<PAGE>

                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, DC  20549

                                 FORM 10-K

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

      For the fiscal year ended December 31, 1998 

                                     OR

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

      For the transition period from ________ to ________.

                       Commission File Number 1-6155 

                    American General Finance Corporation
           (Exact name of registrant as specified in its charter)

             Indiana                            35-0416090   
     (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:

                                                  Name of each exchange
         Title of each class                       on which registered  
6-3/8% Senior Notes due March 1, 2003             New York Stock Exchange
8.45% Senior Notes due October 15, 2009           New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act:

                                    None

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

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

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

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

At  March 19, 1999, there were 10,160,012 shares of the registrant's common
stock, $.50 par value, outstanding.
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<PAGE> 2

                             TABLE OF CONTENTS




           Item                                                      Page

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

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

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

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

Part II     5.  Market for Registrant's Common Equity and Related
                  Stockholder Matters  . . . . . . . . . . . . . . . . 17

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

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

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

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

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

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

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

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

           13.  Certain Relationships and Related Transactions . . . .  *

Part IV    14.  Exhibits, Financial Statement Schedules, and Reports
                  on Form 8-K  . . . . . . . . . . . . . . . . . . . . 63



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

     **    Item 9 is  not included, as  no information was required  by Item
           304 of Regulation S-K.
<PAGE>
<PAGE> 3

                                   PART I

Item 1.  Business.

                                  GENERAL

American General Finance Corporation  will be referred to in  this document
as  "AGFC"  or  collectively  with its  subsidiaries,  whether  directly or
indirectly owned,  as the "Company".   AGFC was incorporated  in Indiana in
1927 as successor to  a business started in 1920.  All  of the common stock
of AGFC  is owned  by  American General  Finance,  Inc. (AGFI),  which  was
incorporated  in Indiana in  1974.  Since  1982, AGFI has been  a direct or
indirect wholly-owned  subsidiary of American General Corporation (American
General), the parent  company of  one of the  nation's largest  diversified
financial   services   organizations.      American   General's   operating
subsidiaries are leading providers of retirement services, life  insurance,
and consumer loans.  American General, a Texas corporation headquartered in
Houston,  is  the  successor  to  American  General  Insurance  Company, an
insurance company incorporated in Texas in 1926.

AGFC  is  a financial  services holding  company with  subsidiaries engaged
primarily  in  the consumer  finance and  credit  insurance business.   The
Company  conducts the  credit insurance  business as  part of  the consumer
finance  business through  Merit Life  Insurance Co.  (Merit)  and Yosemite
Insurance Company (Yosemite), which are both subsidiaries of AGFC.
 
At December  31, 1998, the Company  had 1,310 offices in  40 states, Puerto
Rico, and the U.S. Virgin Islands  and approximately 7,900 employees.   The
Company's executive offices are located in Evansville, Indiana.


Selected Financial Information

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

The following table shows selected financial information of the Company:

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

Average finance receivables net
  of unearned finance charges
  (average net receivables)        $8,335,435    $7,340,902    $7,930,169

Average borrowings                 $7,630,925    $6,949,021    $6,989,745
<PAGE>
<PAGE> 4

Item 1.  Continued


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

Yield - finance charges as a
  percentage of average net
  receivables                        15.87%        16.80%        17.84%

Borrowing cost - interest
  expense as a percentage  
  of average borrowings               6.57%         6.82%         6.90%

Interest spread - yield 
  less borrowing cost                 9.30%         9.98%        10.94%

Insurance revenues as a
  percentage of average 
  net receivables                     2.11%         2.57%         2.60%

Operating expenses as a
  percentage of average
  net receivables                     5.93%         6.36%         6.27%

Allowance ratio - allowance for 
  finance receivable losses as
  a percentage of net finance 
  receivables                         3.94%         4.64%         5.18%

Charge-off ratio - net charge-offs 
  as a percentage of the average
  of net finance receivables at
  the beginning of each month
  during the period                   2.60%         3.62%         5.51%

Delinquency ratio - finance 
  receivables 60 days or more 
  past due as a percentage
  of related receivables              3.78%         3.61%         3.84%

Return on average assets              1.96%         1.51%          .55%

Return on average equity             13.31%        10.16%         3.55%

Ratio of earnings to fixed charges
  (refer to Exhibit 12 for
  calculations)                       1.60          1.44          1.16

Debt to tangible equity ratio -  
  debt to equity less goodwill 
  and net unrealized gains or 
  losses on investment securities     6.46          6.54          7.08

Debt to equity ratio                  5.33          5.16          5.57
<PAGE>
<PAGE> 5

Item 1.  Continued


                        CONSUMER FINANCE OPERATIONS

The Company makes loans directly to individuals, acquires real estate loans
made  by  brokers and  other real  estate  lenders, purchases  retail sales
contract obligations  of  individuals,  and  offers  revolving  retail  and
private  label services.    The Company  conducts  its lending  and  retail
operations  through  its  consumer  branch  and  centralized  real   estate
segments.  See Note  21. of the Notes to Consolidated  Financial Statements
in Item 8. for further information on the Company's segments.

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

In  its retail  operations,  the Company  purchases retail  sales contracts
arising  from  the retail  sale of  consumer  goods and  services, provides
revolving retail  services for  various  business entities,  and  purchases
private label  receivables originated by American  General Financial Center
(AGFC-Utah), a subsidiary of AGFI,  pursuant to a participation  agreement.
Retail sales contracts are primarily closed-end accounts which consist of a
single purchase.  Revolving retail and private label are open-end revolving
accounts that can  be used for repeated purchases.   Retail sales contracts
are secured  by the real property  or personal property giving  rise to the
contract and generally have maximum original terms of 60 months.  Revolving
retail and private label  are secured by purchase money  security interests
in the goods purchased and generally require minimum monthly payments based
on outstanding balances.

In fourth  quarter  1996, the  Company  decided to  offer for  sale  $874.8
million  of non-strategic,  underperforming finance  receivable portfolios,
consisting of $520.3 million  of credit card and $354.5  million of private
label  finance  receivables.    The  Company  reclassified  these   finance
receivables and $70.0 million of allowance for finance receivable losses to
assets held for sale on  December 31, 1996.  In June 1997, the Company sold
all  of  the assets  held  for sale  (with  a remaining  balance  of $658.1
million) and $81.4 million of other private label finance receivables.  See
Note 10. of the Notes  to Consolidated Financial Statements in Item  8. for
further  information on  the reclassification and  subsequent sale  of non-
strategic assets.  

