<PAGE>

                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, DC  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, 1998 

                                     OR

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

      For the transition period from ________ to ________.

                       Commission File Number 1-7422 

                       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  19,  1999,  no common  stock  of the  registrant  was held  by  a
non-affiliate.

At March 19, 1999, there  were 2,000,000 shares of the registrant's  common
stock, $.50 par value, outstanding.
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<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  . . . . . . . . . . . . . . . . 17

            6.  Selected Financial Data  . . . . . . . . . . . . . . . 17

            7.  Management's Discussion and Analysis of Financial 
                  Condition and Results of Operations. . . . . . . . . 18

           7A.  Quantitative and Qualitative Disclosures About
                  Market Risk  . . . . . . . . . . . . . . . . . . . . 29

            8.  Financial Statements and Supplementary Data  . . . . . 30

            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>
<PAGE> 3

                                   PART I

Item 1.  Business.

                                  GENERAL

American General  Finance, Inc. will  be referred  to in  this document  as
"AGFI"  or   collectively  with  its  subsidiaries,   whether  directly  or
indirectly owned,  as the "Company".   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), the parent  company of  one of the  nation's largest  diversified
financial   services   organizations.      American   General's   operating
subsidiaries are leading providers of retirement services, life  insurance,
and consumer loans.  American General, a Texas corporation headquartered in
Houston,  is  the  successor  to American  General  Insurance  Company,  an
insurance company incorporated in Texas in 1926.

AGFI is a  financial services holding company whose  principal subsidiaries
are AGFC and American General Financial Center (AGFC-Utah).  AGFC is also a
holding company with subsidiaries engaged primarily in the consumer finance
and credit insurance business.   The Company conducts the  credit insurance
business  as part  of  the consumer  finance  business through  Merit  Life
Insurance Co.  (Merit) and Yosemite Insurance Company (Yosemite), which are
both subsidiaries of AGFC.  AGFC-Utah, a Utah corporation, is an industrial
loan company which engages  in the consumer finance business  and partially
funds  its operations by accepting  public deposits insured  by the Federal
Deposit Insurance Corporation.  

At December  31, 1998, the Company  had 1,343 offices in  41 states, Puerto
Rico,  and the U.S. Virgin  Islands and approximately  8,100 employees. The
Company's executive offices are located in Evansville, Indiana.


Selected Financial Information

The  Company reclassified  credit card  and  certain private  label finance
receivables  to assets  held for sale  on December  31, 1996.   Because the
reclassification  was effective  on the  last day  of the  year, it  had no
effect  on   average  net  receivables;  yield;   finance  receivable  loss
experience; and finance receivables originated, renewed, and purchased  for
1996.   See  Consumer Finance  Operations for  further information  on this
reclassification.

The following table shows selected financial information of the Company:

                                          Years Ended December 31,       
                                      1998          1997          1996   
                                           (dollars in thousands)

Average finance receivables net
  of unearned finance charges
  (average net receivables)        $8,518,922    $7,522,841    $8,123,947

Average borrowings                 $7,806,977    $7,123,397    $7,170,371
<PAGE>
<PAGE> 4

Item 1.  Continued


                                               At or for the
                                          Years Ended December 31,     
                                      1998          1997          1996 

Yield - finance charges as a
  percentage of average net
  receivables                        15.90%        16.81%        17.85%

Borrowing cost - interest
  expense as a percentage of
  average borrowings                  6.55%         6.80%         6.88%

Interest spread - yield 
  less borrowing cost                 9.35%        10.01%        10.97%

Insurance revenues as a
  percentage of average 
  net receivables                     2.07%         2.51%         2.54%

Operating expenses as a
  percentage of average
  net receivables                     5.93%         6.31%         6.31%

Allowance ratio - allowance for 
  finance receivable losses as 
  a percentage of net finance 
  receivables                         3.96%         4.65%         5.18%

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                   2.60%         3.60%         5.47%

Delinquency ratio - finance 
  receivables 60 days or more 
  past due as a percentage
  of related receivables              3.75%         3.60%         3.83%

Return on average assets              1.88%         1.42%          .37%

Return on average equity             13.96%        10.49%         2.63%

Ratio of earnings to fixed charges
  (refer to Exhibit 12 for
  calculations)                       1.56          1.41          1.11

Debt to tangible equity ratio -
  debt to equity less goodwill
  and net unrealized gains or
  losses on investment securities     7.46          7.52          8.40

Debt to equity ratio                  5.89          5.75          6.36
<PAGE>
<PAGE> 5

Item 1.  Continued


                        CONSUMER FINANCE OPERATIONS

The Company makes loans directly to individuals, acquires real estate loans
made  by  brokers and  other real  estate  lenders, purchases  retail sales
contract obligations  of  individuals,  and  offers  revolving  retail  and
private  label services.    The Company  conducts  its lending  and  retail
operations  through  its  consumer  branch  and  centralized  real   estate
segments.  See Note 20.  of the Notes to Consolidated  Financial Statements
in Item 8. for further information on the Company's segments.

In its loan  operations, the  Company makes home  equity loans,  originates
secured and unsecured consumer  loans, and acquires real estate  loans from
mortgage  brokers and  other real  estate lenders.   The  Company generally
takes a security  interest in real property and/or personal property of the
borrower.  At December 31, 1998, real estate loans accounted for 60% of the
amount  and  8%  of the  number  of  net  finance receivables  outstanding,
compared to  52%  of  the  amount and  7%  of  the number  of  net  finance
receivables  outstanding at December 31, 1997.  Real estate loans generally
have maximum original terms of 360 months.  Non-real estate loans generally
have maximum original terms of 60 months.

In  its retail  operations, the  Company purchases  retail sales  contracts
arising from  the retail sale of consumer  goods and services, and provides
revolving retail and private label services for various business  entities.
Retail sales contracts are primarily closed-end accounts which 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.

In  fourth  quarter 1996,  the  Company decided  to  offer for  sale $874.8
million  of non-strategic,  underperforming finance  receivable portfolios,
consisting of $520.3 million of credit  card and $354.5 million of  private
label  finance  receivables.    The  Company  reclassified  these   finance
receivables and $70.0 million of allowance for finance receivable losses to
assets held for sale on December 31, 1996.   In June 1997, the Company sold
all  of the  assets  held for  sale  (with a  remaining  balance of  $658.1
million) and $81.4 million of other private label finance receivables.  See
Note 9.  of the Notes to  Consolidated Financial Statements in  Item 8. for
further  information on  the reclassification  and subsequent sale  of non-
strategic assets.  

Prior to such sale, the Company  issued MasterCard and VISA credit cards to
individuals through branch  and direct mail solicitation programs.   Credit
cards  were  unsecured and  required  minimum  monthly  payments  based  on
outstanding balances.
<PAGE>
<PAGE> 6

Item 1.  Continued


Finance Receivables

All  finance receivable data in this report (except as otherwise indicated)
is calculated after deducting unearned finance charges but before deducting
allowance for finance receivable losses.

Effective January 1,  1997, certain  real estate loans  having advances  of
less than $10,000 and high loan-to-value ratios were reclassified from real
estate to non-real estate  loans.  These  loans are serviced and  collected
more  like  non-real   estate  loans   than  real  estate   loans.     This
reclassification affected $255.0 million of loans at January 1, 1997.

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

                                         Years Ended December 31,      
                                      1998         1997         1996   
Amount (in thousands):

  Real estate loans                $1,766,041   $1,584,101   $1,347,133
  Non-real estate loans             2,394,623    2,437,266    2,224,472
  Retail sales finance              1,629,258    1,456,352    1,378,684
  Credit cards                           -            -         502,379

  Total originated and renewed      5,789,922    5,477,719    5,452,668
  Net purchased (a)                 1,920,701      598,608      946,168

Total originated, renewed,
  and purchased                    $7,710,623   $6,076,327   $6,398,836


Number:

  Real estate loans                    58,219       59,927       67,583
  Non-real estate loans               885,212      906,756      965,384
  Retail sales finance              1,010,225      968,881      989,776

Total                               1,953,656    1,935,564    2,022,743


Average size (to nearest dollar):

  Real estate loans                   $30,334      $26,434      $19,933
  Non-real estate loans                 2,705        2,688        2,304
  Retail sales finance                  1,613        1,503        1,392


  (a)  See Note 4. of  the Notes to  Consolidated  Financial  Statements in
       Item 8.  for information on  purchases of   finance receivables from
       affiliates.
<PAGE>
<PAGE> 7

Item 1.  Continued


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

                                                December 31,            
                                       1998         1997         1996   

Amount (in thousands):

  Real estate loans                 $5,757,185   $4,155,167   $3,734,195
  Non-real estate loans              2,560,565    2,554,888    2,516,009
  Retail sales finance               1,339,367    1,301,133    1,375,021

Total                               $9,657,117   $8,011,188   $7,625,225


Number:

  Real estate loans                    169,314      163,119      200,420
  Non-real estate loans              1,088,584    1,132,039    1,243,204
  Retail sales finance                 993,233    1,065,280    1,161,740

Total                                2,251,131    2,360,438    2,605,364


Average size (to nearest dollar):

  Real estate loans                    $34,003      $25,473      $18,632
  Non-real estate loans                  2,352        2,257        2,024
  Retail sales finance                   1,348        1,221        1,184


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,                        
                   1998                 1997                 1996        
             Amount   Percent     Amount   Percent     Amount   Percent    
                               (dollars in thousands)

California  $1,461,438     15%   $  842,690     11%   $  697,734      9%
N. Carolina    728,801      7       696,261      9       672,021      9
Illinois       593,789      6       434,029      5       452,508      6 
Florida        574,693      6       518,837      7       534,936      7 
Ohio           559,964      6       465,489      6       454,290      6
Indiana        502,653      5       438,369      5       397,698      5
Virginia       367,995      4       356,928      4       350,349      5
Georgia        351,347      4       310,485      4       312,377      4
Other        4,516,437     47     3,948,100     49     3,753,312     49 

            $9,657,117    100%   $8,011,188    100%   $7,625,225    100%
<PAGE>
<PAGE> 8

Item 1.  Continued


Average Net Receivables and Yield

Finance charges  are recognized as revenue  on the accrual basis  using the
interest method.    The accrual  of revenue  is suspended  when the  fourth
contractual payment becomes past due for loans, retail sales contracts, and
revolving  retail and when the  sixth contractual payment  becomes past due
for private label.  For credit  cards, the accrual of revenue was suspended
when the sixth  contractual payment became past due.   Extension fees, late
charges, and prepayment penalties are recognized as revenue when received. 

The Company defers costs associated with the origination of certain finance
receivables  and revenue  from  nonrefundable  points  and fees  on  loans.
Deferred origination costs and  nonrefundable points and fees are  included
in finance  receivables and are amortized  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,  any  unamortized costs  or
points  and fees  are  charged  or  credited  to revenue  at  the  date  of
liquidation.  

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

                                       Years Ended December 31,        
                                   1998          1997          1996   
                                        (dollars in thousands)

Real estate loans:
  Average net receivables       $4,681,038    $3,711,444    $3,129,379
  Yield                             12.90%        13.71%        14.83%

Non-real estate loans:
  Average net receivables       $2,532,267    $2,542,651    $2,549,750
  Yield                             22.02%        21.84%        22.29%

Total loans:
  Average net receivables       $7,213,305    $6,254,095    $5,679,129
  Yield                             16.10%        17.02%        18.18%

Retail sales finance:
  Average net receivables       $1,305,617    $1,268,746    $1,915,718
  Yield                             14.78%        15.80%        16.16%

Credit cards:
  Average net receivables       $     -       $     -       $  529,100
  Yield                               -  %          -  %        20.41%

Total:
  Average net receivables       $8,518,922    $7,522,841    $8,123,947
  Yield                             15.90%        16.81%        17.85%
<PAGE>
<PAGE> 9

Item 1.  Continued


Finance Receivable Credit Quality Information

The Company's 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 which are  six installments past due, and  revolving retail
and  private  label accounts  which are  180 days  past  due.   Credit card
accounts  were charged  off when  180 days  past due.   The  Company starts
foreclosure proceedings on real estate loans when four monthly installments
are past due.  When  foreclosure is completed and the Company  has obtained
title to the property, the real estate is established as an asset valued at
fair value,  and any loan  amount in excess  of that value is  charged off.
The charge-off  period is  occasionally  extended for  individual  accounts
when, in management's opinion, such treatment is warranted.

The following table  shows finance  receivable loss experience  by type  of
finance receivable:  

                                        Years Ended December 31,     
                                    1998          1997          1996 
                                         (dollars in thousands)
Real estate loans:
  Net charge-offs                  $ 32,843     $ 32,240     $ 36,997
  Charge-off ratio                     .71%         .87%        1.19%

Non-real estate loans:
  Net charge-offs                  $144,382     $182,371     $229,109
  Charge-off ratio                    5.70%        7.15%        8.95%

Total loans:
  Net charge-offs                  $177,225     $214,611     $266,106
  Charge-off ratio                    2.48%        3.44%        4.70%

Retail sales finance:
  Net charge-offs                  $ 42,365     $ 55,872     $127,077 
  Charge-off ratio                    3.25%        4.40%        6.57%

Credit cards:
  Net charge-offs                  $   -        $   -        $ 51,386
  Charge-off ratio                     -  %         -  %        9.68%

Total:
  Net charge-offs                  $219,590     $270,483     $444,569
  Charge-off ratio                    2.60%        3.60%        5.47%


The  following table shows delinquency (finance receivables 60 days or more
past  due  including  unearned  finance  charges  and  excluding   deferred
origination  costs, a  fair value  adjustment on  finance receivables,  and
accrued interest)  based on  contract terms  in effect  by type  of finance
receivable:
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<PAGE> 10

Item 1.  Continued


                                                 December 31,           
                                      1998          1997          1996  
                                           (dollars in thousands)

Real estate loans                   $189,474      $108,277      $ 84,361
  % of related receivables             3.28%         2.56%         2.21%

Non-real estate loans               $159,027      $163,942      $184,410
  % of related receivables             5.48%         5.72%         6.45%

Total loans                         $348,501      $272,219      $268,771
  % of related receivables             4.02%         3.84%         4.03%

Retail sales finance                $ 35,236      $ 37,504      $ 47,961
  % of related receivables             2.26%         2.46%         3.01%

Total                               $383,737      $309,723      $316,732
  % of related receivables             3.75%         3.60%         3.83%


The  Company maintains  the allowance  for finance  receivable losses  at a
level based  on periodic  evaluation  of the  finance receivable  portfolio
which  reflects an  amount that,  in management's  opinion, is  adequate to
absorb anticipated losses in the  existing portfolio.  Management evaluates
the Company's finance receivables as a group and considers numerous factors
in estimating the anticipated finance receivable losses, including  current
economic  conditions,  prior   finance  receivable  loss   and  delinquency
experience, and the composition of the finance receivable portfolio. 

