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

                               FORM 10-K


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

       For the fiscal year ended December 31, 2003

                                     OR

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

       For the transition period from __________ to __________.


                         Commission File Number 1-7422

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

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

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

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


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


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


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes  X  No

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

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

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

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

At March 10, 2004, there were 2,000,000 shares of the registrant's common
stock, $.50 par value, outstanding.
<PAGE> 2

                           TABLE OF CONTENTS

          Item                                                    Page

Part I     1.  Business . . . . . . . . . . . . . . . . . . . . . .  3

           2.  Properties . . . . . . . . . . . . . . . . . . . . . 26

           3.  Legal Proceedings  . . . . . . . . . . . . . . . . . 26

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

Part II    5.  Market for Registrant's Common Equity, Related
                 Stockholder Matters and Issuer Purchases of
                 Equity Securities  . . . . . . . . . . . . . . . . 27

           6.  Selected Financial Data  . . . . . . . . . . . . . . 27

           7.  Management's Discussion and Analysis of Financial
                 Condition and Results of Operations. . . . . . . . 28

          7A.  Quantitative and Qualitative Disclosures About
                 Market Risk  . . . . . . . . . . . . . . . . . . . 49

           8.  Financial Statements and Supplementary Data  . . . . 49

           9.  Changes in and Disagreements with Accountants
                 on Accounting and Financial Disclosure . . . . . . 93

          9A.  Controls and Procedures  . . . . . . . . . . . . . . 93

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

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

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

          13.  Certain Relationships and Related Transactions . . .  *

          14.  Principal Accountant Fees and Services . . . . . . . 94

Part IV   15.  Exhibits, Financial Statement Schedules, and
                 Reports on Form 8-K  . . . . . . . . . . . . . . . 95


*  Items 4, 10, 11, 12, and 13 are not included, per conditions met by
   Registrant set forth in General Instructions I(1)(a) and (b) of
   Form 10-K.

                         AVAILABLE INFORMATION

American General Finance, Inc. (AGFI) files annual, quarterly, and
current reports and other information with the Securities and Exchange
Commission (the SEC).  The SEC maintains a website that contains
annual, quarterly, and current reports and other information that
issuers (including AGFI) file electronically with the SEC.  The SEC's
website is www.sec.gov.  This Annual Report on Form 10-K for the year
ended December 31, 2003, our Annual Report on Form 10-K for the year
ended December 31, 2002, and our 2003 Quarterly Reports on Form 10-Q
are available free of charge on our Internet website
www.agfinance.com.  The information on our website is not incorporated
by reference into this report.  The website addresses listed above are
provided for the information of the reader and are not intended to be
active links.
<PAGE> 3

                                PART I

Item 1.  Business.

                                GENERAL

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

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

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

Concurrent with AIG's indirect acquisition of the Company in August
2001, American General Bank, FSB (AG Bank), a subsidiary of AGFI, was
merged into AIG Federal Savings Bank, a non-subsidiary affiliate of
AGFI, with AIG Federal Savings Bank being the surviving entity.  AG
Bank previously operated as a traditional thrift, whose products
included deposit and savings accounts, residential mortgage and home
equity loans, and private label services.

At December 31, 2003, the Company had 1,403 offices in 45 states,
Puerto Rico, and the U.S. Virgin Islands and approximately 8,500
employees.  Our executive offices are located in Evansville, Indiana.


Selected Financial Information

Selected financial information of the Company was as follows:

                                       Years Ended December 31,
                                  2003           2002          2001
                                        (dollars in thousands)

Average net receivables        $14,232,110   $12,409,908   $11,726,436

Average borrowings             $13,381,555   $11,471,189   $10,704,644
<PAGE> 4

Item 1.  Continued

                                                At or for the
                                           Years Ended December 31,
                                        2003         2002        2001

Yield - finance charges as a
  percentage of average net
  receivables                          12.46%       13.85%      14.60%

Borrowing cost - interest
  expense as a percentage
  of average borrowings                 4.08%        4.88%       5.93%

Interest spread - yield
  less borrowing cost                   8.38%        8.97%       8.67%

Operating expenses as a
  percentage of average
  net receivables                       4.82%        4.52%       4.70%

Allowance ratio - allowance for
  finance receivable losses as
  a percentage of net finance
  receivables                           3.04%        3.34%       3.74%

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                     2.19%        2.41%       2.26%

Charge-off coverage - allowance
  for finance receivable losses
  to net charge-offs                    1.50x        1.56x       1.70x

Delinquency ratio - gross finance
  receivables 60 days or more
  past due as a percentage
  of gross finance receivables          3.28%        3.67%       3.71%

Return on average assets                2.27%        2.48%       1.70%

Return on average equity               21.33%       24.49%      14.34%

Ratio of earnings to fixed charges
  (refer to Exhibit 12 for
  calculations)                         2.02x        1.85x       1.55x

Debt to tangible equity ratio -
  debt to equity less goodwill
  and accumulated other
  comprehensive income                  8.88x        8.66x       8.89x

Debt to equity ratio                    7.86x        8.16x       8.24x
<PAGE> 5

Item 1.  Continued


                  CONSUMER FINANCE BUSINESS SEGMENT

Through its 1,403 branch offices and its centralized services and
support operations, the consumer finance business segment:

     *  makes loans directly to individuals;
     *  offers retail sales financing to merchants;
     *  purchases portfolios of finance receivables originated by
        other lenders;
     *  provides for a fee, marketing, certain origination processing
        services, and loan servicing for a non-subsidiary affiliate;
     *  originates real estate loans for sale to investors; and
     *  offers credit and non-credit insurance products.

Most of our customers are usually described as non-conforming, non-
prime, or subprime.


Products and Services

We make home equity loans, originate secured and unsecured consumer
loans, and extend lines of credit.  We generally take a security
interest in the real property and/or personal property of the
borrower.  Real estate loans are secured by first or second mortgages
on residential real estate and generally have maximum original terms
of 360 months.  Non-real estate loans are secured by consumer goods,
automobiles, or other personal property or are unsecured and generally
have maximum original terms of 60 months.

We purchase retail sales contracts and provide revolving retail
services arising from the retail sale of consumer goods and services
by retail merchants.  We also purchase private label receivables
originated by AIG Federal Savings Bank, a non-subsidiary affiliate,
under a participation agreement.  Retail sales contracts, revolving
retail, and private label receivables are generated at approximately
24,000 retail merchant locations across the United States, Puerto
Rico, and the U.S. Virgin Islands.  Retail sales contracts are closed-
end accounts that consist of a single purchase transaction.  Revolving
retail and private label are open-end 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 the goods purchased and generally
require minimum monthly payments based on outstanding balances.

To supplement our lending and retail sales financing activities, we
purchase portfolios of real estate loans, non-real estate loans, and
retail sales finance receivables originated by other lenders whose
customers meet our credit quality standards and profitability
objectives.  We also purchase real estate loans originated by AIG
Federal Savings Bank under a purchase agreement.  Additionally, we
provide for a fee, marketing, certain origination processing services,
and loan servicing for AIG Federal Savings Bank's origination and sale
of non-conforming residential real estate loans.  We also originate
real estate loans, primarily through broker relationships and, to a
lesser extent, directly to consumers, and sell the originated loans to
investors with servicing released.
<PAGE> 6

Item 1.  Continued


We offer credit life, credit accident and health, credit related
property and casualty, credit involuntary unemployment, and non-credit
insurance to eligible consumer finance customers.  These products are
issued by affiliated as well as non-affiliated insurance companies and
are described under "Insurance Business Segment".


Customer Development and Servicing

Retail sales finance obligations that we purchase from merchants
provide an important source of new loan customers.  These customers
have demonstrated an apparent need to finance a retail purchase and a
willingness to use credit.  After purchase of the retail sales finance
obligation, we contact the customer using various marketing methods to
invite the customer to discuss his or her overall credit needs with
our consumer lending specialists.  Any resulting loan may pay off the
customer's retail sales finance obligation and consolidate his or her
debts with other creditors.

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

We also originate loans by soliciting former customers who have
recently paid off their loans as well as current customers.  In
addition, we purchase prospect lists from major list compilers based
on our predetermined selection criteria.  We market our financial
products to these potential customers using various solicitation
methods.  We also use various Internet loan application sources,
including our own website, to obtain potential customers.  We forward
this information to our branch offices where consumer lending
specialists contact the potential customers in attempts to initiate
loans.

Our branch offices are supported by centralized administrative and
operational functions.  Our centralized operations include the
following:

     *  customer solicitations;
     *  real estate loan approvals;
     *  real estate loan servicing;
     *  real estate owned processing;
     *  retail sales finance approvals;
     *  retail sales finance collections;
     *  retail sales finance payment processing;
     *  revolving retail and private label processing;
     *  merchant services; and
     *  charge-off recovery operations.

We continually seek to identify functions that could be more cost-
effective if centralized, thereby reducing costs and freeing our
consumer lending specialists in our branches to concentrate on
providing service to our customers.
<PAGE> 7

Item 1.  Continued


Operational Controls

We control and monitor our consumer finance business segment through a
variety of methods including the following:

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

See Note 23. of the Notes to Consolidated Financial Statements in Item
8. for further information on the Company's consumer finance business
segment.


Finance Receivables

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

Although a significant portion of insurance claims and policyholder
liabilities originate from the finance receivables, our policy is to
report them as liabilities and not net them against finance
receivables.  Finance receivables relate to the financing activities
of our consumer finance business segment, and insurance claims and
policyholder liabilities relate to the underwriting activities of our
insurance business segment.
<PAGE> 8

Item 1.  Continued


Amount, number, and average size of net finance receivables originated
and renewed and net purchased by type (retail sales contracts,
revolving retail, and private label comprise retail sales finance)
were as follows:

                                       Years Ended December 31,
                               2003              2002              2001
                         Amount   Percent  Amount   Percent  Amount   Percent

Originated and renewed

Amount (in thousands):
  Real estate loans      $4,829,397   52%  $2,572,734   37%  $2,193,452   33%
  Non-real estate loans   2,826,370   31    2,742,647   39    2,759,478   41
  Retail sales finance    1,611,019   17    1,642,246   24    1,728,061   26

  Total                  $9,266,786  100%  $6,957,627  100%  $6,680,991  100%

Number:
  Real estate loans          73,427    5%      59,757    4%      58,066    3%
  Non-real estate loans     774,464   48      766,582   46      784,953   45
  Retail sales finance      764,612   47      824,162   50      905,801   52

  Total                   1,612,503  100%   1,650,501  100%   1,748,820  100%

Average size (to nearest
  dollar):
    Real estate loans       $65,771           $43,053           $37,775
    Non-real estate loans     3,649             3,578             3,515
    Retail sales finance      2,107             1,993             1,908


Net purchased

Amount (in thousands):
  Real estate loans      $  836,959   96%  $2,355,181   92%  $  904,629   84%
  Non-real estate loans       3,052    -      124,983    5       27,085    3
  Retail sales finance       30,475    4       84,053    3      143,065   13

  Total                  $  870,486  100%  $2,564,217  100%  $1,074,779  100%

Number:
  Real estate loans          10,620   44%      39,158   38%      14,753   22%
  Non-real estate loans       1,735    7       35,222   34       13,399   20
  Retail sales finance       11,926   49       28,176   28       38,633   58

  Total                      24,281  100%     102,556  100%      66,785  100%

Average size (to nearest
  dollar):
    Real estate loans       $78,810           $60,146           $61,318
    Non-real estate loans     1,759             3,548             2,021
    Retail sales finance      2,555             2,983             3,703


Net purchased was net of sales of $68.7 million during 2001.  We had
no sales in 2003 or 2002.
<PAGE> 9

Item 1.  Continued


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

                                       Years Ended December 31,
                               2003              2002              2001
                        Amount    Percent  Amount   Percent  Amount   Percent

Originated, renewed,
  and net purchased

Amount (in thousands):
  Real estate loans     $ 5,666,356   56%  $4,927,915   52%  $3,098,081   40%
  Non-real estate loans   2,829,422   28    2,867,630   30    2,786,563   36
  Retail sales finance    1,641,494   16    1,726,299   18    1,871,126   24

  Total                 $10,137,272  100%  $9,521,844  100%  $7,755,770  100%

Number:
  Real estate loans          84,047    5%      98,915    6%      72,819    4%
  Non-real estate loans     776,199   47      801,804   46      798,352   44
  Retail sales finance      776,538   48      852,338   48      944,434   52

  Total                   1,636,784  100%   1,753,057  100%   1,815,605  100%

Average size (to nearest
  dollar):
    Real estate loans       $67,419           $49,820           $42,545
    Non-real estate loans     3,645             3,576             3,490
    Retail sales finance      2,114             2,025             1,981


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

                                          Years Ended December 31,
                                        2003        2002        2001

Real estate loans                         15%         48%          29%
Non-real estate loans                      -           4            1
Retail sales finance                       2           5            8

Total                                      9%         27%          14%
<PAGE> 10

Item 1.  Continued


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

                                             December 31,
                               2003              2002              2001
                         Amount   Percent  Amount   Percent  Amount   Percent

Net finance receivables

Amount (in thousands):
  Real estate loans      $11,038,140  72%  $ 9,498,046  69%  $ 7,624,824  64%
  Non-real estate loans    2,932,120  19     2,958,925  21     2,922,557  24
  Retail sales finance     1,337,701   9     1,389,241  10     1,440,908  12

  Total                  $15,307,961 100%  $13,846,212 100%  $11,988,289 100%

Number:
  Real estate loans          215,294  12%      218,615  11%      189,907   9%
  Non-real estate loans      895,879  48       927,604  48       953,600  48
  Retail sales finance       743,850  40       805,734  41       868,064  43

  Total                    1,855,023 100%    1,951,953 100%    2,011,571 100%

Average size (to nearest
  dollar):
    Real estate loans        $51,270           $43,446           $40,150
    Non-real estate loans      3,273             3,190             3,065
    Retail sales finance       1,798             1,724             1,660


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,
                        2003                 2002                 2001
                   Amount  Percent      Amount  Percent      Amount  Percent
                                    (dollars in thousands)

California        $ 2,276,408   15%    $ 2,160,846   16%    $ 1,374,599   12%
Florida               936,435    6         840,182    6         772,830    7
N. Carolina           883,866    6         887,243    6         850,995    7
Ohio                  841,380    6         785,506    6         741,702    6
Illinois              835,156    5         786,593    6         731,238    6
Virginia              680,288    4         553,386    4         500,137    4
Georgia               661,307    4         591,970    4         510,140    4
Indiana               639,201    4         598,832    4         586,625    5
Other               7,553,920   50       6,641,654   48       5,920,023   49

Total             $15,307,961  100%    $13,846,212  100%    $11,988,289  100%
<PAGE> 11

Item 1.  Continued


Average Net Receivables

Average net receivables by type were as follows:

                                     Years Ended December 31,
                            2003               2002               2001
                      Amount    Percent  Amount    Percent  Amount    Percent
                                      (dollars in thousands)

Real estate loans     $10,033,304   71%  $ 8,184,040   66%  $ 7,356,898   63%
Non-real estate loans   2,883,200   20     2,858,016   23     2,954,690   25
Retail sales finance    1,315,606    9     1,367,852   11     1,414,848   12

Total                 $14,232,110  100%  $12,409,908  100%  $11,726,436  100%


Growth in average net receivables by type was as follows:

                                     Years Ended December 31,
                            2003               2002               2001
                                Percent            Percent            Percent
                      Amount     Change  Amount     Change  Amount     Change
                                      (dollars in thousands)

Real estate loans     $1,849,264    23%  $  827,142    11%  $  145,644     2%
Non-real estate loans     25,184     1      (96,674)   (3)     152,875     5
Retail sales finance     (52,246)   (4)     (46,996)   (3)      19,004     1

Total                 $1,822,202    15%  $  683,472     6%  $  317,523     3%


Finance Charges and Yield

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

We stop accruing finance charges when the fourth contractual payment
becomes past due for loans and retail sales contracts and when the
sixth contractual payment becomes past due for revolving retail and
private label.  Beginning in third quarter 2001, in conformity with
AIG policy, we reverse amounts previously accrued upon suspension.
Prior to AIG's indirect acquisition of the Company, we did not reverse
amounts previously accrued upon suspension.  After suspension, we
recognize revenue for loans and retail sales contracts only to the
extent of any additional payments we receive.
<PAGE> 12

Item 1.  Continued


Finance charges and yield by type of finance receivable were as
follows:

                                      Years Ended December 31,
                                  2003          2002           2001
                                       (dollars in thousands)

Real estate loans:
  Finance charges              $  970,636     $  902,925    $  872,914
  Yield                             9.67%         11.03%        11.87%

Non-real estate loans:
  Finance charges              $  612,446     $  616,094    $  638,019
  Yield                            21.24%         21.56%        21.59%

Retail sales finance:
  Finance charges              $  190,195     $  199,854    $  201,552
  Yield                            14.46%         14.61%        14.25%

Total:
  Finance charges              $1,773,277     $1,718,873    $1,712,485
  Yield                            12.46%         13.85%        14.60%


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


Finance Receivable Credit Quality Information

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

We use credit risk scoring models at the time of credit application to
assess our risk of the applicant's unwillingness or inability to
repay.  These models are developed and based upon numerous factors
including past customer credit repayment experience.  The risk scoring
models are periodically revalidated based on recent portfolio
performance.  We extend credit to those consumers who fit our risk
guidelines as determined by these models and, in some cases, manual
underwriting.  Price and size of the loan or retail sales finance
transaction are generally in relation to the estimated credit risk
assumed.