Prior to  such sale, the Company purchased  MasterCard and VISA credit card
receivables originated by AGFC-Utah pursuant to a participation  agreement.
Credit  cards were unsecured and required minimum monthly payments based on
outstanding balances.
<PAGE>
<PAGE> 6

Item 1.  Continued


Finance Receivables

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

Effective January 1,  1997, certain  real estate loans  having advances  of
less than $10,000 and high loan-to-value ratios were reclassified from real
estate to  non-real estate loans.   These loans are serviced  and collected
more  like  non-real   estate  loans   than  real  estate   loans.     This
reclassification affected $251.8 million of loans at January 1, 1997.

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

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

  Real estate loans                $1,721,378   $1,542,498   $1,314,022
  Non-real estate loans             2,347,929    2,392,730    2,179,930
  Retail sales finance              1,591,816    1,419,352    1,346,032
  Credit cards                           -            -         502,379

  Total originated and renewed      5,661,123    5,354,580    5,342,363
  Net purchased (a)                 1,919,795      600,174      945,193 

Total originated, renewed,
  and purchased                    $7,580,918   $5,954,754   $6,287,556


Number:

  Real estate loans                    56,416       58,136       65,647
  Non-real estate loans               865,814      888,382      945,124
  Retail sales finance                989,902      949,319      974,253

Total                               1,912,132    1,895,837    1,985,024


Average size (to nearest dollar):

  Real estate loans                   $30,512      $26,533      $20,016
  Non-real estate loans                 2,712        2,693        2,307
  Retail sales finance                  1,608        1,495        1,382


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

Item 1.  Continued


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

                                                December 31,            
                                       1998         1997         1996   

Amount (in thousands):

  Real estate loans                 $5,660,414   $4,067,500   $3,652,106
  Non-real estate loans              2,510,525    2,502,051    2,459,660
  Retail sales finance               1,301,225    1,257,485    1,331,555

Total                               $9,472,164   $7,827,036   $7,443,321


Number:

  Real estate loans                    164,382      158,034      194,689
  Non-real estate loans              1,066,482    1,107,869    1,214,791
  Retail sales finance                 971,461    1,041,854    1,138,231

Total                                2,202,325    2,307,757    2,547,711


Average size (to nearest dollar):

  Real estate loans                    $34,435      $25,738      $18,759
  Non-real estate loans                  2,354        2,258        2,025
  Retail sales finance                   1,339        1,207        1,170


Geographic Distribution

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

                                    December 31,                        
                   1998                 1997                 1996       
             Amount   Percent     Amount   Percent     Amount   Percent    
                               (dollars in thousands)

California  $1,461,438     15%   $  842,690     11%   $  697,734     10%
N. Carolina    728,801      8       696,261      9       672,021      9
Illinois       593,789      6       434,029      5       452,508      6
Florida        574,693      6       518,837      7       534,936      7
Ohio           559,964      6       465,489      6       454,290      6
Indiana        502,653      5       438,369      6       397,698      5
Virginia       367,995      4       356,928      4       350,349      5
Georgia        351,347      4       310,485      4       312,377      4
Other        4,331,484     46     3,763,948     48     3,571,408     48 

            $9,472,164    100%   $7,827,036    100%   $7,443,321    100%
<PAGE>
<PAGE> 8

Item 1.  Continued


Average Net Receivables and Yield

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

The Company defers costs associated with the origination of certain finance
receivables  and  revenue from  nonrefundable  points  and fees  on  loans.
Deferred origination costs and nonrefundable  points and fees are  included
in finance  receivables and are  amortized to revenue on  the accrual basis
using the  interest method over the  lesser of the contractual  term or the
estimated life based upon  prepayment experience.  If a  finance receivable
liquidates  before  amortization is  completed,  any  unamortized costs  or
points  and  fees  are charged  or  credited  to  revenue  at the  date  of
liquidation.  

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

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

Real estate loans:
  Average net receivables       $4,589,034    $3,627,736    $3,044,966
  Yield                             12.87%        13.69%        14.80%

Non-real estate loans:
  Average net receivables       $2,481,479    $2,486,771    $2,487,112
  Yield                             22.01%        21.88%        22.31%

Total loans:
  Average net receivables       $7,070,513    $6,114,507    $5,532,078
  Yield                             16.07%        17.02%        18.18%

Retail sales finance:
  Average net receivables       $1,264,922    $1,226,395    $1,868,991
  Yield                             14.74%        15.71%        16.11%

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

Total:
  Average net receivables       $8,335,435    $7,340,902    $7,930,169
  Yield                             15.87%        16.80%        17.84%
<PAGE>
<PAGE> 9

Item 1.  Continued


Finance Receivable Credit Quality Information

The  Company's policy is to charge off  each month non-real estate loans on
which little  or no collections were  made in the prior  six months, retail
sales contracts which are  six installments past due, and  revolving retail
and private  label accounts  which  are 180  days past  due.   Credit  card
accounts  were charged  off when  180 days  past due.   The  Company starts
foreclosure proceedings on real estate loans when four monthly installments
are  past due.  When foreclosure is  completed and the Company has obtained
title to the property, the real estate is established as an asset valued at
fair  value, and any  loan amount in  excess of that  value is charged off.
The charge-off  period is  occasionally  extended for  individual  accounts
when, in management's opinion, such treatment is warranted.

