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, 2000

                                    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.

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.

At March 28, 2001, no common stock of the registrant was held by a
non-affiliate.

At March 28, 2001, 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 . . . . . . . . . . . . . . . . . . . . . .  3

            2.  Properties . . . . . . . . . . . . . . . . . . . . . 16

            3.  Legal Proceedings  . . . . . . . . . . . . . . . . . 16

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

Part II     5.  Market for Registrant's Common Equity and Related
                  Stockholder Matters  . . . . . . . . . . . . . . . 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  . . . . . . . . . . . . . . . . . . . 29

            8.  Financial Statements and Supplementary Data  . . . . 29

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

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

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

           12.  Security Ownership of Certain Beneficial Owners
                  and Management . . . . . . . . . . . . . . . . . .  *

           13.  Certain Relationships and Related Transactions . . .  *

Part IV    14.  Exhibits, Financial Statement Schedules, and
                  Reports on Form 8-K  . . . . . . . . . . . . . . . 62



 *  Items 4, 10, 11, 12, and 13 are not included, as per conditions met
    by Registrant 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.
<PAGE> 3

                                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 1982, AGFI has been a direct or indirect
wholly owned subsidiary of American General Corporation (American General),
a leading provider of retirement services, life insurance, consumer loans,
and investments to 12 million customers.  American General, a Texas
corporation headquartered in Houston, is the successor to American General
Insurance Company, an insurance company incorporated in Texas in 1926.

On March 11, 2001, American General entered into an agreement to merge with
Prudential plc in which American General will become a wholly owned indirect
subsidiary of Prudential plc.  The transaction, which is subject to
shareholder and regulatory approvals, is expected to be completed in third
quarter 2001.

AGFI is a financial services holding company whose principal subsidiary is
AGFC.  AGFC is also a financial services holding company with subsidiaries
engaged primarily in the consumer finance and credit insurance business.
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 subsidiaries of AGFC.

In May 1999, AGFI acquired Standard Pacific Savings, F.A. from Standard
Pacific Corporation and renamed the institution American General Bank, FSB
(AG Bank).  AG Bank currently operates as a traditional thrift, whose
products include deposit and savings accounts, residential mortgage and
home equity loans, and private label services.

At December 31, 2000, the Company had 1,338 offices in 42 states, Puerto
Rico, and the U.S. Virgin Islands and approximately 7,500 employees.  Our
executive offices are located in Evansville, Indiana.


Selected Financial Information

The following table shows selected financial information of the Company:

                                       Years Ended December 31,
                                  2000           1999          1998
                                        (dollars in thousands)

Average net receivables        $11,408,913   $10,008,809   $ 8,518,922

Average borrowings             $10,518,190   $ 9,205,119   $ 7,806,977

Yield - finance charges as a
  percentage of average net
  receivables                       14.19%        14.54%        15.90%
<PAGE> 4

Item 1.  Continued


                                                 At or for the
                                           Years Ended December 31,
                                         2000        1999        1998

Borrowing cost - interest
  expense as a percentage
  of average borrowings                  6.59%       6.23%       6.55%

Interest spread - yield
  less borrowing cost                    7.60%       8.31%       9.35%

Insurance revenues as a
  percentage of average
  net receivables                        1.72%       1.84%       2.07%

Operating expenses as a
  percentage of average
  net receivables                        4.75%       5.24%       5.93%

Allowance ratio - allowance for
  finance receivable losses as
  a percentage of net finance
  receivables                            3.26%       3.59%       3.96%

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                      1.81%       2.08%       2.60%

Charge-off coverage - allowance
  for finance receivable losses
  to net charge-offs                     1.86x       1.91x       1.74x

Delinquency ratio - finance
  receivables 60 days or more
  past due as a percentage
  of related receivables                 3.41%       3.46%       3.75%

Return on average assets                 1.59%       1.56%       1.88%

Return on average equity                13.03%      12.03%      13.96%

Ratio of earnings to fixed charges
  (refer to Exhibit 12 for
  calculations)                          1.46x       1.48x       1.56x

Debt to tangible equity ratio -
  debt to equity less goodwill
  and net unrealized gains or
  losses on investment securities        7.50x       7.64x       7.46x

Debt to equity ratio                     6.61x       6.68x       5.89x
<PAGE> 5

Item 1.  Continued


                      CONSUMER FINANCE OPERATIONS

The consumer finance operation makes loans directly to individuals, offers
retail sales financing to merchants, purchases portfolios of finance
receivables originated by others, and sells credit and non-credit
insurance.

We make home equity loans, originate secured and unsecured consumer loans,
and extend lines of credit.  We generally take a security interest in the
real property and/or personal property of the borrower.  At December 31,
2000, real estate loans accounted for 62% of the amount and 9% of the
number of net finance receivables outstanding, compared to 64% of the
amount and 8% of the number of net finance receivables outstanding at
December 31, 1999.  Real estate loans are secured by first and second
mortgages and generally have maximum original terms of 360 months.  Non-
real estate loans are secured by consumer goods, automobiles, or other
chattel security 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
approximately 16,000 retail merchants and offer private label services for
approximately 260 retail merchants.  Retail sales contracts are closed-end
accounts that consist of a single purchase.  Revolving retail and private
label are open-end revolving accounts that can be used for repeated
purchases.  Retail sales contracts are secured by the real property or
personal property giving rise to the contract and generally have maximum
original terms of 60 months.  Revolving retail and private label are
secured by purchase money security interests in the goods purchased and
generally require minimum monthly payments based on outstanding balances.

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 that match our customer profile and meet our
credit quality standards and profitability objectives.

We also sell credit life, credit accident and health, credit related
property and casualty, and non-credit insurance to our consumer finance
customers.  The benefits of these insurance products for both our customers
and us are described under Insurance Operations.  Premiums for insurance
products are most often financed as part of the finance receivable but may
be paid in cash to the insurer.

See Note 20. of the Notes to Consolidated Financial Statements in Item 8.
for further information on the Company's consumer finance business segment.


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.
<PAGE> 6

Item 1.  Continued


Although a significant portion of insurance claims and policyholder
liabilities originate from the finance receivables, our policy is to show
them as liabilities and not net them against finance receivables.  Finance
receivables relate to the financing activities of our consumer finance
business segment and insurance claims and policyholder liabilities relate
to the underwriting activities of our insurance business segment.

The following table shows the amount, number, and average size of finance
receivables originated and renewed by type (retail sales contracts,
revolving retail, and private label comprise retail sales finance) and the
net purchased amount by type:

                                        Years Ended December 31,
                                     2000         1999         1998
Originated and renewed

  Amount (in thousands):

    Real estate loans             $2,086,721   $1,945,181   $1,766,041
    Non-real estate loans          2,728,318    2,557,486    2,394,623
    Retail sales finance           1,917,128    1,705,635    1,629,258

    Total                         $6,732,167   $6,208,302   $5,789,922


  Number:

    Real estate loans                 58,540       56,933       58,219
    Non-real estate loans            829,852      851,798      885,212
    Retail sales finance           1,064,865      995,152    1,010,225

    Total                          1,953,257    1,903,883    1,953,656


  Average size (to nearest dollar):

    Real estate loans                $35,646      $34,166      $30,334
    Non-real estate loans              3,288        3,002        2,705
    Retail sales finance               1,800        1,714        1,613


Net purchased

  Amount (in thousands):

    Real estate loans             $  405,848   $1,678,859   $1,705,972
    Non-real estate loans            450,655       10,758      116,004
    Retail sales finance              66,748       37,764       98,725

    Total                         $  923,251   $1,727,382   $1,920,701


Net purchased was net of sales of $27.1 million during 2000 and $21.8
million during 1999.  We had no sales in 1998.
<PAGE> 7

Item 1.  Continued


The following table shows the amount, number, and average size of finance
receivables by type:

                                             December 31,
                                  2000           1999          1998

Amount (in thousands):

  Real estate loans            $ 7,280,234   $ 7,104,227   $ 5,757,185
  Non-real estate loans          3,027,989     2,576,081     2,560,565
  Retail sales finance           1,453,588     1,349,689     1,339,367

  Total                        $11,761,811   $11,029,997   $ 9,657,117


Number:

  Real estate loans                184,591       181,484       169,314
  Non-real estate loans          1,017,127       998,150     1,088,584
  Retail sales finance             944,923       957,841       993,233

  Total                          2,146,641     2,137,475     2,251,131


Average size (to nearest dollar):

  Real estate loans                $39,440       $39,145       $34,003
  Non-real estate loans              2,977         2,581         2,352
  Retail sales finance               1,538         1,409         1,348


Geographic Distribution

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,
                      2000                 1999                 1998
                 Amount  Percent      Amount  Percent      Amount  Percent
                                  (dollars in thousands)

California      $ 1,582,130   13%    $ 1,562,183   14%    $ 1,461,438   15%
N. Carolina         831,977    7         811,625    7         728,801    7
Florida             740,186    6         671,970    6         574,693    6
Illinois            698,181    6         659,674    6         593,789    6
Ohio                678,238    6         644,804    6         559,964    6
Indiana             597,898    5         560,887    5         502,653    5
Virginia            486,607    4         430,687    4         367,995    4
Georgia             477,110    4         427,523    4         351,347    4
Other             5,669,484   49       5,260,644   48       4,516,437   47

                $11,761,811  100%    $11,029,997  100%    $ 9,657,117  100%
<PAGE> 8

Item 1.  Continued


Average Net Receivables and Yield

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.  We stop accruing revenue 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.  Upon suspension, we do not reverse
amounts previously accrued.  We resume the accrual of revenue for loans and
retail sales contracts if we receive additional payments and the finance
receivable is less than four contractual payments past due.  We recognize
late charges, prepayment penalties and extension fees as revenue when
received.

We defer the costs to originate certain finance receivables and the revenue
from nonrefundable points and fees on loans and amortize them to revenue
on the accrual basis 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 costs or points and fees to revenue at the
date of liquidation.

The following table shows average net receivables and yield by type:

                                       Years Ended December 31,
                                  2000           1999          1998
                                        (dollars in thousands)

Real estate loans:
  Average net receivables      $ 7,211,254   $ 6,227,580   $ 4,681,038
  Yield                             11.41%        11.59%        12.90%

Non-real estate loans:
  Average net receivables      $ 2,801,815   $ 2,509,412   $ 2,532,267
  Yield                             21.54%        21.96%        22.02%

Retail sales finance:
  Average net receivables      $ 1,395,844   $ 1,271,817   $ 1,305,617
  Yield                             13.83%        14.35%        14.78%

Total:
  Average net receivables      $11,408,913   $10,008,809   $ 8,518,922
  Yield                             14.19%        14.54%        15.90%


See Management's Discussion and Analysis in Item 7. for information on the
trends in yield.


Finance Receivable Credit Quality Information

Our policy is to charge off each month non-real estate loans on which
little or no collections were made in the prior six months, retail sales
contracts that are six installments past due, and revolving retail and
private label accounts that are 180 days past due.  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 establish the real estate as an asset valued at fair value,
and charge off any loan amount in excess of that value.  We occasionally
<PAGE> 9

Item 1.  Continued


extend the charge-off period for individual accounts when, in our opinion,
such treatment is warranted.

The following table shows net charge-offs and charge-off ratio by type of
finance receivable:

                                         Years Ended December 31,
                                     2000          1999          1998
                                          (dollars in thousands)
Real estate loans:
  Net charge-offs                   $ 45,234     $ 38,364     $ 32,843
  Charge-off ratio                      .63%         .62%         .71%

Non-real estate loans:
  Net charge-offs                   $130,586     $134,070     $144,382
  Charge-off ratio                     4.66%        5.34%        5.70%

Retail sales finance:
  Net charge-offs                   $ 30,455     $ 34,198     $ 42,365
  Charge-off ratio                     2.19%        2.69%        3.25%

Total:
  Net charge-offs                   $206,275     $206,632     $219,590
  Charge-off ratio                     1.81%        2.08%        2.60%


The following table shows delinquency (finance receivables 60 days or more
past due including unearned finance charges and unearned points and fees
and excluding deferred origination costs, net premiums and discounts on
purchased finance receivables, and accrued finance charges) based on
contract terms in effect and delinquency ratio by type of finance
receivable:

                                               December 31,
                                      2000         1999         1998
                                          (dollars in thousands)
Real estate loans:
  Delinquency                       $239,462     $214,013     $189,474
  Delinquency ratio                    3.28%        3.02%        3.28%

Non-real estate loans:
  Delinquency                       $148,621     $156,325     $159,027
  Delinquency ratio                    4.42%        5.37%        5.48%

Retail sales finance:
  Delinquency                       $ 32,493     $ 28,672     $ 35,236
  Delinquency ratio                    1.95%        1.85%        2.26%

Total:
  Delinquency                       $420,576     $399,010     $383,737
  Delinquency ratio                    3.41%        3.46%        3.75%
<PAGE> 10

Item 1.  Continued


We periodically evaluate our finance receivable portfolio as a group to
determine any adjustment necessary to maintain the allowance for finance
receivable losses at a level that we consider adequate to absorb
anticipated losses in our existing portfolio.  We consider numerous factors
in estimating the anticipated finance receivable losses, including current
economic conditions, prior finance receivable loss and delinquency
experience, and the composition of our finance receivable portfolio.

