $   303,585


Pretax Income
Segments                      $   737,112   $   634,785   $   549,695
Corporate                         (45,118)      (48,081)      (53,050)
Adjustments                         1,677       (11,296)       (4,477)

Consolidated pretax income    $   693,671   $   575,408   $   492,168


Assets
Segments                      $21,188,433   $16,354,628   $14,793,832
Corporate                         811,761       405,238       516,853
Adjustments                       235,578       246,298       173,601

Consolidated assets           $22,235,772   $17,006,164   $15,484,286
<PAGE> 90

Notes to Consolidated Financial Statements, Continued


Note 23.  Interim Financial Information (Unaudited)

Our quarterly statements of income for 2004 were as follows:

                                              2004 Quarter Ended
                                   Dec. 31,   Sep. 30,   June 30,   Mar. 31,
                                            (dollars in thousands)
Revenues
  Finance charges                  $522,811   $507,232   $483,501   $463,658
  Insurance                          43,471     43,989     43,679     45,701
  Other:
    Service fee income from a
      non-subsidiary affiliate       61,410     62,113     40,716     35,617
    Miscellaneous                    25,151     23,069     28,962     28,082
Total revenues                      652,843    636,403    596,858    573,058

Expenses
  Interest expense                  184,225    167,518    146,900    137,661
  Operating expenses:
    Salaries and benefits           131,551    120,509    126,355    119,880
    Other operating expenses         65,625     75,909     71,690     70,829
  Provision for finance
    receivable losses                76,512     69,126     65,267     59,253
  Insurance losses and loss
    adjustment expenses              16,287     21,267     18,000     21,127
Total expenses                      474,200    454,329    428,212    408,750

Income before provision for
  income taxes                      178,643    182,074    168,646    164,308

Provision for Income Taxes           27,400     67,151     61,396     59,670

Net Income                         $151,243   $114,923   $107,250   $104,638
<PAGE> 91

Notes to Consolidated Financial Statements, Continued


Our quarterly statements of income for 2003 were as follows:

                                              2003 Quarter Ended
                                   Dec. 31,   Sep. 30,   June 30,   Mar. 31,
                                            (dollars in thousands)
Revenues
  Finance charges                  $446,266   $445,241   $441,424   $440,346
  Insurance                          46,955     46,307     42,672     45,708
  Other:
    Service fee income from a
      non-subsidiary affiliate       36,082     12,406        491        568
    Miscellaneous                    33,170     49,336     62,551     40,583
Total revenues                      562,473    553,290    547,138    527,205

Expenses
  Interest expense                  134,612    132,263    136,965    142,876
  Operating expenses:
    Salaries and benefits           109,465    103,187    101,900     98,806
    Other operating expenses         72,819     66,332     69,530     64,264
  Provision for finance
    receivable losses                84,047     82,362     76,305     71,116
  Insurance losses and loss
    adjustment expenses              14,862     17,438     15,160     20,389
Total expenses                      415,805    401,582    399,860    397,451

Income before provision for
  income taxes                      146,668    151,708    147,278    129,754

Provision for Income Taxes           53,236     56,969     53,389     45,711

Net Income                         $ 93,432   $ 94,739   $ 93,889   $ 84,043
<PAGE> 92

Notes to Consolidated Financial Statements, Continued


Note 24.  Fair Value of Financial Instruments

We present the carrying values and estimated fair values of certain of
the Company's financial instruments below.  Readers should exercise
care in drawing conclusions based on fair value, since the fair values
presented below can be misinterpreted and do not include the value
associated with all of the Company's assets and liabilities.

                              December 31, 2004         December 31, 2003
                           Carrying          Fair    Carrying          Fair
                            Value           Value     Value           Value
                                         (dollars in thousands)
Assets

Net finance receivables,
  less allowance for
  finance receivable
  losses                  $19,711,827  $20,194,750  $14,841,930  $15,345,079
Investment securities       1,378,362    1,378,362    1,307,472    1,307,472
Cash and cash equivalents     160,610      160,610      145,462      145,462
Swap agreements               217,014      217,014         -            -


Liabilities

Long-term debt             14,679,501   14,793,704   10,862,218   11,152,447
Short-term debt             4,299,085    4,299,085    3,467,096    3,467,096
Swap agreements                25,689       25,689       75,679       75,679


Off-Balance Sheet Financial
  Instruments

Unused customer credit
  limits                         -            -            -            -
Limited partnership commitments  -          12,238         -          14,520



                VALUATION METHODOLOGIES AND ASSUMPTIONS

We used the following methods and assumptions to estimate the fair
value of our financial instruments.