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

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

Balance at beginning of year        $372,653      $395,153      $492,124
Provision for finance receivable
  losses                             212,090       247,983       417,446
Allowance reclassified to assets
  held for sale                         -             -          (70,000)
Allowance related to acquired
  receivables                         17,297          -              152 
Charge-offs, net of recoveries      (219,590)     (270,483)     (444,569)

Balance at end of year              $382,450      $372,653      $395,153

Allowance ratio                        3.96%         4.65%         5.18%


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.
<PAGE>
<PAGE> 11

Item 1.  Continued


Sources of Funds

The  Company funds its 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, and capital contributions from American General.  


Average Borrowings and Borrowing Cost

The  following table  shows average  borrowings and  interest expense  as a
percentage of average borrowings by type of debt:

                                     Years Ended December 31,        
                                1998           1997           1996   
                                      (dollars in thousands)
Long-term debt:
  Average borrowings         $4,327,990     $4,100,324     $4,734,633
  Borrowing cost                  6.95%          7.32%          7.28%

Short-term debt:
  Average borrowings         $3,476,910     $3,019,808     $2,430,620
  Borrowing cost                  6.06%          6.10%          6.10%

Investment certificates:
  Average borrowings         $    2,077     $    3,265     $    5,118
  Borrowing cost                  5.67%          5.73%          6.27%

Total:
  Average borrowings         $7,806,977     $7,123,397     $7,170,371
  Borrowing cost                  6.55%          6.80%          6.88%

The Company's use of interest rate swap agreements, the effect  of which is
included in short-term  borrowing cost above,  is described in Note  13. of
the Notes to Consolidated Financial Statements in Item 8.


Contractual Maturities

Contractual  maturities of net finance receivables and debt at December 31,
1998 were as follows:
                                 Net Finance
                                 Receivables           Debt   
                                    (dollars in thousands)
Due in:
  1999                           $1,219,222         $4,255,787
  2000                            1,420,769          1,288,490
  2001                            1,002,183            946,948
  2002                              576,986            563,059
  2003                              341,439          1,038,058
  2004 and thereafter             5,096,518            770,145

  Total                          $9,657,117         $8,862,487
<PAGE>
<PAGE> 12

Item 1.  Continued


See Note  5. of the Notes  to Consolidated Financial Statements  in Item 8.
for  further  information   on  principal  cash   collections  of   finance
receivables.


                            INSURANCE OPERATIONS

Merit  is  a life  and health  insurance company  domiciled in  Indiana and
licensed  in 43  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 coverages.

Yosemite is a property and casualty insurance company formerly domiciled in
California,  redomiciled  in  Indiana  effective  December  29,  1998,  and
licensed  in 42  states.   Yosemite principally  writes or  assumes credit-
related property and casualty coverages.

Both Merit and Yosemite  market their products through the  consumer branch
and  centralized real  estate  segments of  the Company.   The  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.  The  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.  The credit-
related property  and casualty  insurance  is written  to protect  property
pledged as  security for  the finance  receivable and  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  creditor  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  assumptions 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,  1998, reserves on  the
books of  Merit and Yosemite  attributable to these  reinsurance agreements
totaled $114.6 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>
<PAGE> 13

Item 1.  Continued


The following table shows information concerning the insurance operations: 

                                               At or for the
                                          Years Ended December 31,     
                                        1998        1997        1996   
                                           (dollars in thousands)      
Life Insurance in Force
 
Credit life                          $2,459,818  $2,387,084  $2,629,019
Non-credit life                       3,618,052   3,910,534   3,936,856

Total                                $6,077,870  $6,297,618  $6,565,875


Premiums Earned     
                 
Credit insurance premiums earned:
    Credit life                      $   32,289  $   33,269  $   39,005
    Credit accident and health           42,261      45,687      52,379
    Property and casualty                49,403      54,292      57,895
Other insurance premiums earned: 
    Non-credit life                      42,981      46,190      47,325
    Premiums assumed under
      coinsurance agreements              5,057       5,177       4,750

Total                                $  171,991  $  184,615  $  201,354


Premiums Written

Credit insurance premiums 
  written: 
    Credit life                      $   35,695  $   28,057  $   28,864
    Credit accident and health           42,452      39,401      39,217
    Property and casualty                47,324      47,029      52,230
Other insurance premiums written:
    Non-credit life                      42,981      46,190      47,325
    Premiums assumed under
      coinsurance agreements              5,057       5,177       4,750

Total                                $  173,509  $  165,854  $  172,386


Losses Incurred                
                          
Credit insurance losses incurred:
    Credit life                      $   14,775  $   17,465  $   20,613
    Credit accident and health           21,094      20,292      24,666
    Property and casualty                20,187      23,009      22,479
Other insurance losses incurred: 
    Non-credit life                      16,999      21,279      22,974
    Premiums assumed under
      coinsurance agreements             11,632      11,402      12,079

Total                                $   84,687  $   93,447  $  102,811
<PAGE>
<PAGE> 14

Item 1.  Continued


Investments and Investment Results

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

                                         Years Ended December 31,      
                                     1998          1997          1996  
                                          (dollars in thousands)       

Net investment revenue (a)         $ 74,421      $ 67,837      $ 64,860

Average invested assets (b)        $983,439      $924,411      $885,741

Adjusted portfolio yield (c)          7.88%         8.07%         8.07%

Net realized gains (losses)
  on investments (d)               $   (693)     $  1,071      $   (909)


(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 (SFAS) 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  and also  includes an adjustment for tax-exempt investments
     in 1996 and 1997.

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


See Note  7. of the Notes  to Consolidated Financial Statements  in Item 8.
for  information regarding investment securities for  all operations of the
Company.


                                 REGULATION

Consumer Finance

Various state laws regulate the consumer lending and retail sales financing
businesses. The degree and  nature of such regulation varies  from state to
state.  The laws under which a substantial amount of the Company's business
is conducted provide for  state licensing of lenders; impose  maximum term,
amount, interest rate, and other  charge limitations; and 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. 
<PAGE>
<PAGE> 15

Item 1.  Continued


The Company also is  subject to various federal regulations,  including the
Federal Consumer Credit Protection Act (governing disclosure of  applicable
charges and other  finance receivable terms), the  Equal Credit Opportunity
Act (prohibiting discrimination against credit-worthy applicants), 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), and certain
Federal  Trade Commission  rules.   Federal  law  also preempts  state  law
restrictions on  rates and terms for certain real estate loans.  AGFC-Utah,
which  engages  in  the  consumer  finance  business  and  accepts  insured
deposits, is subject  to regulation  by and reporting  requirements of  the
Federal Deposit  Insurance Corporation  and is subject  to Utah  regulatory
codes. 


Insurance

State   authorities  regulate   and  supervise   the   Company's  insurance
subsidiaries.  The extent  of such regulation varies but  relates primarily
to conduct of business,  types of products offered, standards  of solvency,
payment  of   dividends  and  other  transactions   with  related  parties,
licensing,  deposits  of  securities  for  the  benefit  of  policyholders,
approval of policy  forms and  premium rates, periodic  examination of  the
affairs  of insurers, form and  content of required  financial reports, and
establishment of reserves required to be maintained for unearned  premiums,
losses, and other  purposes.  Substantially all of the  states in which the
Company operates regulate the rates of premiums charged for credit life and
credit accident and health insurance.  State insurance laws and regulations
also  prescribe  the nature,  quality and  percentage  of various  types of
investments which the Company's insurance subsidiaries may make.


                                COMPETITION

Consumer Finance

The consumer finance industry is highly competitive due to the large number
of companies  offering financial products and  services, the sophistication
of   those   products,   technological   improvements,   and   more   rapid
communication.  The  Company competes with other consumer finance companies
and other types of  financial institutions that offer similar  products and
services, including, but not limited to, industrial  banks, industrial loan
companies,  mortgage  banks,  commercial banks,  sales  finance  companies,
savings and  loan associations, federal  savings banks, and  credit unions.
See Competitive Factors in Item 7. for more information.


Insurance

The  Company's  insurance operations  are  primarily  supplementary to  the
consumer  finance  operations.    As such,  competition  for  the insurance
operations is relatively limited.
<PAGE>
<PAGE> 16

Item 2.  Properties.


The  Company's investment  in  real estate  and  tangible property  is  not
significant  in  relation to  its total  assets due  to  the nature  of its
business.  AGFI and certain of its subsidiaries own real  estate upon which
AGFI and its subsidiaries conduct business.  The Company generally conducts
branch  office operations in leased premises.  Lease terms ordinarily range
from three to five years.

The  Company's  exposure  to  environmental  regulation  arises  from   its
ownership of  such properties and properties  obtained through foreclosure.
The  Company monitors  properties  for compliance  with  federal and  local
environmental  guidelines.   The  Company  estimates  that potential  costs
related to any environmental clean-up are immaterial.



Item 3.  Legal Proceedings.


California v. Ochoa

In March 1994, a subsidiary of AGFI and a  subsidiary of AGFC were named as
defendants in a lawsuit, The People of the State of California (California)
v.  Luis Ochoa,  Skeeters Automotive,  Morris  Plan, Creditway  of America,
Inc.,  and American  General  Finance,  filed  in  the  Superior  Court  of
California, County of San Joaquin, Case No. 271130.   California is seeking
injunctive relief, a civil  penalty of not less than $5,000 per  day or not
less than  $250,000  for  violation  of  its  Health  and  Safety  Code  in
connection with  the failure  to register  and  remove underground  storage
tanks on property acquired through a foreclosure proceeding by a subsidiary
of AGFI, and a civil  penalty of $2,500 for each act  of unfair competition
prohibited  by its  Business  and  Professions  Code,  but  not  less  than
$250,000,  plus costs.   The Company believes  that the total  amounts that
would ultimately be  paid, if  any, arising from  this environmental  claim
would  have no  material effect  on the  Company's consolidated  results of
operations and financial position.


Other 

AGFI and certain of its subsidiaries  are parties to various other lawsuits
and proceedings  arising in the ordinary course of business.  Many of these
lawsuits and  proceedings  arise  in jurisdictions,  such  as  Alabama  and
Mississippi,  that  permit damage  awards  disproportionate  to the  actual
economic damages incurred.  Based upon information presently available, the
Company believes that the  total amounts that will  ultimately be paid,  if
any, arising from  these lawsuits and proceedings will not  have a material
adverse  effect on  the Company's  consolidated results  of operations  and
financial  position.    However,  the  frequency of  large  damage  awards,
including  large punitive damage awards, that bear little or no relation to
actual economic  damages  incurred  by  plaintiffs  in  jurisdictions  like
Alabama   and  Mississippi  continues  to   create  the  potential  for  an
unpredictable judgment in any given suit. 
<PAGE>
<PAGE> 17

                                  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                         1998         1997  
                                    (dollars in thousands)

March 31                            $ 31,600     $   -  
June 30                                 -         106,000
September 30                            -          20,500
December 31                             -            -   

                                    $ 31,600     $126,500


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



Item 6.  Selected Financial Data.


The  following  selected  financial  data  are  taken  from  the  Company's
consolidated  financial statements.  The 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,        
                    1998        1997       1996       1995       1994   
                                  (dollars in thousands)

Total revenues   $ 1,609,105 $1,524,105 $1,724,948 $1,791,494 $1,491,239
 
Net income (a)       187,359    129,433     34,146     85,655    244,988

Total assets      11,172,923  9,289,500  9,563,696  9,561,350  8,980,728

Long-term debt     5,176,965  4,011,457  4,498,530  4,979,883  4,312,932


(a)  Per share  information is not  included  because all  of AGFI's common
     stock is owned by American General.
<PAGE>
<PAGE> 18

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

Overview

The Company's sources  of funds include operations,  issuances of long-term
debt, short-term borrowings in the commercial paper  market, and borrowings
from  banks under credit facilities.  American General has also contributed
capital to the  Company when needed for finance  receivable growth or other
circumstances.  Management  believes that the overall  sources of liquidity
available to  the Company  will continue  to be  sufficient to satisfy  its
foreseeable financial obligations and operational requirements.  


Liquidity

The following table shows principal sources and uses of cash flow:

                                         Years Ended December 31,     
                                      1998         1997         1996  
                                           (dollars in millions)
Principal sources of cash flow:

  Operations                        $  438.6     $  516.1     $  590.1  
  Net issuance of debt               1,592.7           -         155.3  
  Capital contributions                 79.0         46.5           -   
  Sale of non-strategic assets            -         732.5           -   
  Net collections on assets held
    for sale                              -          61.3           - 

  Principal sources of cash flow    $2,110.3     $1,356.4     $  745.4


Principal uses of cash flow:

  Net originations and purchases
    of finance receivables          $1,814.2     $  692.9     $  452.5  
  Increase in premiums on finance
    receivables purchased and  
    deferred charges                   122.9         42.1         46.9  
  Dividends paid                        31.6        126.5        138.6  
  Net repayment of debt                   -         366.0           -   
  Repurchase of securitized  
    finance receivables                   -         100.0           - 

  Principal uses of cash flow       $1,968.7     $1,327.5     $  638.0
<PAGE>
<PAGE> 19

Item 7.  Continued


Capital Resources

The  Company's capital  requirements vary  directly with  the level  of net
finance  receivables.  The mix of capital  between debt and equity is based
primarily upon  maintaining leverage that supports  cost-effective funding.
At  December  31,  1998,  the  Company's  capital  totaled  $10.4  billion,
consisting of $8.9 billion of debt and $1.5 billion of  equity, compared to
$8.5 billion at  December 31, 1997, consisting of $7.3  billion of debt and
$1.2 billion of equity.

The Company issues a combination of fixed-rate debt, principally long-term,
and floating-rate debt,  principally short-term.   The Company's  principal
borrowing  subsidiary, AGFC,  and one of  its subsidiaries  sell commercial
paper notes with  maturities ranging from 1 to 270  days 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 and offers medium-term notes
with  original  maturities  of  nine  months  or  longer  to  institutional
investors.    AGFC obtains  the remainder  of  its funds  primarily through
underwritten public  debt offerings with maturities  generally ranging from
three to ten years. 