Our policy is to charge off each month to the allowance for finance
receivable losses non-real estate loans on which payments received in
the prior six months have totaled less than 5% of the original loan
amount and retail sales finance that are six installments past due.
Generally, we start foreclosure proceedings on real estate loans when
four monthly installments are past due.  When foreclosure is completed
<PAGE> 13

Item 1.  Continued


and we have obtained title to the property, we obtain an unrelated
party's valuation of the property, which is either a full appraisal or
a real estate broker's or appraiser's estimate of the property's sale
value without the benefit of a full interior and exterior appraisal
and lacking sales comparisons.  We reduce finance receivables by the
amount of the real estate loan, establish a real estate owned asset
valued at lower of loan balance or 85% of the valuation, and charge
off any loan amount in excess of that value to the allowance for
finance receivable losses.  We occasionally extend the charge-off
period for individual accounts when, in our opinion, such treatment is
warranted and consistent with our credit risk policies.  We increase
the allowance for finance receivable losses for recoveries on accounts
previously charged off.

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

                                        Years Ended December 31,
                                     2003         2002         2001
                                         (dollars in thousands)
Real estate loans:
  Charge-offs                      $ 68,739     $ 58,592     $ 54,615
  Recoveries                         (4,238)      (4,546)      (4,540)
  Net charge-offs                  $ 64,501     $ 54,046     $ 50,075
  Charge-off ratio                     .65%         .67%         .68%

Non-real estate loans:
  Charge-offs                      $229,173     $225,294     $200,917
  Recoveries                        (28,189)     (27,170)     (27,071)
  Net charge-offs                  $200,984     $198,124     $173,846
  Charge-off ratio                    6.97%        6.94%        5.87%

Retail sales finance:
  Charge-offs                      $ 55,361     $ 54,916     $ 49,060
  Recoveries                        (10,016)      (9,501)      (8,679)
  Net charge-offs                  $ 45,345     $ 45,415     $ 40,381
  Charge-off ratio                    3.44%        3.31%        2.85%

Total:
  Charge-offs                      $353,273     $338,802     $304,592
  Recoveries                        (42,443)     (41,217)     (40,290)
  Net charge-offs                  $310,830     $297,585     $264,302
  Charge-off ratio                    2.19%        2.41%        2.26%


Establishing and maintaining customer relationships is very important
to us.  A delinquent payment often indicates that the customer is
experiencing temporary financial difficulties.  We view collection
efforts as opportunities to help our customers solve their temporary
financial problems and retain our customer relationships.

We may renew a delinquent account if the customer has sufficient
income and it does not appear that the cause of past delinquency will
affect the customer's ability to repay the new loan.  We subject all
renewals, whether the customer's account is current or delinquent, to
the same credit risk underwriting process as we would a new
application for credit.
<PAGE> 14

Item 1.  Continued


We may allow a deferment, which is a partial payment that extends the
term of an account.  The partial payment amount is usually the greater
of one-half of a regular monthly payment or the amount necessary to
bring the interest on the account current.  We limit a customer to two
deferments in a rolling twelve-month period.

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

Delinquency (gross finance receivables 60 days or more past due) based
on contract terms in effect and delinquency ratio by type of finance
receivable were as follows:

                                              December 31,
                                    2003          2002          2001
                                         (dollars in thousands)
Real estate loans:
  Delinquency                     $306,717      $300,001      $251,759
  Delinquency ratio                  2.79%         3.19%         3.31%

Non-real estate loans:
  Delinquency                     $167,394      $178,696      $171,514
  Delinquency ratio                  5.16%         5.42%         5.24%

Retail sales finance:
  Delinquency                     $ 41,311      $ 44,565      $ 41,798
  Delinquency ratio                  2.79%         2.87%         2.56%

Total:
  Delinquency                     $515,422      $523,262      $465,071
  Delinquency ratio                  3.28%         3.67%         3.71%


We establish the allowance for finance receivable losses primarily
through the provision for finance receivable losses charged to
expense.  We believe the amount of the allowance for finance
receivable losses is the most significant estimate we make.  Our
Credit Strategy and Policy Committee evaluates our finance receivable
portfolio monthly.  This review determines any adjustment necessary to
maintain the allowance for finance receivable losses at a level we
consider adequate to absorb losses inherent in the existing portfolio.
<PAGE> 15

Item 1.  Continued


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

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

Balance at beginning of year        $ 463,031   $ 448,251   $ 383,415
Provision for finance receivable
  losses                              313,830     303,585     289,302
Allowance related to net
  acquired receivables                   -          8,780      14,836
Charge-offs                          (353,273)   (338,802)   (304,592)
Recoveries                             42,443      41,217      40,290
Other charges - additional
  provision                              -           -         25,000

Balance at end of year              $ 466,031   $ 463,031   $ 448,251


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.


Real Estate Owned

We acquire real estate owned through foreclosure on real estate loans.
We record real estate owned in other assets, initially at lower of
loan balance or 85% of the unrelated party's valuation, which
approximates the fair value less the estimated cost to sell.  If we do
not sell a property within one year of acquisition, we reduce the
carrying value by five percent of the initial value each month
beginning in the thirteenth month.  Prior to AIG's indirect
acquisition of the Company in August 2001, we did not begin this
writedown until the nineteenth month.  The other charges recorded in
third quarter 2001 included $5.0 million to adjust for this
difference.  We continue the writedown until the property is sold or
the carrying value is reduced to ten percent of the initial value.  We
charge these writedowns to other revenues.  We record the sale price
we receive for a property less the carrying value and any amounts
refunded to the customer as a recovery or loss in other revenues.  We
do not profit from foreclosures in accordance with the American
Financial Services Association's Voluntary Standards for Consumer
Mortgage Lending.  We only attempt to recover our investment in the
property, including expenses incurred.
<PAGE> 16

Item 1.  Continued


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

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

Balance at beginning of year         $ 49,012    $ 49,985    $ 45,864
Properties acquired                    77,971      73,745      59,026
Properties sold or disposed of        (67,338)    (65,629)    (45,043)
Monthly writedowns                     (8,390)     (9,089)     (9,862)

Balance at end of year               $ 51,255    $ 49,012    $ 49,985

Real estate owned as a percentage
  of real estate loans                  0.46%       0.52%       0.66%

Net recovery (loss) on sales of
  real estate owned                  $  2,174    $  2,933    $ (1,059)


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

                                              At or for the
                                         Years Ended December 31,
                                       2003        2002        2001

Balance at beginning of year               951      1,006         834
Properties acquired                      1,451      1,418       1,557
Properties sold or disposed of          (1,415)    (1,473)     (1,385)

Balance at end of year                     987        951       1,006


Sources of Funds

We fund our consumer finance business segment principally through the
following sources:

     *  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;
     *  securitizations; and
     *  capital contributions from parent.
<PAGE> 17

Item 1.  Continued


Average Borrowings

Average borrowings by term of debt were as follows:

                                    Years Ended December 31,
                          2003                2002                2001
                    Amount    Percent   Amount    Percent   Amount    Percent
                                     (dollars in thousands)

Long-term debt      $ 9,716,410   73%   $ 7,344,323   64%   $ 6,024,311   56%
Short-term debt       3,665,145   27      4,126,866   36      4,617,152   43
Deposits                   -       -           -       -         63,181    1

Total               $13,381,555  100%   $11,471,189  100%   $10,704,644  100%


Average borrowings by rate of debt were as follows:

                                    Years Ended December 31,
                          2003                2002                2001
                    Amount    Percent   Amount    Percent   Amount    Percent
                                     (dollars in thousands)

Fixed-rate debt     $ 7,707,005   58%   $ 7,416,440   65%   $ 7,306,430   68%
Floating-rate debt    5,674,550   42      4,054,749   35      3,398,214   32

Total               $13,381,555  100%   $11,471,189  100%   $10,704,644  100%


Interest Expense and Borrowing Cost

Interest expense and borrowing cost by term of debt were as follows:

                                         Years Ended December 31,
                                      2003         2002         2001
                                          (dollars in thousands)
Long-term debt:
  Interest expense                  $447,903     $432,764     $401,073
  Borrowing cost                       4.61%        5.89%        6.66%

Short-term debt:
  Interest expense                  $ 98,813     $126,527     $230,684
  Borrowing cost                       2.70%        3.06%        4.99%

Deposits:
  Interest expense                  $   -        $   -        $  3,726
  Borrowing cost                        -            -           5.90%

Total:
  Interest expense                  $546,716     $559,291     $635,483
  Borrowing cost                       4.08%        4.88%        5.93%
<PAGE> 18

Item 1.  Continued


Interest expense and borrowing cost by rate of debt were as follows:

                                         Years Ended December 31,
                                      2003         2002         2001
                                          (dollars in thousands)
Fixed-rate debt:
  Interest expense                  $436,612     $480,285     $488,540
  Borrowing cost                       5.67%        6.48%        6.69%

Floating-rate debt:
  Interest expense                  $110,104     $ 79,006     $146,943
  Borrowing cost                       1.92%        1.95%        4.31%

Total:
  Interest expense                  $546,716     $559,291     $635,483
  Borrowing cost                       4.08%        4.88%        5.93%


The Company's use of interest rate swap agreements to fix floating-
rate debt or float fixed-rate debt, the effect of which is included in
the rates above, is described in Note 12. of the Notes to Consolidated
Financial Statements in Item 8.


Contractual Maturities

Contractual maturities of net finance receivables and debt at December
31, 2003 were as follows:
                                    Net Finance
                                    Receivables            Debt
                                        (dollars in thousands)

2004                                $ 1,368,954        $ 5,566,285
2005                                  1,584,060          1,887,323
2006                                  1,170,696          2,454,296
2007                                    730,678          1,421,550
2008                                    495,036            540,668
2009 and thereafter                   9,958,537          2,459,192

Total                               $15,307,961        $14,329,314


See Note 5. of the Notes to Consolidated Financial Statements in Item
8. for contractual maturities and principal cash collections of net
finance receivables by type.
<PAGE> 19

Item 1.  Continued


                       INSURANCE BUSINESS SEGMENT

The insurance business segment markets its products to our eligible
consumer finance customers.  Cash generated from operations is
invested in investment securities, commercial mortgage loans,
investment real estate, and policy loans and is also used to pay
dividends.

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

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


Products and Services

Our credit life insurance policies insure the life of the borrower in
an amount typically equal to the unpaid balance of the finance
receivable and provide for payment in full to the lender of the
finance receivable in the event of the borrower's death.  Our credit
accident and health insurance policies provide, to the lender, payment
of the installments on the finance receivable coming due during a
period of the borrower's disability due to illness or injury.  Our
credit-related property and casualty insurance policies are written to
protect the lender's interest in property pledged as collateral for
the finance receivable.  Our credit involuntary unemployment insurance
policies provide, to the lender, payment of the installments on the
finance receivable coming due during a period of the borrower's
involuntary unemployment.  The borrower's purchase of credit life,
credit accident and health, credit-related property and casualty, or
credit involuntary unemployment insurance is voluntary with the
exception of lender-placed property damage coverage for property
pledged as collateral.  In these instances, our consumer finance
business segment obtains property damage coverage through Yosemite
either on a direct or reinsured basis under the terms of the lending
agreement if the borrower does not provide evidence of coverage with
another insurance carrier.  Non-credit insurance policies are
primarily traditional life level term coverage.  The purchase of this
coverage is voluntary.  Customers usually either finance premiums for
insurance products as part of the finance receivable or pay premiums
monthly with their finance receivable payment, but they may pay the
premiums in cash to the insurer.  We do not offer single premium
credit insurance products to our real estate loan customers.
<PAGE> 20

Item 1.  Continued


Reinsurance

Merit and Yosemite have entered into reinsurance agreements with other
insurance companies, including certain affiliated companies, for
reinsurance of various non-credit life, individual annuity, group
annuity, credit life, credit accident and health, and credit-related
property and casualty insurance where our insurance subsidiaries
reinsure the risk of loss.  The reserves for this business fluctuate
over time and in certain instances are subject to recapture by the
insurer.  At December 31, 2003, reserves on the books of Merit and
Yosemite for these reinsurance agreements totaled $93.5 million.

See Note 23. of the Notes to Consolidated Financial Statements in Item
8. for further information on the Company's insurance business
segment.


Insurance Premium Revenue Recognition

We recognize credit insurance premiums on closed-end real estate loans
and revolving finance receivables as revenue when billed monthly.  We
defer credit insurance premiums collected in advance in unearned
premium reserves which are included in insurance claims and
policyholder liabilities.  We recognize unearned premiums on credit
life insurance as revenue using the sum-of-the-digits or actuarial
methods, except in the case of level-term contracts, for which we
recognize unearned premiums as revenue using the straight-line method
over the terms of the policies.  We recognize unearned premiums on
credit accident and health insurance as revenue using an average of
the sum-of-the-digits and the straight-line methods.  We recognize
unearned premiums on credit-related property and casualty and credit
involuntary unemployment insurance as revenue using the straight-line
method over the terms of the policies.  We recognize non-credit life
insurance premiums as revenue when collected but not before their due
dates.
<PAGE> 21

Item 1.  Continued


Premiums earned and premiums written by type of insurance were as
follows:

                                          Years Ended December 31,
                                        2003        2002        2001
                                           (dollars in thousands)
Premiums Earned

Credit insurance premiums earned:
  Credit life                         $ 35,026    $ 37,576    $ 41,046
  Credit accident and health            45,114      47,726      50,405
  Property and casualty                 58,371      55,645      53,537
Other insurance premiums earned:
  Non-credit life                       32,934      38,097      39,157
  Non-credit accident and health         7,719       7,323       6,136
  Premiums assumed under
    coinsurance agreements                (654)      2,631       2,725

Total                                 $178,510    $188,998    $193,006


Premiums Written

Credit insurance premiums written:
  Credit life                         $ 26,057    $ 23,263    $ 29,333
  Credit accident and health            39,754      40,458      44,570
  Property and casualty                 50,697      55,186      54,048
Other insurance premiums written:
  Non-credit life                       32,934      38,097      39,157
  Non-credit accident and health         7,719       7,323       6,136
  Premiums assumed under
    coinsurance agreements                (654)      2,631       2,725

Total                                 $156,507    $166,958    $175,969


Insurance Losses Incurred

Insurance losses incurred represent claims paid on behalf of the
insured plus changes in various insurance reserves.  We base claim
reserves on Company experience.  We estimate reserves for losses and
loss adjustment expenses for credit-related property and casualty
insurance based upon claims reported plus estimates of incurred but
not reported claims.  We accrue liabilities for future life insurance
policy benefits associated with non-credit life contracts when we
recognize premium revenue and base amounts on assumptions as to
investment yields, mortality, and surrenders.  We base annuity
reserves on assumptions as to investment yields and mortality.  We
base insurance reserves assumed under coinsurance agreements where we
assume the risk of loss on various tabular and unearned premium
methods.
<PAGE> 22

Item 1.  Continued


Losses incurred by type of insurance were as follows:

                                          Years Ended December 31,
                                        2003        2002        2001
                                           (dollars in thousands)

Credit insurance losses incurred:
  Credit life                         $ 20,661    $ 21,869    $ 21,830
  Credit accident and health            16,501      26,494      24,814
  Property and casualty                 13,917       9,247      15,715
Other insurance losses incurred:
  Non-credit life                        6,800      11,996      11,102
  Non-credit accident and health         4,632       4,485       3,751
  Losses incurred under
    coinsurance agreements               5,338       9,184      10,899

Total                                 $ 67,849    $ 83,275    $ 88,111


Life Insurance in Force

Life insurance in force by type of insurance was as follows:

                                             December 31,
                                   2003          2002          2001
                                        (dollars in thousands)

Credit life                      $3,050,535   $3,091,211   $3,126,473
Non-credit life                   2,900,944    3,104,772    3,275,199

Total                            $5,951,479   $6,195,983   $6,401,672


Investments and Investment Results

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

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

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

We currently classify all investment securities as available-for-sale
and record them at fair value.  We specifically identify realized
gains and losses on investment securities.
<PAGE> 23

Item 1.  Continued


We recognize interest on interest bearing fixed maturity investment
securities, commercial mortgage loans, and policy loans as revenue on
the accrual basis using the interest method.  We amortize any premiums
or discounts as a revenue adjustment using the interest method.  We
stop accruing interest revenue when collection of interest becomes
uncertain.  We record dividends as revenue on ex-dividend dates.  We
recognize income on mortgage-backed securities as revenue using a
constant effective yield based on estimated prepayments of the
underlying mortgages.  We recognize the pretax operating income from
our investment real estate as revenue monthly and from our investments
in limited partnerships as revenue quarterly.

Investment results of our insurance business segment were as follows:

                                       Years Ended December 31,
                                    2003         2002         2001
                                        (dollars in thousands)

Net investment revenue (a)       $   82,630   $   82,812   $   81,711

Average invested assets (b)      $1,302,509   $1,252,625   $1,231,187

Adjusted portfolio yield (c)          6.56%        6.84%        7.03%

Net realized losses on
  investments (d)                $   (8,361)  $   (4,400)  $   (2,989)


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

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

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

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

The increase in net realized losses on investments in 2003 was
primarily due to a write-off of a limited partnership, which was
considered other than temporary.  See Note 7. of the Notes to
Consolidated Financial Statements in Item 8. for information regarding
investment securities for all operations of the Company.
<PAGE> 24

Item 1.  Continued


                              REGULATION

Consumer Finance

The Company's consumer finance subsidiaries are subject to various
state and federal laws and regulations.  Applicable federal laws
include:

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

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

Various state laws also regulate our consumer lending and retail sales
financing businesses.  The degree and nature of such regulation vary
from state to state.  The laws under which a substantial amount of our
business is conducted generally:

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

The federal government is considering, and a number of states,
counties, and cities have enacted or may be considering, laws or rules
that restrict the credit terms or other aspects of residential
mortgage loans that are typically described as "high cost mortgage
loans".  These laws or regulations, if adopted, may impose specific
statutory liabilities in cases of non-compliance and may also limit or
restrict the terms of covered loan transactions.  Additionally, some
of these laws may restrict other business activities or business
dealings of affiliates of the Company under certain conditions.
<PAGE> 25

Item 1.  Continued


Insurance

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

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

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


                              COMPETITION

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, the capital market resources of some
competitors, and the general acceptance and widespread usage of
available credit.  We compete with other consumer finance companies as
well as other types of financial institutions that offer similar
products and services.