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

                                        Years Ended December 31,     
                                    1998          1997          1996 
                                         (dollars in thousands)
Real estate loans:
  Net charge-offs                  $ 32,462     $ 31,849     $ 36,352
  Charge-off ratio                     .72%         .88%        1.21%

Non-real estate loans:
  Net charge-offs                  $141,804     $178,644     $223,580
  Charge-off ratio                    5.72%        7.17%        8.96%

Total loans:
  Net charge-offs                  $174,266     $210,493     $259,932
  Charge-off ratio                    2.49%        3.45%        4.72%

Retail sales finance:
  Net charge-offs                  $ 40,763     $ 54,460     $125,451
  Charge-off ratio                    3.23%        4.44%        6.65%

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

Total:
  Net charge-offs                  $215,029     $264,953     $436,769
  Charge-off ratio                    2.60%        3.62%        5.51%


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

Item 1.  Continued


                                                 December 31,            
                                      1998          1997          1996  
                                           (dollars in thousands)

Real estate loans                   $188,452      $107,066      $ 83,239
  % of related receivables             3.32%         2.59%         2.23%

Non-real estate loans               $156,331      $160,700      $179,719
  % of related receivables             5.48%         5.71%         6.43%

Total loans                         $344,783      $267,766      $262,958
  % of related receivables             4.04%         3.85%         4.03%

Retail sales finance                $ 34,080      $ 35,930      $ 46,242
  % of related receivables             2.26%         2.45%         3.01%

Total                               $378,863      $303,696      $309,200
  % of related receivables             3.78%         3.61%         3.84%


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

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

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

Balance at beginning of year        $363,126      $385,272      $482,243
Provision for finance receivable
  losses                             207,529       242,453       409,646
Allowance reclassified to assets
  held for sale                         -             -          (70,000)
Allowance related to acquired
  receivables                         17,297           354           152 
Charge-offs, net of recoveries      (215,029)     (264,953)     (436,769)

Balance at end of year              $372,923      $363,126      $385,272

Allowance ratio                        3.94%         4.64%         5.18%


See Management's Discussion and Analysis in Item 7. for further information
on  finance receivable  loss  and delinquency  experience  and the  related
allowance for finance receivable losses.
<PAGE>
<PAGE> 11

Item 1.  Continued


Sources of Funds

The  Company funds its consumer  finance operations principally through net
cash flows from  operating activities, issuances of  long-term debt, short-
term borrowings in the commercial paper market, borrowings from banks under
credit facilities, and capital contributions from AGFI.  


Average Borrowings and Borrowing Cost

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

                                     Years Ended December 31,        
                                1998           1997           1996   
                                      (dollars in thousands)
Long-term debt:
  Average borrowings         $4,266,955     $4,022,819     $4,680,197
  Borrowing cost                  6.96%          7.34%          7.28%

Short-term debt:
  Average borrowings         $3,363,970     $2,926,202     $2,309,548
  Borrowing cost                  6.08%          6.12%          6.13%

Total:
  Average borrowings         $7,630,925     $6,949,021     $6,989,745
  Borrowing cost                  6.57%          6.82%          6.90%

The Company's  use of interest rate swap agreements, the effect of which is
included in  short-term borrowing cost above,  is described in  Note 14. of
the Notes to Consolidated Financial Statements in Item 8.


Contractual Maturities

Contractual  maturities of net finance receivables and debt at December 31,
1998 were as follows:
                                 Net Finance
                                 Receivables           Debt   
                                    (dollars in thousands)
Due in:
  1999                           $1,185,247         $4,048,167
  2000                            1,381,704          1,284,488
  2001                              977,305            945,073
  2002                              563,202            561,729
  2003                              332,651          1,038,058
  2004 and thereafter             5,032,055            770,145

  Total                          $9,472,164         $8,647,660


See Note  5. of the Notes  to Consolidated Financial Statements  in Item 8.
for  further  information   on  principal  cash   collections  of   finance
receivables. 
<PAGE>
<PAGE> 12

Item 1.  Continued


                            INSURANCE OPERATIONS

Merit is  a life  and health  insurance company  domiciled  in Indiana  and
licensed  in 43  states,  the District  of Columbia,  and  the U.S.  Virgin
Islands.  Merit  writes or assumes  (through affiliated and  non-affiliated
insurance  companies) credit  life, credit  accident and  health, and  non-
credit insurance coverages.

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

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

Merit  and Yosemite  have entered  into reinsurance  agreements with  other
insurance companies, including certain other American General subsidiaries,
for assumptions  of various annuities  and non-credit, group,  credit life,
credit accident  and  health,  and  credit-related  property  and  casualty
insurance  on a  coinsurance  basis.   The  reserves attributable  to  this
business  fluctuate over  time  and in  certain  instances are  subject  to
recapture  by the ceding  company.  At  December 31, 1998,  reserves on the
books of Merit  and Yosemite attributable  to these reinsurance  agreements
totaled $114.6 million.

See  Note 21. of the Notes to  Consolidated Financial Statements in Item 8.
for further information on the Company's insurance business segment.
<PAGE>
<PAGE> 13

Item 1.  Continued


The following table shows information concerning the insurance operations: 

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

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


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

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


Premiums Written

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

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


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

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

Item 1.  Continued


Investments and Investment Results

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

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

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

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

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

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


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

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

(c)  Adjusted portfolio yield is calculated based  upon the definitions  of
     net investment revenue and average  invested assets listed  in (a) and
     (b) above and also includes an  adjustment for tax-exempt  investments
     in 1996 and 1997.

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


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


                                 REGULATION

Consumer Finance

Various state laws regulate the consumer lending and retail sales financing
businesses. The degree and  nature of such regulation varies  from state to
state.  The laws under which a substantial amount of the Company's business
is conducted provide for  state licensing of lenders; impose  maximum term,
amount, interest rate, and other  charge limitations; and enumerate whether
and  under what circumstances insurance and other ancillary products may be
sold  in connection  with a  lending  transaction.   Certain of  these laws
prohibit  the taking  of liens  on real  estate for  loans of  small dollar
amounts, except liens resulting from judgments. 
<PAGE>
<PAGE> 15

Item 1.  Continued


The Company also is  subject to various federal regulations,  including the
Federal Consumer Credit Protection Act (governing disclosure of  applicable
charges and other  finance receivable terms), the  Equal Credit Opportunity
Act (prohibiting discrimination against credit-worthy applicants), the Fair
Credit  Reporting  Act (governing  the accuracy  and  use of  credit bureau
reports),  the Real  Estate Settlement  Procedures Act  (regulating certain
loans secured by real  estate), the Federal Fair Debt  Collection Practices
Act (regulating debt collection activity in certain instances), and certain
Federal  Trade Commission  rules.   Federal  law  also preempts  state  law
restrictions on rates and terms for certain real estate loans.