The following table shows changes in the allowance for finance receivable
losses:

                                              At or for the
                                         Years Ended December 31,
                                       2000        1999        1998
                                          (dollars in thousands)

Balance at beginning of year         $395,626    $382,450    $372,653
Provision for finance receivable
  losses                              206,275     206,632     212,090
Allowance related to net
  (sold) acquired receivables         (12,211)     13,176      17,297
Charge-offs, net of recoveries       (206,275)   (206,632)   (219,590)

Balance at end of year               $383,415    $395,626    $382,450

Allowance ratio                         3.26%       3.59%       3.96%


See Management's Discussion and Analysis in Item 7. for further information
on finance receivable loss and delinquency experience and the related
allowance for finance receivable losses.


Sources of Funds

We fund our consumer finance operations principally through net cash flows
from operating activities, issuances of long-term debt, short-term
borrowings in the commercial paper market, borrowings from banks under
credit facilities, acceptance of bank demand and time deposits, and capital
contributions from American General.
<PAGE> 11

Item 1.  Continued


Average Borrowings and Borrowing Cost

The following table shows average borrowings and borrowing cost by type of
debt:

                                       Years Ended December 31,
                                   2000          1999          1998
                                        (dollars in thousands)
Long-term debt:
  Average borrowings            $ 5,708,732   $5,431,257    $4,327,990
  Borrowing cost                      6.64%        6.61%         6.95%

Short-term debt:
  Average borrowings            $ 4,765,923   $3,749,160    $3,476,910
  Borrowing cost                      6.54%        5.70%         6.06%

Deposits:
  Average borrowings            $    43,535   $   24,702    $    2,077
  Borrowing cost                      5.94%        5.19%         5.67%

Total:
  Average borrowings            $10,518,190   $9,205,119    $7,806,977
  Borrowing cost                      6.59%        6.23%         6.55%


The Company's use of interest rate swap agreements, the effect of which is
included in the rates above, is described in Note 11. of the Notes to
Consolidated Financial Statements in Item 8.


Contractual Maturities

Contractual maturities of net finance receivables and debt at December 31,
2000 were as follows:
                                    Net Finance
                                    Receivables            Debt
                                        (dollars in thousands)
Due in:
  2001                              $ 1,331,563        $ 6,389,208
  2002                                1,597,547          1,401,748
  2003                                1,179,355          1,580,723
  2004                                  708,056            376,205
  2005                                  436,589            737,873
  2006 and thereafter                 6,508,701            347,397

  Total                             $11,761,811        $10,833,154


See Note 4. of the Notes to Consolidated Financial Statements in Item 8.
for contractual maturities of net finance receivables by type and further
information on principal cash collections of finance receivables.
<PAGE> 12

Item 1.  Continued


                         INSURANCE OPERATIONS

Merit is a life and health insurance company domiciled in Indiana and
licensed in 44 states, the District of Columbia, and the U.S. Virgin
Islands.  Merit writes or assumes (through affiliated and non-affiliated
insurance companies) credit life, credit accident and health, and non-
credit insurance.

Yosemite is a property and casualty insurance company domiciled in Indiana
and licensed in 42 states.  Yosemite principally writes or assumes credit-
related property and casualty insurance.

Both Merit and Yosemite market their products through our consumer finance
business segment.  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 death.  Our credit accident and health
insurance policies provide for the payment to the lender of the
installments on the finance receivable coming due during a period of
disability due to illness or injury.  Our credit-related property and
casualty insurance policies are written either to protect the lender's
interest in property pledged as security for the finance receivable or to
provide for the payment to the lender of the installments on the finance
receivable coming due during a period of unemployment.  The purchase by the
borrower of credit life, credit accident and health, and credit-related
property and casualty insurance is voluntary with the exception of lender-
placed property damage coverage for automobiles, large equipment,
dwellings, and real estate pledged as collateral.  In these instances,
property damage coverage is provided under the terms of the lending
agreement if the borrower does not provide evidence of coverage with
another insurance carrier.  The non-credit insurance policies are primarily
ordinary life level term coverage.  The purchase of this coverage is
voluntary.  Premiums for insurance products are most often financed as part
of the finance receivable but may be paid in cash to the insurer.

Merit and Yosemite have entered into reinsurance agreements with other
insurance companies, including certain other American General subsidiaries,
for assumption of various annuities and non-credit, group, credit life,
credit accident and health, and credit-related property and casualty
insurance on a coinsurance basis.  The reserves attributable to this
business fluctuate over time and in certain instances are subject to
recapture by the ceding company.  At December 31, 2000, reserves on the
books of Merit and Yosemite attributable to these reinsurance agreements
totaled $151.2 million.

See Note 20. of the Notes to Consolidated Financial Statements in Item 8.
for further information on the Company's insurance business segment.
<PAGE> 13

Item 1.  Continued


The following table shows information concerning our insurance operations:

                                              At or for the
                                         Years Ended December 31,
                                       2000        1999        1998
                                          (dollars in thousands)
Life Insurance in Force

Credit life                         $3,075,206  $2,709,962  $2,459,818
Non-credit life                      3,343,066   3,355,547   3,618,052

Total                               $6,418,272  $6,065,509  $6,077,870


Premiums Earned

Credit insurance premiums earned:
    Credit life                     $   38,958  $   34,760  $   32,289
    Credit accident and health          48,006      43,237      42,261
    Property and casualty               50,016      49,026      49,403
Other insurance premiums earned:
    Non-credit life                     48,539      46,333      42,981
    Non-credit accident and health       6,689       4,541         702
    Premiums assumed under
      coinsurance agreements             1,156       3,340       4,355

Total                               $  193,364  $  181,237  $  171,991


Premiums Written

Credit insurance premiums
  written:
    Credit life                     $   45,486  $   42,114  $   35,695
    Credit accident and health          55,981      52,910      42,452
    Property and casualty               58,387      49,846      47,324
Other insurance premiums written:
    Non-credit life                     48,539      46,333      42,981
    Non-credit accident and health       6,689       4,541         702
    Premiums assumed under
      coinsurance agreements             1,156       3,340       4,355

Total                               $  216,238  $  199,084  $  173,509


Losses Incurred

Credit insurance losses incurred:
    Credit life                     $   18,409  $   16,240  $   14,775
    Credit accident and health          24,412      22,370      21,094
    Property and casualty               12,397      13,112      20,187
Other insurance losses incurred:
    Non-credit life                     20,142      20,746      16,999
    Non-credit accident and health       4,031       2,724         409
    Losses incurred under
      coinsurance agreements             8,963      11,442      11,223

Total                               $   88,354  $   86,634  $   84,687
<PAGE> 14

Item 1.  Continued


Investments and Investment Results

The following table shows the investment results of the insurance
operations:

                                       Years Ended December 31,
                                    2000         1999         1998
                                         (dollars in thousands)

Net investment revenue (a)       $   80,807   $   74,732   $   74,421

Average invested assets (b)      $1,148,950   $1,056,183   $  983,439

Adjusted portfolio yield (c)          7.35%        7.35%        7.88%

Net realized gains (losses)
  on investments (d)             $    2,809   $   (1,564)  $     (693)


(a)  Net investment revenue is after deducting investment expense but
     before net realized gains or losses on investments and provision for
     income taxes.

(b)  Average invested assets excludes the effect of Statement of
     Financial Accounting Standards 115.

(c)  Adjusted portfolio yield is calculated based upon the definitions
     of net investment revenue and average invested assets listed in (a)
     and (b) above.

(d)  Includes net realized gains or losses on investment securities and
     other invested assets before provision for income taxes.


See Note 6. of the Notes to Consolidated Financial Statements in Item 8.
for information regarding investment securities for all operations of the
Company.


                               REGULATION

Consumer Finance

The Company is subject to various federal laws and regulations, including
the Federal Consumer Credit Protection Act and the Truth in Lending Act
(governing disclosure of applicable charges and other finance receivable
terms), the Equal Credit Opportunity Act (prohibiting discrimination
against credit-worthy applicants), the Fair Housing Act (prohibiting
discrimination in housing lending), the Fair Credit Reporting Act
(governing the accuracy and use of credit bureau reports), the Real Estate
Settlement Procedures Act (regulating certain loans secured by real
estate), the Federal Fair Debt Collection Practices Act (regulating debt
collection activity in certain instances), the Federal Trade Commission
Act, and the Federal Reserve Board's Regulations B, C, P, Z, and AA.  In
many states, the Company relies on federal law to preempt state law
restrictions on interest rates and points and fees for first lien
residential mortgage loans.  The Company also relies upon the Federal
Alternative Mortgage Transactions Parity Act in many states to preempt
state rates on loan payments, such as balloon payments and prepayment
<PAGE> 15

Item 1.  Continued


penalties.  The Company makes residential mortgage loans under the
provisions of these and other federal laws.  The Company is also subject
to the Federal Privacy Act and the regulations promulgated thereunder,
which generally mandate certain practices and disclosures when dealing with
consumer or customer information.

Various state laws also regulate our consumer lending and retail sales
financing businesses.  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: (1) provide for state licensing of lenders; (2)
impose maximum term, amount, interest rate, and other charge limitations;
and (3) enumerate whether and under what circumstances insurance and other
ancillary products may be sold in connection with a lending transaction.
Certain of these laws prohibit the taking of liens on real estate for loans
of small dollar amounts, except liens resulting from judgments.  These
state laws may require contract disclosures in addition to those required
under federal law and may limit remedies available in the event of default
by an obligor on the credit.

Additionally, 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 certain loans
that are typically described as "high cost mortgage loans".  These
requirements may impose specific statutory liabilities in cases of non-
compliance and may also limit activities or business dealings of affiliates
of the Company under certain conditions.

AG Bank, a wholly owned subsidiary of AGFI, is a federally chartered
savings bank subject to the examination, regulation, and supervision of the
Federal Office of Thrift Supervision (the "OTS").  AG Bank offers consumer
loans and deposit products to the public.  AG Bank's deposit accounts are
insured by the Federal Deposit Insurance Corporation.  The OTS has the
statutory and regulatory authority to examine AG Bank and its affiliates
and the activities of each entity as it deems necessary.


Insurance

State authorities regulate and supervise our insurance subsidiaries.  The
extent of such regulation varies by product but relates primarily to
conduct of business, types of products offered, standards of solvency,
limitations on the payment of dividends and on other transactions with
related parties, licensing, deposits of securities for the benefit of
policyholders, permissible investments, approval of policy forms and
premium rates, periodic examination of the affairs of insurers, form and
content of required financial reports, and reserve requirements for
unearned premiums, losses, and other purposes.  Substantially all of the
states in which we operate regulate the rates of premiums charged for
credit insurance and the calculation of premium refunds.


                              COMPETITION

Consumer Finance

The consumer finance business is highly competitive due to the large
number of companies offering financial products and services, the
sophistication of those products, capital market resources of some
competitors, and general acceptance and widespread usage of available
<PAGE> 16

Item 1.  Continued


credit.  We compete with other consumer finance companies as well as
other types of financial institutions that offer similar products and
services, including, but not limited to, industrial banks, industrial
loan companies, mortgage companies, mortgage brokers, commercial banks,
sales finance companies, national banks, limited purpose credit card
banks, federal savings banks, state banks, credit unions, and vendors
and manufacturers of consumer goods.


Insurance

Our insurance operations supplement our consumer finance operations.
Although the insurance business is competitive in both price and service,
we believe that our insurance companies' abilities to market insurance
products through our distribution systems provide a competitive advantage
over our insurance competitors.



Item 2.  Properties.


Our investment in real estate and tangible property is not significant in
relation to our total assets due to the nature of our business.  AGFI and
certain of its subsidiaries own real estate upon which AGFI, its
subsidiaries and affiliates, and third parties conduct business.  We
generally conduct branch office operations in leased premises.  Lease terms
ordinarily range from three to five years.



Item 3.  Legal Proceedings.


Satellite Dish Litigation

In the mid-1990s, one of our subsidiaries, A.G. Financial Service Center,
Inc. (Financial Service Center), formerly named American General Financial
Center, provided financing for satellite dishes sold by independent
unaffiliated dealers.  On May 18, 1999, the Chancery Court of the First
Judicial District of Jones County, Mississippi in a case captioned Clayton
D. Smith, et al. v. Delta TV Corporation, Don Acy, US Electronics, American
General Financial Center, Civil Action No. 96-0254 (the Clayton Smith
matter), rendered a judgment awarding approximately $500,000 in
compensatory damages and $167 million in punitive damages against Financial
Service Center.  The lawsuit was filed on November 15, 1996, by 29
individuals who had each purchased a satellite dish.  Financial Service
Center, together with certain other American General companies, were also
named as defendants in other cases involving the financing of satellite
dishes.
<PAGE> 17

Item 3.  Continued


In August 1999, Financial Service Center filed a voluntary petition to
reorganize under Chapter 11 of the United States Bankruptcy Code with the
United States Bankruptcy Court for the Southern District of Indiana.  The
decision to reorganize was necessitated by the judgment rendered against
Financial Service Center by the Mississippi state court.  The filing for
reorganization under Chapter 11 was limited to Financial Service Center and
was intended to provide a fair and orderly process for managing the claims
against Financial Service Center.  Prior to the bankruptcy filing,
Financial Service Center had assets of approximately $7 million.