Insurance

Our insurance business segment supplements our consumer finance
business segment.  We believe that our insurance companies' abilities
to market insurance products through our distribution systems provide
a competitive advantage over our insurance competitors.
<PAGE> 26

Item 2.  Properties.


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

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



Item 3.  Legal Proceedings.


Satellite Dish Operations Bankruptcy

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

The plan of reorganization was confirmed by the bankruptcy court in
February 2001, distributions under the plan were substantially
completed, and in September 2003 the court closed the case.  Certain
creditors appealed the 2001 confirmation of the plan.  In December
2003, the United States District Court affirmed the confirmation of
the plan of reorganization, and in January 2004, those creditors
further appealed to the United States Court of Appeals for the Seventh
Circuit.  We do not expect their appeal to prevail.


Other

AGFI and certain of its subsidiaries are also parties to various other
lawsuits and proceedings, including certain purported class action
claims, arising in the ordinary course of business.  In addition, many
of these proceedings are pending in jurisdictions, such as
Mississippi, that permit damage awards disproportionate to the actual
economic damages alleged to have been incurred.  Based upon
information presently available, we believe that the total amounts, if
any, that will ultimately be paid arising from these lawsuits and
proceedings will not have a material adverse effect on our
consolidated results of operations or financial position.  However,
the continued occurrences of large damage awards in general in the
United States, including large punitive damage awards that bear little
or no relation to actual economic damages incurred by plaintiffs in
some jurisdictions, create the potential for an unpredictable judgment
in any given suit.
<PAGE> 27

                                PART II


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


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

Quarter Ended                2003          2002
                           (dollars in thousands)

March 31                   $    895      $ 85,003
June 30                      99,322        61,996
September 30                 67,002          -
December 31                  15,895          -

Total                      $183,114      $146,999


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 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,
                  2003          2002         2001        2000         1999
                                   (dollars in thousands)

Total revenues $ 2,190,106  $ 1,999,838  $ 1,998,498  $ 1,909,916 $ 1,731,602

Net income (a)     366,103      346,826      228,257      207,938     179,734

Total assets    17,006,164   15,484,286   13,531,654   13,408,395  12,635,307

Long-term debt  10,862,218    9,566,256    6,301,433    5,670,670   5,716,991


(a)  Per share information is not included because all of AGFI's common stock
     is indirectly owned by AIG.
<PAGE> 28

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.


                      FORWARD-LOOKING STATEMENTS

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

     *  changes in general economic conditions, including the interest
        rate environment in which we conduct business and the
        financial markets through which we access capital and invest
        cash flows from the insurance business segment;
     *  changes in the competitive environment in which we operate,
        including the demand for our products, customer responsiveness
        to our distribution channels and the formation of business
        combinations among our competitors;
     *  the effectiveness of our credit risk scoring models in
        assessing the risk of customer unwillingness or inability to
        repay;
     *  shifts in collateral values, contractual delinquencies, credit
        losses and the levels of unemployment and personal
        bankruptcies;
     *  our ability to access capital markets and maintain our credit
        rating position;
     *  changes in laws or regulations that affect our ability to
        conduct business or the manner in which we conduct business,
        such as licensing requirements, pricing limitations or
        restrictions on the method of offering products;
     *  the costs and effects of any litigation or governmental
        inquiries or investigations that are determined adversely to
        the Company;
     *  changes in accounting standards or tax policies and practices
        and the application of such new policies and practices to the
        manner in which we conduct business;
     *  our ability to integrate the operations of our acquisitions
        into our businesses;
     *  changes in our ability to attract and retain employees or key
        executives to support our businesses; and
     *  natural or accidental events such as fires or floods affecting
        our branches or other operating facilities.
<PAGE> 29

Item 7.  Continued


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


                               OVERVIEW

We are in the consumer finance and credit insurance businesses.  Our
consumer finance business segment borrows money at wholesale prices,
lends money at retail prices, and offers credit and non-credit
insurance products to eligible customers.  Our insurance business
segment writes and reinsures credit and non-credit insurance products
for eligible customers of our consumer finance business segment and
invests premiums received in various investments.


                          BASIS OF REPORTING

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

At December 31, 2003, 87% of our assets were net finance receivables
less allowance for finance receivable losses.  Our finance charge
revenue is a function of the amount of average net receivables and the
yield on those average net receivables.  GAAP requires that we
recognize finance charges as revenue on the accrual basis using the
interest method.  The only discretion we have is the point of
suspension of the accrual of this finance charge revenue.

At December 31, 2003, 94% of our liabilities were debt issued
primarily to support our net finance receivables.  Our interest
expense is a function of the amount of average borrowings and the
borrowing cost on those average borrowings.  GAAP requires that we
recognize interest on borrowings as expense on the accrual basis using
the interest method.  Interest expense includes the effect of our
interest rate swap agreements.

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

We invest cash generated by our insurance business segment primarily
in investment securities, which were 8% of our assets at December 31,
2003, and to a lesser extent in commercial mortgage loans, investment
real estate, and policy loans, which are included in other assets.  We
report the resulting investment revenue in other revenue.  GAAP
requires that we recognize interest on these investments as revenue on
the accrual basis using the interest method.  The only areas of
<PAGE> 30

Item 7.  Continued


discretion we have are determining the classification of the
investment, the point of suspension of the accrual of this investment
revenue, and when the investment security's decline in fair value is
considered to be other than temporary and is to be reduced to its fair
value.

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


                     CRITICAL ACCOUNTING POLICIES

Our finance receivable portfolio consists of approximately $15.3
billion of net finance receivables due from approximately 1.9 million
customer accounts.  These accounts were originated or purchased and
are serviced by our 1,403 branch offices or by our centralized
services and support operations.

To manage our exposure to credit losses, we use credit risk scoring
models for finance receivables that we originate or perform due
diligence investigations for finance receivables that we purchase.  We
also have standard collection procedures supplemented with data
processing systems to aid branch and centralized services and support
operations personnel in their finance receivable collection processes.

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

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

     *  prior finance receivable loss and delinquency experience;
     *  the composition of our finance receivable portfolio; and
     *  current economic conditions, including the levels of
        unemployment and personal bankruptcies.
<PAGE> 31

Item 7.  Continued


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

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

We use migration analysis as one of the tools to determine the
appropriate amount of allowance for finance receivable losses.
Migration analysis is a statistical technique that attempts to predict
the future amount of losses for existing pools of finance receivables.
This technique applies empirically measured historical movement of
like finance receivables through various levels of repayment,
delinquency, and loss categories to existing finance receivable pools.
These results are aggregated for all segments of the Company's
portfolio to arrive at an estimate of future finance receivable losses
for the finance receivables existing at the time of analysis.  We
calculate migration analysis using several different scenarios based
on varying assumptions in order to evaluate the widest range of
possible outcomes.  We adjust the amounts determined by migration
analysis for management's best estimate of the effects of current
economic conditions, including the levels of unemployment and personal
bankruptcies, on the amounts determined from historical loss and
delinquency experience.

If we had chosen to establish the allowance for finance receivable
losses at the highest and lowest levels produced by the various
migration analysis scenarios, our allowance for finance receivable
losses at December 31, 2003 and 2002 and provision for finance
receivable losses and net income for 2003 and 2002 would have changed
as follows:

                                               At or for the
                                          Years Ended December 31,
                                           2003              2002
                                            (dollars in millions)
Highest level:
  Increase in allowance for finance
    receivable losses                    $  29.7            $  15.8
  Increase in provision for finance
    receivable losses                       29.7               15.8
  Decrease in net income                   (18.9)             (11.1)

Lowest level:
  Decrease in allowance for finance
    receivable losses                    $(104.9)           $(106.4)
  Decrease in provision for finance
    receivable losses                     (104.9)            (106.4)
  Increase in net income                    66.7               75.0
<PAGE> 32

Item 7.  Continued


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


                    OFF-BALANCE SHEET ARRANGEMENTS

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


                   LIQUIDITY AND CAPITAL RESOURCES

Liquidity

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

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

Also in second quarter 2003, a consolidated special purpose subsidiary
of AGFI purchased $266.8 million of real estate loans from seven
subsidiaries of AGFC.  The AGFI subsidiary securitized $259.0 million
of these real estate loans and recorded $256.4 million of debt issued
by the trust that purchased these real estate loans.  This transaction
was recorded as an "on balance sheet" secured financing.
<PAGE> 33

Item 7.  Continued


Principal sources and uses of cash were as follows:

                                          Years Ended December 31,
                                        2003        2002        2001
                                           (dollars in millions)
Principal sources of cash:
  Net issuances of debt               $1,382.2    $1,766.1    $  420.9
  Operations                             817.3       568.8       720.1
  Capital contributions                     -         33.0          -

  Total                               $2,199.5    $2,367.9    $1,141.0


Principal uses of cash:
  Net originations and purchases
    of finance receivables            $1,837.4    $1,885.3    $  562.0
  Dividends paid                         183.1       147.0       438.3

  Total                               $2,020.5    $2,032.3    $1,000.3


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

Net originations and purchases of finance receivables and net
issuances of debt increased in 2002 due to significant increases in
real estate loan acquisitions.  Net cash from operations decreased in
2002 due to routine operating activities, partially offset by higher
finance charges and lower interest expense.

Dividends paid, less capital contributions received, reflect changes
in net income retained by AGFI to maintain equity and total debt at a
targeted ratio.  At year end 2001, we increased our leverage target to
9.0 to 1 for debt to tangible equity.  Approximately $210.0 million of
the $260.0 million fourth quarter 2001 dividend was due to our change
in targeted leverage.

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

     *  maintain a finance receivable portfolio comprised mostly of
        real estate loans, which generally represent a lower risk of
        customer non-payment;
     *  originate and monitor finance receivables with our proprietary
        credit risk management system;
     *  maintain an investment securities portfolio of predominantly
        investment grade, liquid securities; and
     *  maintain a capital structure appropriate to our asset base.
<PAGE> 34

Item 7.  Continued


Consistent execution of our business strategies should result in
continued profitability, strong credit ratings, and investor
confidence.  These results should allow continued access to capital
markets for issuances of our commercial paper and long-term debt.  At
December 31, 2003, we had $9.1 billion of long-term debt securities
registered under the Securities Act of 1933 that had not yet been
issued.  We also maintain committed bank credit facilities and have
the ability to securitize a portion of our finance receivables to
provide additional sources of liquidity for needs potentially not met
through other funding sources.  See Note 11. of the Notes to
Consolidated Financial Statements in Item 8. for information on our
credit facilities.

At December 31, 2003, material contractual obligations were as
follows:

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

Debt:
  Long-term debt        $ 2,099.2  $ 4,341.6  $ 1,962.2  $ 2,459.2  $10,862.2
  Short-term debt         3,467.1         -          -          -     3,467.1
Operating leases             50.5       61.0       21.1       14.7      147.3

Total                   $ 5,616.8  $ 4,402.6  $ 1,983.3  $ 2,473.9  $14,476.6


Debt

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


Operating Leases

Operating leases represent annual rental commitments for leased office
space, automobiles, and data processing and related equipment.
<PAGE> 35

Item 7.  Continued


Capital Resources

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

Long-term debt                   $10,862.2     67%   $ 9,566.2     66%
Short-term debt                    3,467.1     22      3,375.7     23

Total debt                        14,329.3     89     12,941.9     89
Equity                             1,823.8     11      1,586.8     11

Total capital                    $16,153.1    100%   $14,528.7    100%

Net finance receivables          $15,308.0           $13,846.2
Debt to equity ratio                 7.86x               8.16x
Debt to tangible equity ratio        8.88x               8.66x


Reconciliations of equity to tangible equity were as follows:

                                                December 31,
                                            2003            2002
                                           (dollars in millions)

Equity                                    $ 1,823.8      $ 1,586.8
Goodwill                                     (224.7)        (161.9)
Accumulated other comprehensive loss           14.9           68.9

Tangible equity                           $ 1,614.0      $ 1,493.8


Our capital varies primarily with the level of net finance
receivables.  The increase in total capital at December 31, 2003 when
compared to December 31, 2002 was greater than our finance receivable
growth for the same period primarily due to capital required to
support the acquisition of WFI and its operations.  The capital mix of
debt and equity is based primarily upon maintaining leverage that
supports cost-effective funding.  AGFI has historically paid dividends
to (or received capital contributions from) its parent to manage our
leverage of debt to tangible equity to a targeted amount.  Since year-
end 2001, that tangible leverage target has been 9.0 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 effectively limit the amount
of dividends AGFC may pay.  These agreements have not prevented AGFI
from managing its capital to targeted leverage.  See Note 17. of the
Notes to Consolidated Financial Statements in Item 8. for information
on dividend restrictions.

We issue a combination of fixed-rate debt, principally long-term, and
floating-rate debt, principally short-term.  AGFC obtains our fixed-
rate funding through public issuances of long-term debt with
maturities generally ranging from three to ten years.  Most floating-
rate funding is through AGFI and AGFC sales and refinancing of
commercial paper and through AGFC issuances of long-term, floating-
<PAGE> 36

Item 7.  Continued


rate debt.  Commercial paper, with maturities ranging from 1 to 270
days, is sold to banks, insurance companies, corporations, and other
accredited investors.  At December 31, 2003, short-term debt included
$2.9 billion of commercial paper.  AGFC also sells extendible
commercial notes with initial maturities of up to 90 days, which may
be extended by AGFC to 390 days.  At December 31, 2003, short-term
debt included $530.4 million of extendible commercial notes.

We maintain credit facilities to support the issuance of commercial
paper and to provide an additional source of funds for operating
requirements.  At December 31, 2003, credit facilities totaled $3.2
billion (including $3.0 billion of committed credit facilities) with
remaining availability of $3.1 billion.  See Note 11. of the Notes to
Consolidated Financial Statements in Item 8. for additional
information on credit facilities.

Our committed credit facilities at December 31, 2003 expire as
follows:

                           Committed Credit Facilities
                              (dollars in millions)

2004                                $1,503.0
2007                                 1,500.0

Total                               $3,003.0


                    ANALYSIS OF OPERATING RESULTS

Net Income
                                         Years Ended December 31,
                                       2003        2002        2001
                                          (dollars in millions)

Net income                            $366.1      $346.8      $228.3
  Amount change                       $ 19.3      $118.5      $ 20.4
  Percent change                          6%         52%         10%

Return on average assets               2.27%       2.48%       1.70%
Return on average equity              21.33%      24.49%      14.34%
Ratio of earnings to fixed charges     2.02x       1.85x       1.55x


Net income for 2002 included a $30.0 million reduction in the
provision for income taxes resulting from a favorable settlement of
income tax audit issues.  Net income for 2003 and 2002 did not include
goodwill amortization due to the adoption of Statement of Financial
Accounting Standards 142 on January 1, 2002.  Net income included
goodwill amortization of $7.8 million for 2001.

Net income for 2001 included charges of $78.3 million ($50.9 million
aftertax) resulting from our review of our businesses and the assets
supporting those businesses, as well as the adoption of AIG's
accounting policies and methodologies, in connection with AIG's
indirect acquisition of the Company.  See Note 18. of the Notes to
Consolidated Financial Statements in Item 8. for further information
on these charges.
<PAGE> 37

Item 7.  Continued


We manage our operations in response to economic events and to achieve
our profitability objectives.  A continued sluggish economy in the
first half of 2003 and the lowest interest rate environment in 45
years caused further decreases in both our yield and borrowing cost.
Our acquisition of WFI, effective January 1, 2003, caused increases in
our other revenue and also increased our operating expenses.  Real
estate loan production of approximately $1.9 billion from the recently
acquired WFI operations more than offset the decrease in real estate
loans acquired from third party lenders.  We also continued to control
operating expenses.  The higher proportion of real estate loans in our
finance receivable portfolio resulted in net charge-offs that were
also well controlled.  This, plus the improving economy in the second
half of 2003, resulted in lower additions to the allowance for finance
receivable losses when compared to the prior two years.

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

In 2001, a slowing economy resulted in lower borrowing cost but higher
net charge-offs.  We invested in business development programs,
including new branch openings, and increased our allowance for finance
receivable losses in response to higher delinquency, charge-offs,
unemployment, and personal bankruptcies.

See Note 23. of the Notes to Consolidated Financial Statements in Item
8. for information on the results of the Company's business segments.
<PAGE> 38

Item 7.  Continued


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

                                          Years Ended December 31,
                                          2003      2002      2001

Revenues
  Finance charges                        12.46%    13.85%    14.60%
  Insurance                               1.28      1.54      1.67
  Other                                   1.65      0.72      0.77

Total revenues                           15.39     16.11     17.04

Expenses
  Interest expense                        3.84      4.51      5.42
  Operating expenses                      4.82      4.52      4.70
  Provision for finance
    receivable losses                     2.21      2.45      2.47
  Insurance losses and loss
    adjustment expenses                   0.48      0.67      0.75
  Other charges                             -         -       0.66

Total expenses                           11.35     12.15     14.00

Income before provision for
  income taxes                            4.04      3.96      3.04

Provision for income taxes                1.47      1.17      1.09

Net income                                2.57%     2.79%     1.95%


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


Finance Charges
                                       Years Ended December 31,
                                    2003         2002        2001
                                        (dollars in millions)

Finance charges                   $ 1,773.3   $ 1,718.9   $ 1,712.5
  Amount change                   $    54.4   $     6.4   $    93.5
  Percent change                         3%          -%          6%

Average net receivables           $14,232.1   $12,409.9   $11,726.4
Yield                                12.46%      13.85%      14.60%
<PAGE> 39

Item 7.  Continued


Finance charges increased due to the following:

                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)

Increase in average net
  receivables                        $ 216.4     $ 84.0      $ 40.4
(Decrease) increase in yield          (162.0)     (77.6)       56.7
Decrease in number of days               -           -         (3.6)

Total                                $  54.4     $  6.4      $ 93.5


Growth in average net receivables by type was as follows:

                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)

Real estate loans                    $1,849.3   $  827.2   $  145.6
Non-real estate loans                    25.2      (96.7)     152.9
Retail sales finance                    (52.3)     (47.0)      19.0

Total                                $1,822.2   $  683.5   $  317.5

Percent change                            15%         6%         3%


In 2003, the lowest interest rate environment in 45 years continued to
cause increases in both originations and liquidations of our real
estate loans.  Real estate loan production of approximately $1.9
billion from the recently acquired WFI operations also increased real
estate loan originations as well as the average size of real estate
loans originated in 2003.  We reduced real estate loan acquisitions in
2003 because premiums on portfolios of real estate loans produced by
third party originators and required by sellers reached levels
unacceptable to us.