Insurance

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


                                COMPETITION

Consumer Finance

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


Insurance

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

Item 2.  Properties.


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

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



Item 3.  Legal Proceedings.


California v. Ochoa

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


Other

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

                                  PART II


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


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

Quarter Ended                         1998         1997  
                                    (dollars in thousands)

March 31                            $ 26,315     $   -   
June 30                                 -         115,317
September 30                          16,561       21,820
December 31                             -            -   

                                    $ 42,876     $137,137


See Management's  Discussion and Analysis in  Item 7., and Note  18. of the
Notes  to  Consolidated   Financial  Statements  in   Item  8.,   regarding
limitations on the ability of AGFC and its subsidiaries to pay dividends.



Item 6.  Selected Financial Data.


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

                          At or for the Years Ended December 31,        
                    1998        1997       1996       1995       1994   
                                  (dollars in thousands)               

Total revenues   $ 1,594,239 $1,511,943 $1,708,673 $1,789,184 $1,388,075
 
Net income (a)       194,396    137,071     50,959     92,293    243,300

Total assets      11,059,601  9,240,605  9,502,589  9,485,477  8,918,698

Long-term debt     5,162,012  3,941,486  4,416,637  4,935,894  4,265,226


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

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


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


                      LIQUIDITY AND CAPITAL RESOURCES

Overview

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


Liquidity

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

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

  Operations                        $  445.5     $  514.3     $  589.9  
  Net issuance of debt               1,545.9           -         163.0  
  Capital contributions                 92.0         27.0           -   
  Sale of non-strategic assets            -         732.5           -   
  Net collections on assets held
    for sale                              -          61.3           - 

  Principal sources of cash flow    $2,083.4     $1,335.1     $  752.9


Principal uses of cash flow:

  Net originations and purchases
    of finance receivables          $1,808.7     $  676.3     $  471.5  
  Increase in premiums on finance
    receivables purchased and  
    deferred charges                   123.1         41.7         47.0  
  Dividends paid                        42.9        137.1        147.6  
  Net repayment of debt                   -         336.0           -   
  Repurchase of securitized 
    finance receivables                   -         100.0           - 

  Principal uses of cash flow       $1,974.7     $1,291.1     $  666.1
<PAGE>
<PAGE> 19

Item 7.  Continued


Capital Resources

The  Company's capital  requirements vary  directly with  the level  of net
finance  receivables.  The mix of capital  between debt and equity is based
primarily upon  maintaining leverage that supports  cost-effective funding.
At  December  31,  1998,  the  Company's  capital  totaled  $10.3  billion,
consisting of $8.7 billion of debt and $1.6 billion of  equity, compared to
$8.5 billion at  December 31, 1997, consisting of $7.1  billion of debt and
$1.4 billion of equity.

The Company issues a combination of fixed-rate debt, principally long-term,
and  floating-rate debt,  principally  short-term.   AGFC  and one  of  its
subsidiaries  sell commercial paper notes with maturities ranging from 1 to
270 days  directly to banks,  insurance companies, corporations,  and other
institutional investors.  AGFC also  sells extendible commercial notes with
initial maturities of up to  90 days which may  be extended by AGFC to  390
days and offers medium-term  notes with original maturities of  nine months
or longer to institutional  investors.  AGFC obtains  the remainder of  its
funds primarily through underwritten public debt offerings with  maturities
generally ranging from three to ten years. 

Dividends have been paid  (or capital contributions have been  received) to
manage  the  Company's leverage  of debt  to  tangible equity  (equity less
goodwill  and net unrealized gains  or losses on  investment securities) to
6.50 to 1.  The debt to tangible equity ratio at December 31, 1998 was 6.46
to  1.   Certain  AGFC financing  agreements  have effectively  limited the
amount  of  dividends  AGFC  may pay.    See  Note  18.  of  the  Notes  to
Consolidated Financial Statements  in Item 8.  for information on  dividend
restrictions.


Credit Ratings

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

                          Long-term Debt      Commercial Paper

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


Credit Facilities

The  Company participates in credit  facilities to support  the issuance of
commercial paper and to provide an additional source of funds for operating
requirements.     At  December  31,  1998,   credit  facilities,  including
facilities  shared with  American General  and AGFI, totaled  $5.3 billion,
with remaining availability of $5.3 billion.  See  Note 13. of the Notes to
Consolidated Financial Statements in Item 8.  for additional information on
credit facilities.
<PAGE>
<PAGE> 20

Item 7.  Continued


Securitization

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

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


                       ANALYSIS OF OPERATING RESULTS

Net Income

Net income increased $57.3 million, or  42%, for 1998 and $86.1 million, or
169%, for 1997 when compared to the respective previous year.  See Note 21.
of  the Notes to Consolidated  Financial Statements for  information on the
results of the Company's business segments.

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

Factors which specifically affected the  Company's operating results are as
follows:


Finance Charges

Finance  charges increased  $89.6 million,  or 7%,  for 1998  and decreased
$181.2 million, or 13%,  for 1997 when compared to the  respective previous
year.

The increase in  finance charges for 1998 when compared to  1997 was due to
an  increase in average net receivables, partially  offset by a decrease in
yield.   Average net receivables  increased $994.5 million,  or 14%, during
1998 when  compared to 1997 primarily  due to growth in  real estate loans,
partially offset by the sale of certain private label receivables in second
quarter 1997.  Yield decreased 93 basis points during 1998 when compared to
1997 primarily due to the larger proportion of finance receivables that are
real estate loans, which generally have lower yields.

The decrease in finance  charges for 1997 when compared to  1996 was due to
decreases  in  both  average  net  receivables  and  yield.    Average  net
receivables decreased $589.3 million,  or 7%, during 1997 when  compared to
1996 primarily due  to the  reclassification and sales  of certain  finance
receivables and  the liquidation of underperforming  receivables, partially
<PAGE> 21

Item 7.  Continued


offset by  growth in real estate  loans.  The exclusion  of finance charges
related to the assets held for sale for 1997 totaled  $75.0 million.  Yield
decreased  104 basis points during 1997 when compared to 1996 primarily due
to  the  larger proportion  of finance  receivables  that were  real estate
loans, which generally have lower yields. 