Finance Receivables

We estimated fair values of net finance receivables, less allowance
for finance receivable losses using projected cash flows, computed by
category of finance receivable, discounted at the weighted-average
interest rates offered for similar finance receivables at December 31
of each year.  We based cash flows on contractual payment terms
adjusted for delinquencies and finance receivable losses.  The fair
value estimates do not reflect the value of the underlying customer
relationships or the related distribution systems.
<PAGE> 93

Notes to Consolidated Financial Statements, Continued


Investment Securities

When available, we used quoted market prices as fair values of
investment securities.  For investment securities not actively traded,
we estimated fair values using values obtained from independent
pricing services or, in the case of some private placements, by
discounting expected future cash flows using each year's December 31
market rate applicable to yield, credit quality, and average life of
the investments.


Cash and Cash Equivalents

The fair values of cash and cash equivalents approximated the carrying
values.


Swap Agreements

We estimated the fair values of interest rate, foreign currency, and
equity-indexed swap agreements using counterparty quotes and market
recognized valuation systems at each year's December 31 market rates.


Long-term Debt

We estimated the fair values of long-term debt using cash flows
discounted at each year's December 31 borrowing rates and adjusted for
the fair value hedge swap agreement.


Short-term Debt

The fair values of short-term debt approximated the carrying values.


Unused Customer Credit Limits

The unused credit limits available to the customers of AIG Bank, which
sells private label receivables to the Company under a participation
agreement, and to the Company's customers have no fair value.  The
interest rates charged on these facilities can be changed at AIG
Bank's discretion for private label, or are adjustable and reprice
frequently for loan and retail revolving lines of credit.  These
amounts, in part or in total, can be cancelled at the discretion of
AIG Bank and the Company.


Limited Partnership Commitments

The fair values of limited partnership commitments equal the
commitment amounts due to the partnership's ability to call these
commitments on demand.
<PAGE> 94

Item 9A.  Controls and Procedures.


(a)  Evaluation of disclosure controls and procedures

     The conclusions of our principal executive officer and principal
     financial officer about the effectiveness of the Company's
     disclosure controls and procedures based on their evaluation of
     these controls and procedures as of December 31, 2004 are as
     follows:

     The Company's disclosure controls and procedures are designed to
     ensure that information required to be disclosed by the Company
     is recorded, processed, summarized and reported within required
     timeframes.  The Company's disclosure controls and procedures
     include controls and procedures designed to ensure that
     information required to be disclosed is accumulated and
     communicated to the Company's management, including its principal
     executive officer and principal financial officer, as appropriate
     to allow timely decisions regarding required disclosure.

     The Company's management, including its principal executive
     officer and principal financial officer, evaluates the
     effectiveness of our disclosure controls and procedures as of the
     end of each quarter.  Based on an evaluation of the disclosure
     controls and procedures as of December 31, 2004, the Company's
     principal executive officer and principal financial officer have
     concluded that the disclosure controls and procedures have
     functioned effectively and that the consolidated financial
     statements fairly present our consolidated financial position and
     the results of our operations for the periods presented.

(b)  Changes in internal control over financial reporting

     There was no change in the Company's internal control over
     financial reporting during the three months ended December 31,
     2004, that has materially affected, or is reasonably likely to
     materially affect, the Company's internal control over financial
     reporting.
<PAGE> 95

                               PART III


Item 14.  Principal Accountant Fees and Services.


One of AIG's Audit Committee's duties is to oversee our independent
accountants, PricewaterhouseCoopers LLP.  AGFI does not have its own
Audit Committee.  AIG's Audit Committee has adopted pre-approval
policies and procedures regarding audit and non-audit services
provided by PricewaterhouseCoopers LLP for AIG and its consolidated
subsidiaries, including AGFI.

Independent accountant fees and services were as follows:

                                           Years Ended December 31,
                                            2004              2003
                                            (dollars in thousands)

Audit fees                                $1,027                $850
Audit-related fees                           112                  90
Tax fees                                    -                     -
All other fees                                 2                   2

Total                                     $1,141                $942


Audit fees in 2004 and 2003 were primarily for the audit of the AGFI
and AGFC Annual Reports on Form 10-K, quarterly review procedures in
relation to the AGFI and AGFC Quarterly Reports on Form 10-Q, and
statutory audits of insurance subsidiaries of AGFC.  AGFC is a
separate SEC registrant and its fees are part of the total AGFI fee,
representing approximately 99% of the total audit fees for AGFI.
Audit-related fees were primarily for the audit of a subsidiary of
AGFC in 2004 and 2003.  All other fees in 2004 and 2003 were primarily
for accounting research licensing.
<PAGE> 96

                                PART IV


Item 15.  Exhibits and Financial Statement Schedules.