As part of the resolution process, settlement agreements were executed in
January 2000 to settle the Clayton Smith matter and certain other claims.
Accordingly, we recorded a charge of $57.0 million ($36.2 million aftertax)
in fourth quarter 1999 to cover the proposed settlements and other
litigation.  On September 1, 2000, payment was made in connection with the
final settlement of the Clayton Smith matter.

In 2000, Financial Service Center filed a plan of reorganization to resolve
the remaining claims in the bankruptcy.  In January 2001, Financial Service
Center and the creditors' committee in the bankruptcy entered into a
settlement that has been approved by the bankruptcy court.  The plan of
reorganization was confirmed by the bankruptcy court in February 2001.
Certain creditors have appealed the confirmation of the plan, but we do not
expect their appeal to prevail.  We expect our remaining recorded liability
related to this matter to be sufficient to cover the costs of the plan of
reorganization.


Other

AGFI and certain of its subsidiaries are also parties to various other
lawsuits and proceedings, including certain class action claims, arising
in the ordinary course of business.  In addition, many of the 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 that
will ultimately be paid arising from these lawsuits and proceedings will
not have a material adverse effect on our consolidated results of
operations and financial position.  However, the frequency of large damage
awards, including large punitive damage awards that bear little or no
relation to actual economic damages incurred by plaintiffs in some
jurisdictions, continues to create the potential for an unpredictable
judgment in any given suit.
<PAGE> 18

                                PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder
         Matters.


No trading market exists for AGFI's common stock because American General
owns all of AGFI's common stock.  AGFI declared the following cash
dividends on its common stock:

Quarter Ended                2000          1999
                           (dollars in thousands)

March 31                   $ 27,000      $ 41,001
June 30                        -           93,003
September 30                 15,700        29,996
December 31                  64,401          -

                           $107,101      $164,000


See Management's Discussion and Analysis in Item 7., and Note 15. 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.


The following selected financial data should be read in conjunction with
the consolidated financial statements and related notes in Item 8.,
Management's Discussion and Analysis in Item 7., and other financial
information in Item 1.

                           At or for the Years Ended December 31,
                   2000         1999         1998        1997         1996
                                   (dollars in thousands)

Total revenues  $ 1,909,916  $ 1,731,602  $ 1,609,105  $1,524,105  $1,724,948

Net income (a)      207,938      179,734      187,359     129,433      34,146

Total assets     13,408,395   12,635,307   11,172,923   9,289,500   9,563,696

Long-term debt    5,670,670    5,716,991    5,176,965   4,011,457   4,498,530


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

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


Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the consolidated financial
statements and related notes in Item 8. and other financial information in
Item 1.


                     LIQUIDITY AND CAPITAL RESOURCES

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 acceptance of bank demand and time deposits.
American General has also contributed capital to AGFI when needed for
finance receivable growth or other circumstances.

The following table shows principal sources and uses of cash:

                                          Years Ended December 31,
                                        2000        1999        1998
                                            (dollars in millions)
Principal sources of cash:

  Operations                          $  620.0    $  493.8    $  438.6
  Net issuance of debt                   622.9     1,294.4     1,592.7
  Capital contributions                     -         54.0        79.0

  Principal sources of cash           $1,242.9    $1,842.2    $2,110.3


Principal uses of cash:

  Net originations and purchases
    of finance receivables            $  968.1    $1,551.4    $1,814.2
  Dividends paid                         107.1       164.0        31.6

  Principal uses of cash              $1,075.2    $1,715.4    $1,845.8


We believe that our overall sources of liquidity will continue to be
sufficient to satisfy our foreseeable financial obligations and operational
requirements.
<PAGE> 20

Item 7.  Continued


Capital Resources
                                                December 31,
                                           2000             1999
                                           (dollars in millions)

Long-term debt                           $ 5,670.6       $ 5,717.0
Short-term debt                            5,088.5         4,457.5
Deposits                                      74.0            32.1

Total debt                                10,833.1        10,206.6
Equity                                     1,638.3         1,527.3

Total capital                            $12,471.4       $11,733.9

Net finance receivables                  $11,761.8       $11,030.0
Debt to tangible equity ratio                7.50x           7.64x


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

We issue a combination of fixed-rate debt, principally long-term, and
floating-rate debt, principally short-term.  AGFC obtains most of our
fixed-rate debt through issuances of medium-term notes and underwritten
debt offerings with maturities generally ranging from two to ten years.
AGFI and AGFC obtain most of our floating-rate debt through sales of
commercial paper.  Commercial paper, with maturities ranging from 1 to 270
days, is sold directly to banks, insurance companies, corporations, and
other institutional investors.  AGFC also sells extendible commercial notes
with initial maturities of up to 90 days, which may be extended by AGFC to
390 days.

We participate in credit facilities to support the issuance of commercial
paper and to provide an additional source of funds for operating
requirements.  At December 31, 2000, credit facilities, including
facilities shared with American General, totaled $6.4 billion, with
remaining availability of $6.4 billion.  See Note 10. of the Notes to
Consolidated Financial Statements in Item 8. for additional information on
credit facilities.

In addition, our mortgage warehouse lending subsidiary arranges interim
financing for third-party mortgage originators through a purchase facility.
At December 31, 2000, this facility totaled $250.0 million with remaining
availability of $90.0 million.

AGFI has paid dividends to (or received capital contributions from)
American General to manage our leverage of debt to tangible equity (equity
less goodwill and net unrealized gains or losses on investment securities)
to 7.50 to 1.  AGFI's ability to pay dividends is substantially dependent
on the receipt of dividends or other funds from its subsidiaries, primarily
AGFC.  An AGFC financing agreement limits the amount of dividends AGFC may
pay.  This agreement has not prevented us from managing our capital to
targeted leverage.  See Note 15. of the Notes to Consolidated Financial
Statements in Item 8. for information on dividend restrictions.
<PAGE> 21

Item 7.  Continued


Credit Ratings

AGFC's long-term debt and commercial paper ratings facilitate its access
to capital markets.  On January 23, 2001, AGFC's ratings were as follows:

                              Long-term Debt      Commercial Paper

Fitch                         A+  (High)          F1+   (Highest)
Moody's                       A2  (Favorable)     P-1   (Highest)
Standard & Poor's             A+  (Strong)        A-1   (Strong)


                     ANALYSIS OF OPERATING RESULTS

Net Income
                                         Years Ended December 31,
                                       2000        1999        1998
                                          (dollars in millions)

Net income                            $207.9      $179.7      $187.4
Return on average assets               1.59%       1.56%       1.88%
Return on average equity              13.03%      12.03%      13.96%
Ratio of earnings to fixed charges     1.46x       1.48x       1.56x


Net income increased $28.2 million, or 16%, for 2000 and decreased $7.7
million, or 4%, for 1999 when compared to the respective previous year.
See Note 20. of the Notes to Consolidated Financial Statements for
information on the results of the Company's business segments.

Net income for 2000 included a charge of $50.0 million ($32.5 million
aftertax) for the estimated loss on an alleged fraud against our mortgage
warehouse lending subsidiary that was discovered in late June 2000.
Without this charge, net income for 2000 would have been $240.4 million.
See Note 16. of the Notes to Consolidated Financial Statements in Item 8.
for further information on the loss.

The decrease in net income for 1999 when compared to 1998 reflected a
charge of $57.0 million ($36.2 million aftertax) in 1999 for the settlement
of satellite dish and other related litigation.  Without this charge, net
income for 1999 would have been $215.9 million.  See Legal Proceedings in
Item 3. and Note 16. of the Notes to Consolidated Financial Statements in
Item 8. for further information on the satellite dish litigation.

Factors that specifically affected the Company's operating results are as
follows:
<PAGE> 22

Item 7.  Continued


Finance Charges
                                        Years Ended December 31,
                                     2000         1999        1998
                                         (dollars in millions)

Finance charges                    $ 1,619.0   $ 1,455.5   $ 1,354.2
Average net receivables            $11,408.9   $10,008.8   $ 8,518.9
Yield                                 14.19%      14.54%      15.90%


Finance charges increased $163.5 million, or 11%, for 2000 and $101.3
million, or 7%, for 1999 when compared to the respective previous year due
to higher average net receivables, partially offset by lower yield.

Average net receivables increased $1.4 billion, or 14%, during 2000 and
$1.5 billion, or 17%, during 1999 when compared to the respective previous
year primarily due to higher average net real estate loans.  Yield
decreased 35 basis points during 2000 and 136 basis points during 1999 when
compared to the respective previous year reflecting a larger proportion of
average net receivables that are real estate loans, which generally have
lower yields, and a decline in real estate loan yield.  The decrease in
yield for 2000 when compared to 1999 also reflected declines in non-real
estate loan and retail sales finance yield.


Insurance Revenues
                                         Years Ended December 31,
                                       2000        1999        1998
                                          (dollars in millions)

Insurance revenues                    $196.2      $184.5      $176.0
Premiums earned                       $193.4      $181.2      $172.0
Insurance revenues as a
  percentage of average
  net receivables                      1.72%       1.84%       2.07%


Insurance revenues increased $11.7 million, or 6%, for 2000 and $8.5
million, or 5%, for 1999 when compared to the respective previous year
primarily due to higher earned premiums.  Earned premiums increased due to
higher written premiums in 1999 and 2000 resulting from higher related loan
volume.

Insurance revenues as a percentage of average net receivables declined
during 2000 and 1999 reflecting a higher proportion of average net
receivables that are real estate loans, including purchased real estate
loans, where the opportunity to sell insurance products is limited.
<PAGE> 23

Item 7.  Continued


Other Revenues
                                        Years Ended December 31,
                                      2000        1999        1998
                                         (dollars in millions)

Other revenues                      $   94.7    $   91.6    $   79.0
Investment revenue                  $   92.4    $   80.3    $   75.9
Net realized gains (losses)
  on investments                    $    2.8    $   (1.6)   $   (0.7)
Average invested assets             $1,149.0    $1,056.2    $  983.4
Adjusted portfolio yield               7.35%       7.35%       7.88%


Other revenues increased $3.1 million, or 3%, for 2000 and $12.6 million,
or 16%, for 1999 when compared to the respective previous year.

The increase in other revenues for 2000 when compared to 1999 was primarily
due to higher investment revenue, partially offset by mark-to-market and
portfolio servicing adjustments recorded in 2000.  The increase in
investment revenue reflected growth in average invested assets for the
insurance operations of $92.8 million and net realized gains in 2000
compared to net realized losses in 1999.

As a result of the higher interest rate levels in the last half of 1999 and
the first half of 2000, we made mark-to-market and portfolio servicing
adjustments to write-down mortgage loans generated by outside originators
and serviced by our warehouse lending subsidiary that were not sold in the
normal course of business to secondary mortgage investors.  These mark-to-
market and portfolio servicing adjustments reduced other revenues by
approximately $8.0 million during 2000.

The increase in other revenues for 1999 when compared to 1998 was primarily
due to higher investment revenue and mortgage set-up/warehousing fees.  The
increase in investment revenue reflected growth in average invested assets
for the insurance operations of $72.8 million, partially offset by a
decline in adjusted portfolio yield of 53 basis points and higher realized
losses on investments.

The increases in average invested assets in 2000 and 1999 was primarily due
to investment of insurance operations cash flows.  The decrease in adjusted
portfolio yield in 1999 reflected market conditions.


Interest Expense
                                        Years Ended December 31,
                                     2000         1999        1998
                                         (dollars in millions)

Interest expense                   $   694.3   $   573.8   $   511.6
Average borrowings                 $10,518.2   $ 9,205.1   $ 7,807.0
Borrowing cost                         6.59%       6.23%       6.55%


Interest expense increased $120.5 million, or 21%, for 2000 and $62.2
million, or 12%, for 1999 when compared to the respective previous year.
<PAGE> 24

Item 7.  Continued


The increase in interest expense for 2000 when compared to 1999 reflected
higher average borrowings and borrowing cost.  The increase in interest
expense for 1999 when compared to 1998 was primarily due to higher average
borrowings, partially offset by lower borrowing cost.

Average borrowings increased $1.3 billion, or 14%, during 2000 and $1.4
billion, or 18%, during 1999 when compared to the respective previous year
primarily to support finance receivable growth.  Borrowing cost increased
36 basis points during 2000 when compared to 1999 reflecting higher rates
on short-term debt.  Borrowing cost decreased 32 basis points during 1999
when compared to 1998 due to lower rates on both long-term and short-term
debt.


Operating Expenses
                                         Years Ended December 31,
                                       2000        1999        1998
                                          (dollars in millions)

Operating expenses                    $542.4      $524.8      $505.2
Operating expenses as a
  percentage of average
  net receivables                      4.75%       5.24%       5.93%


Operating expenses increased $17.6 million, or 3%, for 2000 and $19.6
million, or 4%, for 1999 when compared to the respective previous year,
substantially less than the increases in average net receivables of 14% and
17%, respectively.

The increase in operating expenses for 2000 when compared to 1999 was
primarily due to higher salaries and data processing expenses, partially
offset by lower litigation expenses.

The increase in operating expenses for 1999 when compared to 1998 was
primarily due to increases in salaries, litigation expenses, amortization
of intangibles, and occupancy expenses, partially offset by higher deferred
loan origination costs.