In 2002, the low interest rate environment caused significant
increases in both originations and liquidations of our real estate
loans.  However, we took advantage of the record real estate loan
refinancings that occurred in the market and acquired $2.4 billion of
real estate loan portfolios from third party originators.

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

                                        Years Ended December 31,
                                       2003       2002       2001

Real estate loans                    (136) bp    (84) bp      46 bp
Non-real estate loans                 (32)        (3)          5
Retail sales finance                  (15)        36          42

Total                                (139)       (75)         41
<PAGE> 40

Item 7.  Continued


Yield decreased in both 2003 and 2002 primarily reflecting a lower
real estate loan yield resulting from the low interest rate
environment.  We anticipate yield to level off or decrease less in
2004.


Insurance Revenues

Insurance revenues were as follows:

                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)

Earned premiums                      $178.5      $189.0      $193.0
Commissions                             3.1         2.2         2.4

Total                                $181.6      $191.2      $195.4

Amount change                        $ (9.6)     $ (4.2)     $ (0.8)
Percent change                         (5)%        (2)%          -%


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

Earned premiums decreased in 2002 primarily due to lower premium
volume and lower premium rates.  The lower premium volume reflected a
higher proportion of average net receivables that are real estate
loans, as well as a decrease in the amount of premiums permitted to be
charged in a number of states.  Our experience is that customers
purchase fewer insurance products on real estate loans than on non-
real estate loans.
<PAGE> 41

Item 7.  Continued


Other Revenues

Other revenues were as follows:

                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)

Net gain on sales of real estate
  loans held for sale                $ 84.0      $   -       $   -
Investment revenue                     82.2        85.9        87.9
Service fee income from a
  non-subsidiary affiliate             49.5         3.1          -
Net interest income on real estate
  loans held for sale                  14.8          -           -
Writedowns on real estate owned        (8.4)       (9.1)       (4.9)
Net recovery (loss) on sales of
  real estate owned                     2.2         2.9        (1.1)
Other                                  10.9         6.9         8.7

Total                                $235.2      $ 89.7      $ 90.6

Amount change                        $145.5      $ (0.9)     $ (4.1)
Percent change                         162%        (1)%        (4)%


The increase in other revenues for 2003 was primarily due to the
acquisition of WFI effective January 1, 2003 which resulted in net
gain on sales of real estate loans held for sale, higher service fee
income from a non-subsidiary affiliate, and net interest income on
real estate loans held for sale in 2003.  Effective July 1, 2003, WFI
and AIG Federal Savings Bank, a non-subsidiary affiliate, entered into
an agreement whereby for a fee, WFI provides marketing, certain
origination processing services, loan servicing, and related services
for the affiliate's origination and sale of non-conforming residential
real estate loans.  These WFI service activities have supplanted much
of WFI's origination and sales activity and are anticipated to do so
going forward.

The decrease in other revenues for 2002 was primarily due to lower
revenue on mortgage warehouse lending activity and higher writedowns
on real estate owned, partially offset by net recovery on sales of
foreclosed real estate in 2002 compared to net loss in 2001 and higher
service fee income from a non-subsidiary affiliate.  During first
quarter 2002, we discontinued the operations of our mortgage warehouse
lending subsidiary.

Investment revenue was affected by the following:

                                       Years Ended December 31,
                                     2003        2002        2001
                                        (dollars in millions)

Average invested assets            $1,302.5    $1,252.6    $1,231.2
Adjusted portfolio yield              6.56%       6.84%       7.03%
Net realized losses on
  investments                      $   (8.4)   $   (4.4)   $   (3.0)
<PAGE> 42

Item 7.  Continued


Interest Expense
                                       Years Ended December 31,
                                    2003         2002        2001
                                        (dollars in millions)

Interest expense                  $   546.7   $   559.3   $   635.5
  Amount change                   $   (12.6)  $   (76.2)  $   (58.8)
  Percent change                       (2)%       (12)%        (8)%

Average borrowings                $13,381.6   $11,471.2   $10,704.6
Borrowing cost                        4.08%       4.88%       5.93%


Interest expense decreased due to the following:

                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)

Decrease in borrowing cost           $(105.8)    $(121.7)    $(70.7)
Increase in average borrowings          93.2        45.5       12.3
Decrease in number of days                -           -        (0.4)

Total                                $ (12.6)    $ (76.2)    $(58.8)


Changes in average borrowings by type were as follows:

                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)

Long-term debt                       $2,372.1   $1,320.0   $  315.6
Short-term debt                        (461.7)    (490.3)    (148.8)
Deposits                                   -       (63.1)      19.6

Total                                $1,910.4   $  766.6   $  186.4

Percent change                            17%         7%         2%


AGFC issued $2.7 billion of long-term debt in 2003, compared to $4.6
billion in 2002 and $1.9 billion in 2001.  Long-term debt issuances in
2003 were lower than in 2002 primarily due to reductions in commercial
paper, higher levels of finance receivable growth, and long-term debt
refinancings in 2002.

In second quarter 2003, a consolidated special purpose subsidiary of
AGFI recorded $256.4 million of debt issued by a trust that purchased
$259.0 million of real estate loans as part of our securitization.  We
recorded the transaction as an "on balance sheet" secured financing.
<PAGE> 43

Item 7.  Continued


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

                                        Years Ended December 31,
                                       2003       2002       2001

Long-term debt                        (128) bp    (77) bp      2 bp
Short-term debt                        (36)      (193)      (155)
Deposits                               n/a        n/a         (4)

Total                                  (80)      (105)       (66)


Federal Reserve actions lowered the federal funds rate 50 basis points
in November 2002 and 25 basis points in June 2003 which resulted in
lower short-term debt rates and lower rates on floating-rate long-term
debt for 2003.  Federal Reserve actions from 2001 through June 2003
created the lowest interest rate environment in 45 years and resulted
in lower long-term debt rates as new issuances were at substantially
lower rates than long-term debt being refinanced.


Operating Expenses

Operating expenses were as follows:

                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)

Salaries and benefits                $413.4      $316.3      $302.5
Other                                 272.9       245.2       248.3

Total                                $686.3      $561.5      $550.8

Amount change                        $124.8      $ 10.7      $  8.4
Percent change                          22%          2%          2%

Operating expenses as a
  percentage of average
  net receivables                     4.82%       4.52%       4.70%


The increase in operating expenses for 2003 was primarily due to
higher salaries and benefits, credit and collection expenses,
occupancy, and advertising expenses.  The increase in salaries and
benefits for 2003 reflected the acquisition of WFI which resulted in
the addition of approximately 500 WFI employees effective January 1,
2003 and 400 additional WFI employees hired during 2003, competitive
compensation, and rising benefit costs.  The increase in credit and
collection expenses reflected higher credit investigation, recording
and releasing, and mortgage appraisal fees resulting from higher real
estate loan originations and renewals during 2003.
<PAGE> 44

Item 7.  Continued


The increase in operating expenses for 2002 was primarily due to
higher salaries and benefits, data processing, and administrative
expenses allocated from AIG, partially offset by the absence of
goodwill amortization in 2002.  The increases in salaries and benefits
for 2002 reflected higher competitive compensation and rising benefit
costs.

The increase in operating expenses as a percentage of average net
receivables for 2003 reflected increased operating expenses due to the
acquisition of WFI, partially offset by continued emphasis on
controlled operating expenses.  Approximately $83.9 million of the
Company's 2003 operating expenses were directly related to WFI
operations.  The improvements in operating expenses as a percentage of
average net receivables in 2002 reflected controlled operating
expenses and moderate finance receivable growth.


Provision for Finance Receivable Losses

                                             At or for the
                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)
Provision for finance
  receivable losses                  $313.8      $303.6      $289.3
  Amount change                      $ 10.2      $ 14.3      $ 83.0
  Percent change                         3%          5%         40%

Net charge-offs                      $310.8      $297.6      $264.3
Charge-off ratio                      2.19%       2.41%       2.26%
Charge-off coverage                   1.50x       1.56x       1.70x

60 day+ delinquency                  $515.4      $523.3      $465.1
Delinquency ratio                     3.28%       3.67%       3.71%

Allowance for finance
  receivable losses                  $466.0      $463.0      $448.3
Allowance ratio                       3.04%       3.34%       3.74%


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

                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)

Real estate loans                    $10.4       $ 4.0        $ 4.8
Non-real estate loans                  2.9        24.3         43.3
Retail sales finance                  (0.1)        5.0          9.9

Total                                $13.2       $33.3        $58.0


Real estate loan net charge-offs increased in 2003 and 2002 primarily
due to increases in real estate loan average net receivables of $1.8
billion, or 23%, in 2003 and $827.1 million, or 11%, in 2002.  The
increase in non-real estate loan and retail sales finance net charge-
offs in 2002 reflected the sluggish economy during 2002.
<PAGE> 45

Item 7.  Continued


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

                                        Years Ended December 31,
                                       2003       2002       2001

Real estate loans                       (2) bp     (1) bp      5 bp
Non-real estate loans                    3        107        121
Retail sales finance                    13         46         66

Total                                  (22)        15         45


The decrease in total charge-off ratio for 2003 reflected a higher
proportion of average net receivables that were real estate loans and
the improving economy during the second half of 2003.  The increase in
total charge-off ratio for 2002 reflected a sluggish economy in 2002
and higher levels of unemployment and personal bankruptcies.

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

                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)

Real estate loans                    $  6.7      $48.2        $12.3
Non-real estate loans                 (11.3)       7.2         22.9
Retail sales finance                   (3.3)       2.8          9.3

Total                                $ (7.9)     $58.2        $44.5


Real estate loan delinquency increased in 2003 and 2002 primarily due
to increases in real estate loans of $1.5 billion in 2003 and $1.9
billion in 2002.  Delinquency was favorably impacted at December 31,
2003 by the improving economy in the second half of 2003, but was
unfavorably impacted at December 31, 2002 by the sluggish economy
during 2002.

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

                                        Years Ended December 31,
                                       2003       2002       2001

Real estate loans                      (40) bp    (12) bp      3 bp
Non-real estate loans                  (26)        18         82
Retail sales finance                    (8)        31         61

Total                                  (39)        (4)        30


The delinquency ratio at December 31, 2003 and 2002 decreased
primarily due to a higher proportion of net finance receivables that
were real estate loans.  The delinquency ratio at December 31, 2003
also reflected the improving economy during the second half of 2003
and improvements in non-real estate and retail sales finance
delinquency ratios.
<PAGE> 46

Item 7.  Continued


Our Credit Strategy and Policy Committee evaluates our finance
receivable portfolio monthly to determine the appropriate level of the
allowance for finance receivable losses.  We believe the amount of the
allowance for finance receivable losses is the most significant
estimate we make.  In our opinion, the allowance is adequate to absorb
losses inherent in our existing portfolio.  The increase in the
allowance for finance receivable losses at December 31, 2003 when
compared to December 31, 2002 was due to net increases to the
allowance for finance receivable losses through the provision for
finance receivable losses in 2003 totaling $3.0 million.  These
increases were necessary in response to our levels of delinquency and
net charge-offs and the levels of both unemployment and personal
bankruptcies in the United States.

The allowance as a percentage of net finance receivables at December
31, 2003 and 2002 decreased primarily due to a higher proportion of
net finance receivables that were real estate loans.  The allowance as
a percentage of net finance receivables at December 31, 2003 also
reflected the improving economy during the second half of 2003.

Charge-off coverage, which compares the allowance for finance
receivable losses to net charge-offs, declined in 2003 and 2002
primarily due to a higher proportion of net finance receivables that
were real estate loans.


Insurance Losses and Loss Adjustment Expenses

Insurance losses and loss adjustment expenses were as follows:

                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)

Claims incurred                      $75.3       $85.3        $90.3
Change in benefit reserves            (7.5)       (2.0)        (2.2)

Total                                $67.8       $83.3        $88.1

Amount change                        $(15.5)     $(4.8)       $(0.3)
Percent change                        (19)%       (5)%           -%


Insurance losses and loss adjustment expenses declined in 2003
primarily due to lower claims incurred and a decrease in required
benefit reserves due to lower premium volume in the last three years.
Also, in April 2003, we terminated a reinsurance agreement with a non-
subsidiary affiliate and reversed approximately $3.6 million of
annuity reserve expense and annuity premiums that we previously
recorded.

Claims incurred decreased in 2002 primarily due to decreases in claim
reserves, partially offset by increases in claims paid.
<PAGE> 47

Item 7.  Continued


Other Charges

In third quarter 2001, we recorded charges of $78.3 million ($50.9
million aftertax) resulting from our review of our businesses and the
assets supporting those businesses, as well as the adoption of AIG's
accounting policies and methodologies, in connection with AIG's
indirect acquisition of the Company.  See Note 18. of the Notes to
Consolidated Financial Statements in Item 8. for further information
on these charges.


Provision for Income Taxes
                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in millions)

Provision for income taxes           $209.3      $145.3      $128.3
  Amount change                      $ 64.0      $ 17.0      $  7.6
  Percent change                        44%         13%          6%

Pretax income                        $575.4      $492.2      $356.5
Effective income tax rate            36.38%      29.53%      35.98%


Provision for income taxes increased during 2003 due to higher
effective income tax rate and higher taxable income.  The increase in
the provision for income taxes for 2002 reflected higher taxable
income, partially offset by a lower effective income tax rate.  During
fourth quarter 2002, we reduced the provision for income taxes by
$30.0 million resulting from a favorable settlement of income tax
audit issues.  This decreased the effective income tax rate for 2002.



                   ANALYSIS OF FINANCIAL CONDITION

Asset Quality

We believe that our geographic diversification reduces the risk
associated with a recession in any one region.  In addition, 97% of
our finance receivables at December 31, 2003 were secured by real
property or personal property.  While finance receivables have some
exposure to further economic uncertainty, we believe that the
allowance for finance receivable losses is adequate to absorb losses
inherent in our existing portfolio.  See Analysis of Operating Results
for further information on allowance ratio, delinquency ratio, and
charge-off ratio and Note 3. of the Notes to Consolidated Financial
Statements in Item 8. for further information on how we estimate
finance receivable losses.

Investment securities are the majority of our insurance business
segment's investment portfolio.  Our investment strategy is to
optimize aftertax returns on invested assets, subject to the
constraints of safety, liquidity, diversification, and regulation.
<PAGE> 48

Item 7.  Continued


Asset/Liability Management

In an effort to reduce the risk associated with unfavorable changes in
interest rates not met by favorable changes in finance charge yields
of our finance receivables, we monitor the anticipated cash flows of
our assets and liabilities, principally our finance receivables and
debt.  For 2003, real estate loans had an average life of 2.5 years
(although loan lives may change in response to interest rate changes),
while non-real estate loans had an average life of 1.5 years and
retail sales finance receivables had an average life of 9 months.  The
weighted-average life until maturity for our long-term debt was 3.2
years at December 31, 2003.

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

We limit our exposure to market interest rate increases by fixing
interest rates that we pay for term periods.  The primary means by
which we accomplish this is by issuing fixed-rate, long-term debt.  To
supplement fixed-rate debt issuances, AGFC also alters the nature of
certain floating-rate funding by using interest rate swap agreements
to synthetically create fixed-rate, long-term debt, thereby limiting
our exposure to market interest rate increases.  Additionally, AGFC
has swapped fixed-rate, long-term debt to floating-rate, long-term
debt.  Including the effect of interest rate swap agreements that
effectively fix floating-rate debt or float fixed-rate debt, our
floating-rate debt represented 43% of our borrowings at December 31,
2003 compared to 38% at December 31, 2002.  Adjustable-rate net
finance receivables represented 25% of our net finance receivables at
December 31, 2003 compared to 22% at December 31, 2002.



                        REGULATION AND OTHER

Regulation

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


Taxation

We monitor federal and state tax legislation and respond with
appropriate tax planning.
<PAGE> 49

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


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

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

                                December 31, 2003       December 31, 2002
                              +100 bp       -100 bp   +100 bp       -100 bp
                                          (dollars in thousands)
Assets
Net finance receivables,
  less allowance for
  finance receivable
  losses                      $(490,884)  $ 542,491   $(354,578)  $ 386,430
Fixed-maturity investment
  securities                    (77,750)     82,802     (73,058)     77,812

Liabilities
Long-term debt                 (287,934)    298,965    (227,886)    240,637
Interest rate swap agreements    (1,195)      1,555      10,114      (9,979)


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

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



Item 8.  Financial Statements and Supplementary Data.