Insurance Revenues

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

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


Other Revenues

Other revenues increased $5.3 million, or 6%, for 1998 and $2.1 million, or
2%, for 1997 when compared to the respective previous year.

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

The increase in other revenues for 1997 when compared to 1996 was primarily
due to an increase in investment revenue, partially offset by a decrease in
interest  revenue on  notes  receivable from  parent.   Investment  revenue
increased for  1997 when compared to 1996 due to growth in average invested
assets for  the insurance operations of  $38.7 million and  $1.1 million of
realized  gains on investments in 1997 compared  to $.9 million of realized
losses on investments in 1996.   Adjusted portfolio yield for 1997 remained
substantially the same when compared to 1996.


Interest Expense

Interest  expense increased $50.6 million,  or 11%, for  1998 and decreased
$31.4 million,  or 7%, for  1997 when compared  to the  respective previous
year.

The increase in interest expense  for 1998 when compared to 1997 was due to
an  increase  in  average borrowings,  partially  offset  by  a decline  in
borrowing cost.  Average  borrowings increased $681.9 million, or  10%, for
1998  when compared to 1997 primarily to support finance receivable growth.
Borrowing  cost decreased 25 basis points during 1998 when compared to 1997
due to lower rates on both long-term and short-term debt.
<PAGE>
<PAGE> 22

Item 7.  Continued

  
The decrease in  interest expense for 1997 when compared to 1996 was due to
the  exclusion of  interest expense  related to  the assets  held  for sale
totaling $23.2  million, a  decline in  borrowing cost,  and a  decrease in
average borrowings.  Borrowing cost decreased 8 basis  points for 1997 when
compared to 1996  primarily due  to an increased  proportion of  short-term
debt  at lower rates.   Average borrowings decreased  $40.7 million, or 1%,
for  1997 when  compared to  1996  primarily due  to the  sales of  certain
private label receivables during second quarter 1997, substantially  offset
by growth in real estate loans during 1997.  


Operating Expenses

Operating expenses increased $27.5  million, or 6%, for 1998  and decreased
$30.4 million, or  6%, for  1997 when compared  to the respective  previous
year.

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

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


Provision for Finance Receivable Losses

Provision for  finance receivable losses  decreased $34.9 million,  or 14%,
for  1998  and $167.2  million,  or  41%, for  1997  when  compared to  the
respective  previous  year reflecting  decreases in  net charge-offs.   The
decrease in  net charge-offs for  1997 when  compared to 1996  included the
exclusion of net charge-offs  related to the assets held for  sale totaling
$58.6 million.  

Net charge-offs  from  finance receivables  for  1998 decreased  to  $215.0
million  from $265.0  million for 1997  and $436.8  million for  1996.  The
charge-off ratio for 1998 decreased to 2.60% compared to 3.62% for 1997 and
5.51%  for 1996.   Excluding the portfolios  held for  sale, the charge-off
ratio was 4.72% for 1996.
<PAGE>
<PAGE> 23

Item 7.  Continued


At  December 31, 1998, delinquencies were $378.9 million compared to $303.7
million at December  31, 1997 and $309.2 million at December 31, 1996.  The
delinquency  ratio at  December 31,  1998 was  3.78% compared  to  3.61% at
December 31, 1997  and 3.84%  at December 31,  1996.   The increase in  the
delinquency ratio for  1998 when compared to 1997 was  primarily due to the
maturing  of  purchased real-estate  portfolios  which  were primarily  new
originations when purchased and the effects of general economic conditions.

At  December  31, 1998,  the allowance  for  finance receivable  losses was
$372.9 million compared to $363.1 million  at December 31, 1997 and  $385.3
million at December 31, 1996.  The allowance ratio at December 31, 1998 was
3.94% compared  to 4.64% at  December 31,  1997 and 5.18%  at December  31,
1996.  The Company maintains the allowance for finance receivable losses at
a  level based on periodic  evaluation of the  finance receivable portfolio
which  reflects an  amount that,  in management's  opinion, is  adequate to
absorb anticipated losses in the existing portfolio.


Loss on Non-strategic Assets

In  fourth quarter  1996, the  Company  decided to  offer  for sale  $874.8
million  of non-strategic,  underperforming finance  receivable portfolios,
consisting of $520.3 million  of credit card and $354.5 million  of private
label finance receivables.   These receivables and  an associated allowance
for  finance receivable losses of $70.0 million were reclassified to assets
held for  sale at December  31, 1996, and a  loss of $137.0  million ($88.1
million  aftertax)  was recognized  to reduce  the  carrying amount  of the
assets held for sale  to net realizable value.   In June 1997, the  Company
sold the  assets held  for sale  and $81.4 million  of other  private label
finance receivables and recorded an additional loss of $42.2 million ($27.0
million aftertax)  primarily to establish a liability  for estimated future
payments to the  purchaser under a five-year  loss sharing agreement.   See
Note 10. of the Notes  to Consolidated Financial Statements in Item  8. for
further information on  the reclassification  and subsequent  sale of  non-
strategic assets.


Insurance Losses and Loss Adjustment Expenses

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

The decreases in insurance losses and  loss adjustment expenses were due to
decreases in provision for  future benefits and in claims paid.   Provision
for future  benefits decreased $3.9  million for 1998 and  $3.7 million for
1997  due  to  reduced sales  of  non-credit  insurance  products.   Claims
decreased $4.9  million for 1998 and $5.7 million for 1997 primarily due to
lower earned premiums and favorable loss experience on credit insurance.
<PAGE>
<PAGE> 24

Item 7.  Continued


Provision for Income Taxes

Provision for income taxes  increased $32.8 million,  or 41%, for 1998  and
$50.4 million, or 176%, for  1997 when compared to the  respective previous
year primarily due to higher taxable income.  The effective income tax rate
was 36.52% for 1998, 36.57% for 1997, and 36.01% for 1996.


                      ANALYSIS OF FINANCIAL CONDITION

At December 31,  1998, the  Company's assets were  distributed as  follows:
82.28% in net  finance receivables, less  allowance for finance  receivable
losses; 9.00% in  investment securities;  5.90% in other  assets; 1.65%  in
notes receivable from parent; and 1.17% in cash and cash equivalents.