Dividends have been paid  (or capital contributions have been  received) to
manage  the  Company's leverage  of debt  to  tangible equity  (equity less
goodwill  and net unrealized gains  or losses on  investment securities) to
7.50 to 1.  The debt to tangible equity ratio at December 31, 1998 was 7.46
to 1.   AGFI's ability to  pay dividends is substantially  dependent on the
receipt  of dividends or other funds from its subsidiaries, primarily AGFC.
Certain AGFC  financing agreements have  effectively limited the  amount of
dividends  AGFC  may pay.    See  Note 17.  of  the  Notes to  Consolidated
Financial Statements in Item 8. for information on dividend restrictions.


Credit Ratings

AGFC's  strong  debt and  commercial paper  ratings  enhance its  access to
capital markets.  On March 19, 1999, AGFC's ratings were as follows:

                          Long-term Debt      Commercial Paper

Duff & Phelps             A+  (Strong)        D-1+  (Highest)
Fitch                          -              F-1+  (Highest)
Moody's                   A2  (Strong)        P-1   (Highest)
Standard & Poor's         A+  (Strong)        A-1   (Strong)
<PAGE>
<PAGE> 20

Item 7.  Continued


Liquidity Facilities

The  Company participates in credit  facilities to support  the issuance of
commercial paper and to provide an additional source of funds for operating
requirements.     At  December  31,  1998,   credit  facilities,  including
facilities  shared  with  American  General,  totaled  $5.5  billion,  with
remaining  availability of  $5.3 billion.   See  Note 12.  of the  Notes to
Consolidated Financial Statements in Item  8. for additional information on
credit facilities.

A  subsidiary of AGFI  arranges interim financing  for third-party mortgage
originators through  a bank purchase facility.   At December 31, 1998, this
facility  totaled  $563.0 million  with  remaining  availability of  $250.3
million.   


Securitization

In April  1997, the Company repurchased $100.0 million of private label and
credit card  finance  receivables that  previously  had been  sold  through
securitization.   No  gain or  loss resulted  from this  transaction.   The
repurchased credit  card finance  receivables were  offered for  sale along
with the Company's other credit  card finance receivables, which  increased
the  carrying amount of assets held for sale by approximately $70.0 million
in April 1997.

The Company may securitize a portion of its finance receivable portfolio in
the future as an additional source of funds for finance receivable growth.


                       ANALYSIS OF OPERATING RESULTS

Net Income

Net income  increased $57.9 million, or 45%, for 1998 and $95.3 million, or
279%, for 1997 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.

During  the past three  years, the Company  has improved credit  quality by
selling  under-performing  receivable   portfolios,  raising   underwriting
standards, and rebalancing the portfolio to increase the proportion of real
estate loans.  At December 31, 1998, real estate loans accounted for 60% of
total net finance receivables  outstanding compared to 52% at  December 31,
1997 and 49% at December 31, 1996.  

Factors  which specifically affected the Company's operating results are as
follows:  
<PAGE>
<PAGE> 21

Item 7.  Continued


Finance Charges

Finance  charges increased  $89.4 million,  or 7%,  for 1998  and decreased
$185.2 million, or 13%, for 1997  when compared to the respective  previous
year.

The increase  in finance charges for 1998 when  compared to 1997 was due to
an increase in  average net receivables, partially offset by  a decrease in
yield.   Average net receivables  increased $996.1 million,  or 13%, during
1998 when  compared to 1997 primarily  due to growth in  real estate loans,
partially offset by the sale of certain private label receivables in second
quarter 1997.  Yield decreased 91 basis points during 1998 when compared to
1997 primarily due to the larger proportion of finance receivables that are
real estate loans, which generally have lower yields.

The  decrease in finance charges for 1997 when  compared to 1996 was due to
decreases  in  both  average  net  receivables  and  yield.    Average  net
receivables decreased $601.1 million,  or 7%, during 1997 when  compared to
1996 primarily due  to the  reclassification and sales  of certain  finance
receivables and the  liquidation of underperforming receivables,  partially
offset by  growth in real estate  loans.  The exclusion  of finance charges
related to  the assets held for sale for 1997 totaled $75.0 million.  Yield
decreased 104  basis points during 1997 when compared to 1996 primarily due
to  the  larger proportion  of finance  receivables  that were  real estate
loans, which generally have lower yields.  


Insurance Revenues

Insurance  revenues  decreased $12.6  million, or  7%,  for 1998  and $17.6
million, or 9%, for 1997 when compared to the respective previous year.

The  decreases in  insurance revenues  were primarily  due to  decreases in
earned premiums.   Earned premiums decreased primarily due to a decrease in
related loan volume during 1996 and the first three quarters of 1997.


Other Revenues

Other revenues increased $8.2 million, or  12%, for 1998 and $1.9  million,
or 3%, for 1997 when compared to the respective previous year.

The increase in other revenues for 1998 when compared to 1997 was primarily
due  to  an increase  in investment  revenue  reflecting growth  in average
invested  assets for the  insurance operations of  $59.0 million, partially
offset by $.7 million of realized losses on investments in 1998 compared to
$1.1 million  of realized  gains on  investments in 1997  and a  decline in
adjusted portfolio yield of 19 basis points.

The increase in other revenues for 1997 when compared to 1996 was primarily
due  to  an increase  in investment  revenue  reflecting growth  in average
invested  assets for  the insurance  operations of  $38.7 million  and $1.1
million of realized gains on investments in 1997 compared to $.9 million of
realized losses on investments in 1996.  Adjusted portfolio  yield for 1997
remained substantially the same when compared to 1996.
<PAGE>
<PAGE> 22

Item 7.  Continued


Interest Expense

Interest  expense increased $50.3 million,  or 11%, for  1998 and decreased
$31.8 million, or  6%, for 1997  when compared to  the respective  previous
year.

The increase in interest expense for 1998 when compared to 1997 was  due to
an  increase  in  average borrowings,  partially  offset  by  a decline  in
borrowing cost.  Average  borrowings increased $683.6 million, or  10%, for
1998  when compared to 1997 primarily to support finance receivable growth.
Borrowing cost decreased 25 basis points during 1998 when  compared to 1997
due to lower rates on both long-term and short-term debt.
  
The decrease in interest expense for 1997 when compared  to 1996 was due to
the  exclusion of  interest expense  related to  the assets  held for  sale
totaling  $23.2 million, a  decline in  borrowing cost,  and a  decrease in
average borrowings.  Borrowing cost decreased 8 basis points for  1997 when
compared to 1996  primarily due  to an increased  proportion of  short-term
debt at lower  rates.  Average borrowings  decreased $47.0 million,  or 1%,
for 1997  when compared  to  1996 primarily  due to  the  sales of  certain
private label receivables during second quarter 1997, substantially  offset
by growth in real estate loans during 1997.  


Operating Expenses

Operating expenses increased $30.3  million, or 6%, for 1998  and decreased
$37.9 million, or  7%, for 1997  when compared to  the respective  previous
year.

The  increase in  operating expenses  for 1998  when compared  to 1997  was
primarily due to increases  in litigation expenses, salaries  and benefits,
and  amortization  of  intangibles,  partially  offset  by  an increase  in
deferred loan acquisition costs.   The increase in litigation  expenses was
primarily due to estimated  settlements and costs of litigation  in various
Alabama  and  Mississippi cases.   See  Legal  Proceedings in  Item  3. for
further  information.    The  increase  in  salaries and  benefits  expense
reflects an increase in  incentive program expenses, partially offset  by a
workforce reduction  of approximately 400 positions since December 31, 1997
which includes the effects of cost containment programs and the sale of the
non-strategic assets during second quarter 1997.

The  decrease  in operating  expenses for  1997 when  compared to  1996 was
primarily  due to the exclusion of expenses  to service the assets held for
sale  totaling  $18.2  million, certain  non-recurring  operating  expenses
associated  with  discontinued  initiatives  that  negatively  impacted the
financial  results  for  1996 by  $8.9  million,  and the  effects  of cost
containment programs.  
<PAGE>
<PAGE> 23

Item 7.  Continued


Provision for Finance Receivable Losses

Provision for finance  receivable losses decreased  $35.9 million, or  14%,
for  1998  and $169.5  million,  or  41%, for  1997  when  compared to  the
respective  previous year  reflecting decreases  in  net charge-offs.   The
decrease in  net charge-offs for  1997 when compared  to 1996 included  the
exclusion of net charge-offs related to  the assets held for sale  totaling
$58.6 million.  

Net  charge-offs  from finance  receivables  for 1998  decreased  to $219.6
million from  $270.5 million  for 1997  and $444.6 million  for 1996.   The
charge-off ratio for 1998 decreased to 2.60% compared to 3.60% for 1997 and
5.47% for  1996.  Excluding  the portfolios held  for sale,  the charge-off
ratio was 4.70% for 1996.

At  December 31, 1998, delinquencies were $383.7 million compared to $309.7
million  at December 31, 1997 and $316.7 million at December 31, 1996.  The
delinquency ratio  at  December 31,  1998 was  3.75% compared  to 3.60%  at
December  31, 1997  and 3.83% at  December 31,  1996.  The  increase in the
delinquency ratio for  1998 when compared to 1997 was  primarily due to the
maturing  of  purchased real-estate  portfolios  which  were primarily  new
originations when purchased and the effects of general economic conditions.

At  December  31, 1998,  the allowance  for  finance receivable  losses was
$382.5 million compared  to $372.7 million at December  31, 1997 and $395.2
million at  December 1996.   The allowance ratio  at December 31,  1998 was
3.96% compared  to 4.65% at  December 31,  1997 and 5.18%  at December  31,
1996.  The Company maintains the allowance for finance receivable losses at
a  level based on periodic  evaluation of the  finance receivable portfolio
which  reflects an  amount that,  in management's  opinion, is  adequate to
absorb anticipated losses in the existing portfolio.


Loss on Non-strategic Assets

In fourth  quarter  1996, the  Company  decided to  offer  for sale  $874.8
million  of non-strategic,  underperforming finance  receivable portfolios,
consisting  of $520.3 million of credit card  and $354.5 million of private
label finance receivables.  These  receivables and an associated  allowance
for  finance receivable losses of $70.0 million were reclassified to assets
held for  sale at December 31,  1996, and a  loss of $145.5  million ($93.5
million  aftertax)  was recognized  to reduce  the  carrying amount  of the
assets  held for sale to  net realizable value.  In  June 1997, the Company
sold the  assets held  for sale  and $81.4 million  of other  private label
finance receivables and recorded an additional loss of $42.2 million ($27.0
million  aftertax) primarily to establish  a liability for estimated future
payments to the purchaser  under a five-year  loss sharing agreement.   See
Note 9.  of the Notes to  Consolidated Financial Statements in  Item 8. for
further  information on  the reclassification and  subsequent sale  of non-
strategic assets.
<PAGE>
<PAGE> 24

Item 7.  Continued


Insurance Losses and Loss Adjustment Expenses

Insurance losses and  loss adjustment expenses  decreased $8.8 million,  or
9%,  for  1998 and  $9.4  million, or  9%, for  1997  when compared  to the
respective previous year.

The decreases in insurance losses and loss adjustment  expenses were due to
decreases in  provision for future benefits and  in claims paid.  Provision
for  future benefits decreased $3.9  million for 1998  and $3.7 million for
1997  due  to  reduced sales  of  non-credit  insurance  products.   Claims
decreased $4.9  million for 1998 and $5.7 million for 1997 primarily due to
lower earned premiums and favorable loss experience on credit insurance.


Provision for Income Taxes

Provision for  income taxes increased $33.3  million, or 44%,  for 1998 and
$55.6  million, or 287%, for 1997 when  compared to the respective previous
year primarily due to higher taxable income.  The effective income tax rate
was 36.62% for 1998, 36.66% for 1997, and 36.16% for 1996.


                      ANALYSIS OF FINANCIAL CONDITION

At December 31,  1998, the  Company's assets were  distributed as  follows:
83.01% in  net finance receivables,  less allowance for  finance receivable
losses; 8.92% in investment securities; 6.75% in other assets; and 1.32% in
cash and cash equivalents.


Asset Quality

The Company  believes that its geographic diversification  reduces the risk
associated with a  recession in any  one region.   In addition, 95% of  the
finance receivables at  December 31, 1998 were secured by  real property or
personal property.

The  allowance  ratio decrease  for 1998  reflects  the action  taken after
management's review of the  allowance adequacy.  See Analysis  of Operating
Results for further information on  allowance ratio, delinquency ratio, and
charge-off  ratio.  While finance receivables have some exposure to further
economic uncertainty, management  believes that the  allowance for  finance
receivable  losses is adequate to absorb anticipated losses in the existing
portfolio.

Investment securities principally represent the investment portfolio of the
Company's insurance  operations.   The 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.  See Notes  2. and
8. of the Notes to Consolidated Financial Statements in Item 8. for further
information on goodwill.
<PAGE>
<PAGE> 25

Item 7.  Continued


Operating and Capital Requirements

The  overall sources of  cash available to  the Company are  expected to be
more  than sufficient  to  satisfy operating  requirements  in 1999.    See
Liquidity and  Capital Resources for information on the Company's operating
and capital requirements.


Asset/Liability Management

The Company manages anticipated cash flows of its assets and liabilities in
an  effort  to  reduce the  risk  associated  with  unfavorable changes  in
interest  rates.  Management determines the Company's mix of fixed-rate and
floating-rate  debt based,  in  part, on  the nature  of  the assets  being
supported.    The  Company limits  its  exposure  to  market interest  rate
increases  by fixing  interest rates that  it pays  for term  periods.  The
primary  means  by  which the  Company  accomplishes  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 floating-rate funding, thereby limiting its
exposure  to adverse interest  rate movements.  In  addition, AGFC has used
treasury rate lock agreements to hedge against the risk of  rising interest
rates on anticipated long-term debt issuances.


                        BUSINESS ENVIRONMENT FACTORS

The Company operates in a business environment which requires effective and
efficient managerial  performance, and  a  prudent lending  and  investment
strategy.   The  three most  relevant  environmental factors  affecting the
Company are economic, regulatory, and competitive.


Economic Factors

The  three key  economic  factors that  affect  the Company's  results  are
interest rates, inflation, and the economic cycle.