The increases in salaries for 2000 and 1999 when compared to the respective
previous year reflect higher competitive compensation, partially offset by
a workforce reduction of approximately 200 positions during 2000 and 400
positions during 1999 due to improved productivity.

The improvements in operating expenses as a percentage of average net
receivables in 2000 and 1999 when compared to the respective previous year
reflect continued improvement in operating efficiencies.
<PAGE> 25

Item 7.  Continued


Provision for Finance Receivable Losses

                                              At or for the
                                         Years Ended December 31,
                                       2000        1999        1998
                                          (dollars in millions)
Provision for finance
  receivable losses                   $206.3      $206.6      $212.1

Net charge-offs                       $206.3      $206.6      $219.6
Charge-off ratio                       1.81%       2.08%       2.60%
Charge-off coverage                    1.86x       1.91x       1.74x

60 day+ delinquency                   $420.6      $399.0      $383.7
Delinquency ratio                      3.41%       3.46%       3.75%

Allowance for finance
  receivable losses                   $383.4      $395.6      $382.5
Allowance ratio                        3.26%       3.59%       3.96%


Provision for finance receivable losses remained near the same for 2000 and
decreased $5.5 million, or 3%, for 1999 when compared to the respective
previous year.  The decrease in the provision for finance receivable losses
for 1999 when compared to 1998 reflected lower net charge-offs.

The decrease in the charge-off ratio for 2000 and 1999 when compared to the
respective previous year reflected the results of past and ongoing credit
quality improvement efforts, including consistent adherence to strict
underwriting guidelines.

The decrease in the delinquency ratio for 2000 and 1999 when compared to
the respective previous year reflected the improvement in credit quality.
The decrease in the delinquency ratio for 2000 also reflected the sale of
fully-reserved delinquent net finance receivables totaling $27.1 million
(gross balances totaling $34.8 million) in 2000.  These receivables
consisted of non-real estate loans ($25.0 million) and retail sales finance
($2.1 million).  This sale reduced the delinquency ratio by approximately
29 basis points at the time of sale.  The decrease in the delinquency ratio
for 2000 was partially offset by the maturation of real estate loan
portfolios purchased in fourth quarter 1999 ($792.7 million), which were
primarily new originations when purchased.

We periodically evaluate our finance receivable portfolio to determine the
appropriate level of the allowance for finance receivable losses.  In our
opinion, the allowance is adequate to absorb anticipated losses in our
existing portfolio.  The allowance as a percentage of net finance
receivables has declined in both 2000 and 1999 when compared to the
respective previous year reflecting the improvement in credit quality.  The
decrease in the allowance ratio for 2000 also reflected the sale of the
fully-reserved net finance receivables in 2000 which reduced the allowance
ratio by approximately 23 basis points at the time of sale.  Charge-off
coverage, which compares the allowance for finance receivable losses to net
charge-offs, declined slightly in 2000 and improved in 1999.  The slightly
lower charge-off coverage for 2000 reflected the sale of the fully-reserved
net finance receivables during 2000 which reduced charge-off coverage by
approximately 14 basis points at the time of sale.
<PAGE> 26

Item 7.  Continued


Insurance Losses and Loss Adjustment Expenses

                                         Years Ended December 31,
                                       2000        1999       1998
                                          (dollars in millions)

Claims incurred                       $83.0       $82.4       $86.5
Change in benefit reserves              5.4         4.2        (1.8)

Insurance losses and loss
  adjustment expenses                 $88.4       $86.6       $84.7


Insurance losses and loss adjustment expenses increased $1.8 million, or
2%, for 2000 and $1.9 million, or 2%, for 1999 when compared to the
respective previous year.

The increase in insurance losses and loss adjustment expenses for 2000 when
compared to 1999 was due to increases in provision for future benefits and
claims.  Provision for future benefits increased $1.2 million for 2000 due
to increased sales of non-credit insurance products.  Claims increased $.6
million for 2000 primarily due to increased loss experience.

The increase in insurance losses and loss adjustment expenses for 1999 when
compared to 1998 was due to an increase in provision for future benefits,
partially offset by a decrease in claims incurred.  Provision for future
benefits increased $6.0 million for 1999 due to increased sales of non-
credit insurance products.  Claims decreased $4.1 million for 1999
primarily due to favorable loss experience on credit insurance.


Other Charges

In second quarter 2000, we recorded a charge of $50.0 million ($32.5
million aftertax) for the estimated loss on the alleged fraud against our
mortgage warehouse lending subsidiary that was discovered in late June
2000.  See Note 16. of the Notes to Consolidated Financial Statements in
Item 8. for information on the loss.

In fourth quarter 1999, we recorded a charge of $57.0 million ($36.2
million aftertax) for the settlement of satellite dish and other related
litigation.  See Legal Proceedings in Item 3. and Note 16. of the Notes to
Consolidated Financial Statements in Item 8. for further information on the
satellite dish litigation.


Provision for Income Taxes
                                         Years Ended December 31,
                                       2000        1999        1998
                                          (dollars in millions)

Provision for income taxes            $120.7      $102.9      $108.2
Pretax income                         $328.6      $282.7      $295.6
Effective income tax rate             36.72%      36.41%      36.62%
<PAGE> 27

Item 7.  Continued


Provision for income taxes increased $17.8 million, or 17%, for 2000 and
decreased $5.3 million, or 5%, for 1999 when compared to the respective
previous year.

The increase in provision for income taxes for 2000 when compared to 1999
reflected higher taxable income.  The decrease in provision for income
taxes for 1999 when compared to 1998 reflected lower taxable income
primarily due to the $57.0 million charge in 1999 for the settlement of
satellite dish and other related litigation.


                    ANALYSIS OF FINANCIAL CONDITION

At December 31, 2000, the Company's assets were distributed as follows: 85%
in net finance receivables, less allowance for finance receivable losses;
8% in investment securities; 6% in other assets; and 1% in cash and cash
equivalents.


Asset Quality

We believe that our geographic diversification reduces the risk associated
with a recession in any one region.  In addition, 97% of our finance
receivables at December 31, 2000 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 anticipated losses in our existing portfolio.  See
Analysis of Operating Results for further information on allowance ratio,
delinquency ratio, and charge-off ratio.

Investment securities principally represent the investment portfolio of our
insurance operations.  Our investment strategy is to optimize after-tax
returns on invested assets, subject to the constraints of safety,
liquidity, diversification, and regulation.

The largest intangible asset is acquisition-related goodwill, which is
charged to expense in equal amounts over 20 to 40 years.


Asset/Liability Management

We manage anticipated cash flows of our assets and liabilities in an effort
to reduce the risk associated with unfavorable changes in interest rates.
Management determines the mix of fixed-rate and floating-rate debt based,
in part, on the nature of the assets being supported.  We limit our
exposure to market interest rate increases by fixing interest rates that
we pay for term periods.  The primary means by which we accomplish this is
through the issuance of fixed-rate debt.  To supplement fixed-rate debt
issuances, AGFC also uses interest rate swap agreements to synthetically
create fixed-rate debt by altering the nature of certain floating-rate
funding, thereby limiting our exposure to market interest rate increases.
Floating-rate debt represented 37% of our average borrowings for 2000
compared to 32% for 1999.  These percentages include the effect of interest
rate swap agreements that converted floating-rate debt to a fixed rate.
<PAGE> 28

Item 7.  Continued

                          REGULATION AND OTHER

Regulation

The regulatory environment of the consumer finance and insurance business
is described in Item 1.


Taxation

We monitor federal and state tax legislation and respond with appropriate
tax planning in order to minimize the impact of taxation.


                      FORWARD-LOOKING STATEMENTS

All statements, trend analyses, and other information contained in this
report relative to trends in our operations or financial results, as well
as other statements including words such as "anticipate," "believe,"
"plan," "estimate," "expect," "intend," and other similar expressions,
constitute forward-looking statements under the Private Securities
Litigation Reform Act of 1995.  We have made these forward-looking
statements based upon our current expectations and beliefs concerning
future developments and their potential effects on the Company.  There can
be no assurance that future developments affecting the Company will be
those we anticipated.  Actual results may differ materially from those
included in the forward-looking statements.

These forward-looking statements involve risks and uncertainties including,
but not limited to, the following:  (1) changes in general economic
conditions, including the performance of financial markets, interest rates,
and the level of personal bankruptcies; (2) customer responsiveness to both
products and distribution channels; (3) competitive, regulatory,
accounting, or tax changes that affect the cost of, or demand for, our
products; (4) our ability to secure necessary court and regulatory
approvals; (5) our ability to realize projected expense savings; (6)
adverse litigation results or resolution of litigation, including
proceedings related to satellite dish financing; and (7) the formation of
strategic alliances or business combinations among our competitors or our
business partners.  Readers are also directed to other risks and
uncertainties discussed in other documents we filed with the Securities and
Exchange Commission.  We undertake no obligation to update or revise any
forward-looking information, whether as a result of new information, future
developments, or otherwise.
<PAGE> 29

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, 2000       December 31, 1999
                              +100 bp       -100 bp   +100 bp       -100 bp
                                          (dollars in thousands)
Assets
Net finance receivables,
  less allowance for
  finance receivable
  losses                      $(322,005)  $ 348,798   $(331,210)  $ 361,526
Fixed-maturity securities       (51,658)     45,578     (42,700)     44,911

Liabilities
Long-term debt                 (123,311)    128,317    (122,447)    128,121
Deposits                         (1,125)      1,159        (214)        214

Derivatives
Interest rate swaps              63,445     (66,407)     34,727     (36,721)


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.  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.


The Report of Independent Auditors and the related consolidated financial
statements are presented on the following pages.
<PAGE> 30

                     REPORT OF INDEPENDENT AUDITORS





The Board of Directors
American General Finance, Inc.


We have audited the accompanying consolidated balance sheets of American
General Finance, Inc. (a wholly-owned subsidiary of American General
Corporation) and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of income, shareholder's equity, cash
flows, and comprehensive income for each of the three years in the period
ended December 31, 2000.  Our audits also included the financial statement
schedule listed in the Index at Item 14(a).  These financial statements and
schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of American General Finance, Inc. and subsidiaries at December 31,
2000 and 1999, and the consolidated results of their operations and their
cash flows for each of the three years in the period ended December 31,
2000, in conformity with accounting principles generally accepted in the
United States.  Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.


                                             Ernst & Young LLP


Indianapolis, Indiana
January 23, 2001
<PAGE> 31

               American General Finance, Inc. and Subsidiaries
                         Consolidated Balance Sheets




                                                         December 31,
                                                     2000            1999
                                                    (dollars in thousands)
Assets

Net finance receivables  (Notes 2.
  and 4.):
    Real estate loans                             $ 7,280,234    $ 7,104,227
    Non-real estate loans                           3,027,989      2,576,081
    Retail sales finance                            1,453,588      1,349,689

Net finance receivables                            11,761,811     11,029,997
Allowance for finance receivable
  losses  (Note 5.)                                  (383,415)      (395,626)
Net finance receivables, less allowance
  for finance receivable losses                    11,378,396     10,634,371

Investment securities  (Note 6.)                    1,107,533        988,563
Cash and cash equivalents                             163,895        146,710
Other assets  (Note 7.)                               758,571        865,663

Total assets                                      $13,408,395    $12,635,307


Liabilities and Shareholder's Equity

Long-term debt  (Note 8.)                         $ 5,670,670    $ 5,716,991
Short-term notes payable:
  Commercial paper  (Notes 9. and 11.)              5,088,513      4,245,961
  Banks and other (Notes 10. and 12.)                    -           211,559
Deposits                                               73,971         32,118
Insurance claims and policyholder
  liabilities                                         519,447        462,100
Other liabilities                                     391,895        416,572
Accrued taxes                                          25,632         22,771

Total liabilities                                  11,770,128     11,108,072

Shareholder's equity:
  Common stock  (Note 14.)                              1,000          1,000
  Additional paid-in capital                          877,576        876,708
  Accumulated other comprehensive
    income (loss)  (Note 6.)                            2,631         (6,696)
  Retained earnings  (Note 15.)                       757,060        656,223

Total shareholder's equity                          1,638,267      1,527,235

Total liabilities and shareholder's equity        $13,408,395    $12,635,307





See Notes to Consolidated Financial Statements.
<PAGE> 32

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




                                             Years Ended December 31,
                                         2000          1999          1998
                                              (dollars in thousands)

Revenues
  Finance charges                     $1,618,969    $1,455,485    $1,354,158
  Insurance                              196,241       184,529       175,969
  Other                                   94,706        91,588        78,978

Total revenues                         1,909,916     1,731,602     1,609,105

Expenses
  Interest expense                       694,251       573,834       511,587
  Operating expenses                     542,412       524,843       505,150
  Provision for finance receivable
    losses                               206,275       206,632       212,090
  Insurance losses and loss
    adjustment expenses                   88,354        86,634        84,687
  Other charges  (Note 16.)               50,000        57,000          -

Total expenses                         1,581,292     1,448,943     1,313,514

Income before provision for income
  taxes                                  328,624       282,659       295,591

Provision for Income Taxes
  (Note 17.)                             120,686       102,925       108,232