Asset Quality

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

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

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

The  largest  intangible asset  is  acquisition-related  goodwill which  is
charged to expense in  equal amounts over 20 to 40 years.  See Notes 2. and
9. of the Notes to Consolidated Financial Statements in Item 8. for further
information on goodwill.


Operating and Capital Requirements

The overall sources  of cash available  to the Company  are expected to  be
more  than sufficient  to  satisfy operating  requirements  in 1999.    See
Liquidity  and Capital Resources for information on the Company's operating
and capital requirements.
<PAGE>
<PAGE> 25

Item 7.  Continued


Asset/Liability Management

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


                        BUSINESS ENVIRONMENT FACTORS

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


Economic Factors

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

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

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

Real  estate loans  are  particularly subject  to  refinancing when  market
interest rates trend lower.  However, revenue generated from interest rates
charged on non-real estate  loans and retail sales finance  receivables are
relatively  insensitive  to  movements  in  interest  rate  levels.     Net
investment revenue and realized gains or losses on the Company's investment
securities, and borrowing  cost on the  Company's long-term and  short-term
debt, are relatively sensitive over varying periods of time to movements in
general  interest rate levels caused by inflation.  The Company's operating
expenses are no  more or less  sensitive to the  effects of inflation  than
would be experienced by businesses in general.
<PAGE>
<PAGE> 26

Item 7.  Continued


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

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


Regulatory Factors

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


Competitive Factors

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

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

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

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

Productivity.    The  Company  continuously  monitors  performance  of  its
branches  and products and  makes organizational and  procedural changes as
necessary.
<PAGE>
<PAGE> 27

Item 7.  Continued


Year 2000 Contingency

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

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

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

Contingency Plan.  The Company has commenced contingency planning to reduce
the risk of  Year 2000-related  business failures.   The contingency  plan,
which addresses  both  internal  systems  and  third  party  relationships,
includes the following activities: (1) evaluate the consequences of failure
of  business processes  with significant  exposure to  Year 2000  risk; (2)
determine  the  probability  of  a  Year  2000-related  failure  for  those
processes that  have a high consequence  of failure; (3) develop  an action
plan  to complete contingency  plan for those  processes that  rank high in
consequence  and probability  of failure;  and (4) complete  the applicable
action  plan.  The Company  is currently developing  a contingency plan and
expects to substantially  complete all contingency  planning activities  by
April 30, 1999.
<PAGE>
<PAGE> 28

Item 7.  Continued


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

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


                         FORWARD-LOOKING STATEMENTS

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

These forward-looking statements involve risks and uncertainties including,
but  not limited  to,  the following:    (1)  changes in  general  economic
conditions, including the performance of financial markets, interest rates,
and the level of personal bankruptcies; (2) competitive, regulatory, or tax
changes that affect the cost of, or demand for, the Company's products; (3)
the  Company's ability  or  the ability  of third  parties  to achieve  and
maintain Year 2000  readiness for significant  systems and operations;  and
(4)  adverse litigation results or  resolution of litigation.   Readers are
also directed to other risks and uncertainties discussed in other documents
filed  by the  Company with  the Securities  and Exchange Commission.   The
Company undertakes  no obligation to  update or revise  any forward-looking
<PAGE>
<PAGE> 29

Item 7.  Continued


information, whether as  a result of new information,  future developments,
or otherwise.



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


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

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

                             December 31, 1998       December 31, 1997  
                           +100 bp       -100 bp   +100 bp       -100 bp
                                       (dollars in thousands)
Assets
Net finance receivables,
  less allowance for 
  finance receivable
  losses                   $(248,813)  $ 269,131   $(191,982)  $ 205,778
Fixed-maturity securities    (52,838)     55,410     (41,433)     43,199

Liabilities
Long-term debt              (154,796)    162,750    (108,017)    114,280

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


The changes in fair values were derived by modeling estimated cash flows of
certain of the Company's assets and liabilities as of December 31, 1998 and
1997.  These  cash flows do not consider loan originations, debt issuances,
or new investment purchases.  The  cash flows on investment securities were
adjusted to reflect changes in prepayments and calls.
<PAGE>
<PAGE> 30

Item 7A.  Continued


Care  should be  exercised  in  drawing  conclusions  based  on  the  above
analysis.  While these changes in fair values provide a measure of interest
rate sensitivity, they are not representative of management's  expectations
about the impact  of interest rate changes.  This analysis is also based on
the Company's exposure at a particular point in time, without regard to the
impact of certain business decisions  or initiatives that management  would
likely  undertake  to mitigate  or eliminate  some  or all  of  the adverse
effects of the modeled scenarios.



Item 8.  Financial Statements and Supplementary Data.


The Report of Independent Auditors  and the related consolidated  financial
statements are presented on the following pages.
<PAGE>
<PAGE> 31


                       REPORT OF INDEPENDENT AUDITORS





The Board of Directors
American General Finance Corporation


We  have audited the  accompanying consolidated balance  sheets of American
General Finance Corporation (a wholly-owned subsidiary of American  General
Finance, Inc.) and  subsidiaries as of December 31, 1998  and 1997, and the
related  consolidated statements  of  income,  shareholder's  equity,  cash
flows,  and comprehensive income for each of  the three years in the period
ended December 31, 1998.   Our audit also included the  financial statement
schedule listed in the Index at Item 14(a).  These financial statements and
schedule  are  the   responsibility  of  the  Company's  management.    Our
responsibility is to express  an opinion on these financial  statements and
schedule based on our audits.

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

In our  opinion, the  consolidated financial  statements referred  to above
present fairly,  in  all  material  respects,  the  consolidated  financial
position of  American  General  Finance  Corporation  and  subsidiaries  at
December  31,  1998  and  1997,  and  the  consolidated  results  of  their
operations and their cash flows for  each of the three years in the  period
ended December 31,  1998, in conformity with  generally accepted accounting
principles.    Also,  in  our  opinion,  the  related  financial  statement
schedule,  when considered  in relation to  the basic  financial statements
taken   as  a  whole,  presents  fairly,  in  all  material  respects,  the
information set forth therein.