(a)  (1) and (2)  The following consolidated financial statements of
     American General Finance, Inc. and subsidiaries are included in
     Item 8:

          Consolidated Balance Sheets, December 31, 2004 and 2003

          Consolidated Statements of Income, years ended December 31,
          2004, 2003, and 2002

          Consolidated Statements of Shareholder's Equity, years ended
          December 31, 2004, 2003, and 2002

          Consolidated Statements of Cash Flows, years ended December
          31, 2004, 2003, and 2002

          Consolidated Statements of Comprehensive Income, years ended
          December 31, 2004, 2003, and 2002

          Notes to Consolidated Financial Statements

     Schedule I--Condensed Financial Information of Registrant is
     included in Item 15(d).

     All other financial statement schedules have been omitted because
     they are inapplicable.

     (3)  Exhibits:

          Exhibits are listed in the Exhibit Index beginning on page
          103 herein.

(b)  Exhibits

     The exhibits required to be included in this portion of Item 15.
     are submitted as a separate section of this report.
<PAGE> 97

Item 15(d).


Schedule I - Condensed Financial Information of Registrant


                    American General Finance, Inc.
                       Condensed Balance Sheets




                                                         December 31,
                                                     2004            2003
                                                    (dollars in thousands)
Assets

Cash and cash equivalents                         $      345      $      115
Investment in subsidiaries                         2,736,460       2,051,337
Notes receivable from subsidiaries                   298,448         264,854
Other assets                                          51,460          71,821

Total assets                                      $3,086,713      $2,388,127


Liabilities and Shareholder's Equity

Long-term debt, 2.80% - 3.00%
  due 2009                                        $  100,000      $     -
Short-term debt                                      605,622         559,320
Other liabilities                                      4,849           5,010

Total liabilities                                    710,471         564,330

Shareholder's equity:
  Common stock                                         1,000           1,000
  Additional paid-in capital                         996,305         920,276
  Other equity                                        37,413         (14,947)
  Retained earnings                                1,341,524         917,468

Total shareholder's equity                         2,376,242       1,823,797

Total liabilities and shareholder's equity        $3,086,713      $2,388,127




See Notes to Condensed Financial Statements.
<PAGE> 98

Schedule I, Continued


                    American General Finance, Inc.
                    Condensed Statements of Income




                                                 Years Ended December 31,
                                                2004       2003       2002
                                                  (dollars in thousands)

Revenues
  Dividends received from subsidiaries        $ 15,827   $176,065   $154,692
  Interest and other                            19,053     24,310     20,389

Total revenues                                  34,880    200,375    175,081

Expenses
  Interest expense                              20,604     17,532     21,254
  Operating expenses                             1,564      3,127      2,713

Total expenses                                  22,168     20,659     23,967

Income before income taxes and equity
  in undistributed net income of
  subsidiaries                                  12,712    179,716    151,114

(Credit) Provision for Income Taxes             (1,090)     1,278     (1,252)

Income before equity in undistributed
  net income of subsidiaries                    13,802    178,438    152,366

Equity in Undistributed Net Income of
  Subsidiaries                                 464,252    187,665    194,460

Net Income                                    $478,054   $366,103   $346,826




See Notes to Condensed Financial Statements.
<PAGE> 99

Schedule I, Continued
<TABLE>

                       American General Finance, Inc.
                     Condensed Statements of Cash Flows



<CAPTION>
                                                      Years Ended December 31,
                                                    2004       2003        2002
                                                       (dollars in thousands)
<S>                                              <C>         <C>         <C>
Cash Flows from Operating Activities
Net Income                                       $ 478,054   $ 366,103   $ 346,826
Reconciling adjustments:
  Equity in undistributed net income
    of subsidiaries                               (464,252)   (187,665)   (194,460)
  Change in other assets and other liabilities       3,236     (13,024)    (38,695)
  Other, net                                         5,868      10,194       7,657
Net cash provided by operating activities           22,906     175,608     121,328

Cash Flows from Investing Activities
  Capital contributions to subsidiaries           (156,200)       -        (66,737)
  Change in notes receivable from subsidiaries     (33,594)     32,616      28,092
  Other, net                                          (186)       (743)     (1,200)
Net cash (used for) provided by
  investing activities                            (189,980)     31,873     (39,845)

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt         100,000        -           -
  Repayment of long-term debt                         -           -         (1,284)
  Change in short-term debt                         46,302     (24,541)     34,028
  Capital contributions from parent                 75,000        -         33,000
  Dividends paid                                   (53,998)   (183,114)   (146,999)
Net cash provided by (used for)
  financing activities                             167,304    (207,655)    (81,255)

Increase (decrease) in cash and cash equivalents       230        (174)        228
Cash and cash equivalents at beginning of year         115         289          61
Cash and cash equivalents at end of year         $     345   $     115   $     289



<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE> 100

Schedule I, Continued


                     American General Finance, Inc.
                 Notes to Condensed Financial Statements
                           December 31, 2004




Note 1.  Accounting Policies

AGFI records its investments in subsidiaries at cost plus the equity
in undistributed (overdistributed) net income of subsidiaries since
the date of the acquisition.  You should read the condensed financial
statements of the registrant in conjunction with AGFI's consolidated
financial statements.