Net Income                            $  207,938    $  179,734    $  187,359





See Notes to Consolidated Financial Statements.
<PAGE> 33

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




                                             Years Ended December 31,
                                         2000          1999          1998
                                              (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           876,708       822,497       743,083
  Capital contributions from
    parent and other                         868        54,211        79,414
  Balance at end of year                 877,576       876,708       822,497

Accumulated Other Comprehensive
  Income (Loss)
    Balance at beginning of year          (6,696)       39,419        34,512
    Change in net unrealized
      gains (losses) on
      investment securities                9,327       (46,115)        4,907
    Balance at end of year                 2,631        (6,696)       39,419

Retained Earnings
  Balance at beginning of year           656,223       640,489       484,730
  Net income                             207,938       179,734       187,359
  Common stock dividends                (107,101)     (164,000)      (31,600)
  Balance at end of year                 757,060       656,223       640,489

Total Shareholder's Equity            $1,638,267    $1,527,235    $1,503,405





See Notes to Consolidated Financial Statements.
<PAGE> 34
<TABLE>
                  American General Finance, Inc. and Subsidiaries
                       Consolidated Statements of Cash Flows



<CAPTION>
                                                      Years Ended December 31,
                                                    2000        1999        1998
                                                       (dollars in thousands)
<S>                                              <C>         <C>         <C>
Cash Flows from Operating Activities
Net Income                                       $  207,938  $  179,734  $  187,359
Reconciling adjustments:
  Provision for finance receivable losses           206,275     206,632     212,090
  Depreciation and amortization                     149,405     132,552     107,946
  Deferral of finance receivable
    origination costs                               (54,254)    (53,291)    (46,773)
  Deferred income tax charge (benefit)               21,728      (8,020)     16,446
  Change in other assets and other liabilities      (74,750)    (57,210)    (34,947)
  Change in insurance claims and
    policyholder liabilities                         57,347      25,021         220
  Change in taxes receivable and payable             64,040       1,422      19,681
  Other charges                                      50,000      57,000        -
  Other, net                                         (7,714)      9,932     (23,444)
Net cash provided by operating activities           620,015     493,772     438,578

Cash Flows from Investing Activities
  Finance receivables originated or purchased    (6,281,876) (6,653,665) (6,589,414)
  Principal collections on finance receivables    5,313,806   5,102,250   4,775,254
  Acquisition of Standard Pacific Savings, F.A.        -         44,516        -
  Acquisition of HSA Residential Mortgage
    Services of Texas, Inc.                            -           -        (25,600)
  Investment securities purchased                  (644,246)   (328,442)   (211,087)
  Investment securities called, matured and sold    536,058     247,886     158,360
  Change in premiums on finance receivables
    purchased and deferred charges                  (22,528)    (54,609)   (122,879)
  Other, net                                        (19,884)    (37,420)    (20,963)
Net cash used for investing activities           (1,118,670) (1,679,484) (2,036,329)

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt        1,240,329   1,107,517   2,028,405
  Repayment of long-term debt                    (1,290,234)   (571,286)   (866,024)
  Change in deposits                                 41,853     (15,683)       (700)
  Change in short-term notes payable                630,993     773,872     430,977
  Capital contribution from parent                     -         54,000      79,000
  Dividends paid                                   (107,101)   (164,000)    (31,600)
Net cash provided by financing activities           515,840   1,184,420   1,640,058

Increase (decrease) in cash and cash equivalents     17,185      (1,292)     42,307
Cash and cash equivalents at beginning of year      146,710     148,002     105,695
Cash and cash equivalents at end of year         $  163,895  $  146,710  $  148,002

Supplemental Disclosure of Cash Flow Information
  Income taxes paid                              $   34,385  $  111,127  $   74,047
  Interest paid                                  $  685,059  $  552,702  $  493,356



<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE> 35

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




                                              Years Ended December 31,
                                          2000          1999          1998
                                               (dollars in thousands)

Net Income                              $207,938      $179,734      $187,359

Other comprehensive income:
  Net unrealized gains (losses)
    on investment securities              17,254       (72,512)        6,857
  Income tax effect                       (6,101)       25,380        (2,401)

  Net unrealized gains (losses)
    on investment securities,
    net of tax                            11,153       (47,132)        4,456

  Reclassification adjustment
    for realized (gains) losses
    included in net income                (2,809)        1,564           693
  Income tax effect                          983          (547)         (242)

  Realized (gains) losses included
    in net income, net of tax             (1,826)        1,017           451

Other comprehensive income (loss),
  net of tax                               9,327       (46,115)        4,907

Comprehensive income                    $217,265      $133,619      $192,266





See Notes to Consolidated Financial Statements.
<PAGE> 36

              American General Finance, Inc. and Subsidiaries
                Notes to Consolidated Financial Statements
                             December 31, 2000



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".  AGFI is a wholly owned subsidiary of American
General Corporation (American General).  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
business.  At December 31, 2000, the Company had 1,338 offices in 42
states, Puerto Rico and the U.S. Virgin Islands and approximately 7,500
employees.

In our consumer finance operations, we make home equity loans, originate
secured and unsecured consumer loans, extend lines of credit, purchase
retail sales contracts and provide revolving retail services arising from
the retail sale of consumer goods and services by approximately 16,000
retail merchants, and offer private label services for approximately 260
retail merchants.  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.  We also sell credit and non-
credit insurance to our consumer finance customers.

In our insurance operations, we write and assume credit life, credit
accident and health, credit-related property and casualty, and non-credit
insurance covering our consumer finance customers and property pledged as
collateral.  See Note 20. for further information on the Company's business
segments.

We fund our operations principally through net cash flows from operating
activities, issuances of long-term debt, short-term borrowings in the
commercial paper market, borrowings from banks under credit facilities,
acceptance of bank demand and time deposits, and capital contributions from
American General.

In May 1999, AGFI acquired Standard Pacific Savings, F.A. from Standard
Pacific Corporation and renamed the institution American General Bank, FSB
(AG Bank).  AG Bank currently operates as a traditional thrift, whose
products include deposit and savings accounts, residential mortgage and
home equity loans, and private label services.

At December 31, 2000, the Company had $11.8 billion of net finance
receivables due from approximately 2.1 million customer accounts and $6.4
billion of credit and non-credit life insurance in force covering
approximately 1.1 million customer accounts.



Note 2.  Summary of Significant Accounting Policies

                       PRINCIPLES OF CONSOLIDATION

We prepared our consolidated financial statements using generally accepted
accounting principles.  They include the accounts of AGFI and its
subsidiaries, all of which are wholly owned.  We eliminated all
intercompany items.  AGFI is a wholly owned subsidiary of American General.
<PAGE> 37

Notes to Consolidated Financial Statements, Continued


                          FINANCE OPERATIONS

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 show
them as liabilities and not net them against finance receivables.  Finance
receivables relate to the financing activities of our consumer finance
business segment and insurance claims and policyholder liabilities relate
to the underwriting activities of our insurance business segment.  We
determine delinquency on finance receivables contractually.


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.  We stop accruing revenue 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.  Upon suspension, we do not reverse
amounts previously accrued.  We resume the accrual of revenue for loans and
retail sales contracts if we receive additional payments and the finance
receivable is less than four contractual payments past due.  We recognize
late charges, prepayment penalties, and extension fees as revenue when
received.

We defer the costs to originate certain finance receivables and the revenue
from nonrefundable points and fees on loans and amortize them to revenue
on the accrual basis 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 costs or points and fees to revenue at the
date of liquidation.


Allowance For Finance Receivable Losses

We periodically evaluate the finance receivable portfolio as a group to
determine any adjustment necessary to maintain the allowance for finance
receivable losses at a level that we consider adequate to absorb
anticipated losses in our existing portfolio.  We consider numerous factors
in estimating the anticipated finance receivable losses, including current
economic conditions, prior finance receivable loss and delinquency
experience, and the composition of our finance receivable portfolio.
<PAGE> 38

Notes to Consolidated Financial Statements, Continued


Our policy is to charge off each month non-real estate loans on which
little or no collections were made in the prior six months, retail sales
contracts that are six installments past due, and revolving retail and
private label accounts that are 180 days past due.  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 establish the real estate as an asset valued at fair value,
and charge off any loan amount in excess of that value.  We occasionally
extend the charge-off period for individual accounts when, in our opinion,
such treatment is warranted.


                          INSURANCE OPERATIONS

Revenue Recognition

We recognize credit insurance premiums on revolving finance receivables as
revenue when billed.  We defer credit insurance premiums collected in
advance in unearned premium reserves which are included in insurance claims
and policyholder liabilities.  We recognize premiums on credit life
insurance as revenue using the sum-of-the-digits or actuarial methods,
except in the case of level-term contracts, which we recognize as revenue
using the straight-line method over the terms of the policies.  We
recognize 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 premiums on credit-related property and casualty insurance as
revenue using the straight-line method over the terms of the policies or
appropriate shorter periods.  We recognize non-credit life insurance
premiums as revenue when collected but not before their due dates.


Policy Reserves

Policy reserves for credit life, credit accident and health, and credit-
related property and casualty 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 non-credit life, group
annuity, and accident and health insurance reserves assumed under
coinsurance agreements on various tabular and unearned premium methods.


Acquisition Costs

We defer insurance acquisition costs, principally commissions, reinsurance
fees, and premium taxes, and charge them to expense over the terms of the
related policies or reinsurance agreements.
<PAGE> 39

Notes to Consolidated Financial Statements, Continued


                          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 net adjustment 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.


Realized Gains and Losses on Investments

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


                                OTHER

Cash Equivalents

We consider all short-term investments with a maturity at date of purchase
of three months or less to be cash equivalents.


Goodwill

We charge goodwill to expense in equal amounts over 20 to 40 years.  We
regularly review goodwill for indicators of impairment in value which we
believe are not temporary, including unexpected or adverse changes in the
following:  (1) the economic or competitive environments in which we
operate, (2) profitability analyses, and (3) cash flow analyses.  If facts
and circumstances suggest that goodwill is impaired, we assess the fair
value of the underlying business and reduce goodwill to an amount that
results in the book value of the Company approximating fair value.


Customer Base Valuations

We charge customer base valuations to expense in equal amounts generally
over 6 years.


Income Taxes

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 some portion of the deferred tax asset will not be realized.  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.
We include fluctuations in fair value of available-for-sale investment
<PAGE> 40

Notes to Consolidated Financial Statements, Continued


securities in accumulated other comprehensive income (loss) in
shareholder's equity.


Derivative Financial Instruments

We account for our derivative financial instruments as hedges. Hedge
accounting requires a high correlation between changes in fair values or
cash flows of the derivative financial instrument and the specific item
being hedged, both at inception and throughout the life of the hedge.

We accrue the differences between amounts payable and receivable on
interest rate swap agreements as adjustments to interest expense over the
lives of the agreements.  We include the related amounts payable to and
receivable from counterparties in other liabilities and other assets.  We
do not recognize the fair values of interest rate swap agreements in the
consolidated balance sheet, which is consistent with the treatment of the
related debt that is hedged.

We defer any gain or loss resulting from the early termination of an
interest rate swap agreement and amortize it into income over the remaining
term of the related debt.  If the underlying debt is extinguished, we
recognize any related gain or loss on the interest rate swap agreement in
income.


Use of Estimates

We make estimates and assumptions in preparing financial statements that
affect amounts reported in our financial statements and disclosures of
contingent assets and liabilities.  Ultimate results could differ from our
estimates.


Fair Value of Financial Instruments

We estimate the fair values disclosed in Note 22. using discounted cash
flows when quoted market prices or values obtained from independent pricing
services are not available.  The assumptions used, 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 3.  Accounting Changes

On January 1, 2001, we adopted Statement of Financial Accounting Standards
(SFAS) 133, "Accounting for Derivative Instruments and Hedging Activities,"
which requires all derivative instruments to be recognized at fair value
in the balance sheet.  Changes in the fair value of a derivative instrument
are required to be reported in net income or accumulated other
comprehensive income, depending upon the intended use of the derivative
instrument. Upon adoption, we recorded aftertax cumulative adjustments to
recognize the fair value of interest rate swaps related to debt in the
balance sheet, which reduced accumulated other comprehensive income in
shareholders' equity $27.4 million.  We do not expect SFAS 133 to have a
<PAGE> 41

Notes to Consolidated Financial Statements, Continued


material impact on the Company's results of operations and financial
position in future periods.

In fourth quarter 2000, we adopted Staff Accounting Bulletin 101, "Revenue
Recognition in Financial Statements," which provides criteria for revenue
recognition.  Adoption of this bulletin did not result in any changes to
the Company's revenue recognition policies.