                                              ERNST & YOUNG, LLP

Indianapolis, Indiana
February 16, 1999
<PAGE>
<PAGE> 32
<TABLE>
           American General Finance Corporation and Subsidiaries
                        Consolidated Balance Sheets

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

Finance receivables, net of unearned
  finance charges  (Note 5.):
    Real estate loans                             $ 5,660,414   $4,067,500
    Non-real estate loans                           2,510,525    2,502,051
    Retail sales finance                            1,301,225    1,257,485

Net finance receivables                             9,472,164    7,827,036
Allowance for finance receivable
  losses  (Note 6.)                                  (372,923)    (363,126)
Net finance receivables, less allowance
  for finance receivable losses                     9,099,241    7,463,910

Investment securities  (Note 7.)                      995,799      928,411
Cash and cash equivalents                             129,500       91,076
Notes receivable from parent  (Note 8.)               182,930      185,028
Other assets  (Note 9.)                               652,131      572,180

Total assets                                      $11,059,601   $9,240,605


Liabilities and Shareholder's Equity

Long-term debt  (Note 11.)                        $ 5,162,012   $3,941,486
Commercial paper  (Notes 12., 13. and 14.)          3,485,648    3,157,671
Insurance claims and policyholder 
  liabilities                                         437,079      436,859
Other liabilities                                     331,709      308,601
Accrued taxes                                          19,811       21,073

Total liabilities                                   9,436,259    7,865,690

Shareholder's equity: 
  Common stock  (Note 17.)                              5,080        5,080
  Additional paid-in capital                          810,914      718,914
  Accumulated other comprehensive   
    income  (Note 7.)                                  39,419       34,512 
  Retained earnings  (Note 18.)                       767,929      616,409

Total shareholder's equity                          1,623,342    1,374,915

Total liabilities and shareholder's equity        $11,059,601   $9,240,605

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



<CAPTION>
                                           Years Ended December 31,  
                                        1998         1997         1996   
                                            (dollars in thousands)
<S>                                  <C>          <C>          <C>
Revenues
  Finance charges                    $1,323,028   $1,233,387   $1,414,590
  Insurance                             175,969      188,574      206,170
  Other                                  95,242       89,982       87,913

Total revenues                        1,594,239    1,511,943    1,708,673

Expenses
  Interest expense                      501,533      450,914      482,343
  Operating expenses                    494,262      466,791      497,204
  Provision for finance receivable
    losses                              207,529      242,453      409,646
  Loss on non-strategic assets             -          42,225      137,036
  Insurance losses and loss
    adjustment expenses                  84,687       93,447      102,811

Total expenses                        1,288,011    1,295,830    1,629,040

Income before provision for income
  taxes                                 306,228      216,113       79,633

Provision for Income Taxes
  (Note 16.)                            111,832       79,042       28,674

Net Income                           $  194,396   $  137,071   $   50,959



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



<CAPTION>
                                         Years Ended December 31,     
                                       1998        1997        1996   
                                          (dollars in thousands)      
<S>                                 <C>         <C>         <C>
Common Stock 
  Balance at beginning of year      $    5,080  $    5,080  $    5,080
  Balance at end of year                 5,080       5,080       5,080

Additional Paid-in Capital
  Balance at beginning of year         718,914     691,914     691,914
  Capital contributions from parent     92,000      27,000        -   
  Balance at end of year               810,914     718,914     691,914

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

Retained Earnings 
  Balance at beginning of year         616,409     616,475     713,090
  Net income                           194,396     137,071      50,959
  Common stock dividends               (42,876)   (137,137)   (147,574)
  Balance at end of year               767,929     616,409     616,475

Total Shareholder's Equity          $1,623,342  $1,374,915  $1,334,923 



<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 35
<TABLE>
           American General Finance Corporation and Subsidiaries
                   Consolidated Statements of Cash Flows
<CAPTION>
                                                       Years Ended December 31,
                                                    1998         1997         1996    
                                                        (dollars in thousands)
<S>                                              <C>          <C>          <C>
Cash Flows from Operating Activities
Net Income                                       $  194,396   $  137,071   $   50,959 
Reconciling adjustments:
  Provision for finance receivable losses           207,529      242,453      409,646 
  Depreciation and amortization                     105,070       75,971       87,129 
  Deferral of finance receivable
    origination costs                               (45,590)     (38,218)     (49,129)
  Deferred income tax charge (benefit)               16,400       59,567      (42,897)
  Change in other assets and other liabilities                                          (30,933)    (9,757)   (25,459)
  Change in insurance claims and
    policyholder liabilities                            220      (19,571)     (27,541)
  Change in taxes receivable and payable             22,582      (12,671)      33,379 
  Loss on non-strategic assets                         -          42,225      137,036 
  Operations related to assets held for sale                                               -        39,905       -    
  Other, net                                        (24,205)      (2,638)      16,797 
Net cash provided by operating activities           445,469      514,337      589,920 

Cash Flows from Investing Activities
  Finance receivables originated or purchased    (6,484,893)  (4,927,348)  (5,249,595)
  Principal collections on finance receivables    4,676,226    4,251,026    4,778,076 
  Net collections on assets held for sale              -          61,266         -    
  Securitized finance receivables purchased            -        (100,000)        -    
  Sale of non-strategic assets                         -         732,504         -    
  Investment securities purchased                  (210,797)    (129,158)    (188,657)
  Investment securities called, matured and sold    157,970      104,491      169,350 
  Change in notes receivable from parent              2,098      (11,793)      13,803 
  Purchases of assets from affiliates                  -          (9,536)     (62,176)
  Change in premiums on finance receivables
    purchased and deferred charges                 (123,127)     (41,695)     (47,021)
  Other, net                                        (19,557)       2,971      (17,232)
Net cash used for investing activities           (2,002,080)     (67,272)    (603,452)
    
Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt        2,028,405      726,950       77,817 
  Repayment of long-term debt                      (810,471)  (1,204,750)    (600,260)
  Change in short-term notes payable                327,977      141,751      685,449 
  Capital contribution from parent                   92,000       27,000         -    
  Dividends paid                                    (42,876)    (137,137)    (147,574)
Net cash provided by (used for) 
  financing activities                            1,595,035     (446,186)      15,432 

Increase in cash and cash equivalents                38,424          879        1,900 
Cash and cash equivalents at beginning of year       91,076       90,197       88,297 
Cash and cash equivalents at end of year         $  129,500   $   91,076   $   90,197 