Interest Rates.  Interest rates in the United States decreased in 1998 when
compared  to 1997 and were substantially the  same in 1997 when compared to
1996.  The Company's finance receivables, investment securities,  long-term
debt, and short-term  debt react over varying periods of  time to movements
in  interest  rates.    See  Analysis  of  Operating  Results  for  further
information  on  the  changes  in  yield,  adjusted  portfolio  yield,  and
borrowing cost.  See Quantitative  and Qualitative Disclosures About Market
Risk in Item 7A. for sensitivity analysis.

Inflation.   Inflation and  inflationary expectations are  factors that  to
some  extent  affect the  Company's revenue  and  expenses and  are factors
implicit  in interest  rates.   During each  of the  last three  years, the
Company operated in a low inflation environment.
<PAGE>
<PAGE> 26

Item 7.  Continued


Real  estate loans  are  particularly subject  to  refinancing when  market
interest rates trend lower.  However, revenue generated from interest rates
charged on non-real estate  loans and retail sales finance  receivables are
relatively  insensitive  to  movements  in   interest  rate  levels.    Net
investment revenue and realized gains or losses on the Company's investment
securities, and borrowing  cost on the  Company's long-term and  short-term
debt, are relatively sensitive over varying periods of time to movements in
general  interest rate levels caused by inflation.  The Company's operating
expenses are no  more or less  sensitive to the  effects of inflation  than
would be experienced by businesses in general.

Economic  Cycle.   The Company  believes that  its  relatively conservative
lending policies, its  conservative insurance  underwriting and  investment
policies, and its geographic diversification mitigate the potential  impact
of defaults on finance receivables and  investments in any downturn of  the
U.S. economic cycle.

During  1998 and  1997,  the rates  of  increase  in U.S.  consumer  credit
moderated from the rate  of increase during  1996.  Lenders are  exercising
relative  restraint  in  extending credit  as  a  result  of the  increased
frequency of  personal bankruptcy  filings,  and consumers  are  apparently
lessening their  credit demands.  The  Company believes that there  will be
moderate economic growth for the country in general  during 1999.  Although
this economic outlook suggests that growth in net receivables from internal
initiatives will also be moderate, management anticipates that improvements
in  loan production and  portfolio acquisitions  will favorably  impact net
receivable growth in 1999.


Regulatory Factors

The regulatory environment of the consumer finance and insurance industries
is described  in Item 1.   Taxation is another regulatory  factor affecting
the  Company.  A risk to any business  is that changes in state and federal
tax  laws or  regulations may affect  the way  that the  business operates.
Since tax  laws affect not only the way that  the Company is taxed but also
the design of many of its products, these laws and regulations  and the way
they are interpreted are of  concern to the Company.  The  Company monitors
federal  and  state  tax  legislation  and responds  with  appropriate  tax
planning in order to minimize the impact of taxation.


Competitive Factors

Consumer  finance  companies   compete  with  other   types  of   financial
institutions  which offer  similar products  and services.   Competition in
financial  services markets  continues to  intensify due  to the  increased
number    and   sophistication   of   financial   products,   technological
improvements, and more rapid communication.

The  Company  has positioned  itself to  meet  the continuing  challenge of
competition in three primary ways:
<PAGE>
<PAGE> 27

Item 7.  Continued


Customer  Focus.  The Company focuses on selling financial service products
to low- to middle-income consumers.

Customer Service.   The Company concentrates on delivering  quality service
to  its customers.   This  is done  through one  of the  industry's largest
domestic branch networks.

Productivity.    The  Company  continuously  monitors  performance  of  its
branches and  products and makes  organizational and procedural  changes as
necessary.


Year 2000 Contingency

Internal Systems.  The Company is modifying its internal systems to achieve
Year 2000  readiness.  The Company has developed and is implementing a plan
to minimize the risk of a significant negative impact on its operations.  

The  Company's  plan includes  the following  activities:   (1)  perform an
inventory  of  the  Company's information  technology  and  non-information
technology systems; (2) assess which items in the inventory  may expose the
Company to business interruptions due to Year 2000 issues; (3) reprogram or
replace  systems that are  not Year 2000  ready; (4) test  systems to prove
that they will function into the next century as they do currently; and (5)
return  the  systems  to  operations.   As  of  December  31,  1998,  these
activities have  been  completed for  substantially  all of  the  Company's
critical systems, making them Year 2000 ready.  Vendor upgrades for a small
number  of systems  are  expected in  the  first half  of  1999; therefore,
activities (3) through (5) are ongoing for these systems.  The Company will
continue  to test  its  systems  throughout  1999  to  maintain  Year  2000
readiness.

Third  Party  Relationships.   The Company  has relationships  with various
third  parties who  must also  be  Year 2000  ready.   These third  parties
provide (or receive) resources  and services to (or  from) the Company  and
include organizations with  which the Company exchanges information.  Third
parties include vendors  of hardware, software,  and information  services;
providers of infrastructure services such as voice  and data communications
and utilities for office  facilities; and customers.  Third  parties differ
from internal systems  in that the Company  exercises less, or  no, control
over their Year 2000 readiness.  The Company has developed a plan to assess
and attempt to mitigate the risks associated  with the potential failure of
third  parties to  achieve  Year 2000  readiness.   The  plan includes  the
following activities:  (1) identify and classify  third party dependencies;
(2)  research, analyze, and document Year 2000 readiness for critical third
parties;  and  (3)  test  critical   hardware  and  software  products  and
electronic interfaces.  As of December 31, 1998, the Company has identified
and assessed approximately 100  critical third party dependencies.   A more
detailed evaluation will be completed during first quarter 1999 as  part of
the Company's contingency planning  efforts.  Due to the  various stages of
third parties' Year 2000  readiness, the Company's testing  activities will
extend throughout 1999.
<PAGE>
<PAGE> 28

Item 7.  Continued


Contingency Plan.  The Company has commenced contingency planning to reduce
the risk of  Year 2000-related  business failures.   The contingency  plan,
which addresses  both  internal  systems  and  third  party  relationships,
includes the following activities: (1) evaluate the consequences of failure
of  business processes  with significant  exposure to  Year 2000  risk; (2)
determine  the  probability  of  a  Year  2000-related  failure  for  those
processes that have  a high consequence of  failure; (3) develop  an action
plan to  complete contingency plan  for those  processes that rank  high in
consequence and  probability of  failure; and  (4) complete  the applicable
action plan.   The Company  is currently developing a  contingency plan and
expects to substantially  complete all contingency  planning activities  by
April 30, 1999.

Risks and Uncertainties.  Based on its plan to make  internal systems ready
for Year  2000,  to deal  with third  party relationships,  and to  develop
contingency actions, the Company  believes that it will experience  at most
isolated  and minor disruptions of business processes following the turn of
the century.   Such disruptions are not expected to  have a material effect
on the  Company's  future results  of operations,  liquidity, or  financial
condition.  However, due to the  magnitude and complexity of this  project,
risks and uncertainties exist and the Company is not able to predict a most
reasonably  likely  worst case  scenario.   If Year  2000 readiness  is not
achieved due  to nonperformance  by  significant third  party vendors,  the
Company's  failure to maintain critical systems as Year 2000 ready, failure
of critical third parties to achieve Year 2000 readiness on a timely basis,
or other unforeseen  circumstances in completing  the Company's plans,  the
Year 2000  issues could  have a  material adverse  impact on  the Company's
operations following the turn of the century.

Costs.   Through December 31,  1998, the Company  has incurred and expensed
$6.3  million  (pretax)  related  to Year  2000  readiness,  including $5.6
million  incurred during 1998.   The Company currently  anticipates that it
will  incur future costs of approximately $1.0 million (pretax) to maintain
Year  2000 readiness, complete Year  2000 work on  non-critical systems and
third  party relationships, and  complete contingency  planning activities.
In addition,  the Company accelerated  the planned  replacement of  certain
systems as part  of the Year 2000 plan.   Costs of the  replacement systems
were  capitalized and are being amortized over their useful lives, recorded
as  operating  leases,  or expensed  as  incurred  in  accordance with  the
Company's normal accounting  policies.  All  anticipated replacement  costs
were incurred in 1998 and totaled $2.1 million. 


                         FORWARD-LOOKING STATEMENTS

All statements,  trend analyses,  and other information  contained in  this
report relative to trends in the Company's operations or financial results,
as  well  as  other  statements   including  words  such  as  "anticipate,"
"believe,"  "plan,"  "estimate,"  "expect,"  "intend,"  and  other  similar
expressions,   constitute  forward-looking  statements  under  the  Private
Securities Litigation Reform Act  of 1995.  Forward-looking statements  are
made based upon  management's current expectations  and beliefs  concerning
future  developments and their potential  effects upon the  Company.  There
can be no assurance that future  developments affecting the Company will be
those anticipated by management.  Actual results may differ materially from
<PAGE>
<PAGE> 29

Item 7.  Continued


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) competitive, regulatory, or tax
changes that affect the cost of, or demand for, the Company's products; (3)
the  Company's ability  or  the ability  of  third parties  to  achieve and
maintain  Year 2000 readiness  for significant systems  and operations; and
(4)  adverse litigation results or  resolution of litigation.   Readers are
also directed to other risks and uncertainties discussed in other documents
filed by  the Company with  the Securities  and Exchange  Commission.   The
Company undertakes no  obligation to update  or revise any  forward-looking
information, whether as a  result of new information, future  developments,
or otherwise.



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


The  fair values of  certain of  the Company's  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 the Company's interest-rate sensitive financial
instruments would not be material to the Company's financial position.

The Company has  elected to  present the quantitative  information using  a
sensitivity  analysis,  as  this is  the  most  widely-used  method in  the
financial services industry.   The estimated increases (decreases)  in fair
values  of interest-rate  sensitive financial  instruments at  December 31,
1998  and 1997,  all of  which were  entered into  for purposes  other than
trading, were as follows:

                             December 31, 1998       December 31, 1997  
                           +100 bp       -100 bp   +100 bp       -100 bp
                                       (dollars in thousands)
Assets
Net finance receivables,
  less allowance for 
  finance receivable
  losses                   $(253,623)  $ 274,955   $(196,053)  $ 210,083
Fixed-maturity securities    (52,838)     55,410     (41,433)     43,199

Liabilities
Long-term debt              (155,029)    162,993    (108,382)    114,655

Derivatives
Interest rate swaps          (34,109)     36,430     (24,066)     25,320
Treasury rate locks             -           -        (18,627)     23,570
<PAGE>
<PAGE> 30

Item 7A.  Continued


The changes in fair values were derived by modeling estimated cash flows of
certain of the Company's assets and liabilities as of December 31, 1998 and
1997.  These cash flows do  not consider loan originations, debt issuances,
or new investment purchases.  The cash  flows on investment securities were
adjusted to reflect changes in prepayments and calls.

Care  should be  exercised  in  drawing  conclusions  based  on  the  above
analysis.  While these changes in fair values provide a measure of interest
rate sensitivity, they are not representative of management's  expectations
about the  impact of interest rate changes.  This analysis is also based on
the Company's exposure at a particular point in time, without regard to the
impact  of certain business decisions or  initiatives that management 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>
<PAGE> 31


                       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, 1998  and 1997, 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, 1998.   Our audit 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  generally accepted  auditing
standards.  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,
1998 and 1997, and  the consolidated results of their operations  and their
cash  flows for each of  the three years  in the period  ended December 31,
1998, in conformity  with generally accepted accounting  principles.  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
February 16, 1999
<PAGE>
<PAGE> 32
<TABLE>
              American General Finance, Inc. and Subsidiaries
                        Consolidated Balance Sheets

<CAPTION>
                                                        December 31,      
                                                     1998          1997  
                                                   (dollars in thousands)
<S>                                               <C>           <C>
Assets

Finance receivables, net of unearned
  finance charges  (Note 5.):
    Real estate loans                             $ 5,757,185   $4,155,167
    Non-real estate loans                           2,560,565    2,554,888
    Retail sales finance                            1,339,367    1,301,133

Net finance receivables                             9,657,117    8,011,188
Allowance for finance receivable
  losses  (Note 6.)                                  (382,450)    (372,653)
Net finance receivables, less allowance
  for finance receivable losses                     9,274,667    7,638,535

Investment securities  (Note 7.)                      996,599      929,311
Cash and cash equivalents                             148,002      105,695
Other assets  (Note 8.)                               753,655      615,959

Total assets                                      $11,172,923   $9,289,500


Liabilities and Shareholder's Equity

Long-term debt  (Note 10.)                        $ 5,176,965   $4,011,457
Short-term notes payable:
  Commercial paper  (Notes 11., 12.
    and 13.)                                        3,485,648    3,157,671
  Banks and other  (Notes 11. and 14.)                198,000       95,000
Investment certificates                                 1,874        2,574
Insurance claims and policyholder 
  liabilities                                         437,079      436,859
Other liabilities                                     348,866      300,342
Accrued taxes                                          21,086       22,272

Total liabilities                                   9,669,518    8,026,175

Shareholder's equity: 
  Common stock  (Note 16.)                              1,000        1,000
  Additional paid-in capital                          822,497      743,083
  Accumulated other comprehensive   
    income  (Note 7.)                                  39,419       34,512 
  Retained earnings  (Note 17.)                       640,489      484,730

Total shareholder's equity                          1,503,405    1,263,325

Total liabilities and shareholder's equity        $11,172,923   $9,289,500

<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 33
<TABLE>
              American General Finance, Inc. and Subsidiaries
                     Consolidated Statements of Income



<CAPTION>
                                           Years Ended December 31,  
                                        1998         1997         1996   
                                            (dollars in thousands)
<S>                                  <C>          <C>          <C>
Revenues
  Finance charges                    $1,354,158   $1,264,798   $1,449,968
  Insurance                             175,969      188,574      206,170
  Other                                  78,978       70,733       68,810

Total revenues                        1,609,105    1,524,105    1,724,948

Expenses
  Interest expense                      511,587      461,275      493,051
  Operating expenses                    505,150      474,822      512,698
  Provision for finance receivable
    losses                              212,090      247,983      417,446
  Loss on non-strategic assets             -          42,225      145,459
  Insurance losses and loss
    adjustment expenses                  84,687       93,447      102,811

Total expenses                        1,313,514    1,319,752    1,671,465

Income before provision for income
  taxes                                 295,591      204,353       53,483

Provision for Income Taxes
  (Note 15.)                            108,232       74,920       19,337