The Report of Management's Responsibility, PricewaterhouseCoopers LLP
Report of Independent Auditors, Ernst & Young LLP Report of
Independent Auditors, and the related consolidated financial
statements are presented on the following pages.
<PAGE> 50

                 REPORT OF MANAGEMENT'S RESPONSIBILITY



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

The Company's management is responsible for establishing and
maintaining an internal control structure and procedures for financial
reporting.  These systems are designed to provide reasonable assurance
that assets are safeguarded from loss or unauthorized use, that
transactions are recorded according to GAAP under management's
direction and that financial records are reliable to prepare financial
statements.  We support the internal control structure with careful
selection, training and development of qualified personnel.  The
Company's employees are subject to AIG's Code of Conduct designed to
assure that all employees perform their duties with honesty and
integrity.  We do not allow loans to executive officers.  The systems
include a documented organizational structure and policies and
procedures that we communicate throughout the Company.  Our internal
auditors report directly to AIG to strengthen independence.  They
continually monitor the operation of our internal controls and report
their findings to the Company's management and AIG's internal audit
department.  We take prompt action to correct control deficiencies and
address opportunities for improving the system.  The Company's
management assesses the adequacy of our internal control structure
quarterly.  Based on these assessments, management has concluded that
the internal control structure and the procedures for financial
reporting have functioned effectively and that the consolidated
financial statements fairly present our consolidated financial
position and the results of our operations for the periods presented.
<PAGE> 51

                     REPORT OF INDEPENDENT AUDITORS





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


In our opinion, the consolidated financial statements listed in the
index appearing under Items 15(a)(1) and (2) on page 95 present
fairly, in all material respects, the financial position of American
General Finance, Inc. and its subsidiaries (the "Company") at December
31, 2003 and 2002, and the results of their operations and their cash
flows for each of the two years in the period ended December 31, 2003
in conformity with accounting principles generally accepted in the
United States of America.  In addition, in our opinion, the financial
statement schedule at and for the years ended December 31, 2003 and
2002 listed in the index appearing under Item 15(d) on page 96
presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated
financial statements.  These financial statements and financial
statement schedule are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.  We
conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.

As discussed in Note 4, the Company adopted Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets, on
January 1, 2002.  Additionally, as discussed in Note 22, the Company
changed its method of accounting for pensions for the year ended
December 31, 2002.



/s/  PricewaterhouseCoopers LLP


Chicago, Illinois
February 16, 2004
<PAGE> 52

                    REPORT OF INDEPENDENT AUDITORS





The Board of Directors
American General Finance, Inc.


We have audited the accompanying consolidated statements of income,
shareholder's equity, cash flows, and comprehensive income of American
General Finance, Inc. (a wholly owned indirect subsidiary of American
International Group, Inc.) and subsidiaries for the year ended
December 31, 2001.  Our audit also included the financial statement
schedule for the year ended December 31, 2001 listed in the Index at
Item 15(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 audit.

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

In our opinion, the 2001 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
results of operations and cash flows of American General Finance, Inc.
and subsidiaries for the year ended December 31, 2001, in conformity
with accounting principles generally accepted in the United States.
Also, in our opinion, the related 2001 financial statement schedule,
when considered in relation to the basic 2001 financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.

As discussed in Note 4. to the consolidated financial statements, in
2001 the Company changed its method of accounting for derivative
financial instruments.


                                            /s/  Ernst & Young LLP


Indianapolis, Indiana
January 31, 2002
<PAGE> 53

            American General Finance, Inc. and Subsidiaries
                      Consolidated Balance Sheets




                                                         December 31,
                                                     2003            2002
                                                    (dollars in thousands)
Assets

Net finance receivables (Notes 3. and 5.):
  Real estate loans                               $11,038,140    $ 9,498,046
  Non-real estate loans                             2,932,120      2,958,925
  Retail sales finance                              1,337,701      1,389,241

Net finance receivables                            15,307,961     13,846,212
Allowance for finance receivable
  losses (Note 6.)                                   (466,031)      (463,031)
Net finance receivables, less allowance
  for finance receivable losses                    14,841,930     13,383,181

Investment securities (Note 7.)                     1,307,472      1,227,156
Cash and cash equivalents                             145,462        153,660
Other assets (Note 8.)                                711,300        720,289

Total assets                                      $17,006,164    $15,484,286


Liabilities and Shareholder's Equity

Long-term debt (Notes 9. and 12.)                 $10,862,218    $ 9,566,256
Short-term debt (Notes 10. and 12.)                 3,467,096      3,375,674
Insurance claims and policyholder
  liabilities (Note 13.)                              438,362        472,348
Other liabilities (Note 14.)                          376,739        442,932
Accrued taxes                                          37,952         40,259

Total liabilities                                  15,182,367     13,897,469

Shareholder's equity:
  Common stock (Note 15.)                               1,000          1,000
  Additional paid-in capital                          920,276        920,276
  Accumulated other comprehensive
    loss (Note 16.)                                   (14,947)       (68,938)
  Retained earnings (Note 17.)                        917,468        734,479

Total shareholder's equity                          1,823,797      1,586,817

Total liabilities and shareholder's equity        $17,006,164    $15,484,286





See Notes to Consolidated Financial Statements.
<PAGE> 54

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




                                             Years Ended December 31,
                                         2003          2002          2001
                                              (dollars in thousands)

Revenues
  Finance charges                     $1,773,277    $1,718,873    $1,712,485
  Insurance                              181,642       191,230       195,393
  Other                                  235,187        89,735        90,620

Total revenues                         2,190,106     1,999,838     1,998,498

Expenses
  Interest expense                       546,716       559,291       635,483
  Operating expenses:
    Salaries and benefits                413,358       316,262       302,461
    Other operating expenses             272,945       245,257       248,326
  Provision for finance receivable
    losses                               313,830       303,585       289,302
  Insurance losses and loss
    adjustment expenses                   67,849        83,275        88,111
  Other charges (Note 18.)                  -             -           78,297

Total expenses                         1,614,698     1,507,670     1,641,980

Income before provision for income
  taxes                                  575,408       492,168       356,518

Provision for Income Taxes
  (Note 19.)                             209,305       145,342       128,261

Net Income                            $  366,103    $  346,826    $  228,257





See Notes to Consolidated Financial Statements.
<PAGE> 55

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




                                             Years Ended December 31,
                                         2003          2002          2001
                                              (dollars in thousands)

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

Additional Paid-in Capital
  Balance at beginning of year           920,276       880,594       877,576
  Capital contributions from
    parent and other                        -           39,682         3,018
  Balance at end of year                 920,276       920,276       880,594

Accumulated Other Comprehensive
  (Loss) Income
    Balance at beginning of year         (68,938)      (61,687)        2,631
    Change in net unrealized
      gains (losses):
        Investment securities             10,673        23,792         3,543
        Interest rate swaps               43,318       (31,391)      (67,513)
        Minimum pension liability           -              348          (348)
    Balance at end of year               (14,947)      (68,938)      (61,687)

Retained Earnings
  Balance at beginning of year           734,479       534,652       757,060
  Net income                             366,103       346,826       228,257
  Common stock dividends                (183,114)     (146,999)     (438,303)
  Disposition of American General
    Bank, FSB                               -             -          (12,362)
  Balance at end of year                 917,468       734,479       534,652

Total Shareholder's Equity            $1,823,797    $1,586,817    $1,354,559





See Notes to Consolidated Financial Statements.
<PAGE> 56
<TABLE>
               American General Finance, Inc. and Subsidiaries
                    Consolidated Statements of Cash Flows


<CAPTION>
                                                      Years Ended December 31,
                                                    2003        2002        2001
                                                       (dollars in thousands)
<S>                                              <C>         <C>         <C>
Cash Flows from Operating Activities
Net Income                                       $  366,103  $  346,826  $  228,257
Reconciling adjustments:
  Provision for finance receivable losses           313,830     303,585     289,302
  Depreciation and amortization                     197,232     153,211     149,262
  Deferral of finance receivable
    origination costs                               (71,401)    (60,215)    (58,488)
  Deferred income tax benefit                        (2,372)    (58,601)    (27,827)
  Origination of real estate loans held
    for sale                                     (1,789,108)       -           -
  Sales and principal collections of real
    estate loans held for sale                    1,885,122        -           -
  Change in other assets and other liabilities      (49,944)    (59,970)     24,499
  Change in insurance claims and
    policyholder liabilities                        (33,986)    (23,240)    (23,859)
  Change in taxes receivable and payable             (4,688)    (33,546)     63,738
  Other charges                                        -           -         78,297
  Other, net                                          6,538         756      (3,042)
Net cash provided by operating activities           817,326     568,806     720,139

Cash Flows from Investing Activities
  Finance receivables originated or purchased    (8,948,036) (8,184,075) (6,516,578)
  Principal collections on finance receivables    7,110,628   6,298,802   5,954,613
  Acquisition of Wilmington Finance, Inc.           (93,189)       -           -
  Acquisition of First Horizon                         -       (208,666)       -
  Disposition of American General Bank, FSB            -           -        (39,998)
  Investment securities purchased                  (504,561)   (806,989) (1,024,964)
  Investment securities called and sold             413,554     713,653     982,127
  Investment securities matured                      23,335      42,475      10,310
  Change in premiums on finance receivables
    purchased and deferred charges                   (1,008)    (88,465)    (36,628)
  Other, net                                        (25,305)    (13,023)    (16,495)
Net cash used for investing activities           (2,024,582) (2,246,288)   (687,613)

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt        2,947,613   4,638,983   1,892,820
  Repayment of long-term debt                    (1,656,863) (1,394,998) (1,265,867)
  Change in deposits                                   -           -         28,924
  Change in short-term debt                          91,422  (1,477,846)   (234,993)
  Capital contributions from parent                    -         33,000        -
  Dividends paid                                   (183,114)   (146,999)   (438,303)
Net cash provided by (used for)
  financing activities                            1,199,058   1,652,140     (17,419)

(Decrease) increase in cash and cash equivalents     (8,198)    (25,342)     15,107
Cash and cash equivalents at beginning of year      153,660     179,002     163,895
Cash and cash equivalents at end of year         $  145,462  $  153,660  $  179,002



<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE> 57

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




                                              Years Ended December 31,
                                          2003          2002          2001
                                               (dollars in thousands)


Net Income                              $ 366,103     $ 346,826    $ 228,257

Other comprehensive gain (loss):

  Net unrealized gains (losses):
    Investment securities                   8,040        32,220        2,396
    Interest rate swaps:
      Transition adjustment                  -             -         (42,103)
      Current period                       (6,773)     (151,142)    (121,636)
    Minimum pension liability                -              535         (535)

  Income tax effect:
    Investment securities                  (2,802)      (11,288)        (796)
    Interest rate swaps:
      Transition adjustment                  -             -          14,736
      Current period                        2,369        52,900       42,573
    Minimum pension liability                -             (187)         187

  Net unrealized gains (losses),
    net of tax                                834       (76,962)    (105,178)

  Reclassification adjustments
    for realized losses included
    in net income:
      Investment securities                 8,361         4,400        2,989
      Interest rate swaps                  73,418       102,848       59,872

  Income tax effect:
    Investment securities                  (2,926)       (1,540)      (1,046)
    Interest rate swaps                   (25,696)      (35,997)     (20,955)

  Realized losses included
    in net income, net of tax              53,157        69,711       40,860

Other comprehensive gain (loss),
  net of tax                               53,991        (7,251)     (64,318)


Comprehensive income                    $ 420,094     $ 339,575    $ 163,939





See Notes to Consolidated Financial Statements.
<PAGE> 58

            American General Finance, Inc. and Subsidiaries
              Notes to Consolidated Financial Statements
                           December 31, 2003



Note 1.  Nature of Operations

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

AGFI is a financial services holding company whose principal
subsidiary is American General Finance Corporation (AGFC).  AGFC is
also a financial services holding company with subsidiaries engaged
primarily in the consumer finance and credit insurance businesses.  At
December 31, 2003, the Company had 1,403 offices in 45 states, Puerto
Rico and the U.S. Virgin Islands and approximately 8,500 employees.

In our consumer finance business segment, we:

     *  make home equity loans;
     *  originate secured and unsecured consumer loans;
     *  extend lines of credit;
     *  purchase retail sales contracts and provide revolving retail
        services arising from the retail sale of consumer goods and
        services by retail merchants;
     *  purchase private label receivables originated by AIG Federal
        Savings Bank, a non-subsidiary affiliate, arising from the
        sales by retail merchants under a participation agreement;
     *  purchase real estate loans originated by AIG Federal Savings
        Bank under a purchase agreement;
     *  provide for a fee, marketing, certain origination processing
        services, and loan servicing for AIG Federal Savings Bank; and
     *  originate real estate loans for sale to investors.

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

In our insurance business segment, we principally write and reinsure
credit life, credit accident and health, credit-related property and
casualty, credit involuntary unemployment, and non-credit insurance
covering our consumer finance customers and property pledged as
collateral.  See Note 23. for further information on the Company's
business segments.

We fund our operations principally through net cash flows from
operating activities, issuances of long-term debt, short-term
borrowings in the commercial paper market, borrowings from banks under
credit facilities, securitizations, and capital contributions from our
parent.
<PAGE> 59

Notes to Consolidated Financial Statements, Continued


At December 31, 2003, the Company had $15.3 billion of net finance
receivables due from approximately 1.9 million customer accounts and
$6.0 billion of credit and non-credit life insurance in force covering
approximately 900,000 customer accounts.



Note 2.  Acquisitions/Divestiture

Effective January 1, 2003, we acquired 100% of the common stock of
Wilmington Finance, Inc. (WFI), a majority owned subsidiary of WSFS
Financial Corporation, in a purchase business combination.  The
purchase price was $120.8 million, consisting of $25.8 million for net
assets and $95.0 million for intangibles.  The majority of the
tangible assets acquired were real estate loans held for sale.  We
included the results of WFI's operations in our financial statements
beginning January 1, 2003, the effective date of the acquisition.  We
finalized an independent valuation of the intangibles in second
quarter 2003 and recorded $54.2 million as goodwill and $40.8 million
as other intangibles.  Goodwill and other intangibles are both
included in other assets.  Other intangibles primarily consisted of
broker relationships and non-compete agreements and had an initial
weighted-average amortization period of 9 years.  WFI originates non-
conforming residential real estate loans, primarily through broker
relationships and, to a lesser extent, directly to consumers, and
sells its originated loans to investors with servicing released to the
purchaser.  Effective July 1, 2003, WFI and AIG Federal Savings Bank,
a non-subsidiary affiliate, entered into an agreement whereby for a
fee, WFI provides marketing, certain origination processing services,
loan servicing, and related services for the affiliate's origination
and sale of non-conforming residential real estate loans.  These WFI
service activities have supplanted much of WFI's origination and sales
activity and are anticipated to do so going forward.  WFI provides the
Company with other sources of revenue through its servicing fees and
net gain on sales of real estate loans held for sale.

On September 16, 2002, we acquired the majority of the assets of First
Horizon Money Centers, a consumer financial services subsidiary of
First Tennessee Bank National Association, in a purchase business
combination.  The fair value of the assets acquired totaled $208.7
million, representing real estate loans, non-real estate loans, and
retail sales finance receivables.  We also acquired certain branch
office locations by assuming the branch office leases and hired
certain branch office personnel.  We included the acquisition of First
Horizon in our consolidated financial statements since the date of
acquisition.

One of AGFI's former subsidiaries, American General Bank, FSB (AG
Bank), operated as a traditional thrift, whose products included
deposit and savings accounts, residential mortgage and home equity
loans, and private label services.  Concurrent with AIG's indirect
acquisition of the Company in August 2001, AG Bank was merged into AIG
Federal Savings Bank with AIG Federal Savings Bank being the surviving
entity.
<PAGE> 60

Notes to Consolidated Financial Statements, Continued


Note 3.  Summary of Significant Accounting Policies

                       BASIS OF PRESENTATION

We prepared our consolidated financial statements using accounting
principles generally accepted in the United States (GAAP).  The
statements include the accounts of AGFI and its subsidiaries, all of
which are wholly owned.  We eliminated all intercompany items.  We
made estimates and assumptions that affect amounts reported in our
financial statements and disclosures of contingent assets and
liabilities.  Ultimate results could differ from our estimates.  To
conform to the 2003 presentation, we reclassified certain items in
prior periods.


                  CONSUMER FINANCE BUSINESS SEGMENT

Finance Receivables

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

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


Revenue Recognition

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

We stop accruing finance charges when the fourth contractual payment
becomes past due for loans and retail sales contracts and when the
sixth contractual payment becomes past due for revolving retail and
private label.  Beginning in third quarter 2001, in conformity with
AIG policy, we reverse amounts previously accrued upon suspension.
Prior to AIG's indirect acquisition of the Company, we did not reverse
amounts previously accrued upon suspension.  After suspension, we
<PAGE> 61

Notes to Consolidated Financial Statements, Continued


recognize revenue for loans and retail sales contracts only to the
extent of any additional payments we receive.


Allowance for Finance Receivable Losses

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

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

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

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

We may allow a deferment, which is a partial payment that extends the
term of an account.  The partial payment amount is usually the greater
of one-half of a regular monthly payment or the amount necessary to
bring the interest on the account current.  We limit a customer to two
deferments in a rolling twelve-month period.
<PAGE> 62

Notes to Consolidated Financial Statements, Continued


Real Estate Owned

We acquire real estate owned through foreclosure on real estate loans.
We record real estate owned in other assets, initially at lower of
loan balance or 85% of the unrelated party's valuation, which
approximates the fair value less the estimated cost to sell.  If we do
not sell a property within one year of acquisition, we reduce the
carrying value by five percent of the initial value each month
beginning in the thirteenth month.  Prior to AIG's indirect
acquisition of the Company in August 2001, we did not begin this
writedown until the nineteenth month.  We continue the writedown until
the property is sold or the carrying value is reduced to ten percent
of the initial value.  We charge these writedowns to other revenues.
We record the sale price we receive for a property less the carrying
value and any amounts refunded to the customer as a recovery or loss
in other revenues. We do not profit from foreclosures in accordance
with the American Financial Services Association's Voluntary Standards
for Consumer Mortgage Lending.  We only attempt to recover our
investment in the property, including expenses incurred.


Customer Relationships

Customer relationships, included in other assets, are intangible
assets we acquire by assigning a portion of the purchase price on
certain portfolio acquisitions to the customer relationships.  In
those instances, we expect our relationships with the customers to
last beyond the terms of the finance receivables we purchased.  We
charge customer relationships to expense in equal amounts generally
over six years.  If the required impairment testing suggests that
customer relationships are impaired, we reduce customer relationships
to an amount that results in the carrying value of the customer
relationships approximating fair value.  See Note 4. for information
on the adoption of SFAS 142.