Note 2.  Long-term Debt

The long-term debt at December 31, 2004 matures in 2009.



Note 3.  Short-term Debt

Components of short-term debt were as follows:

                                               December 31,
                                           2004            2003
                                          (dollars in thousands)

Notes payable to subsidiaries            $309,009        $276,753
Commercial paper                          236,613         222,567
Notes payable to banks                     60,000          60,000

Total                                    $605,622        $559,320
<PAGE> 101

                              Signatures


Pursuant to the requirements of Section 13 or 15(d) 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
March 7, 2005.

                                  AMERICAN GENERAL FINANCE, INC.


                                  By: /s/  Donald R. Breivogel, Jr.
                                           Donald R. Breivogel, Jr.
                                  (Senior Vice President, Chief
                                   Financial Officer, and Director)


Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities indicated on March 7, 2005.



Frederick W. Geissinger*            Robert A. Cole*
Frederick W. Geissinger             Robert A. Cole
(Chairman, President, Chief         (Director)
 Executive Officer, and
 Director - Principal Executive
 Officer)                           William N. Dooley*
                                    William N. Dooley
                                    (Director)
/s/  Donald R. Breivogel, Jr.
     Donald R. Breivogel, Jr.
(Senior Vice President, Chief       Jerry L. Gilpin*
 Financial Officer, and             Jerry L. Gilpin
 Director - Principal Financial     (Director)
 Officer

                                    Stephen H. Loewenkamp*
George W. Schmidt*                  Stephen H. Loewenkamp
George W. Schmidt                   (Director)
(Vice President, Controller,
 and Assistant Secretary -
 Principal Accounting Officer)      George D. Roach*
                                    George D. Roach
                                    (Director)
Stephen L. Blake*
Stephen L. Blake
(Director)                          *By: /s/  Donald R. Breivogel, Jr.
                                              Donald R. Breivogel, Jr.
                                    (Attorney-in-fact)
<PAGE> 102

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT
TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 BY REGISTRANTS
WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934.

No annual report to security-holders or proxy material has been sent
to security-holders.
<PAGE> 103

                             Exhibit Index


Exhibit
Number

(3) a.  Restated Articles of Incorporation of American General
        Finance, Inc. (formerly Credithrift Financial, Inc.) dated May
        27, 1988 and amendments thereto dated September 7, 1988 and
        March 20, 1989.  Incorporated by reference to Exhibit (3)a.
        filed as a part of the Company's Annual Report on Form 10-K
        for the year ended December 31, 1988 (File No. 1-7422).

    b.  By-laws of American General Finance, Inc.  Incorporated by
        reference to Exhibit (3)b. filed as a part of the Company's
        Annual Report on Form 10-K for the year ended December 31,
        1992 (File No. 1-7422).

(4) a.  The following instruments are filed pursuant to Item
        601(b)(4)(ii) of Regulation S-K, which requires with certain
        exceptions that all instruments be filed which define the
        rights of holders of the Company's long-term debt and of our
        consolidated subsidiaries.  In the aggregate, the outstanding
        issuances of debt at December 31, 2004 under the following
        Indenture exceeds 10% of the Company's total assets on a
        consolidated basis:

            Indenture dated as of May 1, 1999 from American General
            Finance Corporation to Citibank, N.A.  Incorporated by
            reference to Exhibit (4)a.(1) filed as a part of our
            Quarterly Report on Form 10-Q for the quarter ended
            September 30, 2000 (File No. 1-7422).

    b.  In accordance with Item 601(b)(4)(iii) of Regulation S-K,
        certain other instruments defining the rights of holders of
        the Company's long-term debt and of our consolidated
        subsidiaries have not been filed as exhibits to this Annual
        Report on Form 10-K because the total amount of securities
        authorized and outstanding under each instrument does not
        exceed 10% of the total assets of the Company on a
        consolidated basis.  We hereby agree to furnish a copy of each
        instrument to the Securities and Exchange Commission upon
        request.

(12)    Computation of ratio of earnings to fixed charges

(23)    Consent of PricewaterhouseCoopers LLP, Independent Registered
        Accounting Firm

(24)    Power of Attorney

(31.1)  Rule 13a-14(a)/15d-14(a) Certifications

(31.2)  Rule 13a-14(a)/15d-14(a) Certifications

(32)	Section 1350 Certifications