Net Income                           $  187,359   $  129,433   $   34,146



<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 34
<TABLE>
              American General Finance, Inc. and Subsidiaries
              Consolidated Statements of Shareholder's Equity



<CAPTION>
                                         Years Ended December 31,     
                                       1998        1997        1996   
                                          (dollars in thousands)       
<S>                                 <C>         <C>         <C>
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         743,083     696,230     696,128
  Capital contributions from parent
    and other                           79,414      46,853         102
  Balance at end of year               822,497     743,083     696,230

Accumulated Other Comprehensive
  Income                  
    Balance at beginning of year        34,512      21,454      38,412 
    Change in net unrealized 
      gains (losses) on   
      investment securities              4,907      13,058     (16,958)
    Balance at end of year              39,419      34,512      21,454 

Retained Earnings 
  Balance at beginning of year         484,730     481,797     586,241
  Net income                           187,359     129,433      34,146
  Common stock dividends               (31,600)   (126,500)   (138,590)
  Balance at end of year               640,489     484,730     481,797

Total Shareholder's Equity          $1,503,405  $1,263,325  $1,200,481 



<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 35
<TABLE>
              American General Finance, Inc. and Subsidiaries
                   Consolidated Statements of Cash Flows
<CAPTION>
                                                       Years Ended December 31,
                                                    1998         1997         1996
                                                        (dollars in thousands)
<S>                                              <C>          <C>          <C>
Cash Flows from Operating Activities
Net Income                                       $  187,359   $  129,433   $   34,146 
Reconciling adjustments:
  Provision for finance receivable losses           212,090      247,983      417,446 
  Depreciation and amortization                     107,946       86,330       98,032 
  Deferral of finance receivable
    origination costs                               (46,773)     (39,134)     (50,303)
  Deferred income tax charge (benefit)               16,446       62,620      (45,875)
  Change in other assets and other liabilities      (34,947)     (20,862)     (33,609)
  Change in insurance claims and
    policyholder liabilities                            220      (19,571)     (27,541)
  Change in taxes receivable and payable             19,681      (11,073)      34,392 
  Loss on non-strategic assets                         -          42,225      145,459 
  Operations related to assets held for sale           -          39,905         -    
  Other, net                                        (23,444)      (1,772)      17,952 
Net cash provided by operating activities           438,578      516,084      590,099 

Cash Flows from Investing Activities
  Finance receivables originated or purchased    (6,589,414)  (5,035,973)  (5,338,928)
  Principal collections on finance receivables    4,775,254    4,343,120    4,886,420 
  Net collections on assets held for sale              -          61,266         -    
  Securitized finance receivables purchased            -        (100,000)        -    
  Acquisition of HSA Residential Mortgage 
    Services of Texas, Inc.                         (25,600)        -            -    
  Sale of non-strategic assets                         -         732,504         -    
  Investment securities purchased                  (211,087)    (129,468)    (188,732)
  Investment securities called, matured and sold    158,360      104,801      169,405 
  Purchase of assets from affiliates                   -            -         (62,176)
  Change in premiums on finance receivables
    purchased and deferred charges                 (122,879)     (42,147)     (46,900)
  Other, net                                        (20,963)      (4,028)     (23,642)
Net cash used for investing activities           (2,036,329)     (69,925)    (604,553)
    
Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt        2,028,405      730,566      124,228 
  Repayment of long-term debt                      (866,024)  (1,221,070)    (609,559)
  Change in investment certificates                    (700)      (1,204)      (2,419)
  Change in short-term notes payable                430,977      125,751      643,049 
  Capital contribution from parent                   79,000       46,500         -    
  Dividends paid                                    (31,600)    (126,500)    (138,590)
Net cash provided by (used for)
  financing activities                            1,640,058     (445,957)      16,709 

Increase in cash and cash equivalents                42,307          202        2,255 
Cash and cash equivalents at beginning of year      105,695      105,493      103,238 
Cash and cash equivalents at end of year         $  148,002   $  105,695   $  105,493 

Supplemental Disclosure of Cash Flow Information
  Income taxes paid                              $   74,047   $   30,165   $   34,167 
  Interest paid                                  $  493,356   $  485,067   $  497,084 

<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 36
<TABLE>
              American General Finance, Inc. and Subsidiaries
              Consolidated Statements of Comprehensive Income



<CAPTION>
                                            Years Ended December 31,    
                                        1998          1997          1996  
                                             (dollars in thousands)
<S>                                   <C>           <C>           <C>
Net Income                            $187,359      $129,433      $ 34,146

Other comprehensive income:
  Net unrealized gains (losses) 
    on investment securities             6,857        21,161       (27,009)
  Income tax effect                     (2,401)       (7,406)        9,460 

  Net unrealized gains (losses)
    on investment securities,
    net of tax                           4,456        13,755       (17,549)

  Reclassification adjustment 
    for realized (gains) losses
    included in net income                 693        (1,071)          909 
  Income tax effect                       (242)          374          (318)

  Realized (gains) losses included
    in net income, net of tax              451          (697)          591 

Other comprehensive income (loss),
  net of tax                             4,907        13,058       (16,958)

Comprehensive income                  $192,266      $142,491      $ 17,188



<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 37

              American General Finance, Inc. and Subsidiaries
                 Notes to Consolidated Financial Statements
                             December 31, 1998



Note 1.  Nature of Operations

American General  Finance,  Inc. will  be  referred to  in these  Notes  to
Consolidated Financial  Statements  as  "AGFI"  or  collectively  with  its
subsidiaries, whether directly or indirectly owned, as the "Company".  AGFI
is a  wholly-owned subsidiary  of  American General  Corporation  (American
General).  The  subsidiaries include American  General Finance  Corporation
(AGFC)  and American  General  Financial Center  (AGFC-Utah).   AGFI  is  a
financial services  holding company with subsidiaries  engaged primarily in
the consumer  finance and credit  insurance business. The  Company conducts
loan  and retail  operations  and markets  insurance  products through  its
consumer  branch and  centralized real  estate segments.   At  December 31,
1998,  the Company had 1,343 offices in 41 states, Puerto Rico and the U.S.
Virgin Islands and approximately 8,100 employees.

In its loan operations, the Company makes loans directly to individuals and
acquires real estate loans made by  brokers and other real estate  lenders.
In  its retail operations, the Company purchases retail sales contracts and
provides revolving retail services arising from the retail sale of consumer
goods and  services by approximately  16,000 retail merchants  and provides
private  label services  for approximately  320 retail  merchants.   In its
insurance operations,  the Company writes  and assumes credit  life, credit
accident and health,  credit-related property and  casualty insurance,  and
non-credit insurance  coverages  on  its  consumer  finance  customers  and
property  pledged as collateral.   See Note 20.  for further information on
the Company's business segments.

The  Company funds its 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,
and capital contributions from American General.    

At  December 31,  1998,  the  Company  had  $9.7  billion  of  net  finance
receivables due from  approximately 2.3 million customer  accounts and $6.1
billion  of  credit  and  non-credit  life  insurance   in  force  covering
approximately 1.2 million customer accounts.

In  fourth quarter  1996,  the Company  decided  to offer  for  sale $874.8
million  of non-strategic,  underperforming finance  receivable portfolios,
consisting of $520.3  million of credit card and $354.5  million of private
label  finance  receivables.    The  Company  reclassified  these   finance
receivables and $70.0 million of allowance for finance receivable losses to
assets held for sale on December 31, 1996.  In June 1997, the  Company sold
all of  the  assets held  for  sale (with  a  remaining balance  of  $658.1
million) and $81.4 million of other private label finance receivables.  See
Note 9. for further information on the reclassification and subsequent sale
of non-strategic assets.  

Prior to such sale, the Company  issued MasterCard and VISA credit cards to
individuals through branch and direct mail solicitation programs. 
<PAGE>
<PAGE> 38

Notes to Consolidated Financial Statements, Continued


Note 2.  Summary of Significant Accounting Policies

                        PRINCIPLES OF CONSOLIDATION

The consolidated financial statements have been prepared in accordance with
generally  accepted accounting principles and include  the accounts of AGFI
and  its subsidiaries.    The subsidiaries  are  all wholly-owned  and  all
intercompany items have been eliminated.  AGFI is a wholly-owned subsidiary
of American General.


                             RECLASSIFICATIONS

Effective January 1,  1997, certain  real estate loans  having advances  of
less than $10,000 and high loan-to-value ratios were reclassified from real
estate to non-real estate  loans.  These  loans are serviced and  collected
more  like  non-real   estate  loans   than  real  estate   loans.     This
reclassification affected $255.0 million of loans at January 1, 1997.


                             FINANCE OPERATIONS

Revenue Recognition

Finance charges are  recognized as revenue on  the accrual basis using  the
interest  method.   The  accrual of  revenue is  suspended when  the fourth
contractual payment becomes past due for loans, retail sales contracts, and
revolving  retail and when the  sixth contractual payment  becomes past due
for private  label.  For credit cards, the accrual of revenue was suspended
when the sixth  contractual payment became past due.   Extension fees, late
charges, and prepayment penalties are recognized as revenue when received. 

The Company defers costs associated with the origination of certain finance
receivables  and  revenue  from nonrefundable  points  and  fees  on loans.
Deferred origination costs  and nonrefundable points and  fees are included
in finance receivables  and are amortized 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,  any  unamortized costs  or
points  and  fees  are charged  or  credited  to  revenue  at the  date  of
liquidation.  


Allowance For Finance Receivable Losses

The  Company maintains  the allowance  for finance  receivable losses  at a
level  based on  periodic evaluation  of  the finance  receivable portfolio
which  reflects an  amount that,  in management's  opinion, is  adequate to
absorb anticipated losses in the  existing portfolio.  Management evaluates
the Company's finance receivables as a group and considers numerous factors
in estimating the anticipated finance receivable losses, including  current
economic  conditions,  prior   finance  receivable  loss   and  delinquency
experience, and the composition of the finance receivable portfolio.
<PAGE>
<PAGE> 39

Notes to Consolidated Financial Statements, Continued


The  Company's 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 which are  six installments past due, and  revolving retail
and private  label accounts  which  are 180  days past  due.   Credit  card
accounts  were charged  off when  180 days  past due.   The  Company starts
foreclosure proceedings on real estate loans when four monthly installments
are  past due.  When foreclosure is  completed and the Company has obtained
title to the property, the real estate is established as an asset valued at
fair value,  and any loan  amount in excess  of that value is  charged off.
The charge-off  period is  occasionally  extended for  individual  accounts
when, in management's opinion, such treatment is warranted.


                            INSURANCE OPERATIONS

Revenue Recognition

The  Company's insurance  subsidiaries  write and  assume  credit life  and
credit accident and health insurance, credit-related property and  casualty
insurance, and non-credit insurance.  Premiums on credit life insurance are
recognized  as revenue  using the  sum-of-the-digits or  actuarial methods,
except in the case of level-term contracts, which are recognized as revenue
using the straight-line  method over the  lives of the policies.   Premiums
on  credit accident and health insurance are recognized as revenue using an
average of the sum-of-the-digits and  the straight-line methods.   Premiums
on credit-related property and casualty insurance are recognized as revenue
using   the  straight-line  method  over  the  terms  of  the  policies  or
appropriate shorter  periods.    Non-credit  life  insurance  premiums  are
recognized when collected but not before their due dates.  


Policy Reserves

Policy  reserves for credit life  and credit accident  and health insurance
equal  related  unearned premiums.   Claim  reserves  are based  on Company
experience.  Reserves for  losses and loss adjustment expenses  for credit-
related property  and casualty  insurance are  estimated based  upon claims
reported plus estimates of  incurred but not reported claims.   Liabilities
for  future life insurance policy benefits  associated with non-credit life
contracts are accrued when  premium revenue is recognized and  are computed
on  the  basis  of assumptions  as  to  investment  yields, mortality,  and
surrenders.   Annuity reserves are computed on  the basis of assumptions as
to  investment yields and mortality.   Non-credit life,  group annuity, and
accident and health insurance reserves assumed under coinsurance agreements
are based on various tabular and unearned premium methods.


Acquisition Costs

Insurance acquisition costs, principally commissions, reinsurance fees, and
premium taxes,  are deferred and charged  to expense over the  terms of the
related policies or reinsurance agreements.
<PAGE>
<PAGE> 40

Notes to Consolidated Financial Statements, Continued


Reinsurance

The  Company's insurance  subsidiaries  enter  into reinsurance  agreements
among themselves and other insurers, including other insurance subsidiaries
of American General.   The annuity,  credit life,  and credit accident  and
health reserves  attributable  to this  business with  the subsidiaries  of
American General were $68.9 million at December 31, 1998 and $61.0  million
at  December 31,  1997.    The  Company's  insurance  subsidiaries  assumed
reinsurance  premiums from  other insurers  of $40.1  million during  1998,
$38.6 million  during 1997, and $47.5  million during 1996.   The Company's
ceded reinsurance  activities were not  significant during  the last  three
years.


GAAP vs. Statutory Accounting

Statutory accounting  practices differ  from generally accepted  accounting
principles, primarily  in the  following  respects: credit  life  insurance
reserves are maintained on  the basis of mortality tables;  non-credit life
and group  annuity insurance reserves are based  on statutory requirements;
insurance acquisition costs are expensed when incurred rather than expensed
over the related contract period; deferred income taxes are not recorded on
temporary differences in  the recognition of  revenue and expense;  certain
intangible assets  resulting from a  purchase and the  related amortization
are  not reflected in statutory financial statements; investments in fixed-
maturity securities are carried  at amortized cost; and an  asset valuation
reserve  and  interest maintenance  reserve  are  required for  Merit  Life
Insurance  Co. (Merit), a wholly-owned  subsidiary of AGFC.   The following
compares net  income and shareholder's equity for  the insurance operations
determined under statutory accounting practices with those determined under
generally accepted accounting principles:

                                 Net Income         Shareholder's Equity
                          Years Ended December 31,      December 31,    
                          1998     1997     1996      1998        1997  
                                       (dollars in thousands)
Statutory accounting
  practices              $68,537  $58,157  $79,157  $525,450    $457,702

Generally accepted
  accounting principles   64,405   62,312   59,625   683,992     614,679


                           INVESTMENT SECURITIES
Valuation

All investment  securities are  currently classified  as available-for-sale
and recorded at fair value.  After adjusting related balance sheet accounts
as if  the unrealized gains  and losses on  investment securities had  been
realized, the net adjustment is recorded in accumulated other comprehensive
income within  shareholder's equity.   If the  fair value of  an investment
security  classified as available-for-sale declines below its cost and this
decline is considered to  be other than temporary, the  investment security
is reduced to its fair  value, and the reduction is recorded  as a realized
loss.
<PAGE>
<PAGE> 41

Notes to Consolidated Financial Statements, Continued


Realized Gains and Losses on Investments

Realized  gains and losses on investments are recognized using the specific
identification method  and include declines  in fair  value of  investments
below cost that  are considered other than  temporary.  Realized  gains and
losses on investments are included in other revenues.