Real Estate Loans Held for Sale

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

We accrue interest income due from the borrower on real estate loans
held for sale from the date of loan funding until the date of sale to
the investor and include it in other revenues.  Upon sale, we collect
from the investor any accrued interest income not paid by the
borrower.  We record the fees we receive from AIG Federal Savings
Bank, a non-subsidiary affiliate, for providing services for its
investment in real estate loans held for sale in other revenues when
we provide the services.
<PAGE> 63

Notes to Consolidated Financial Statements, Continued


                       INSURANCE BUSINESS SEGMENT

Revenue Recognition

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


Policy Reserves

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


Acquisition Costs

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


                         INVESTMENT SECURITIES

Valuation

We currently classify all investment securities as available-for-sale
and record them at fair value.  We adjust related balance sheet
accounts as if the unrealized gains and losses on investment
securities had been realized, and record the net adjustment in
accumulated other comprehensive income (loss) in shareholder's equity.
If the fair value of an investment security classified as available-
<PAGE> 64

Notes to Consolidated Financial Statements, Continued


for-sale declines below its cost and we consider the decline to be
other than temporary, we reduce the investment security to its fair
value, and recognize a realized loss.


Revenue Recognition

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


Realized Gains and Losses on Investment Securities

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


                                OTHER

Other Invested Assets

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


Cash Equivalents

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


Goodwill

On January 1, 2002, we adopted Statement of Financial Accounting
Standards (SFAS) 142, "Goodwill and Other Intangible Assets."  During
the first quarter of each year, we test both the consumer finance
business segment and the insurance business segment for goodwill
impairment.  Impairment is the condition that exists when the carrying
value of goodwill exceeds its implied fair value.  We assess the fair
value of the underlying business using a projected ten-year earnings
<PAGE> 65

Notes to Consolidated Financial Statements, Continued


stream, discounted using the Treasury "risk free" rate.  The "risk
free" rate is the yield on ten-year U.S. Treasury Bills as of December
31 of the prior year.  If the required impairment testing suggests
that goodwill is impaired, we reduce goodwill to an amount that
results in the carrying value of the underlying business approximating
fair value.  See Note 4. for information on the adoption of SFAS 142.

Prior to our adoption of SFAS 142, we charged goodwill to expense in
equal amounts over 20 to 40 years.


Income Taxes

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

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


Derivative Financial Instruments

We recognize all derivatives on our consolidated balance sheet at
their fair value and designate them as either a hedge of the
variability of cash flows that are to be received or paid in
connection with a recognized asset or liability (a "cash flow" hedge)
or as a hedge of the fair value of a recognized asset or liability (a
"fair value" hedge).

We record changes in the fair value of a derivative that is effective
as - and that is designated and qualifies as - a cash flow hedge, to
the extent that the hedge is effective, in other comprehensive income,
until earnings are affected by the variability of cash flows of the
hedged transaction.  We record changes in the fair value of a
derivative that is effective as - and that is designated and qualifies
as - a fair value hedge, along with changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk, in
current period earnings.

We formally document all relationships between derivative hedging
instruments and hedged items, as well as the risk-management
objectives and strategies for undertaking various hedge transactions
and the method of assessing ineffectiveness.  This process includes
linking all derivatives that are designated as cash flow or fair value
hedges to assets and liabilities on the balance sheet.  We also
formally assess (both at the hedge's inception and at least quarterly
thereafter) whether the derivatives that are used in hedging
transactions have been effective in offsetting changes in the cash
flows or fair value of hedged items and whether those derivatives may
be expected to remain effective in future periods.  We typically use
regression analyses or other statistical analyses to assess the
effectiveness of our hedges.
<PAGE> 66

Notes to Consolidated Financial Statements, Continued


We discontinue hedge accounting prospectively when we determine (1)
that the derivative is no longer effective in offsetting changes in
the cash flows or fair value of a hedged item; (2) the derivative
and/or the hedged item expires or is sold, terminated, or exercised;
or (3) that designating the derivative as a hedging instrument is no
longer appropriate due to changes in our objectives or strategies.

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


Fair Value of Financial Instruments

We estimate the fair values disclosed in Note 25. using discounted
cash flows when quoted market prices or values obtained from
independent pricing services are not available.  The assumptions used,
including the discount rate and estimates of future cash flows,
significantly affect the valuation techniques employed.  In certain
cases, we cannot verify the estimated fair values by comparison to
independent markets or realize the estimated fair values in immediate
settlement of the instruments.



Note 4.  Accounting Changes

In 2001, we adopted SFAS 133, "Accounting for Derivative Instruments
and Hedging Activities," which requires all derivative instruments to
be recognized at fair value on the balance sheet.  Changes in the fair
value of a derivative instrument are reported in net income or
comprehensive income, depending upon the intended use of the
derivative instrument.  Upon adoption of SFAS 133, we recorded
cumulative adjustments of $42.1 million to recognize the fair value of
interest rate swap agreements related to debt on the balance sheet,
which reduced accumulated other comprehensive income in shareholder's
equity by $27.4 million.  During 2001, we reclassified into earnings
$13.6 million of net realized losses which related to the cumulative
adjustment.

In 2001, we conformed to Emerging Issues Task Force (EITF) Issue 99-
20, "Recognition of Interest Income and Impairment on Purchased and
Retained Beneficial Interests in Securitized Financial Assets."  As a
result of applying the impairment provisions of EITF 99-20, we
<PAGE> 67

Notes to Consolidated Financial Statements, Continued


recorded a $1.0 million ($.6 million aftertax) write-down of the
carrying value of certain collateralized debt obligations in other
revenues.

On January 1, 2002, we adopted SFAS 142, "Goodwill and Other
Intangible Assets."  SFAS 142 provides that goodwill and other
intangible assets with indefinite lives are no longer to be amortized.
These assets are to be reviewed for impairment annually, or more
frequently if impairment indicators are present.  We will continue to
amortize separable intangible assets that have finite lives over their
useful lives.  The amortization provisions of SFAS 142 apply to
goodwill and intangible assets acquired after June 30, 2001.
Amortization of goodwill and intangible assets acquired prior to July
1, 2001 continued through December 31, 2001.

In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45 (FIN 45), "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others."  FIN 45 elaborates on the disclosures to be
made by a guarantor in its financial statements about its obligations
under certain guarantees that it has issued.  It also clarifies that a
guarantor is required to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing
the guarantee.  Certain guarantee contracts are excluded from both the
disclosure and recognition requirements of FIN 45, including, among
others, residual value guarantees under capital lease arrangements and
loan commitments.  The disclosure requirements of FIN 45 were
effective as of December 31, 2002.  The recognition requirements of
FIN 45 are to be applied prospectively to guarantees issued or
modified after December 31, 2002.  The adoption of FIN 45 did not have
a material impact on our consolidated results of operations, financial
position, or liquidity.

In December 2003, the Accounting Standards Executive Committee issued
Statement of Position No. 03-3 (SOP 03-3) "Accounting for Certain
Loans or Debt Securities Acquired in a Transfer".  SOP 03-3 addresses
accounting for differences between contractual cash flows and cash
flows expected to be collected from an investor's initial investment
in loans acquired in a transfer if those differences are attributable,
at least in part, to credit quality.  SOP 03-3 limits the yield that
may be accreted (accretable yield) to the excess of the investor's
estimate of undiscounted expected principal, interest, and other cash
flows (cash flows expected at acquisition to be collected) over the
investor's initial investment in the loan.  SOP 03-3 requires that the
excess of contractual cash flows over cash flows expected to be
collected (nonaccretable difference) not be recognized as an
adjustment of yield, loss accrual, or valuation allowance.  Subsequent
increases in cash flows expected to be collected generally should be
recognized prospectively through adjustment of the loan's yield over
its remaining life.  Decreases in cash flows expected to be collected
should be recognized as impairment.  SOP 03-3 is effective for loans
acquired in fiscal years beginning after December 15, 2004.  For loans
acquired in fiscal years beginning on or before December 15, 2004, SOP
03-3 should be applied prospectively for fiscal years beginning after
December 15, 2004 for decreases in cash flows expected to be
collected.  Early adoption is encouraged.  We have not yet determined
the effect of the adoption of SOP 03-3 on our results of operations or
financial position in future periods.
<PAGE> 68

Notes to Consolidated Financial Statements, Continued


Note 5.  Finance Receivables

Components of net finance receivables by type were as follows:

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

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

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


                                            December 31, 2002
                              Real         Non-real      Retail
                             Estate         Estate        Sales
                              Loans          Loans       Finance     Total
                                         (dollars in thousands)

Gross receivables           $ 9,409,294  $3,297,232  $1,550,215  $14,256,741
Unearned finance charges
  and points and fees          (148,421)   (432,747)   (176,463)    (757,631)
Accrued finance charges          79,664      41,788      13,194      134,646
Deferred origination costs       12,864      36,223        -          49,087
Premiums, net of discounts      144,645      16,429       2,295      163,369

Total                       $ 9,498,046  $2,958,925  $1,389,241  $13,846,212


Real estate loans are secured by first or second mortgages on
residential real estate and generally have maximum original terms of
360 months.  Non-real estate loans are secured by consumer goods,
automobiles or other personal property, or are unsecured and generally
have maximum original terms of 60 months.  Retail sales contracts are
secured principally by consumer goods and automobiles and generally
have maximum original terms of 60 months.  Revolving retail and
private label are secured by the goods purchased and generally require
minimum monthly payments based on outstanding balances.  At December
31, 2003, 97% of our net finance receivables were secured by the real
and/or personal property of the borrower, compared to 96% at December
31, 2002.  At December 31, 2003, real estate loans accounted for 72%
of the amount and 12% of the number of net finance receivables
outstanding, compared to 69% of the amount and 11% of the number of
net finance receivables outstanding at December 31, 2002.
<PAGE> 69

Notes to Consolidated Financial Statements, Continued


Contractual maturities of net finance receivables by type at December
31, 2003 were as follows:

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

2004      $   250,616     $   753,629     $   364,709     $ 1,368,954
2005          313,216         981,088         289,756       1,584,060
2006          329,949         698,921         141,826       1,170,696
2007          344,931         310,255          75,492         730,678
2008          350,802         102,454          41,780         495,036
2009+       9,448,626          85,773         424,138       9,958,537

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


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

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

                                        Years Ended December 31,
                                      2003        2002        2001
                                         (dollars in thousands)
Real estate loans:
  Principal cash collections       $3,871,805  $2,953,426  $2,462,318
  % of average net receivables         38.59%      36.09%      33.47%

Non-real estate loans:
  Principal cash collections       $1,595,152  $1,614,216  $1,655,484
  % of average net receivables         55.33%      56.48%      56.03%

Retail sales finance:
  Principal cash collections       $1,643,671  $1,731,160  $1,836,811
  % of average net receivables        124.94%     126.56%     129.82%


Unused credit limits extended by AIG Federal Savings Bank (a non-
subsidiary affiliate whose private label finance receivables are fully
participated to the Company) and the Company to their customers were
$3.5 billion at December 31, 2003 and December 31, 2002.  Company
experience has shown that the funded amounts have been substantially
less than the credit limits.  All unused credit limits, in part or in
total, can be cancelled at the discretion of AIG Federal Savings Bank
and the Company.
<PAGE> 70

Notes to Consolidated Financial Statements, Continued


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

                   December 31, 2003          December 31, 2002
                 Amount        Percent      Amount        Percent
                              (dollars in thousands)

California      $ 2,276,408         15%    $ 2,160,846         16%
Florida             936,435          6         840,182          6
N. Carolina         883,866          6         887,243          6
Ohio                841,380          6         785,506          6
Illinois            835,156          5         786,593          6
Virginia            680,288          4         553,386          4
Georgia             661,307          4         591,970          4
Indiana             639,201          4         598,832          4
Other             7,553,920         50       6,641,654         48

Total           $15,307,961        100%    $13,846,212        100%


Finance receivables on which we stopped accruing revenue totaled
$397.9 million at December 31, 2003 and $388.8 million at December 31,
2002.  Our accounting policy for revenue recognition on revolving
retail and private label finance receivables provides for the accrual
of revenue up to the date of charge-off at six months past due.
Revolving retail and private label finance receivables more than 90
days contractually delinquent totaled $12.1 million at December 31,
2003 and December 31, 2002.  We accrued $.8 million of revenue on
these finance receivables during 2003 and 2002.



Note 6.  Allowance for Finance Receivable Losses

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

                                        Years Ended December 31,
                                     2003         2002         2001
                                         (dollars in thousands)

Balance at beginning of year       $ 463,031   $ 448,251    $ 383,415
Provision for finance receivable
  losses                             313,830     303,585      289,302
Allowance related to net
  acquired receivables                  -          8,780       14,836
Charge-offs                         (353,273)   (338,802)    (304,592)
Recoveries                            42,443      41,217       40,290
Other charges - additional
  provision                             -           -          25,000

Balance at end of year             $ 466,031   $ 463,031    $ 448,251
<PAGE> 71

Notes to Consolidated Financial Statements, Continued


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

We used the Company's internal data of net charge-offs and delinquency
by sub-portfolio as the basis to determine the historical loss
experience component of our allowance for finance receivable losses.
We used monthly bankruptcy statistics, monthly unemployment
statistics, and various other monthly or periodic economic statistics
published by departments of the federal government and other economic
statistics providers to determine the economic component of our
allowance for finance receivable losses.  There were no significant
changes in the kinds of observable data we used to measure these
components during 2003 or 2002.

See Note 3. for information on the determination of the allowance for
finance receivable losses and Note 18. for discussion of other
charges.



Note 7.  Investment Securities

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

                                     Fair Value            Amortized Cost
                                 2003          2002      2003          2002
                                           (dollars in thousands)
Fixed maturity investment
  securities:
  Bonds:
    Corporate securities       $  583,264  $  549,552  $  548,838  $  530,229
    Mortgage-backed securities    158,184     179,155     151,240     170,909
    State and political
      subdivisions                330,857     446,605     314,111     429,637
    Other                         208,963      26,593     203,011      24,447
Total                           1,281,268   1,201,905   1,217,200   1,155,222
Non-redeemable preferred
  stocks                            9,296       5,109       9,275       5,624
Other long-term investments        16,727      19,586      18,388      19,586
Common stocks                         181         556          90         606

Total                          $1,307,472  $1,227,156  $1,244,953  $1,181,038
<PAGE> 72

Notes to Consolidated Financial Statements, Continued


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

                                  Unrealized Gains        Unrealized Losses
                                 2003          2002      2003          2002
                                           (dollars in thousands)
Fixed-maturity investment
  securities:
  Bonds:
    Corporate securities       $37,591        $35,401  $ 3,165        $16,078
    Mortgage-backed securities   7,129          8,246      185           -
    State and political
      subdivisions              16,932         16,986      186             18
    Other                       10,029          5,198    4,077          3,052
Total                           71,681         65,831    7,613         19,148
Non-redeemable preferred
  stocks                            51             55       30            570
Other long-term investments       -              -       1,661           -
Common stocks                       91           -        -                50

Total                          $71,823        $65,886  $ 9,304        $19,768


Our unrealized losses on investment securities and the related
investment securities' fair value by type, all of which have been in a
continuous unrealized loss position for twelve months or more, at
December 31, 2003 were as follows:

                                         12 Months or More
                                        Fair     Unrealized
                                       Value       Losses
                                      (dollars in thousands)
Fixed-maturity investment
  securities:
  Bonds:
    Corporate securities              $ 65,212        $3,165
    Mortgage-backed securities          12,337           185
    State and political
      subdivisions                       7,394           186
    Other                               50,648         4,077
Total                                  135,591         7,613
Non-redeemable preferred stocks            445            30
Other long-term investments              6,159         1,661

Total                                 $142,195        $9,304
<PAGE> 73

Notes to Consolidated Financial Statements, Continued


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

                                        Years Ended December 31,
                                     2003         2002         2001
                                         (dollars in thousands)

Fair value                         $436,889     $756,128     $992,437

Realized gains                     $ 10,583     $  9,147     $ 16,441
Realized losses                      18,944       13,547       19,430

Net realized losses                $ (8,361)    $ (4,400)    $ (2,989)


Contractual maturities of fixed-maturity investment securities at
December 31, 2003 were as follows:
                                            Fair         Amortized
                                            Value           Cost
                                           (dollars in thousands)
Fixed maturities, excluding
  mortgage-backed securities:
    Due in 1 year or less                $   22,518     $   21,909
    Due after 1 year through 5 years        235,648        216,759
    Due after 5 years through 10 years      539,565        515,850
    Due after 10 years                      325,353        311,442
Mortgage-backed securities                  158,184        151,240

Total                                    $1,281,268     $1,217,200


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

Other long-term investments consist of five limited partnerships.
These limited partnerships provide diversification and have high
yielding, long-term financial objectives.  These limited partnerships
invest primarily in private equity investments, high yielding
securities, and mezzanine investments within a variety of industries.
At December 31, 2003, our total commitments for these five limited
partnerships were $33.8 million, consisting of $19.3 million funded
and $14.5 million unfunded.

Bonds on deposit with insurance regulatory authorities had carrying
values of $11.1 million at December 31, 2003 and $8.4 million at
December 31, 2002.
<PAGE> 74

Notes to Consolidated Financial Statements, Continued


Note 8.  Other Assets

Components of other assets were as follows:

                                               December 31,
                                           2003            2002
                                          (dollars in thousands)

Goodwill                                 $224,721        $161,885
Income tax assets (a)                     126,939         152,469
Fixed assets                               90,634          93,365
Prepaid expenses and deferred
  charges                                  84,114          74,096
Other insurance investments                73,809          67,438
Real estate owned                          51,255          49,012
Other                                      59,828         122,024 (b)

Total                                    $711,300        $720,289


(a)  The components of net deferred tax assets are detailed in Note
     19.

(b)  Effective January 1, 2003, we acquired Wilmington Finance, Inc.,
     an originator and seller of residential real estate loans.  In
     anticipation of this acquisition, we entered into a warehouse
     line participation agreement effective December 3, 2002 to
     provide interim funding support to the mortgage originator
     totaling $50.0 million.  See Note 2. for further information on
     this acquisition.