Note 4.  Finance Receivables

The components of net finance receivables by type were as follows:

                                            December 31, 2000
                              Real        Non-real      Retail
                             Estate        Estate        Sales
                              Loans         Loans       Finance      Total
                                         (dollars in thousands)

Gross receivables          $ 7,297,571  $ 3,366,084  $ 1,667,235  $12,330,890
Unearned finance charges
  and points and fees         (166,983)    (440,567)    (237,141)    (844,691)
Accrued finance charges         66,936       47,652       22,715      137,303
Deferred origination costs       9,035       37,817         -          46,852
Premiums, net of discounts      73,675       17,003          779       91,457

                           $ 7,280,234  $ 3,027,989  $ 1,453,588  $11,761,811


                                            December 31, 1999
                              Real        Non-real      Retail
                             Estate        Estate        Sales
                              Loans         Loans       Finance      Total
                                         (dollars in thousands)

Gross receivables          $ 7,087,150  $ 2,910,348  $ 1,546,013  $11,543,511
Unearned finance charges
  and points and fees         (154,988)    (415,458)    (220,271)    (790,717)
Accrued finance charges         60,852       42,785       23,814      127,451
Deferred origination costs       8,163       37,882         -          46,045
Premiums, net of discounts     103,050          524          133      103,707

                           $ 7,104,227  $ 2,576,081  $ 1,349,689  $11,029,997


Real estate loans are secured by first or second mortgages and generally
have maximum original terms of 360 months.  Non-real estate loans are
secured by consumer goods, automobiles or other chattel security, 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 purchase money security interests in the
goods purchased and generally require minimum monthly payments based on
outstanding balances.  At December 31, 2000, 97% of our net finance
receivables were secured by the real and/or personal property of the
borrower, compared to 96% at December 31, 1999.  At December 31, 2000, real
estate loans accounted for 62% of the amount and 9% of the number of net
finance receivables outstanding, compared to 64% of the amount and 8% of
the number of net finance receivables outstanding at December 31, 1999.
<PAGE> 42

Notes to Consolidated Financial Statements, Continued


Contractual maturities of net finance receivables by type at December 31,
2000 were as follows:

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

2001      $   201,217     $   776,185     $   354,161     $ 1,331,563
2002          286,196       1,009,791         301,560       1,597,547
2003          297,205         733,431         148,719       1,179,355
2004          303,547         334,978          69,531         708,056
2005          296,553         107,545          32,491         436,589
2006+       5,895,516          66,059         547,126       6,508,701

          $ 7,280,234     $ 3,027,989     $ 1,453,588     $11,761,811


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 were as follows:

                                        Years Ended December 31,
                                      2000        1999        1998
                                         (dollars in thousands)
Real estate loans:
  Principal cash collections       $1,854,554  $1,886,041  $1,553,759
  % of average net receivables         25.72%      30.29%      33.19%

Non-real estate loans:
  Principal cash collections       $1,610,183  $1,519,531  $1,568,858
  % of average net receivables         57.47%      60.55%      61.95%

Retail sales finance:
  Principal cash collections       $1,849,069  $1,696,678  $1,652,637
  % of average net receivables        132.47%     133.41%     126.58%


Unused credit limits extended by the Company to its customers were as
follows:
                                             December 31,
                                        2000              1999
                                        (dollars in thousands)

Unused credit limits                 $3,718,568        $3,226,282


Company experience has shown that the funded amounts have been less than
the unused credit limits.  All unused credit limits, in part or in total,
can be cancelled at the discretion of the Company.
<PAGE> 43

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, 2000          December 31, 1999
                 Amount        Percent      Amount        Percent
                              (dollars in thousands)

California      $ 1,582,130         13%    $ 1,562,183         14%
N. Carolina         831,977          7         811,625          7
Florida             740,186          6         671,970          6
Illinois            698,181          6         659,674          6
Ohio                678,238          6         644,804          6
Indiana             597,898          5         560,887          5
Virginia            486,607          4         430,687          4
Georgia             477,110          4         427,523          4
Other             5,669,484         49       5,260,644         48

                $11,761,811        100%    $11,029,997        100%


Finance receivables on which we stopped accruing revenue totaled $333.5
million at December 31, 2000 and $315.4 million at December 31, 1999.  Our
accounting policy for revenue recognition on revolving retail and private
label finance receivables follows industry practice and provides for the
accrual of revenue up to the date of charge-off at 180 days past due.  We
accrued revenue on revolving retail and private label finance receivables
greater than 90 days contractually delinquent of $.3 million at December
31, 2000 and $.2 million at December 31, 1999.



Note 5.  Allowance for Finance Receivable Losses

Changes in the allowance for finance receivable losses are detailed below.


                                        Years Ended December 31,
                                     2000         1999         1998
                                         (dollars in thousands)

Balance at beginning of year       $395,626     $382,450     $372,653
Provision for finance receivable
  losses                            206,275      206,632      212,090
Allowance related to net
  (sold) acquired receivables       (12,211)      13,176       17,297
Charge-offs, net of recoveries     (206,275)    (206,632)    (219,590)

Balance at end of year             $383,415     $395,626     $382,450


See Note 2. for information on the determination of the allowance for
finance receivable losses.
<PAGE> 44

Notes to Consolidated Financial Statements, Continued


Note 6.  Investment Securities

Investment securities were as follows at December 31:

                                      Fair Value           Amortized Cost
                                   2000        1999       2000        1999
                                           (dollars in thousands)
Fixed-maturity investment
  securities:
  Bonds:
    Corporate securities         $  601,588  $581,313   $  609,502  $601,458
    Mortgage-backed securities      182,185   151,028      178,706   151,335
    State and political
      subdivisions                  279,922   179,445      272,144   177,863
    Other                             4,240    39,148        4,110    31,599
  Redeemable preferred stocks        11,426    15,233       10,764    14,272
Total                             1,079,361   966,167    1,075,226   976,527
Non-redeemable preferred
  stocks                              3,635     3,679        3,596     3,631
Other long-term investments          23,680    18,517       23,680    18,517
Common stocks                           857       200          887       189

Total investment securities      $1,107,533  $988,563   $1,103,389  $998,864


At December 31, the gross unrealized gains and losses on investment
securities were as follows:
                                        Gross                  Gross
                                   Unrealized Gains       Unrealized Losses
                                   2000        1999       2000        1999
                                           (dollars in thousands)
Fixed-maturity investment
  securities:
  Bonds:
    Corporate securities         $15,802      $ 4,331   $23,716      $24,476
    Mortgage-backed securities     3,747        1,228       268        1,535
    State and political
      subdivisions                 8,279        3,249       501        1,667
    Other                            130        7,625      -              76
  Redeemable preferred stocks        799          966       137            5
Total                             28,757       17,399    24,622       27,759
Non-redeemable preferred
  stocks                              39           48      -            -
Common stocks                          7           11        37         -

Total investment securities      $28,803      $17,458   $24,659      $27,759


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

                                        Years Ended December 31,
                                    2000          1999          1998
                                         (dollars in thousands)

Fair value                         $536,058     $247,886     $158,360

Gross realized gains                 14,166        3,003          340
Gross realized losses                11,357        4,567        1,033
<PAGE> 45

Notes to Consolidated Financial Statements, Continued


Contractual maturities of fixed-maturity securities at December 31, 2000
were as follows:
                                             Fair         Amortized
                                             Value           Cost
                                            (dollars in thousands)
Fixed maturities, excluding
  mortgage-backed securities:
    Due in 1 year or less                 $   13,618     $   13,455
    Due after 1 year through 5 years         240,492        239,281
    Due after 5 years through 10 years       388,352        392,746
    Due after 10 years                       254,714        251,038
Mortgage-backed securities                   182,185        178,706

Total                                     $1,079,361     $1,075,226


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

Bonds on deposit with regulatory authorities had carrying values of $7.3
million at December 31, 2000 and $6.4 million at December 31, 1999.



Note 7.  Other Assets

The components of other assets were as follows:

                                               December 31,
                                           2000            1999
                                          (dollars in thousands)

Goodwill                                 $190,817        $198,720
Fixed assets                              109,729         110,725
Other insurance investments                90,495          75,701
Customer base valuations                   85,519          94,143
Real estate owned                          45,864          52,232
Income tax assets                          44,045         132,280
Prepaid expenses and deferred
  charges                                  39,214          39,181
Other                                     152,888         162,681

Total                                    $758,571        $865,663


Goodwill is net of accumulated amortization of $112.5 million at December
31, 2000 and $104.6 million at December 31, 1999.
<PAGE> 46

Notes to Consolidated Financial Statements, Continued


Note 8.  Long-term Debt

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

                        Carrying Value              Fair Value
                      2000          1999        2000          1999
                                 (dollars in thousands)

Senior debt        $5,670,670    $5,716,991  $5,735,653    $5,641,284


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

                   Years Ended December 31,        December 31,
                    2000     1999     1998         2000    1999

Senior debt         6.64%    6.61%    6.95%       6.72%    6.58%


Maturities of long-term debt at December 31, 2000 were as follows:

                         Carrying Value
                     (dollars in thousands)

2001                       $1,264,767
2002                        1,388,987
2003                        1,571,981
2004                          375,589
2005                          721,949
2006-2009                     347,397

Total                      $5,670,670


A debt agreement contains restrictions on consolidated retained earnings
for certain purposes (see Note 15.).



Note 9.  Short-term Notes Payable

AGFI and AGFC issue commercial paper with terms ranging from 1 to 270 days.
Included in commercial paper are extendible commercial notes that AGFC
sells with initial maturities of up to 90 days which may be extended by
AGFC to 390 days.
<PAGE> 47

Notes to Consolidated Financial Statements, Continued


Information concerning short-term notes payable for commercial paper and
to banks under credit facilities was as follows:

                                            At or for the
                                       Years Ended December 31,
                                    2000         1999         1998
                                        (dollars in thousands)

Average borrowings               $4,765,422   $3,748,637   $3,475,728
Weighted average interest
  rate, at year end:
    Money market yield                6.58%        5.95%        5.30%
    Semi-annual bond
      equivalent yield                6.67%        6.02%        5.36%



Note 10.  Liquidity Facilities

We participate in credit facilities to support the issuance of commercial
paper and to provide an additional source of funds for operating
requirements.  AGFI and AGFC are eligible borrowers under committed credit
facilities extended to American General and certain of its subsidiaries
(the "shared committed facilities").  At December 31, 2000, the annual
commitment fees for the shared committed facilities ranged from .05% to
 .07%.  We pay only an allocated portion of the commitment fees for the
shared committed facilities.  AGFI and certain subsidiaries also have
uncommitted credit facilities.  In addition, AGFI and AGFC were eligible
borrowers under uncommitted credit facilities extended to American General
and certain of its subsidiaries (the "shared uncommitted facilities").
This agreement was modified in December 2000.  Available borrowings under
all facilities are reduced by any outstanding borrowings.

Information concerning the credit facilities was as follows:

                                                   December 31,
                                               2000            1999
                                              (dollars in thousands)
Committed credit facilities:
  Shared committed facilities                $6,200,000    $5,600,000
  Borrowings                                       -             -

  Remaining availability                     $6,200,000    $5,600,000

Uncommitted credit facilities:
  Company uncommitted facilities             $  171,000     $ 271,000
  Shared uncommitted facilities                    -           50,000
  Borrowings                                       -         (211,000)

  Remaining availability                     $  171,000     $ 110,000


In addition, our mortgage warehouse lending subsidiary arranges interim
financing for third-party mortgage originators through a purchase facility.
At December 31, 2000, this facility totaled $250.0 million with remaining
availability of $90.0 million.
<PAGE> 48

Notes to Consolidated Financial Statements, Continued


Note 11.  Derivative Financial Instruments

Our principal borrowing subsidiary is AGFC.  AGFC uses derivative financial
instruments to manage the cost of its debt and is neither a dealer nor a
trader in derivative financial instruments.  AGFC has generally limited its
use of derivative financial instruments to interest rate swap agreements.

AGFC uses interest rate swap agreements to reduce its exposure to market
interest rate increases by synthetically converting certain floating-rate
debt to a fixed-rate basis.  We record these floating-rate obligations at
amortized cost.  The synthetic long-term fixed rates achieved through
interest rate swap agreements are slightly lower than could have been
achieved by issuing comparable long-term fixed-rate debt.  As an
alternative to fixed-rate term debt, AGFC's interest rate swap agreements
did not have a material effect on the Company's weighted-average interest
rate or reported interest expense in any of the three years ended December
31, 2000.

AGFC contracted to pay interest at fixed rates and receive interest at
floating rates on the interest rate swap agreements.  Notional amounts and
weighted average receive and pay rates were as follows:

                                             December 31,
                                   2000          1999          1998
                                       (dollars in thousands)

Notional amount                  $2,450,000    $1,295,000    $935,000

Weighted average receive rate         6.72%         5.40%       4.57%
Weighted average pay rate             6.71%         6.70%       6.94%


These agreements mature at various dates and had the respective fixed rates
at December 31, 2000 as follows:

               Notional       Weighted Average
                Amount         Interest Rate
             (dollars in
              thousands)

2001          $  270,000           6.32%
2002             610,000           6.85
2003             445,000           7.86
2004             600,000           6.41
2005             225,000           6.24
2006             100,000           7.03
2008             200,000           5.50

              $2,450,000           6.71%
<PAGE> 49

Notes to Consolidated Financial Statements, Continued


The following table shows changes in the notional amounts for interest rate
swap agreements:

                                       Years Ended December 31,
                                    2000         1999         1998
                                        (dollars in thousands)

Balance at beginning of year     $1,295,000    $  935,000    $940,000
New contracts                     1,380,000       410,000     260,000
Expired contracts                  (225,000)      (50,000)   (265,000)

Balance at end of year           $2,450,000    $1,295,000    $935,000


AGFC is exposed to credit risk in the event of non-performance by
counterparties to derivative financial instruments.  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.