                                   OTHER

Cash Equivalents

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


Goodwill

Acquisition-related goodwill is charged to expense in equal amounts over 20
to 40  years.   The carrying  value of goodwill  is regularly  reviewed for
indicators of impairment  in value,  which in management's  view are  other
than temporary,  including unexpected or adverse changes  in the following:
1)  the economic or competitive environments in which the Company operates,
2)  profitability analyses,  and  3)  cash flow  analyses.   If  facts  and
circumstances suggest that goodwill  is impaired, the Company  assesses the
fair value  of the underlying  business and  reduces goodwill to  an amount
that results in the book value of the Company approximating fair value.


Income Taxes

Deferred  tax   assets  and  liabilities  are   established  for  temporary
differences  between the  financial reporting  basis and  the tax  basis of
assets and  liabilities at the enacted  tax rates expected to  be in effect
when the temporary differences reverse. The  effect of a tax rate change is
recognized in income in the period of enactment.

A valuation  allowance for deferred tax  assets is provided if  all or some
portion  of the deferred  tax asset  may not be  realized.   An increase or
decrease  in  a  valuation   allowance  that  results  from  a   change  in
circumstances  that causes a change in judgement about the realizability of
the related deferred  tax asset is included in income.  A change related to
fluctuations in  fair value of available-for-sale  investment securities is
included in accumulated other comprehensive income in shareholder's equity.


Derivative Financial Instruments

The Company accounts  for its 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.
<PAGE>
<PAGE> 42

Notes to Consolidated Financial Statements, Continued


The difference between amounts payable and receivable on interest rate swap
agreements is recorded on  the accrual basis as  an adjustment to  interest
expense over the life of the agreements.  The related  amount payable to or
receivable from  counterparties is included  in other liabilities  or other
assets.    The  fair  values  of  interest  rate  swap  agreements are  not
recognized  in the consolidated balance sheet, which is consistent with the
treatment of the related debt that is hedged.

Any gain or loss from early  termination of an interest rate swap agreement
is  deferred and  amortized  into income  over  the remaining  term of  the
related debt.  If the underlying debt is extinguished, any  related gain or
loss on interest rate swap agreements is recognized in income.

Treasury rate lock agreements  are accounted for substantially the  same as
interest rate swap agreements.


Use of Estimates

Management  makes   estimates  and   assumptions  in  preparing   financial
statements that  affect amounts  reported in  the financial  statements and
disclosures of contingent assets and  liabilities.  Ultimate results  could
differ from these estimates.


Fair Value of Financial Instruments

The  fair  values  disclosed  in Note  22.  are  based  on  estimates using
discounted cash flows  when quoted market  prices are not  available.   The
assumptions  used, including the discount rate and estimates of future cash
flows,  significantly affect the  valuation techniques  employed.   In that
regard,  the   derived  fair value  estimates  cannot be  substantiated  by
comparison to independent markets and, in many cases, could not be realized
in  immediate settlement  of  the  instrument.    The  fair  value  amounts
presented can be  misinterpreted, and  the reader should  exercise care  in
drawing conclusions from such data.



Note 3.  Accounting Changes

During  first quarter  1998,  the Company  adopted  Statement of  Financial
Accounting Standards  (SFAS) 130,  "Reporting Comprehensive  Income," which
establishes standards for reporting and displaying comprehensive income and
its components in the financial statements.  The Company  elected to report
comprehensive income and  its components in the consolidated  statements of
comprehensive income.  Adoption of  SFAS 130 did not change  recognition or
measurement  of net  income and,  therefore, did  not impact  the Company's
consolidated results of operations or financial position.

Effective  December 31,  1998, the  Company adopted SFAS  131, "Disclosures
about Segments of an Enterprise and Related Information," which changes the
way  companies  report segment  information.   Adoption  of  this statement
resulted in  more detailed disclosures  but did not  have an impact  on the
Company's consolidated results of operations or financial position.
<PAGE>
<PAGE> 43

Notes to Consolidated Financial Statements, Continued


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



Note 4.  Purchase of Assets from Affiliates

Subsidiaries of AGFI purchased assets, primarily finance receivables,  from
subsidiaries of American General for $62.2 million during 1996.



Note 5.  Finance Receivables

Real  estate loans  generally have  maximum original  terms of  360 months.
Non-real estate  loans collateralized  by  consumer goods,  automobiles  or
other chattel  security,  or that  are  unsecured, generally  have  maximum
original terms of  60 months.   Retail sales  contracts are  collateralized
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.
Credit  card  receivables  were  unsecured  and  required  minimum  monthly
payments  based on outstanding balances.  At  December 31, 1998, 95% of the
net finance receivables were  secured by the real and/or  personal property
of the borrower.  At December 31, 1998, real estate loans accounted for 60%
of the amount and 8% of the number of net finance receivables outstanding.

Contractual maturities of net finance receivables at December 31, 1998 were
as follows:

                         Amount       Percent 
                        (dollars in thousands)

1999                    $1,219,222         13%
2000                     1,420,769         15 
2001                     1,002,183         10 
2002                       576,986          6 
2003                       341,439          3 
2004 and thereafter      5,096,518         53 

                        $9,657,117        100%
<PAGE>
<PAGE> 44

Notes to Consolidated Financial Statements, Continued


Company  experience  has  shown  that  a  substantial  portion  of  finance
receivables will be renewed, converted, or paid  in full prior to maturity.
Accordingly, the preceding  information as to contractual maturities is not
a forecast of future cash collections.

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

                                         1998        1997        1996   
                                            (dollars in thousands)
Loans:
  Principal cash collections          $3,122,617  $2,859,121  $2,653,457
  Percent of average net receivables      43.29%      45.72%      46.72%

Retail sales finance:
  Principal cash collections          $1,652,637  $1,483,999  $1,776,688
  Percent of average net receivables     126.58%     116.97%      92.74%

Credit cards:
  Principal cash collections          $     -     $     -     $  456,275
  Percent of average net receivables        -  %        -  %      86.24%


Unused  credit limits  on private  label  extended by  the  Company to  its
customers  were $2.3  billion  at December  31, 1998  and  $2.7 billion  at
December 31, 1997.  Unused credit limits on loan and retail revolving lines
of  credit extended by the Company to  its customers were $466.1 million at
December 31,  1998 and  $225.3 million  at December 31,  1997.   All unused
credit  limits, in part or in total,  can be cancelled at the discretion of
the Company, and are not indicative of the amounts expected to be funded.

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, 1998            December 31, 1997    
                   Amount       Percent         Amount       Percent  
                                (dollars in thousands)

California      $1,461,438            15%    $  842,690            11%
N. Carolina        728,801             7        696,261             9
Illinois           593,789             6        434,029             5
Florida            574,693             6        518,837             7
Ohio               559,964             6        465,489             6
Indiana            502,653             5        438,369             5
Virginia           367,995             4        356,928             4
Georgia            351,347             4        310,485             4
Other            4,516,437            47      3,948,100            49 

                $9,657,117           100%    $8,011,188           100%
<PAGE>
<PAGE> 45

Notes to Consolidated Financial Statements, Continued


Note 6.  Allowance for Finance Receivable Losses

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

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

Balance at beginning of year        $372,653      $395,153      $492,124
Provision for finance receivable
  losses                             212,090       247,983       417,446
Allowance reclassified to assets
  held for sale                         -             -          (70,000)
Allowance related to acquired
  receivables                         17,297          -              152 
Charge-offs, net of recoveries      (219,590)     (270,483)     (444,569)

Balance at end of year              $382,450      $372,653      $395,153


See Note  2. for  information  on the  determination of  the allowance  for
finance receivable losses.



Note 7.  Investment Securities

At December 31, 1998 and 1997, all investment securities were classified as
available-for-sale and reported at fair value.  Investment securities  were
as follows at December 31:

                                   Fair Value           Amortized Cost  
                                 1998       1997       1998       1997  
                                        (dollars in thousands)
Fixed-maturity investment
  securities:
  Bonds:
    Corporate securities       $575,336   $507,844   $546,135   $482,620
    Mortgage-backed securities  175,014    177,727    168,346    170,929
    States and political
      subdivisions              185,055    173,981    174,308    164,515
    Other                        42,871     45,222     29,297     34,018
  Redeemable preferred stocks    11,194     18,737     10,916     18,400
Total                           989,470    923,511    929,002    870,482
Non-redeemable preferred
  stocks                          2,910      2,332      2,731      2,264
Other long-term investments       4,219      3,468      4,219      3,468

Total investment securities    $996,599   $929,311   $935,952   $876,214
<PAGE>
<PAGE> 46

Notes to Consolidated Financial Statements, Continued


At  December  31,  the gross  unrealized  gains  and  losses on  investment
securities were as follows:
                                      Gross                Gross
                                 Unrealized Gains     Unrealized Losses 
                                  1998       1997      1998       1997  
                                         (dollars in thousands)
Fixed-maturity investment               
  securities:               
  Bonds:
    Corporate securities       $31,955     $25,730   $ 2,754     $   506
    Mortgage-backed securities   6,683       6,932        15         134
    State and political
      subdivisions              10,821       9,466        74        -   
    Other                       13,574      11,210      -              6
  Redeemable preferred stocks      316         431        38          94
Total                           63,349      53,769     2,881         740
Non-redeemable preferred
  stocks                           179          68      -           -   

Total investment securities    $63,528     $53,837   $ 2,881     $   740


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

                                       Years Ended December 31,     
                                   1998          1997          1996 
                                        (dollars in thousands)

Fair value                        $157,971     $104,492     $169,350

Gross realized gains                 3,930        1,481        1,778
Gross realized losses                1,033          410        3,068


Contractual maturities of  fixed-maturity securities at  December 31,  1998
were as follows:
                                            Fair       Amortized
                                            Value         Cost  
                                          (dollars in thousands)
Fixed maturities, excluding                 
  mortgage-backed securities:  
    Due in 1 year or less                 $ 12,836      $ 12,667
    Due after 1 year through 5 years       155,255       147,771
    Due after 5 years through 10 years     526,445       494,554
    Due after 10 years                     119,920       105,664
Mortgage-backed securities                 175,014       168,346

Total                                     $989,470      $929,002


Actual maturities may  differ from contractual  maturities since  borrowers
have  the right to  call or prepay  obligations.  Company  requirements and
investment  strategies  may  result  in  the  sale  of  investments  before
maturity.
<PAGE>
<PAGE> 47

Notes to Consolidated Financial Statements, Continued


Bonds  on deposit with regulatory  authorities had carrying  values of $7.9
million at December 31, 1998 and $8.4 million at December 31, 1997.



Note 8.  Costs In Excess of Net Assets Acquired

Goodwill,  resulting from the  excess of the  purchase price paid  over the
fair value  of  separately identified  tangible and  intangible net  assets
acquired, totaled $276.3 million at December 31, 1998 and $262.0 million at
December  31, 1997.    Accumulated amortization  totaled  $96.2 million  at
December 31, 1998 and $86.8 million at December 31, 1997. 

Other  assets  includes  a customer  base  valuation  of  $91.8 million  at
December 31,  1998 and $31.0 million  at December 31, 1997,  which is being
amortized  to operating  expenses on  a straight-line  basis over  6 to  25
years.



Note 9.  Assets Held for Sale

During  fourth quarter 1996,  the Company decided to  offer for sale $874.8
million  of non-strategic,  underperforming finance  receivable portfolios,
consisting of $520.3 million  of credit card and $354.5  million of private
label  finance  receivables.    The  Company  reclassified  these   finance
receivables and $70.0 million of allowance for finance receivable losses to
assets held for sale on December 31, 1996.

The Company  hired an outside advisor  to market the portfolios.   Based on
negotiations with  prospective purchasers subsequent to year  end 1996, the
Company  determined that  a  write-down of  $145.5  million ($93.5  million
aftertax) at  December 31, 1996 was necessary to reduce the carrying amount
of the  assets held  for sale  to net  realizable value, after  considering
related expenses.

In April 1997, the Company repurchased $100.0 million of private  label and
credit   card   receivables  that   previously   had   been  sold   through
securitization.   No gain  or loss resulted  from this transaction.   These
repurchased  credit card receivables were  offered for sale  along with the
Company's  other  credit card  receivables,  which  increased the  carrying
amount of  assets held for  sale by  approximately $70.0  million in  April
1997.

In  June 1997,  the Company sold  all of the  assets held for  sale (with a
remaining balance of  $658.1 million)  and $81.4 million  of other  private
label finance receivables.   In  connection with these  sales, the  Company
recorded a loss of $42.2 million ($27.0 million aftertax) in second quarter
1997.    This loss  primarily resulted  from  establishing a  liability for
estimated future payments  to the  purchaser of the  credit card  portfolio
under a five-year loss sharing arrangement.
<PAGE>
<PAGE> 48

Notes to Consolidated Financial Statements, Continued


Note 10.  Long-term Debt

Long-term debt consisted of senior debt at December 31, 1998 and 1997.  The
carrying value  and fair value of the  Company's long-term debt at December
31 were as follows: 

                            Carrying Value              Fair Value      
                          1998         1997         1998         1997   
                                     (dollars in thousands)

Senior debt            $5,176,965   $4,011,457   $5,348,086   $4,117,243


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

                     Years Ended December 31,         December 31, 
                       1998    1997    1996          1998     1997 

Senior debt            6.95%   7.32%   7.28%         6.69%    7.18%


Maturities of long-term debt at December 31, 1998 were as follows:

                          Carrying Value    
                      (dollars in thousands)        

1999                        $  570,265
2000                         1,288,490
2001                           946,948
2002                           563,059
2003                         1,038,058
2004-2009                      770,145

Total                       $5,176,965


A certain debt issue of  AGFC is repayable prior to maturity at par, at the
option of each holder.  If this issue was repaid in full, the amounts above
would increase $149.3 million in 1999 and would decrease $149.3  million in
2009.