Changes in goodwill by business segment were as follows:

                                    Consumer
                                    Finance     Insurance     Total
                                         (dollars in thousands)

Balance December 31, 2001          $149,781     $ 12,104     $161,885

Balance December 31, 2002           149,781       12,104      161,885

Acquisitions                         62,836         -          62,836

Balance December 31, 2003          $212,617     $ 12,104     $224,721


The impact of goodwill amortization on net income was as follows:

                                        Years Ended December 31,
                                     2003         2002         2001
                                         (dollars in thousands)

Reported net income                $366,103     $346,826     $228,257
Goodwill amortization,
  net of tax                           -            -           5,058

Adjusted net income                $366,103     $346,826     $233,315
<PAGE> 75

Notes to Consolidated Financial Statements, Continued


During first quarter 2002, 2003, and 2004, we determined that the
required impairment testing for the Company's goodwill and other
intangible assets did not require a write-down of any such assets.



Note 9.  Long-term Debt

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

                       Carrying Value               Fair Value
                    2003           2002        2003           2002
                                (dollars in thousands)

Senior debt      $10,862,218    $9,566,256  $11,152,447    $9,849,447


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

                 Years Ended December 31,        December 31,
                  2003     2002     2001         2003    2002

Senior debt       4.61%    5.89%    6.66%       4.35%    5.09%


Contractual maturities of long-term debt at December 31, 2003 were as
follows:

                        Carrying Value
                    (dollars in thousands)

2004                      $ 2,099,189
2005                        1,887,323
2006                        2,454,296
2007                        1,421,550
2008                          540,668
2009-2013                   2,459,192

Total                     $10,862,218


In second quarter 2003, a consolidated special purpose subsidiary of
AGFI recorded $256.4 million of debt issued by a trust that purchased
$259.0 million of real estate loans as part of our securitization.  We
recorded the transaction as an "on balance sheet" secured financing.
The remaining balance of this secured debt at December 31, 2003 was
$175.3 million.

At December 31, 2003, we had $9.1 billion of long-term debt securities
registered under the Securities Act of 1933 that had not yet been
issued.

An AGFC debt agreement contains restrictions on consolidated retained
earnings for certain purposes (see Note 17.).
<PAGE> 76

Notes to Consolidated Financial Statements, Continued


Note 10.  Short-term Debt

AGFI and AGFC issue commercial paper with terms ranging from 1 to 270
days.  The weighted average maturity of our commercial paper at
December 31, 2003 was 22 days.

Included in short-term debt are extendible commercial notes that AGFC
sells with initial maturities of up to 90 days which may be extended
by AGFC to 390 days.  At December 31, 2003, extendible commercial
notes totaled $530.4 million.

Information concerning short-term debt was as follows:

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

Average borrowings               $3,665,145   $4,126,866   $4,617,152
Weighted average interest
  rate, at year end:
    Money market yield                1.06%        1.45%        1.95%
    Semi-annual bond
      equivalent yield                1.07%        1.45%        1.96%



Note 11.  Liquidity Facilities

We maintain credit facilities to support the issuance of commercial
paper and to provide an additional source of funds for operating
requirements.  At December 31, 2003, AGFC had committed credit
facilities totaling $3.0 billion, including a facility under which
AGFI is an eligible borrower for up to $300 million.  The annual
commitment fees for the facilities are based upon AGFC's long-term
credit ratings and averaged 0.07% at December 31, 2003.

At December 31, 2003, AGFI and certain of its subsidiaries also had
uncommitted credit facilities totaling $170.0 million which could be
increased depending upon lender ability to participate its loans under
the facilities.

Outstanding borrowings under all facilities totaled $60.0 million at
December 31, 2003 and December 31, 2002.  AGFC does not guarantee any
borrowings of AGFI.
<PAGE> 77

Notes to Consolidated Financial Statements, Continued


Note 12.  Derivative Financial Instruments

Our principal borrowing subsidiary is AGFC.  AGFC uses derivative
financial instruments in managing the cost of its debt and is neither
a dealer nor a trader in derivative financial instruments.  AGFC has
generally limited its use of derivative financial instruments to
interest rate swap agreements.  These interest rate swap agreements
are designated and qualify as cash flow hedges or fair value hedges.

AGFC uses interest rate swap agreements to limit our exposure to
market interest rate risk in the funding of our operations.  Most of
our swaps synthetically convert certain short-term or floating-rate
debt to a long-term fixed-rate.  The synthetic long-term fixed rates
achieved through interest rate swap agreements are slightly lower than
could have been achieved by issuing comparable fixed-rate, long-term
debt.  Additionally, AGFC has swapped fixed-rate, long-term debt to
floating-rate, long-term debt.  As an alternative to funding without
these derivative financial instruments, AGFC's interest rate swap
agreements did not have a material effect on the Company's net income
in any of the three years ended December 31, 2003.

Notional amounts and weighted average receive and pay rates were as
follows:

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

Notional amount                $2,495,000    $2,940,000    $2,500,000

Weighted average receive rate       2.19%         2.28%         2.06%
Weighted average pay rate           4.70%         5.24%         6.58%


Notional amount maturities and the respective weighted average
interest rates at December 31, 2003 were as follows:

                Notional       Weighted Average
                 Amount         Interest Rate
              (dollars in
               thousands)

2004           $  920,000           6.05%
2005              525,000           5.25
2006              100,000           7.03
2007              750,000           2.12
2008              200,000           5.50

Total          $2,495,000           4.70%
<PAGE> 78

Notes to Consolidated Financial Statements, Continued


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

                                      Years Ended December 31,
                                  2003          2002          2001
                                       (dollars in thousands)

Balance at beginning of year   $2,940,000    $2,500,000    $2,450,000
New contracts                        -        1,050,000       320,000
Expired contracts                (445,000)     (610,000)     (270,000)

Balance at end of year         $2,495,000    $2,940,000    $2,500,000


AGFC is exposed to credit risk in the event of non-performance by
counterparties to derivative financial instruments.  AGFC limits this
exposure by entering into agreements with counterparties having high
credit ratings and by basing the amounts and terms of these agreements
on their credit ratings.  AGFC regularly monitors counterparty credit
ratings throughout the term of the agreements.  At December 31, 2003,
AGFC had notional amounts of $1.1 billion in interest rate swap
agreements with a highly-rated non-subsidiary affiliate.

AGFC's credit exposure on derivative financial instruments is limited
to the fair value of the agreements that are favorable to the Company.
At December 31, 2003, the interest rate swap agreements were recorded
at fair value of $75.7 million in other liabilities.  AGFC does not
expect any counterparty to fail to meet its obligation; however, non-
performance would not have a material impact on the Company's
consolidated results of operations or financial position.

AGFC's exposure to market risk is mitigated by the offsetting effects
of changes in the value of the agreements and of the related debt
being hedged.  At December 31, 2003, we expect to reclassify $51.4
million of net realized losses on interest rate swap agreements from
accumulated other comprehensive income to income during the next
twelve months.
<PAGE> 79

Notes to Consolidated Financial Statements, Continued


Note 13.  Insurance

Components of insurance claims and policyholder liabilities were as
follows:

                                                 December 31,
                                             2003            2002
                                            (dollars in thousands)

Finance receivable related:
  Unearned premium reserves                $165,627        $187,631
  Benefit reserves                           18,788          14,520
  Claim reserves                             30,264          35,823

  Subtotal                                  214,679         237,974

Non-finance receivable related:
  Benefit reserves                          200,992         212,702
  Claim reserves                             22,691          21,672

  Subtotal                                  223,683         234,374

Total                                      $438,362        $472,348


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

                                                 December 31,
                                             2003            2002
                                            (dollars in thousands)

Affiliated insurance companies             $ 55,184        $ 64,387
Non-affiliated insurance companies           38,352          48,227

Total                                      $ 93,536        $112,614


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

Our insurance subsidiaries file financial statements prepared using
statutory accounting practices prescribed or permitted by each
insurance company's state of domicile.  These are comprehensive bases
of accounting other than GAAP.
<PAGE> 80

Notes to Consolidated Financial Statements, Continued


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

                                           Years Ended December 31,
                                          2003       2002      2001
                                            (dollars in thousands)

Statutory net income                    $88,607    $78,149    $87,632

Change in deferred policy
  acquisition costs                      (8,550)    (8,678)    (7,561)
Reserve changes                          (6,758)     2,919       (669)
Deferred income tax benefit               6,537      8,299      1,512
Amortization of interest
  maintenance reserve                    (1,262)    (1,456)    (2,322)
Goodwill amortization                      -          -          (458)
Other, net                               (1,612)    (5,623)    (5,500)

GAAP net income                         $76,962    $73,610    $72,634


Reconciliations of statutory equity to GAAP equity were as follows:

                                                 December 31,
                                             2003            2002
                                            (dollars in thousands)

Statutory equity                           $  861,589      $734,146

Reserve changes                                69,550        84,119
Net unrealized gains                           64,181        46,119
Deferred policy acquisition costs              56,924        66,018
Deferred income taxes                         (31,015)      (36,074)
Decrease in carrying value
  of affiliates                               (28,603)      (24,932)
Goodwill                                       12,104        13,794
Asset valuation reserve                         6,178        17,134
Interest maintenance reserve                      453        (1,985)
Other, net                                      1,286        26,100

GAAP equity                                $1,012,647      $924,439
<PAGE> 81

Notes to Consolidated Financial Statements, Continued


Note 14.  Other Liabilities

Components of other liabilities were as follows:

                                               December 31,
                                           2003            2002
                                          (dollars in thousands)

Accrued interest                         $114,590        $126,026
Uncashed checks, reclassified from
  cash                                    101,122         113,402
Interest rate swap agreements fair
  values                                   75,679         137,682
Salary and benefit liabilities             26,206          18,796
Other                                      59,142          47,026

Total                                    $376,739        $442,932



Note 15.  Capital Stock

AGFI has two classes of authorized capital stock:  special shares and
common shares.  AGFI may issue special shares in series.  The board of
directors determines the dividend, liquidation, redemption,
conversion, voting and other rights prior to issuance.  Par value,
shares authorized, and shares issued and outstanding at December 31,
2003 and 2002 were as follows:

                                                      Shares
                                              Issued and Outstanding
                       Par       Shares            December 31,
                      Value    Authorized      2003            2002

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



Note 16.  Accumulated Other Comprehensive Loss

Components of accumulated other comprehensive loss were as follows:

                                               December 31,
                                           2003            2002
                                          (dollars in thousands)

Net unrealized losses on interest
  rate swaps                             $(55,586)       $(98,904)
Net unrealized gains on investment
  securities                               40,639          29,966

Accumulated other comprehensive loss     $(14,947)       $(68,938)
<PAGE> 82

Notes to Consolidated Financial Statements, Continued


Note 17.  Retained Earnings

AGFI's ability to pay dividends is substantially dependent on the
receipt of dividends or other funds from its subsidiaries.  State laws
restrict the amounts our insurance subsidiaries may pay as dividends
without prior notice to, or in some cases prior approval from, their
respective state insurance departments.  At December 31, 2003, the
maximum amount of dividends which our insurance subsidiaries may pay
in 2004 without prior approval was $94.1 million.  At December 31,
2003, our insurance subsidiaries had statutory capital and surplus of
$861.6 million.  Merit Life Insurance Co. (Merit), a wholly owned
subsidiary of AGFC, had $52.7 million of accumulated earnings at
December 31, 2003 for which no federal income tax provisions have been
required.  Merit would be liable for federal income taxes on such
earnings if they were distributed as dividends or exceeded limits
prescribed by tax laws.  No distributions are presently contemplated
from these earnings.  If such earnings were to become taxable at
December 31, 2003, 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
contained in these agreements, $829.6 million of the retained earnings
of AGFC was free from restriction at December 31, 2003.



Note 18.  Other Charges - AIG Acquisition

In September 2001, we recorded one-time charges totaling $78.3 million
($50.9 million aftertax), resulting from AIG's and the Company's joint
assessment of the business environment and post-business combination
plans.  These charges recognized that certain assets had no future
economic benefit or ability to generate future revenues.  These costs
included asset impairment charges related to goodwill and customer
relationships intangibles that resulted from previous business
acquisitions.  Also included were certain adjustments associated with
conforming the Company's balances to AIG's accounting policies and
methodologies, as well as an increase in the allowance for finance
receivable losses to reflect AIG's and the Company's assumptions about
the business environment.



Note 19.  Income Taxes

For the period August 30, 2001 to December 31, 2001 and the years 2002
and 2003, the life insurance subsidiaries of AGFC file separate
federal income tax returns.  AGFI and all other AGFI subsidiaries file
a consolidated federal income tax return with AIG.  We provide federal
income taxes as if AGFI and the other AGFI subsidiaries file separate
tax returns and pay AIG accordingly under a tax sharing agreement.
<PAGE> 83

Notes to Consolidated Financial Statements, Continued


For the period January 1, 2001 to August 29, 2001, AGFI and all of its
subsidiaries were included in a federal income tax return with our
then parent company and the majority of its subsidiaries.  We provided
federal income taxes as if AGFI and other AGFI subsidiaries filed
separate tax returns and paid our then parent company accordingly
under a tax sharing agreement.

Components of provision for income taxes were as follows:

                                        Years Ended December 31,
                                     2003         2002         2001
                                         (dollars in thousands)
Federal:
  Current                          $197,903     $197,226     $152,218
  Deferred                           (2,324)     (60,601)     (30,051)
Total federal                       195,579      136,625      122,167
State                                13,726        8,717        6,094

Total                              $209,305     $145,342     $128,261


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

                                         Years Ended December 31,
                                      2003         2002         2001

Statutory federal income tax rate    35.00%       35.00%       35.00%

Contingency reduction                  -          (6.10)         -
State income taxes                    2.39         1.11         1.11
Amortization of goodwill               -            -            .60
Amortization of other intangibles     1.33          -            -
Nontaxable investment income         (2.53)        (.64)        (.98)
Other, net                             .19          .16          .25

Effective income tax rate            36.38%       29.53%       35.98%


During fourth quarter 2002, we reduced the provision for income taxes
by $30.0 million resulting from a favorable settlement of income tax
audit issues.  This decreased the effective income tax rate for 2002.

The Internal Revenue Service (IRS) has completed examinations of AIG's
tax returns through 1990.  The IRS has also completed examinations of
our previous parent company's tax returns through 1999.
<PAGE> 84

Notes to Consolidated Financial Statements, Continued


Components of deferred tax assets and liabilities were as follows:

                                                December 31,
                                            2003            2002
                                           (dollars in thousands)
Deferred tax assets:
  Allowance for finance receivable
    losses                                $149,472        $145,663
  Interest rate swap agreements              8,049          32,014
  Deferred insurance commissions             4,275           4,054
  Goodwill                                   5,356           5,910
  Insurance reserves                         3,100           2,321
  Other                                     18,108          21,013

Total                                      188,360         210,975

Deferred tax liabilities:
  Loan origination costs                    16,684          16,619
  Fixed assets                               8,342           7,001
  Other                                     36,680          34,886

Total                                       61,706          58,506

Net deferred tax assets                   $126,654        $152,469


No valuation allowance was considered necessary at December 31, 2003
and 2002.



Note 20.  Lease Commitments, Rent Expense and Contingent Liabilities

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

                            Lease Commitments
                         (dollars in thousands)

2004                            $ 50,535
2005                              39,042
2006                              21,924
2007                              13,061
2008                               8,041
subsequent to 2008                14,650

Total                           $147,253


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 2003.
Rental expense totaled $53.7 million in 2003, $51.5 million in 2002,
and $49.4 million in 2001.
<PAGE> 85

Notes to Consolidated Financial Statements, Continued


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



Note 21.  Consolidated Statements of Cash Flows

Supplemental disclosure of certain cash flow information was as
follows:

                                        Years Ended December 31,
                                     2003         2002         2001
                                         (dollars in thousands)

Interest paid                      $547,647     $547,676     $649,737
Income taxes paid                   213,848      238,632       95,975


AGFI received a non-cash capital contribution from its parent of $7.3
million in fourth quarter 2002 reflecting AIG's assumption of certain
benefit obligations effective January 1, 2002.  See Note 22. for
further information on the Company's benefit plans.



Note 22.  Benefit Plans

Effective January 1, 2002, the Company's employees participate in
various benefit plans sponsored by AIG, including a noncontributory
qualified defined benefit retirement plan, various stock option and
purchase plans, and a 401(k) plan.

AIG's U.S. plans do not separately identify projected benefit
obligations and plan assets attributable to employees of participating
affiliates.  AIG's projected benefit obligations exceeded the plan
assets at December 31, 2003 by $454.6 million.

Prior to January 1, 2002, the Company's employees participated in our
then parent company's benefit plans.  AGFI accounted for its
participation in these plans as if it had its own plans.
<PAGE> 86

Notes to Consolidated Financial Statements, Continued


AGFI's portion of the retirement plans' funded status was as follows:

                                         December 31, 2001
                                       (dollars in thousands)

Projected benefit obligation                  $123,648
Plan assets at fair value                       95,030
Plan assets less than projected
  benefit obligation                           (28,618)
Other unrecognized items, net                   27,660

Accrued pension expense                       $   (958)


Components of pension expense were as follows:

                                    Year Ended December 31, 2001
                                       (dollars in thousands)

Service cost                                  $  3,849
Interest cost                                    8,245
Expected return on plan assets                 (10,283)
Net amortization and deferral                      260

Pension expense                               $  2,071


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

                                    Year Ended December 31, 2001

Weighted average discount rate                   7.25%
Expected long-term rate of
  return on plan assets                         10.35
Rate of increase in
  compensation levels                            4.25


The accrued liability for postretirement benefits was $6.2 million at
December 31, 2001.  These liabilities were discounted at the same
rates used for the pension plans.  Postretirement benefit expense
totaled $.8 million in 2001.
<PAGE> 87

Notes to Consolidated Financial Statements, Continued


Note 23.  Segment Information

We have two business segments: consumer finance and insurance.  Our
segments are defined by the type of financial service product offered.
The consumer finance segment makes home equity loans, originates
secured and unsecured consumer loans, extends lines of credit, and
purchases retail sales contracts from, and provides revolving retail
services for, retail merchants.  We also purchase, from AIG Federal
Savings Bank, a non-subsidiary affiliate, private label receivables
under a participation agreement and real estate loans under a purchase
agreement.  To supplement our lending and retail sales financing
activities, we purchase portfolios of real estate loans, non-real
estate loans, and retail sales finance receivables.  We also provide
for a fee, marketing, certain origination processing services, and
loan servicing for AIG Federal Savings Bank and originate real estate
loans through brokers for sale to investors.  We offer credit and non-
credit insurance products to our eligible consumer finance customers.
The insurance segment writes and reinsures credit and non-credit
insurance through products that are offered principally by the
consumer finance segment.