AGFC's credit exposure on derivative financial instruments is limited to
the fair value of the agreements that are favorable to the Company.  See
Note 22. for the fair values of the interest rate swap agreements.  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 and 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.



Note 12.  Short-term Notes Payable - Parent

Borrowings from American General primarily provide overnight operating
liquidity when American General is in a surplus cash position.  These
borrowings are due on demand at short-term rates based on overnight bank
investment rates.  At December 31, 2000, 1999 and 1998, AGFI had no
borrowings outstanding with American General.



Note 13.  Insurance

Our insurance subsidiaries enter into reinsurance agreements among
themselves and other insurers, including other American General insurance
subsidiaries.  Insurance claims and policyholder liabilities included the
following amounts with other American General insurance subsidiaries:

                                                 December 31,
                                              2000          1999
                                            (dollars in thousands)
Annuity, credit life, and credit
  accident and health reserves              $80,871        $76,712
<PAGE> 50

Notes to Consolidated Financial Statements, Continued


Our insurance subsidiaries assumed policy and claim reserves from other
insurers as follows:

                                                 December 31,
                                         2000       1999       1998
                                           (dollars in thousands)

Assumed policy and claim reserves      $151,169   $142,917   $130,392


The Company's ceded reinsurance activities were not significant during the
last three years.

Statutory accounting practices differ from generally accepted accounting
principles in the following respects:

                                           Years Ended December 31,
                                          2000       1999      1998
                                            (dollars in thousands)

Statutory net income                    $58,027    $48,754    $68,537
Change in deferred policy
  acquisition costs                      12,650      7,405        254
Reserve changes                          19,298      5,848     (4,885)
Deferred income tax charge               (6,599)    (1,870)    (1,024)
Amortization of interest
  maintenance reserve                      (710)      (711)      (561)
Goodwill amortization                      (458)      (458)      (458)
Other, net                               (2,263)     7,744      2,542

GAAP net income                         $79,945    $66,712    $64,405


                                                 December 31,
                                             2000            1999
                                            (dollars in thousands)

Statutory equity                           $626,572        $575,767
Deferred policy acquisition costs            83,712          70,530
Reserve changes                              73,943          57,724
Net unrealized losses                       (22,508)        (27,879)
Goodwill                                     14,252          14,710
Decrease in carrying value
  of affiliates                             (14,992)        (12,836)
Asset valuation reserve                      13,650          10,579
Deferred income taxes                         3,389           3,606
Interest maintenance reserve                    349            (580)
Other, net                                   15,487          12,970

GAAP equity                                $793,854        $704,591
<PAGE> 51

Notes to Consolidated Financial Statements, Continued


Note 14.  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, 2000 and 1999 were as follows:

                                                      Shares
                                              Issued and Outstanding
                       Par       Shares            December 31,
                      Value    Authorized      2000            1999

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



Note 15.  Retained Earnings

AGFI's ability to pay dividends is substantially dependent on the receipt
of dividends or other funds from its subsidiaries.  State laws restrict the
amounts our insurance subsidiaries may pay as dividends without prior
notice to, or in some cases prior approval from, their respective state
insurance departments.  At December 31, 2000, the maximum amount of
dividends which our insurance subsidiaries may pay in 2001 without prior
approval was $72.0 million.  At December 31, 2000, our insurance
subsidiaries had statutory capital and surplus of $626.6 million.  Merit
Life Insurance Co. (Merit), a wholly owned subsidiary of AGFC, had $52.7
million of accumulated earnings at December 31, 2000 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.  No distributions are presently
contemplated from these earnings.  If such earnings were to become taxable
at December 31, 2000, the federal income tax would approximate $18.4
million.

An AGFC financing agreement limits the amount of dividends AGFC may pay.
Under the restrictive provision contained in this agreement, $620.5 million
of the retained earnings of AGFC was free from such restriction at December
31, 2000.



Note 16.  Other Charges

                       SATELLITE DISH LITIGATION

In the mid-1990s, one of our subsidiaries, A.G. Financial Service Center,
Inc. (Financial Service Center), formerly named American General Financial
Center, provided financing for satellite dishes sold by independent
unaffiliated dealers.  On May 18, 1999, a Mississippi state court rendered
a judgment against Financial Service Center for approximately $500,000 in
compensatory damages and $167 million in punitive damages, in a lawsuit
brought by 29 individuals who had each purchased a satellite dish.  In
1999, Financial Service Center voluntarily filed for bankruptcy.
<PAGE> 52

Notes to Consolidated Financial Statements, Continued


As part of the resolution process, certain settlement agreements were
executed in January 2000.  Accordingly, we recorded a charge of $57.0
million ($36.2 million aftertax) in fourth quarter 1999 to cover the
proposed settlements of this and other litigation.  On September 1, 2000,
payment was made as final settlement of these agreements.

In 2000, Financial Service Center filed a plan of reorganization to resolve
the remaining claims filed in the bankruptcy.  In January 2001, Financial
Service Center and the creditors' committee in the bankruptcy entered into
a settlement that has been approved by the bankruptcy court.  The plan of
reorganization was confirmed by the bankruptcy court in February 2001.
Certain creditors may appeal the confirmation of the plan, but we do not
expect the appeals to prevail.  We expect our remaining recorded liability
related to this matter to be sufficient to cover the costs of the plan of
reorganization.

See Legal Proceedings in Item 3. for additional information on the
satellite dish litigation.


                      MORTGAGE WAREHOUSE LENDING

In June 2000, we discovered a potential fraud committed against a
subsidiary that conducts mortgage warehouse lending activities in our
consumer finance operation.  Mortgages processed by one originator
allegedly had been funded based on fraudulent information.  In July 2000,
the originator's license was suspended and the originator and its parent
company filed for bankruptcy.  Based on the available information, we
recorded a charge of $50.0 million ($32.5 million aftertax) in second
quarter 2000 for our loss related to this alleged fraud.  We are pursuing
all appropriate remedies and believe our recorded liability is sufficient
to cover this loss.



Note 17.  Income Taxes

AGFI and all of its subsidiaries file a consolidated federal income tax
return with American General and the majority of its subsidiaries.  We
provide for federal income taxes as if filing a separate tax return, and
pay such amounts to American General under a tax sharing agreement.
<PAGE> 53

Notes to Consolidated Financial Statements, Continued


Provision for income taxes is summarized as follows:

                                        Years Ended December 31,
                                     2000         1999         1998
                                         (dollars in thousands)
Federal
  Current                          $ 94,085     $106,189     $ 86,813
  Deferred                           17,021       (8,917)      13,475
Total federal                       111,106       97,272      100,288
State                                 9,580        5,653        7,944

Total                              $120,686     $102,925     $108,232


The U.S. statutory federal income tax rate differs from the effective
income tax rate as follows:

                                         Years Ended December 31,
                                      2000         1999         1998

Statutory federal income tax rate    35.00%       35.00%       35.00%
State income taxes                    1.89         1.30         1.75
Amortization of goodwill               .71          .90         1.07
Nontaxable investment income         (1.01)        (.99)        (.94)
Other, net                             .13          .20         (.26)

Effective income tax rate            36.72%       36.41%       36.62%


Net deferred tax assets were as follows:

                                               December 31,
                                           2000            1999
                                          (dollars in thousands)

Deferred tax assets                      $133,980        $205,257
Deferred tax liabilities                  (99,106)        (78,358)

Net deferred tax assets                  $ 34,874        $126,899


The most significant deferred tax asset relates to the allowance for
finance receivable losses.

During 2000, the Internal Revenue Service completed its examinations of
American General's tax returns through 1992.  As a result, the Company
received a cash settlement which reduced deferred tax assets $61.3 million.

State net operating loss (NOL) carryforwards were $603.8 million at
December 31, 2000 and $617.9 million at December 31, 1999 and expire in
2002.  These carryforwards resulted from a 1995 state audit of a return and
the state's acceptance of an amended return.  The valuation allowance
relating to the state NOL carryforwards totaled $43.5 million at December
31, 2000 and $39.5 million at December 31, 1999.
<PAGE> 54

Notes to Consolidated Financial Statements, Continued


Note 18.  Lease Commitments, Rent Expense and Contingent Liabilities

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

                            Lease Commitments
                         (dollars in thousands)

2001                            $ 44,893
2002                              36,679
2003                              27,887
2004                              17,567
2005                               9,569
subsequent to 2005                12,958

Total                           $149,553


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 2000.  Rental expense totaled $47.9 million in
2000, $45.6 million in 1999, and $35.2 million in 1998.

AGFI and certain of its subsidiaries are parties to various lawsuits and
proceedings, including certain class action claims, arising in the ordinary
course of business.  In addition, many of the 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 that will ultimately
be paid arising from these lawsuits and proceedings will not have a material
adverse effect on our consolidated results of operations and financial
position.  However, the frequency of large damage awards, including large
punitive damage awards that bear little or no relation to actual economic
damages incurred by plaintiffs in some jurisdictions, continues to create
the potential for an unpredictable judgment in any given suit.



Note 19.  Benefit Plans

                         RETIREMENT INCOME PLANS

We participate in the American General Retirement Plans (AGRP), which are
non-contributory defined benefit pension plans covering most employees.
Pension benefits are based on the participant's compensation and length of
credited service.  American General's funding policy is to contribute
annually no more than the maximum amount deductible for federal income tax
purposes.

At December 31, 2000, the plans' assets were invested as follows:  (1) 65%
in equity mutual funds managed outside American General; (2) 28% in fixed
income mutual funds managed by an American General subsidiary; and (3) 6%
in American General common stock.  The pension plans have purchased annuity
contracts from American General subsidiaries to provide approximately $8.2
million of future annual benefits to certain retirees.
<PAGE> 55

Notes to Consolidated Financial Statements, Continued


AGFI accounts for its participation in the AGRP as if it had its own plans.
The following table shows AGFI's portion of the plans' funded status:

                                                 December 31,
                                         2000       1999       1998
                                           (dollars in thousands)

Projected benefit obligation           $ 99,622   $ 85,757   $ 87,882
Plan assets at fair value               112,194    109,371     95,653
Plan assets in excess of projected
  benefit obligation                     12,572     23,614      7,771
Other unrecognized items, net           (10,615)   (20,208)    (5,086)

Prepaid pension expense                $  1,957    $ 3,406   $  2,685


Pension expense included the following components:

                                           Years Ended December 31,
                                          2000       1999       1998
                                            (dollars in thousands)

Service cost                            $  3,914   $ 3,927    $ 3,623
Interest cost                              7,488     6,412      5,688
Expected return on plan assets           (10,061)   (8,713)    (6,950)
Net amortization and deferral                199       119        136

Pension expense                         $  1,540   $ 1,745    $ 2,497


Additional assumptions concerning the determination of pension expense were
as follows:

                                           Years Ended December 31,
                                          2000       1999       1998

Weighted average discount rate            8.00%      7.75%      7.00%
Expected long-term rate of
  return on plan assets                  10.35      10.35      10.25
Rate of increase in
  compensation levels                     4.50       4.25       4.25


               POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

We participate in American General's life, medical, supplemental major
medical, and dental plans for certain retired employees.  Most plans are
contributory, with retiree contributions adjusted annually to limit
employer contributions to predetermined amounts.  American General and its
subsidiaries reserve the right to change or eliminate these benefits at any
time.

American General's life plans are insured through December 31, 2001.  The
majority of the retiree medical and dental plans are unfunded and self-
insured.
<PAGE> 56

Notes to Consolidated Financial Statements, Continued


AGFI accounts for its participation in the plans as if it had its own
plans.  The accrued liability for postretirement benefits was $6.5 million
at December 31, 2000 and $6.6 million at December 31, 1999.  These
liabilities were discounted at the same rates used for the pension plans.
Postretirement benefit expense totaled $.8 million in 2000, $.7 million in
1999, and $.5 million in 1998.



Note 20.  Segment Information

We have two business segments:  consumer finance and insurance.  Our
segments are defined by the type of financial service product offered.
During first quarter 2000, the centralized real estate operation was
decentralized and merged into the then-existing consumer branches
operation.  The resulting new segment has been named the consumer finance
operation.  The consumer finance operation makes home equity loans,
originates secured and unsecured consumer loans, extends lines of credit,
purchases retail sales contracts from retail merchants, and provides
revolving retail and private label services for retail merchants.  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.  We also sell credit and non-credit insurance to our
consumer finance customers.  The insurance operation writes and assumes
credit and non-credit insurance through products that are sold principally
by the consumer finance operation.