Certain debt  agreements  contain  restrictions  on  consolidated  retained
earnings for certain purposes (see Note 17.).



Note 11.  Short-term Notes Payable

AGFC and one of its subsidiaries issue commercial  paper with terms ranging
from 1 to 270 days.  Included in commercial paper borrowings 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>
<PAGE> 49

Notes to Consolidated Financial Statements, Continued


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

                                         1998        1997        1996   
                                            (dollars in thousands)

Maximum borrowings at any month end   $3,821,177  $3,256,805  $3,126,920
Average borrowings                    $3,475,728  $3,017,332  $2,426,920
Weighted average interest rate,
  at December 31:
    Money market yield                     5.30%       5.80%       5.57%
    Semi-annual bond equivalent yield      5.36%       5.87%       5.63%
Weighted average interest rate,
  giving effect to interest 
  rate swap agreements and 
  commitment fees at December 31,          5.81%       6.45%       6.03%



Note 12.  Liquidity Facilities

The  Company participates in credit  facilities to support  the issuance of
commercial paper and to provide an additional source of funds for operating
requirements.   The Company was an eligible borrower under committed credit
facilities extended  to American  General and  certain of  its subsidiaries
(the  "shared committed facilities").   The annual commitment  fees for the
shared  committed facilities ranged  from .05% to  .07%.   The Company pays
only an  allocated portion of the commitment  fees for the shared committed
facilities.   The Company also had uncommitted credit facilities and was an
eligible borrower under uncommitted credit facilities extended to  American
General  and  certain   of  its  subsidiaries   (the  "shared   uncommitted
facilities").  Available borrowings under all facilities are reduced by any
outstanding borrowings.   Information concerning the  credit facilities was
as follows:
                                                     December 31,      
                                                 1998            1997  
                                                (dollars in thousands)
Committed credit facilities:
  Shared committed facilities                  $5,000,000    $4,000,000
  Borrowings                                         -             -   

  Remaining availability                       $5,000,000    $4,000,000

Uncommitted credit facilities:
  Company uncommitted facilities               $  363,500    $  321,000
  Shared uncommitted facilities                   150,000       200,000
  Borrowings                                     (198,000)      (95,000)

  Remaining availability                       $  313,500    $  426,000


A  subsidiary of AGFI  arranges interim financing  for third-party mortgage
originators through a bank  purchase facility.  At December  31, 1998, this
facility  totaled  $563.0 million  with  remaining  availability of  $250.3
million.
<PAGE>
<PAGE> 50

Notes to Consolidated Financial Statements, Continued


Note 13.  Derivative Financial Instruments 

The Company's principal borrowing  subsidiary is AGFC.  AGFC  makes limited
use of 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 and treasury rate lock agreements.

AGFC uses interest rate swap agreements  to reduce its exposure to  adverse
future  fluctuations in  interest expense  rates by  effectively converting
short-term  and certain long-term floating-rate debt to a fixed-rate basis.
These floating-rate obligations are recorded at amortized cost.

Fixed interest rates contracted to be paid on interest rate swap agreements
approximated the rates on  fixed-rate term debt with maturities  similar to
the  derivative financial  instruments  at the  date of  contract.   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, 1998.

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,           
                                   1998          1997          1996 
                                        (dollars in thousands)

Notional amount                   $935,000     $940,000     $540,000

Weighted average receive rate        4.57%        5.69%        5.92%
Weighted average pay rate            6.94%        7.39%        8.05%


These agreements mature at various dates and had the respective fixed rates
at December 31, 1998 as follows:

              Notional       Weighted Average
               Amount         Interest Rate  
            (dollars in 
             thousands)

1999          $ 50,000            9.39%
2000           225,000            8.80
2001            60,000            5.41
2002           200,000            6.93
2004           200,000            6.16
2008           200,000            5.50

              $935,000            6.94%
<PAGE>
<PAGE> 51

Notes to Consolidated Financial Statements, Continued


The following table shows changes in the notional amounts for interest rate
swap agreements:
                                           Notional Amounts         
                                    1998         1997         1996  
                                        (dollars in thousands)       

Balance at beginning of year      $940,000     $540,000     $590,000 
New contracts                      260,000      425,000         -    
Expired contracts                 (265,000)     (25,000)     (50,000)

Balance at end of year            $935,000     $940,000     $540,000


Treasury  rate lock agreements have been used  to hedge against the risk of
rising  interest rates  on  anticipated long-term  debt  issuances.   These
agreements  provide  for future  cash settlements  that  are a  function of
specified  U.S.  Treasury rates.    At December  31,  1998,  there were  no
treasury rate  lock  agreements  in effect.    At December  31,  1997,  the
notional  amount of  these agreements  was $390.0  million.  AGFC's  use of
treasury  rate lock  agreements  did  not have  a  material  effect on  the
Company's weighted-average interest  rate or reported  interest expense  in
1998 or 1997.

AGFC  is exposed  to  credit  risk  in  the  event  of  non-performance  by
counterparties to  derivative  financial  instruments.    AGFC  limits  its
exposure to credit  risk by  entering into  agreements with  counterparties
having  strong credit  ratings and  by  basing the  amount and  term of  an
agreement  on these credit  ratings.  Furthermore,  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 and treasury rate
lock agreements.  AGFC does not expect any counterparty to fail to meet its
obligation; however, non-performance  would not have  a material impact  on
the  consolidated  results  of operations  and  financial  position  of the
Company.

AGFC's exposure  to market risk is  mitigated by the offsetting  effects of
changes in the value of the agreements  and of the underlying debt to which
they relate.



Note 14.  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, 1998,  1997  and 1996,  AGFI  had no
borrowings outstanding with American General.
<PAGE>
<PAGE> 52

Notes to Consolidated Financial Statements, Continued


Information concerning such borrowings was as follows:

                                          1998        1997        1996  
                                             (dollars in thousands)

Maximum borrowings at any month end      $ -         $ -         $ -   
Average borrowings                       $1,182      $2,476      $3,700
Weighted average interest rate (total
  interest expense divided by average
  borrowings)                             5.64%       5.24%       5.16%



Note 15.  Income Taxes

AGFI and all  of its  subsidiaries file a  consolidated federal income  tax
return with  American General and  the majority  of its subsidiaries.   The
Company provides  for  federal income  taxes as  if filing  a separate  tax
return, and pays such amounts to American General in accordance  with a tax
sharing agreement.

Provision for income taxes is summarized as follows:

                                           Years Ended December 31,  
                                       1998          1997          1996  
                                            (dollars in thousands)  
Federal
  Current                            $ 86,813      $  8,588      $ 61,702
  Deferred                             13,475        60,860       (43,659)
Total federal                         100,288        69,448        18,043
State                                   7,944         5,472         1,294 

Total                                $108,232      $ 74,920      $ 19,337


The  U.S.  statutory federal  income tax  rate  differs from  the effective
income tax rate as follows:
                                           Years Ended December 31,    
                                       1998          1997          1996 

Statutory federal income tax rate     35.00%        35.00%        35.00%
State income taxes                     1.75          1.74          1.57 
Amortization of goodwill               1.07          1.54          5.89
Nontaxable investment income           (.94)        (1.37)        (4.84)
Other, net                             (.26)         (.25)        (1.46)

Effective income tax rate             36.62%        36.66%        36.16%
<PAGE>
<PAGE> 53

Notes to Consolidated Financial Statements, Continued


Net deferred tax assets were as follows:

                                                 December 31,      
                                             1998            1997  
                                            (dollars in thousands)

Deferred tax assets                        $177,239        $194,837
Deferred tax liabilities                   (153,384)       (150,789)

Net deferred tax assets                    $ 23,855        $ 44,048


The  most significant  deferred  tax assets  relate  to the  provision  for
finance receivable  losses, the benefits  from state NOL  carryforwards and
the  loss on  the  sale of  non-strategic  assets, and  insurance  premiums
recorded for financial reporting purposes.

State NOL carryforwards were $630.5 million at December 31, 1998 and $627.9
million at December 31, 1997 and expire  in the years 2005 and 2006.  These
carryforwards resulted from a 1995 state  audit of a return and the state's
acceptance  of  an amended  return.   At December  31,  1998 and  1997, the
valuation allowance relating to  the state NOL carryforwards  totaled $39.5
million.



Note 16.  Capital Stock

AGFI has two classes of capital  stock:  special shares (without par value,
25  million shares  authorized) which  may be  issued in  series  with such
dividend, liquidation,  redemption, conversion, voting and  other rights as
the board of directors may  determine prior to issuance; and common  shares
($.50  par value,  25 million shares  authorized).   Issued shares  were as
follows:

Special Shares - At December 31, 1998 and 1997, there were no shares issued
and outstanding.

Common Shares - At December 31, 1998 and 1997, 2 million shares were issued
and outstanding.



Note 17.  Retained Earnings

AGFI's ability to pay  dividends is substantially dependent on  the receipt
of dividends or other funds from its subsidiaries.  State laws restrict the
amounts the  Company's 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, 1998, the maximum amount of
dividends  which  the  Company's insurance  subsidiaries  may  pay in  1999
without prior  approval was  $71.6  million.   At  December 31,  1998,  the
Company's  insurance  subsidiaries had  statutory  capital  and surplus  of
$525.5  million.    Merit had  $52.7  million  of  accumulated earnings  at
December  31, 1998 for  which no  federal income  tax provisions  have been
<PAGE>
<PAGE> 54

Notes to Consolidated Financial Statements, Continued


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, 1998,  the federal
income tax would approximate $18.4 million.

Certain AGFC financing agreements effectively limit the amount of dividends
AGFC may  pay.  Under the  most restrictive provision  of these agreements,
$487.4 million  of  the  retained  earnings  of AGFC  was  free  from  such
restrictions at December 31, 1998.  At  that same date, $4.9 million of the
retained  earnings  of AGFI's  industrial  loan  company subsidiaries  were
unrestricted as to dividend payments.



Note 18.  Benefit Plans

                          RETIREMENT INCOME PLANS

The Company  participates in the American General  Retirement Plans (AGRP),
which  are  noncontributory 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 deductible for federal income
tax purposes.

At December  31, 1998,  66% of  the plans' assets  were invested  in equity
securities   and  32%  were   invested  in   fixed  income   mutual  funds.
Additionally,  1%  of  plan  assets  were  invested  in  general investment
accounts of  American General  subsidiaries through deposit  administration
insurance contracts.   The pension  plans have purchased  annuity contracts
from American General subsidiaries to provide benefits to certain retirees.
These  contracts are expected to provide future annual benefits to retirees
of approximately $8.9 million.

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,        
                                           1998       1997       1996 
                                             (dollars in thousands)   

Projected benefit obligation             $87,882    $70,864    $62,887 
Plan assets at fair value                 95,653     86,418     71,450
Plan assets in excess of projected
  benefit obligation                       7,771     15,554      8,563 
Other unrecognized items, net             (5,086)   (10,905)    (2,709)

Prepaid pension expense                  $ 2,685    $ 4,649    $ 5,854
<PAGE>
<PAGE> 55

Notes to Consolidated Financial Statements, Continued


Pension  expense included  the  following components  for  the years  ended
December 31:
                                           1998       1997       1996  
                                             (dollars in thousands)    

Service cost                             $ 3,623    $ 3,150    $ 3,194
Interest cost                              5,688      4,800      4,480 
Expected return on plan assets            (6,950)    (6,060)    (5,464)
Net amortization and deferral                136       (127)      (407)

Pension expense                          $ 2,497    $ 1,763    $ 1,803 


Additional assumptions concerning the determination of pension expense were
as follows:
                                           1998       1997       1996 
 
Weighted average discount rate             7.00%      7.25%      7.50%  
Expected long-term rate of
  return on plan assets                   10.25      10.00      10.00  
Rate of increase in 
  compensation levels                      4.25       4.00       4.00  


                POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company participates 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  have reserved the right to change or eliminate these benefits
at any time.

American General's life plans are  insured through December 31, 1999.   The
majority of  the retiree  medical and  dental plans  is unfunded and  self-
insured.  

AGFI accounts  for its participation  in the  plans as  if it  had its  own
plans.   The accrued liability for postretirement benefits was $6.9 million
at  December  31, 1998  and  $7.4  million at  December  31,  1997.   These
liabilities were discounted  at the same rates used for  the pension plans.
Postretirement  benefit expense totaled $.5 million in 1998, $.7 million in
1997, and $.7 million in 1996.  
<PAGE>
<PAGE> 56

Notes to Consolidated Financial Statements, Continued


Note 19.  Lease Commitments, Rent Expense and Contingent Liabilities

The  approximate  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)        

1999                            $ 41,128
2000                              34,744
2001                              25,821
2002                              18,405
2003                              11,312
subsequent to 2003                12,498

Total                           $143,908


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 1998.   Rental expense totaled $35.2  million in
1998, $32.4 million in 1997, and $36.0 million in 1996.

AGFI  and certain of  its subsidiaries are parties  to various lawsuits and
proceedings  arising in  the ordinary course  of business.   Many  of these
lawsuits and  proceedings  arise  in  jurisdictions, such  as  Alabama  and
Mississippi,  that  permit damage  awards  disproportionate  to the  actual
economic damages incurred.  Based upon information presently available, the
Company believes that  the total amounts that  will ultimately be paid,  if
any,  arising from these lawsuits and  proceedings will not have a material
adverse effect  on the  Company's  consolidated results  of operations  and
financial  position.   However,  the  frequency  of  large  damage  awards,
including large punitive damage  awards, that bear little or no relation to
actual economic  damages  incurred  by  plaintiffs  in  jurisdictions  like
Alabama   and  Mississippi  continues  to  create   the  potential  for  an
unpredictable judgment in any given suit. 