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

     *  segment finance charge revenues are not reduced for the
        amortization of the deferred origination costs;
     *  segment operating expenses are not reduced for the deferral of
        origination costs (segment operating expenses for 2001 also
        excluded the amortization of goodwill);
     *  segment finance receivables exclude deferred origination
        costs; and
     *  segment investment revenues exclude realized gains and losses
        and certain investment expenses.

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.  The adjustments in the reconciliations
include the following:

     *  amortization of deferred origination costs, realized gains
        (losses) on investments, and certain investment expenses for
        revenues;
     *  realized gains (losses) and certain other investment revenue
        and pension expense (2001 also included the amortization of
        goodwill) for pretax income; and
     *  goodwill, deferred origination costs, other assets, and
        corporate assets that are not considered pertinent to
        determining segment performance for assets.  Corporate assets
        include cash, prepaid expenses, deferred charges, and fixed
        assets.
<PAGE> 88

Notes to Consolidated Financial Statements, Continued


At or for the year ended December 31, 2003:

                            Consumer                          Total
                            Finance         Insurance       Segments
                                      (dollars in thousands)
Revenues:
  External:
    Finance charges        $ 1,872,929     $      -       $ 1,872,929
    Insurance                      881         180,761        181,642
    Other                      122,853          88,633        211,486
  Intercompany                  92,232         (71,433)        20,799
Interest expense               500,204            -           500,204
Provision for finance
  receivable losses            314,965            -           314,965
Pretax income                  537,871          96,914        634,785
Assets                      14,965,101       1,389,527     16,354,628


At or for the year ended December 31, 2002:

                            Consumer                          Total
                            Finance         Insurance       Segments
                                      (dollars in thousands)
Revenues:
  External:
    Finance charges        $ 1,803,472     $      -       $ 1,803,472
    Insurance                      994         190,236        191,230
    Other                      (17,057)         87,746         70,689
  Intercompany                  78,878         (75,869)         3,009
Interest expense               513,685            -           513,685
Provision for finance
  receivable losses            304,844            -           304,844
Pretax income                  465,259          84,436        549,695
Assets                      13,472,988       1,320,844     14,793,832


At or for the year ended December 31, 2001:

                            Consumer                          Total
                            Finance         Insurance       Segments
                                      (dollars in thousands)
Revenues:
  External:
    Finance charges        $ 1,788,875     $      -       $ 1,788,875
    Insurance                    1,111         194,282        195,393
    Other                       (5,465)         91,134         85,669
  Intercompany                  80,064         (77,000)         3,064
Interest expense               591,024            -           591,024
Provision for finance
  receivable losses            288,709            -           288,709
Pretax income                  347,222          86,418        433,640
Assets                      11,645,931       1,261,589     12,907,520
<PAGE> 89

Notes to Consolidated Financial Statements, Continued


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

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

Segments                      $ 2,286,856   $ 2,068,400   $ 2,073,001
Corporate                         (18,862)       (7,197)      (13,499)
Adjustments                       (77,888)      (61,365)      (61,004)

Consolidated revenue          $ 2,190,106   $ 1,999,838   $ 1,998,498


Interest Expense

Segments                      $   500,204   $   513,685   $   591,024
Corporate                          46,512        45,606        44,459

Consolidated interest
  expense                     $   546,716   $   559,291   $   635,483


Provision for Finance
  Receivable Losses

Segments                      $   314,965   $   304,844   $   288,709
Corporate                          (1,135)       (1,259)          593

Consolidated provision for
  finance receivable losses   $   313,830   $   303,585   $   289,302


Pretax Income

Segments                      $   634,785   $   549,695   $   433,640
Corporate                         (48,081)      (53,050)      (65,247)
Adjustments                       (11,296)       (4,477)      (11,875)

Consolidated pretax income    $   575,408   $   492,168   $   356,518


Assets

Segments                      $16,354,628   $14,793,832   $12,907,520
Corporate                         405,238       516,853       443,318
Adjustments                       246,298       173,601       180,816

Consolidated assets           $17,006,164   $15,484,286   $13,531,654
<PAGE> 90

Notes to Consolidated Financial Statements, Continued


Note 24.  Interim Financial Information (Unaudited)

Our quarterly statements of income for 2003 and 2002 were as follows:

                                              2003 Quarter Ended
                                   Dec. 31,   Sep. 30,   June 30,   Mar. 31,
                                            (dollars in thousands)
Revenues
  Finance charges                  $446,266   $445,241   $441,424   $440,346
  Insurance                          46,955     46,307     42,672     45,708
  Other                              69,252     61,742     63,042     41,151
Total revenues                      562,473    553,290    547,138    527,205

Expenses
  Interest expense                  134,612    132,263    136,965    142,876
  Operating expenses                182,284    169,519    171,430    163,070
  Provision for finance
    receivable losses                84,047     82,362     76,305     71,116
  Insurance losses and loss
    adjustment expenses              14,862     17,438     15,160     20,389
Total expenses                      415,805    401,582    399,860    397,451

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

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

Net Income                         $ 93,432   $ 94,739   $ 93,889   $ 84,043



                                              2002 Quarter Ended
                                   Dec. 31,   Sep. 30,   June 30,   Mar. 31,
                                            (dollars in thousands)
Revenues
  Finance charges                  $444,636   $427,457   $422,926   $423,854
  Insurance                          49,841     47,839     48,050     45,500
  Other                              23,602     19,896     23,087     23,150
Total revenues                      518,079    495,192    494,063    492,504

Expenses
  Interest expense                  147,557    135,914    138,588    137,232
  Operating expenses                138,598    139,424    139,882    143,615
  Provision for finance
    receivable losses                88,270     71,404     72,852     71,059
  Insurance losses and loss
    adjustment expenses              22,281     19,201     19,811     21,982
Total expenses                      396,706    365,943    371,133    373,888

Income before provision for
  income taxes                      121,373    129,249    122,930    118,616

Provision for Income Taxes           13,336     46,013     43,766     42,227

Net Income                         $108,037   $ 83,236   $ 79,164   $ 76,389
<PAGE> 91

Notes to Consolidated Financial Statements, Continued


Note 25.  Fair Value of Financial Instruments

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

                              December 31, 2003         December 31, 2002
                           Carrying          Fair    Carrying          Fair
                            Value           Value     Value           Value
                                         (dollars in thousands)
Assets

Net finance receivables,
  less allowance for
  finance receivable
  losses                  $14,841,930  $15,345,079  $13,383,181  $13,432,536
Investment securities       1,307,472    1,307,472    1,227,156    1,227,156
Cash and cash equivalents     145,462      145,462      153,660      153,660


Liabilities

Long-term debt             10,862,218   11,152,447    9,566,256    9,849,447
Short-term debt             3,467,096    3,476,096    3,375,674    3,375,674
Interest rate swap
  agreements                   75,679       75,679      137,682      137,682


Off-Balance Sheet Financial
  Instruments

Unused customer credit
  limits                         -            -            -            -
Limited partnership commitments  -          14,520         -          26,110



                VALUATION METHODOLOGIES AND ASSUMPTIONS

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


Finance Receivables

We estimated fair values of net finance receivables, less allowance
for finance receivable losses using projected cash flows, computed by
category of finance receivable, discounted at the weighted-average
interest rates offered for similar finance receivables at December 31
of each year.  We based cash flows on contractual payment terms
adjusted for delinquencies and finance receivable losses.  The fair
value estimates do not reflect the value of the underlying customer
relationships or the related distribution systems.
<PAGE> 92

Notes to Consolidated Financial Statements, Continued


Investment Securities

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


Cash and Cash Equivalents

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


Long-term Debt

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


Short-term Debt

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


Interest Rate Swap Agreements

We estimated the fair values of interest rate swap agreements using
market recognized valuation systems at each year's December 31 market
rates.


Unused Customer Credit Limits

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


Limited Partnership Commitments

The fair values of limited partnership commitments equal the
commitment amounts due to the partnership's ability to call these
commitments on demand.
<PAGE> 93

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


As previously reported in AGFI's Current Report on Form 8-K dated
April 22, 2002, the Company changed independent auditors effective
with the year beginning January 1, 2002.  There were no disagreements,
as defined in Securities and Exchange Commission rules, between the
Company and its previous independent auditors.



Item 9A.  Controls and Procedures.


(a)  Evaluation of disclosure controls and procedures

     The conclusions of our principal executive officer and principal
     financial officer about the effectiveness of the Company's
     disclosure controls and procedures based on their evaluation of
     these controls and procedures as of December 31, 2003 are as
     follows:

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

     The Company's management, including its principal executive
     officer and principal financial officer, evaluates the
     effectiveness of our disclosure controls and procedures as of the
     end of each quarter.  Based on an evaluation of the disclosure
     controls and procedures as of December 31, 2003, the Company's
     principal executive officer and principal financial officer have
     concluded that the disclosure controls and procedures have
     functioned effectively and that the consolidated financial
     statements fairly present our consolidated financial position and
     the results of our operations for the periods presented.

(b)  Changes in internal control over financial reporting

     There was no change in the Company's internal control over
     financial reporting during the three months ended December 31,
     2003, that has materially affected, or is reasonably likely to
     materially affect, the Company's internal control over financial
     reporting.
<PAGE> 94

                               PART III


Item 14.  Principal Accountant Fees and Services.


As an indirect wholly-owned subsidiary of AIG, oversight functions
regarding our independent accountants, PricewaterhouseCoopers LLP, are
included in the duties of AIG's Audit Committee.  AGFI does not have
its own Audit Committee.  AIG's Audit Committee has adopted pre-
approval policies and procedures regarding audit and non-audit
services provided by PricewaterhouseCoopers LLP for AIG and its
consolidated subsidiaries, including AGFI.

Independent accountant fees and services were as follows:

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

Audit fees                                $850                  $710
Audit-related fees                          90                    -
Tax fees                                    -                     -
All other fees                               2                     2

Total                                     $942                  $712


Audit fees in 2003 and 2002 were primarily for the audit of the AGFI
and AGFC Annual Reports on Form 10-K, quarterly review procedures in
relation to the AGFI and AGFC Quarterly Reports on Form 10-Q, and
statutory audits of insurance subsidiaries of AGFC.  AGFC is a
separate SEC registrant and its fees are part of the total AGFI fee,
representing approximately 99% of the total audit fees for AGFI.
Audit-related fees were primarily for the audit of a subsidiary of
AGFC in 2003.  There were no audit-related fees in 2002.  All other
fees in 2003 and 2002 were primarily for accounting research
licensing.
<PAGE> 95

                                PART IV


Item 15.  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, 2003 and 2002

          Consolidated Statements of Income, years ended December 31,
          2003, 2002, and 2001

          Consolidated Statements of Shareholder's Equity, years ended
          December 31, 2003, 2002, and 2001

          Consolidated Statements of Cash Flows, years ended December
          31, 2003, 2002, and 2001

          Consolidated Statements of Comprehensive Income, years ended
          December 31, 2003, 2002, and 2001

          Notes to Consolidated Financial Statements

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

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

     (3)  Exhibits:

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

(b)  Reports on Form 8-K

     No Current Reports on Form 8-K were filed during fourth quarter
     2003.

(c)  Exhibits

     The exhibits required to be included in this portion of Item 15.
     are submitted as a separate section of this report.
<PAGE> 96

Item 15(d).


Schedule I - Condensed Financial Information of Registrant


                    American General Finance, Inc.
                       Condensed Balance Sheets




                                                         December 31,
                                                     2003            2002
                                                    (dollars in thousands)
Assets

Cash and cash equivalents                         $      115      $      289
Investment in subsidiaries                         2,051,337       1,818,267
Notes receivable from subsidiaries                   264,854         297,470
Other assets                                          71,821          72,183

Total assets                                      $2,388,127      $2,188,209


Liabilities and Shareholder's Equity

Short-term debt                                   $  559,320      $  583,861
Other liabilities                                      5,010          17,531

Total liabilities                                    564,330         601,392

Shareholder's equity:
  Common stock                                         1,000           1,000
  Additional paid-in capital                         920,276         920,276
  Other equity                                       (14,947)        (68,938)
  Retained earnings                                  917,468         734,479

Total shareholder's equity                         1,823,797       1,586,817

Total liabilities and shareholder's equity        $2,388,127      $2,188,209




See Notes to Condensed Financial Statements.
<PAGE> 97

Schedule I, Continued


                    American General Finance, Inc.
                    Condensed Statements of Income




                                                 Years Ended December 31,
                                                2003       2002       2001
                                                  (dollars in thousands)

Revenues
  Dividends received from subsidiaries        $176,065   $154,692   $431,234
  Interest and other                            24,310     20,389     24,626

Total revenues                                 200,375    175,081    455,860

Expenses
  Interest expense                              17,532     21,254     32,280
  Operating expenses                             3,127      2,713     12,929
  Other charges                                   -          -        20,277

Total expenses                                  20,659     23,967     65,486

Income before income taxes and equity
  in undistributed (overdistributed)
  net income of subsidiaries                   179,716    151,114    390,374

Provision (Credit) for Income Taxes              1,278     (1,252)   (14,455)

Income before equity in undistributed
  (overdistributed) net income of
  subsidiaries                                 178,438    152,366    404,829

Equity in Undistributed (Overdistributed)
  Net Income of Subsidiaries                   187,665    194,460   (176,572)

Net Income                                    $366,103   $346,826   $228,257




See Notes to Condensed Financial Statements.
<PAGE> 98

Schedule I, Continued
<TABLE>

                       American General Finance, Inc.
                     Condensed Statements of Cash Flows



<CAPTION>
                                                      Years Ended December 31,
                                                    2003       2002        2001
                                                       (dollars in thousands)
<S>                                              <C>         <C>         <C>
Cash Flows from Operating Activities
Net Income                                       $ 366,103   $ 346,826   $ 228,257
Reconciling adjustments:
  Equity in (undistributed) overdistributed
    net income of subsidiaries                    (187,665)   (194,460)    176,572
  Change in other assets and other liabilities     (13,024)    (38,695)    (28,862)
  Other charges                                       -           -         20,277
  Other, net                                        10,194       7,657       9,484
Net cash provided by operating activities          175,608     121,328     405,728

Cash Flows from Investing Activities
  Capital contributions to subsidiaries               -        (66,737)       -
  Change in notes receivable from subsidiaries      32,616      28,092     (11,028)
  Net additions to fixed assets                       (743)     (1,200)     (1,128)
Net cash provided by (used for)
  investing activities                              31,873     (39,845)    (12,156)

Cash Flows from Financing Activities
  Repayment of long-term debt                         -         (1,284)     (1,894)
  Change in short-term debt                        (24,541)     34,028      46,349
  Capital contributions from parent                   -         33,000        -
  Dividends paid                                  (183,114)   (146,999)   (438,303)
Net cash used for financing activities            (207,655)    (81,255)   (393,848)

(Decrease) increase in cash and cash equivalents      (174)        228        (276)
Cash and cash equivalents at beginning of year         289          61         337
Cash and cash equivalents at end of year         $     115   $     289   $      61


<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE> 99

Schedule I, Continued


                    American General Finance, Inc.
                Notes to Condensed Financial Statements
                          December 31, 2003




Note 1.  Accounting Policies

AGFI's investments in subsidiaries are stated at cost plus the equity
in undistributed (overdistributed) 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.  Short-term Debt

Components of short-term debt were as follows:

                                               December 31,
                                           2003            2002
                                          (dollars in thousands)

Notes payable to subsidiaries            $276,753        $269,328
Commercial paper                          222,567         254,533
Notes payable to banks                     60,000          60,000

Total                                    $559,320        $583,861



Note 3.  Other Charges

In September 2001, AGFI recorded one-time charges totaling $20.3
million ($13.2 million aftertax), resulting from AIG's and AGFI's
joint assessment of the business environment and post-business
combination plans.  These charges recognized that certain assets had
no future economic benefit or ability to generate future revenues.
These costs included an asset impairment charge related to goodwill
that resulted from a previous business acquisition.
<PAGE> 100

                              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 10, 2004.

                                  AMERICAN GENERAL FINANCE, INC.


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


Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities indicated on March 10, 2004.



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

                                    Ben D. Hendrix*
George W. Schmidt*                  Ben D. Hendrix
George W. Schmidt                   (Director)
(Vice President, Controller,
 and Assistant Secretary -
 Principal Accounting Officer)      *By: /s/  Donald R. Breivogel, Jr.
                                              Donald R. Breivogel, Jr.
                                    (Attorney-in-fact)
Stephen L. Blake*
Stephen L. Blake
(Director)
<PAGE> 101

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> 102

                             Exhibit Index


Exhibit
Number

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

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

(4) a.	The following instruments are filed pursuant to Item
        601(b)(4)(ii) of Regulation S-K, which requires with certain
        exceptions that all instruments be filed which define the
        rights of holders of the Company's long-term debt and of our
        consolidated subsidiaries.  In the aggregate, the outstanding
        issuances of debt at December 31, 2002 under the following
        Indenture exceeds 10% of the Company's total assets on a
        consolidated basis:

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

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

(12)    Computation of ratio of earnings to fixed charges

(23.1)  Consent of PricewaterhouseCoopers LLP, Independent Accountants

(23.2)  Consent of Ernst & Young LLP, Independent Auditors

(24)    Power of Attorney

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

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

(32)    Section 1350 Certifications