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 2., except that: (1) segment finance charge revenues are
not reduced for the amortization of the deferred origination costs; (2)
segment operating expenses are not reduced for the deferral of origination
costs and exclude the amortization of goodwill; and (3) segment finance
receivables exclude the deferred origination costs.  Intersegment sales and
transfers are intended 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.  Adjustments for revenues are amortization of deferred
origination costs, realized gains (losses) on investments, and certain
investment expenses.  Reconciling items for pretax income include the
amortization of goodwill, realized gains (losses) on investments, and
certain investment expenses.  Adjustments for assets include goodwill,
deferred origination costs, other assets, and corporate assets that are not
considered pertinent to determining segment performance.  Corporate assets
include cash, prepaid expenses, deferred charges, and fixed assets.
<PAGE> 57

Notes to Consolidated Financial Statements, Continued


At or for the Year Ended December 31, 2000:

                             Consumer                         Total
                             Finance        Insurance       Segments
                                      (dollars in thousands)
Revenues:
  External:
    Finance charges         $ 1,692,881    $      -       $ 1,692,881
    Insurance                     1,129        195,112        196,241
    Other                        (8,512)        89,086         80,574
  Intercompany                   76,622        (73,641)         2,981
Interest expense                640,504           -           640,504
Provision for finance
  receivable losses             206,846           -           206,846
Pretax income                   327,761         90,524        418,285
Assets                       11,337,094      1,220,235     12,557,329



At or for the Year Ended December 31, 1999:

                             Consumer                         Total
                             Finance        Insurance       Segments
                                      (dollars in thousands)
Revenues:
  External:
    Finance charges         $ 1,515,761    $      -       $ 1,515,761
    Insurance                     1,573        182,956        184,529
    Other                         3,058         81,620         84,678
  Intercompany                   74,616        (72,195)         2,421
Interest expense                529,515           -           529,515
Provision for finance
  receivable losses             209,832           -           209,832
Pretax income                   335,762         74,759        410,521
Assets                       10,456,698      1,095,150     11,551,848



At or for the Year Ended December 31, 1998:

                             Consumer                         Total
                             Finance        Insurance       Segments
                                      (dollars in thousands)
Revenues:
  External:
    Finance charges         $ 1,392,377    $      -       $ 1,392,377
    Insurance                     1,925        174,044        175,969
    Other                         3,202         76,088         79,290
  Intercompany                   71,520        (68,850)         2,670
Interest expense                463,794            112        463,906
Provision for finance
  receivable losses             219,431           -           219,431
Pretax income                   272,972         70,220        343,192
Assets                        9,326,645      1,077,892     10,404,537
<PAGE> 58

Notes to Consolidated Financial Statements, Continued


Reconciliation of segment totals to consolidated financial statement
amounts is summarized below:

                                           At or for the
                                      Years Ended December 31,
                                 2000          1999           1998
                                       (dollars in thousands)
Revenues

Segments                      $ 1,972,677   $ 1,787,389   $ 1,650,306
Corporate                         (11,176)         (751)        4,971
Adjustments                       (51,585)      (55,036)      (46,172)

Consolidated revenue          $ 1,909,916   $ 1,731,602   $ 1,609,105


Interest Expense

Segments                      $   640,504   $   529,515   $   463,906
Corporate                          53,747        44,319        47,681

Consolidated interest
  expense                     $   694,251   $   573,834   $   511,587


Provision for Finance
  Receivable Losses

Segments                      $   206,846   $   209,832   $   219,431
Corporate                            (571)       (3,200)       (7,341)

Consolidated provision for
  finance receivable losses   $   206,275   $   206,632   $   212,090


Pretax Income

Segments                      $   418,285   $   410,521   $   343,192
Corporate                         (83,599)     (116,711)      (37,091)
Adjustments                        (6,062)      (11,151)      (10,510)

Consolidated pretax income    $   328,624   $   282,659   $   295,591


Assets

Segments                      $12,557,329   $11,551,848   $10,404,537
Corporate                         624,556       869,614       476,552
Adjustments                       226,510       213,845       291,834

Consolidated assets           $13,408,395   $12,635,307   $11,172,923
<PAGE> 59

Notes to Consolidated Financial Statements, Continued


Note 21.  Interim Financial Information (Unaudited)

Unaudited interim information is summarized below:


                                         Total Revenues
Three Months Ended                   2000              1999
                                     (dollars in thousands)

    March 31                      $  467,257        $  422,636
    June 30                          469,257           424,191
    September 30                     486,216           435,936
    December 31                      487,186           448,839

    Total                         $1,909,916        $1,731,602


                                     Income Before Provision
                                        for Income Taxes
Three Months Ended                   2000              1999
                                     (dollars in thousands)

    March 31                      $   93,651        $   79,739
    June 30                           43,093 (a)        86,671
    September 30                      96,213            85,102
    December 31                       95,667            31,147 (b)

    Total                         $  328,624        $  282,659


                                           Net Income
Three Months Ended                   2000              1999
                                     (dollars in thousands)

    March 31                      $   59,524        $   50,707
    June 30                           26,675 (a)        55,114
    September 30                      61,133            54,113
    December 31                       60,606            19,800 (b)

    Total                         $  207,938        $  179,734


(a)  Includes a charge of $50.0 million ($32.5 million aftertax) for the
     estimated loss on an alleged fraud against our mortgage warehouse
     lending subsidiary.

(b)  Includes a charge of $57.0 million ($36.2 million aftertax) for the
     settlement of satellite dish and other related litigation.


See Note 16. for further information on these charges.
<PAGE> 60

Notes to Consolidated Financial Statements, Continued


Note 22.  Fair Value of Financial Instruments

The carrying values and estimated fair values of certain of the Company's
financial instruments are presented below.  The reader 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, 2000         December 31, 1999
                           Carrying          Fair    Carrying          Fair
                            Value           Value     Value           Value
                                         (dollars in thousands)
Assets

Net finance receivables,
  less allowance for
  finance receivable
  losses                  $11,378,396  $10,896,639  $10,634,371  $10,569,662
Investment securities       1,107,533    1,107,533      988,563      988,563
Cash and cash equivalents     163,895      163,895      146,710      146,710


Liabilities

Long-term debt              5,670,670    5,735,653    5,716,991    5,641,284
Short-term notes payable    5,088,513    5,088,513    4,457,520    4,457,520
Deposits                       73,971       74,160       32,118       32,062


Off-Balance Sheet Financial
  Instruments

Unused customer credit
  limits                         -            -            -            -
Interest rate swap
  agreements                     -         (42,103)        -          23,129



                  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> 61

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.


Long-term Debt

We estimated the fair values of long-term debt using cash flows discounted
at each year's December 31 borrowing rates.


Short-term Notes Payable

The fair values of short-term notes payable approximated the carrying
values.


Unused Customer Credit Limits

The unused credit limits available to our customers have no fair value.
The interest rates charged on these facilities can be changed at our
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 the Company.


Derivative Financial Instruments

We estimated the fair values of interest rate swap agreements using cash
flows discounted at each year's December 31 market rates.
<PAGE> 62

                                PART IV


Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form
          8-K


(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, 2000 and 1999

          Consolidated Statements of Income, years ended December 31,
          2000, 1999, and 1998

          Consolidated Statements of Shareholder's Equity, years ended
          December 31, 2000, 1999, and 1998

          Consolidated Statements of Cash Flows, years ended December 31,
          2000, 1999, and 1998

          Consolidated Statements of Comprehensive Income, years ended
          December 31, 2000, 1999, and 1998

          Notes to Consolidated Financial Statements

     Schedule I--Condensed Financial Information of Registrant is included
     in Item 14(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 69
          herein.

(b)  Reports on Form 8-K

     Current Report on Form 8-K dated March 11, 2001, with respect to the
     Agreement and Plan of Merger, dated March 11, 2001, entered into by
     American General and Prudential plc, a public limited company
     incorporated in England and Wales.

(c)  Exhibits

     The exhibits required to be included in this portion of Item 14. are
     submitted as a separate section of this report.
<PAGE> 63

Item 14(d).


Schedule I - Condensed Financial Information of Registrant


                      American General Finance, Inc.
                         Condensed Balance Sheets




                                                         December 31,
                                                     2000            1999
                                                    (dollars in thousands)
Assets

Cash                                              $      337      $      312
Investment in subsidiaries                         1,812,345       1,727,479
Notes receivable from subsidiaries                   314,534         212,987
Other assets                                          65,099          76,039

Total assets                                      $2,192,315      $2,016,817


Liabilities and Shareholder's Equity

Long-term debt, 6.60% - 6.75%
  due 2001 - 2002                                 $    3,103     $     7,236
Short-term notes payable:
  Commercial paper                                   242,068            -
  Notes payable to subsidiaries                      261,416         189,973
  Notes payable to banks                                -            211,000
Other liabilities                                     47,461          81,373

Total liabilities                                    554,048         489,582

Shareholder's equity:
  Common stock                                         1,000           1,000
  Additional paid-in capital                         877,576         876,708
  Other equity                                         2,631          (6,696)
  Retained earnings                                  757,060         656,223

Total shareholder's equity                         1,638,267       1,527,235

Total liabilities and shareholder's equity        $2,192,315      $2,016,817




See Notes to Condensed Financial Statements.
<PAGE> 64

Schedule I, Continued


                       American General Finance, Inc.
                       Condensed Statements of Income




                                                 Years Ended December 31,
                                                2000       1999       1998
                                                  (dollars in thousands)

Revenues
  Dividends received from subsidiaries        $185,115   $166,524   $ 42,875
  Interest and other                            29,557     21,331     19,536

Total revenues                                 214,672    187,855     62,411

Expenses
  Interest expense                              44,861     29,651     27,439
  Operating expenses                             6,349      1,434      3,929
  Other charges                                   -        57,000       -

Total expenses                                  51,210     88,085     31,368

Income before income taxes and equity
  in undistributed net income of
  subsidiaries                                 163,462     99,770     31,043

Income Tax Credit                                7,573     24,080      4,135

Income before equity in undistributed
  net income of subsidiaries                   171,035    123,850     35,178

Equity in Undistributed Net Income of
  Subsidiaries                                  36,903     55,884    152,181

Net Income                                    $207,938   $179,734   $187,359




See Notes to Condensed Financial Statements.
<PAGE> 65

Schedule I, Continued
<TABLE>
                          American General Finance, Inc.
                        Condensed Statements of Cash Flows


<CAPTION>
                                                       Years Ended December 31,
                                                     2000       1999        1998
                                                        (dollars in thousands)
<S>                                               <C>         <C>         <C>
Cash Flows from Operating Activities
Net Income                                        $ 207,938   $ 179,734   $ 187,359
Reconciling adjustments:
  Equity in undistributed net income of
    subsidiaries                                    (36,903)    (55,884)   (152,181)
  Change in other assets and other liabilities      (84,840)    (28,519)       (153)
  Other charges                                      50,000      57,000        -
  Other, net                                        (24,841)      4,065      (1,816)
Net cash provided by operating activities           111,354     156,396      33,209

Cash Flows from Investing Activities
  Capital contributions to subsidiaries                -        (82,598)    (92,000)
  Transfer of liabilities from subsidiary              -         22,996        -
  Net additions to fixed assets                        (958)     (2,389)       (522)
Net cash used for investing activities                 (958)    (61,991)    (92,522)

Cash Flows from Financing Activities
  Repayment of long-term debt                        (4,234)     (7,963)    (55,553)
  Change in commercial paper                        242,068        -           -
  Change in notes payable to banks                 (211,000)     13,000     103,000
  Change in notes receivable or payable
    with parent and subsidiaries                    (30,104)      6,200     (31,025)
  Capital contributions from parent                    -         54,000      79,000
  Dividends paid                                   (107,101)   (164,000)    (31,600)
Net cash (used for) provided by
  financing activities                             (110,371)    (98,763)     63,822

Increase (decrease) in cash                              25      (4,358)      4,509
Cash at beginning of year                               312       4,670         161
Cash at end of year                               $     337   $     312   $   4,670


<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE> 66

Schedule I, Continued


                       American General Finance, Inc.
                   Notes to Condensed Financial Statements
                              December 31, 2000




Note 1.  Accounting Policies

AGFI's investments in subsidiaries are stated at cost plus the equity in
undistributed net income of subsidiaries since the date of the acquisition.
The condensed financial statements of the registrant should be read in
conjunction with AGFI's consolidated financial statements.



Note 2.  Long-Term Debt

Maturities of long-term debt at December 31, 2000 were as follows:  2001,
$1.9 million; and 2002, $1.2 million.
<PAGE> 67

                               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 28, 2001.

                                  AMERICAN GENERAL FINANCE, INC.


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


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 28, 2001.



/s/  Frederick W. Geissinger          /s/  Robert A. Cole
     Frederick W. Geissinger               Robert A. Cole
(President and Chief Executive        (Director)
 Officer and Director -
 Principal Executive Officer)
                                      /s/  Jerry L. Gilpin
                                           Jerry L. Gilpin
/s/  Donald R. Breivogel, Jr.         (Director)
     Donald R. Breivogel, Jr.
(Vice President, Chief
 Financial Officer and                /s/  Philip M. Hanley
 Treasurer - Principal                     Philip M. Hanley
 Financial Officer)                   (Director)


/s/  George W. Schmidt                /s/  Bennie D. Hendrix
     George W. Schmidt                     Bennie D. Hendrix
(Controller and Assistant             (Director)
 Secretary - Principal
 Accounting Officer)


/s/  Stephen L. Blake
     Stephen L. Blake
(Director)
<PAGE> 68

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> 69

                             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 our consolidated
         subsidiaries.  In the aggregate, the outstanding issuances of
         debt under each of the Indentures referred to under items (1)
         and (2) below exceed 10% of the Company's total assets on a
         consolidated basis.

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

         (2)  Indenture dated as of May 1, 1997 from American General
              Finance Corporation to Bank One, National Association
              (formerly known as The First National Bank of Chicago).

     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 our 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 Ernst & Young LLP, Independent Auditors