Note 20.  Segment Information

The  Company  has  three  segments:   consumer  branches,  centralized real
estate,  and  insurance.   The  Company's segments  are  managed separately
because they  offer different  financial service  products.   The  consumer
branch operation  originates and acquires  home equity and  consumer loans,
extends  lines of credit, offers  retail sales financing  to merchants, and
sells  credit and  non-credit  insurance products.    The centralized  real
estate operation  acquires  individual  first  and  second  mortgage  loans
originated  by real  estate brokers  and purchases  portfolios  of mortgage
loans originated by various  real estate lenders.  The  insurance operation
writes  and assumes credit  and non-credit insurance  through products that
are sold principally by the consumer branches.
<PAGE>
<PAGE> 57

Notes to Consolidated Financial Statements, Continued


The  Company evaluates performance of the  segments based on income or loss
before income taxes.  The accounting policies of the segments  are the same
as those disclosed in Note  2., except that segment operating  expenses are
not reduced for the deferral of origination costs, the deferred origination
costs are not included in finance  receivables, and the amortization of the
deferred  origination  costs are  not included  as  a reduction  of finance
charge  revenue.    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 primarily amortization of
deferred origination costs.   Reconciling items for assets include deferred
origination  costs,  other  assets,  and corporate  assets  which  are  not
considered pertinent to determining segment performance.  Corporate  assets
include  cash,  prepaid  expenses,  deferred  charges,  fixed  assets,  and
goodwill.  Segment information prior to 1997 is not presented because it is
impractical to create comparable information.

At or for the Year Ended December 31, 1998:

                       Consumer    Centralized                  Total
                       Branches    Real Estate   Insurance     Segments
                                    (dollars in thousands)
Revenues:
  External:
    Finance charges   $1,263,391   $  128,986   $     -      $ 1,392,377
    Insurance              1,925         -         174,044       175,969
    Other                   -           3,202       74,978        78,180
  Intercompany            70,959          561      (68,850)        2,670 
Interest expense         384,182       79,612          112       463,906 
Provision for finance
  receivable losses      209,027       10,404         -          219,431
Pretax income            248,149       24,823       69,110       342,082
Assets                 7,344,546    1,911,538    1,077,892    10,333,976 



At or for the Year Ended December 31, 1997:

                       Consumer    Centralized                  Total
                       Branches    Real Estate   Insurance     Segments
                                    (dollars in thousands)
Revenues:
  External:
    Finance charges   $1,223,312   $   79,769   $     -       $1,303,081
    Insurance              2,069         -         186,147       188,216
    Other                    534          132       69,243        69,909
  Intercompany            74,724          169      (72,740)        2,153 
Interest expense         376,263       50,011         -          426,274 
Provision for finance
  receivable losses      252,942        2,209         -          255,151
Pretax income            202,364       18,508       64,755       285,627
Assets                 6,545,245    1,050,335    1,000,176     8,595,756 
<PAGE>
<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, 
                                      1998          1997   
                                    (dollars in thousands)
Revenues

Segments                           $ 1,649,196   $1,563,359
Corporate                                4,971          967 
Adjustments                            (45,062)     (40,221)

Total consolidated revenue         $ 1,609,105   $1,524,105


Interest Expense

Segments                           $   463,906   $  426,274
Corporate                               47,681       35,001 

Total consolidated interest
  expense                          $   511,587   $  461,275


Provision for finance receivable
  losses

Segments                           $   219,431   $  255,151
Corporate                               (7,341)      (7,168)

Total consolidated provision for
  finance receivable losses        $   212,090   $  247,983


Pretax Income

Segments                           $   342,082   $  285,627
Corporate                              (46,491)     (81,274)

Total consolidated pretax income   $   295,591   $  204,353


Assets

Segments                           $10,333,976   $8,595,756
Corporate                              823,443      678,291 
Adjustments                             15,504       15,453

Total consolidated assets          $11,172,923   $9,289,500
<PAGE>
<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          1998              1997   
                            (dollars in thousands)

    March 31             $  388,665        $  384,748
    June 30                 396,094           379,470
    September 30            407,585           379,618
    December 31             416,761           380,269

    Total                $1,609,105        $1,524,105


                            Income Before Provision
                               for Income Taxes      
Three Months Ended          1998              1997   
                            (dollars in thousands)

    March 31             $   71,129        $   61,697
    June 30                  72,687            21,641  (a)
    September 30             73,978            64,345
    December 31              77,797            56,670 

    Total                $  295,591        $  204,353


                                  Net Income         
Three Months Ended          1998              1997   
                            (dollars in thousands)

    March 31             $   44,222        $   38,794
    June 30                  45,181            13,622  (a)
    September 30             47,527            40,689
    December 31              50,429            36,328 

    Total                $  187,359        $  129,433


(a)  Includes loss on  sale of non-strategic assets of $42.2 million ($27.0
     million aftertax).
<PAGE>
<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 do  not include the value associated with all of the Company's assets
and liabilities.

                               December 31, 1998       December 31, 1997  
                             Carrying        Fair    Carrying        Fair
                              Value         Value     Value         Value 
Assets                                   (dollars in thousands)

Net finance receivables,
  less allowance for finance
  receivable losses         $9,274,667  $9,274,667  $7,638,535  $7,638,535 
Investment securities          996,599     996,599     929,311     929,311 
Cash and cash equivalents      148,002     148,002     105,695     105,695 


Liabilities

Long-term debt              (5,176,965) (5,348,086) (4,011,457) (4,117,243)
Short-term notes payable    (3,683,648) (3,683,648) (3,252,671) (3,252,671)


Off-Balance Sheet Financial
  Instruments

Unused customer credit limits     -           -           -           -
Interest rate swap agreements     -        (36,697)       -        (29,690)
Treasury rate lock agreements     -           -           -         (1,610)



                  VALUATION METHODOLOGIES AND ASSUMPTIONS

The Company used the following methods and assumptions to estimate the fair
value of the financial instruments.


Finance Receivables

Fair values of net finance  receivables (which approximates carrying amount
less  allowance  for  finance  receivable  losses)  were  estimated   using
projected  cash   flows,  computed  by  category   of  finance  receivable,
discounted at  the weighted-average interest rates  currently being offered
for  similar finance  receivables.   Cash flows  were based  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 system.
<PAGE>
<PAGE> 61

Notes to Consolidated Financial Statements, Continued


Investment Securities

When available, quoted  market prices are used as fair values of investment
securities.   For investment  securities not  actively traded,  the Company
estimates fair  values  using  values  obtained  from  independent  pricing
services  or,  in  the case  of  some  private  placements, by  discounting
expected future cash flows using a current market rate applicable to yield,
credit quality, and average life of the investments.


Cash and Cash Equivalents

The carrying amounts reported  in the Consolidated Balance Sheets  for cash
and cash equivalents approximate those assets' fair values.


Long-term Debt

The fair values of  the Company's long-term borrowings are  estimated using
cash flows discounted at current borrowing rates.


Short-term Notes Payable

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


Unused Customer Credit Limits

The unused credit limits available to the Company's customers have no  fair
value.   The interest  rates  charged on  these  facilities can  either  be
changed at  the Company's  discretion, such  as for  private label, or  are
adjustable  and reprice frequently, such  as for loan  and retail revolving
lines of  credit.  Furthermore, these amounts, in part  or in total, can be
cancelled at the discretion of the Company.


Derivative Financial Instruments

Fair values  for the Company's  interest rate swap  and treasury  rate lock
agreements  are estimated  using cash  flows discounted  at current  market
rates.
<PAGE>
<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, 1998 and 1997

         Consolidated  Statements of Income,  years ended December 31, 1998
         1997, and 1996

         Consolidated  Statements  of  Shareholder's  Equity,  years  ended
         December 31, 1998, 1997, and 1996

         Consolidated Statements of Cash  Flows,  years ended  December 31,
         1998, 1997, and 1996

         Consolidated  Statements  of  Comprehensive  Income,  years  ended
         December 31, 1998, 1997, and 1996

         Notes to Consolidated Financial Statements

    Schedule  I--Condensed Financial Information  of Registrant is included
    in Item 14(d).

    All  other  schedules for  which provision  is  made in  the applicable
    accounting regulations  of the Securities and  Exchange Commission have
    been  omitted,  because   they  are  inapplicable,   or  the   required
    information  is included  in the  consolidated financial  statements or
    notes.

    (3)  Exhibits:

         Exhibits  are listed  in the  Exhibit Index  beginning on  page 69
         herein.

(b) Reports on Form 8-K

    No Current  Reports on Form 8-K were filed during the fourth quarter of
    1998. 

(c) Exhibits

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

Item 14(d).


Schedule I - Condensed Financial Information of Registrant

<TABLE>
                       American General Finance, Inc.
                          Condensed Balance Sheets
<CAPTION>
                                                         December 31,      
                                                      1998          1997   
                                                    (dollars in thousands)
<S>                                                <C>           <C>
Assets

Cash                                               $    4,670    $      161
Investments in subsidiaries                         1,637,634     1,388,325
Notes receivable from subsidiaries                    212,232       183,301
Other assets                                           46,516        47,311

Total assets                                       $1,901,052    $1,619,098


Liabilities and Shareholder's Equity

Senior long-term debt, 5.85% - 9.75%,
    due 1999 - 2002                                $   14,953    $   69,971
Notes payable to banks                                198,000        95,000
Notes payable to subsidiaries                         183,018       185,112
Other liabilities                                       1,676         5,690

Total liabilities                                     397,647       355,773

Shareholder's equity:
    Common stock                                        1,000         1,000
    Additional paid-in capital                        822,497       743,083
    Other equity                                       39,419        34,512 
    Retained earnings                                 640,489       484,730

Total shareholder's equity                          1,503,405     1,263,325

Total liabilities and shareholder's equity         $1,901,052    $1,619,098

<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 64

Schedule I, Continued

<TABLE>
                       American General Finance, Inc.
                       Condensed Statements of Income



<CAPTION>
                                                 Years Ended December 31,  
                                                 1998      1997      1996  
                                                  (dollars in thousands)
<S>                                            <C>       <C>       <C>
Revenues
  Dividends received from subsidiaries         $ 42,875  $147,136  $150,574
  Interest and other                             19,536    25,560    25,850

Total revenues                                   62,411   172,696   176,424

Expenses
  Interest expense                               27,439    26,950    29,802
  Operating expenses                              3,929    12,130    23,844

Total expenses                                   31,368    39,080    53,646

Income before income taxes and equity    
  in undistributed (overdistributed)
  net income of subsidiaries                     31,043   133,616   122,778

Income Tax Credit                                 4,135     4,883     9,751

Income before equity in undistributed 
  (overdistributed) net income of
  subsidiaries                                   35,178   138,499   132,529

Equity in Undistributed (Overdistributed)
  Net Income of Subsidiaries                    152,181    (9,066)  (98,383)

Net Income                                     $187,359  $129,433  $ 34,146

<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 65

Schedule I, Continued

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

<CAPTION>
                                                   Years ended December 31,   
                                                 1998        1997        1996
                                                    (dollars in thousands)  
<S>                                            <C>         <C>         <C>
Cash Flows from Operating Activities
Net Income                                     $187,359    $129,433    $ 34,146
Reconciling adjustments to net cash 
  provided by operating activities:
    Equity in (undistributed)
      overdistributed net income
      of subsidiaries                          (152,181)      9,066      98,383 
    Change in other assets and other 
      liabilities                                  (153)    (11,203)        812
    Other, net                                   (1,816)     13,437       8,263 
Net cash provided by operating activities        33,209     140,733     141,604

Cash Flows from Investing Activities
  Capital contributions to subsidiaries         (92,000)    (27,000)       -  
  Net additions to fixed assets                    (522)     (7,184)     (6,085)
  Other, net                                       -           -          8,423

Net cash (used for) provided by
  investing activities                          (92,522)    (34,184)      2,338

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt         -          3,616      46,411
  Repayment of long-term debt                   (55,553)    (16,320)     (9,299)
  Change in notes receivable or payable
    with parent and subsidiaries                (31,025)      1,715          96
  Change in notes payable to banks              103,000     (16,000)    (42,400)
  Capital contributions from parent              79,000      46,500        -  
  Dividends paid                                (31,600)   (126,500)   (138,590)
Net cash provided by (used for)
  financing activities                           63,822    (106,989)   (143,782)

Increase (decrease) in cash                       4,509        (440)        160
Cash at beginning of year                           161         601         441
Cash at end of year                           $   4,670    $    161    $    601

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

Schedule I, Continued


                       American General Finance, Inc.
                  Notes to Condensed Financial Statements
                             December 31, 1998




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 senior long-term  debt at December 31, 1998  were as follows:
1999, $7.8 million;  2000, $4.0 million; 2001, $1.9 million; and 2002, $1.3
million.
<PAGE>
<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
19, 1999.

                                         AMERICAN GENERAL FINANCE, INC.

     
                                         By: /s/  Robert A. Cole     
                                                  Robert A. Cole 
                                         (Senior Vice President and
                                          Chief Financial Officer)

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 19, 1999.


/s/  Frederick W. Geissinger        
     Frederick W. Geissinger                  James S. D'Agostino Jr.
(President and Chief Executive           (Director)
 Officer and Director - Principal
 Executive Officer)
                                         /s/  Jerry L. Gilpin
                                              Jerry L. Gilpin
/s/  Robert A. Cole                      (Director)
     Robert A. Cole 
(Senior Vice President and
 Chief Financial Officer and             /s/  Philip M. Hanley
 Director - Principal Financial               Philip M. Hanley
 Officer)                                (Director)


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


/s/  W. Tal Bratton                           Jon P. Newton
     W. Tal Bratton                      (Director)
(Director)
<PAGE>
<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>
<PAGE> 69

                              Exhibit Index


Exhibits                                                                    Page

(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 long-
         term  debt of the Company  and its 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 total assets of the Company on a consolidated basis.

         (1)  Indenture dated as of  October 1, 1994 from American  General
              Finance   Corporation   to   The   Chase    Manhattan   Bank.
              Incorporated  by reference to Exhibit 4(a) filed as a part of
              American General Finance Corporation's Registration Statement
              on Form S-3 (Registration No. 33-55803).

         (2)  Indenture  dated as  of  May 1,  1997  from American  General
              Finance Corporation to  The First National  Bank of  Chicago.
              Incorporated  by reference to Exhibit 4(a) filed as a part of
              American General Finance Corporation's Registration Statement
              on Form S-3 (Registration No. 333-28925).

     b.  In  accordance   with  Item   601(b)(4)(iii)  of  Regulation  S-K,
         certain  other  instruments  defining  the  rights  of holders  of
         long-term  debt  of the  Company  and its  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  such  instrument does  not exceed  10% of
         the  total  assets of  the Company  on a  consolidated basis.  The
         Company  hereby  agrees to  furnish a copy of each such instrument
         to the Securities and Exchange Commission upon request therefor.

(12)   Computation of ratio of earnings to fixed charges.                     70

(23)   Consent of Ernst & Young LLP, Independent Auditors                     71

(27)   Financial Data Schedule                                                72
<PAGE>