Supplemental Disclosure of Cash Flow Information
  Income taxes paid                              $   74,342   $   38,363   $   41,187 
  Interest paid                                  $  483,059   $  473,452   $  484,813 

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



<CAPTION>
                                            Years Ended December 31,    
                                        1998          1997          1996  
                                             (dollars in thousands)
<S>                                   <C>           <C>           <C>
Net Income                            $194,396      $137,071      $ 50,959

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

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

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

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

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

Comprehensive income                  $199,303      $150,129      $ 34,001



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

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



Note 1.  Nature of Operations

American General Finance Corporation will be referred to in these Notes  to
Consolidated Financial  Statements  as  "AGFC"  or  collectively  with  its
subsidiaries, whether directly or indirectly owned, as the "Company".  AGFC
is  a wholly-owned  subsidiary  of American  General Finance,  Inc. (AGFI).
AGFC  is a  financial services  holding  company with  subsidiaries engaged
primarily  in  the consumer  finance and  credit  insurance business.   The
Company conducts loan and retail  operations and markets insurance products
through  its  consumer branch  and centralized  real  estate segments.   At
December 31, 1998, the Company had 1,310 offices in 40  states, Puerto Rico
and the U.S. Virgin Islands and approximately 7,900 employees.

In its loan operations, the Company makes loans directly to individuals and
acquires real estate loans made  by brokers and other real  estate lenders.
In  its retail operations, the Company purchases retail sales contracts and
provides revolving retail services arising from the retail sale of consumer
goods and services  by approximately 16,000 retail  merchants and purchases
private label  receivables originated by American  General Financial Center
(AGFC-Utah),  a subsidiary of AGFI, arising from the sales by approximately
320  retail  merchants  pursuant to  a  participation  agreement.   In  its
insurance operations,  the Company writes  and assumes credit  life, credit
accident and health,  credit-related property and  casualty insurance,  and
non-credit insurance  coverages  on  its  consumer  finance  customers  and
property pledged as collateral.   See Note  21. for further information  on
the Company's business segments.

The  Company funds its operations  principally through net  cash flows from
operating activities, issuances of long-term debt, short-term borrowings in
the commercial paper market, borrowings from banks under credit facilities,
and capital contributions from AGFI.    

At  December  31,  1998,  the  Company had  $9.5  billion  of  net  finance
receivables due from  approximately 2.2 million customer accounts  and $6.1
billion  of  credit   and  non-credit  life  insurance  in  force  covering
approximately 1.2 million customer accounts.

In  fourth  quarter 1996,  the Company  decided  to offer  for  sale $874.8
million  of non-strategic,  underperforming finance  receivable portfolios,
consisting of $520.3 million of  credit card and $354.5 million of  private
label  finance  receivables.    The  Company  reclassified  these   finance
receivables and $70.0 million of allowance for finance receivable losses to
assets held for sale on December 31, 1996.  In June 1997, the  Company sold
all  of  the assets  held  for sale  (with  a remaining  balance  of $658.1
million) and $81.4 million of other private label finance receivables.  See
Note  10. for further  information on  the reclassification  and subsequent
sale of non-strategic assets.  

Prior  to such sale, the Company purchased  MasterCard and VISA credit card
receivables originated by AGFC-Utah pursuant to a participation  agreement.
<PAGE>
<PAGE> 38

Notes to Consolidated Financial Statements, Continued


Note 2.  Summary of Significant Accounting Policies

                        PRINCIPLES OF CONSOLIDATION

The consolidated financial statements have been prepared in accordance with
generally accepted  accounting principles and include the  accounts of AGFC
and  its subsidiaries.    The subsidiaries  are  all wholly-owned  and  all
intercompany items have been eliminated.  All of the issued and outstanding
common  stock of  AGFC is  owned by  AGFI, a  holding company  organized to
acquire  AGFC in  a reorganization  during 1974.   AGFI  is a  wholly-owned
subsidiary of American General Corporation (American General).


                             RECLASSIFICATIONS

Effective January 1,  1997, certain  real estate loans  having advances  of
less than $10,000 and high loan-to-value ratios were reclassified from real
estate to non-real estate  loans.  These  loans are serviced and  collected
more  like  non-real   estate  loans   than  real  estate   loans.     This
reclassification affected $251.8 million of loans at January 1, 1997.


                             FINANCE OPERATIONS

Revenue Recognition

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

The Company defers costs associated with the origination of certain finance
receivables  and  revenue  from nonrefundable  points  and  fees on  loans.
Deferred  origination costs and nonrefundable points  and fees are included
in finance receivables  and are amortized to  revenue on the accrual  basis
using the  interest method over the  lesser of the contractual  term or the
estimated life based upon  prepayment experience.  If a  finance receivable
liquidates  before  amortization is  completed,  any  unamortized costs  or
points  and fees  are  charged  or  credited  to revenue  at  the  date  of
liquidation.  


Allowance For Finance Receivable Losses

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

Notes to Consolidated Financial Statements, Continued


The  Company's policy is to charge off  each month non-real estate loans on
which little  or no collections were  made in the prior  six months, retail
sales contracts which are  six installments past due, and  revolving retail
and private  label accounts  which  are 180  days past  due.   Credit  card
accounts  were charged  off when  180 days  past due.   The  Company starts
foreclosure proceedings on real estate loans when four monthly installments
are  past due.  When foreclosure is  completed and the Company has obtained
title to the property, the real estate is established as an asset valued at
fair value,  and any loan amount  in excess of  that value is  charged off.
The charge-off  period is  occasionally  extended for  individual  accounts
when, in management's opinion, such treatment is warranted.


                            INSURANCE OPERATIONS

Revenue Recognition

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


Policy Reserves

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


Acquisition Costs

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

Notes to Consolidated Financial Statements, Continued


Reinsurance

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


GAAP vs. Statutory Accounting

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

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

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


                           INVESTMENT SECURITIES
Valuation

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

Notes to Consolidated Financial Statements, Continued


Realized Gains and Losses on Investments

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


                                   OTHER

Cash Equivalents

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


Goodwill

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


Income Taxes

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

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


Derivative Financial Instruments

The Company  accounts for its  derivative financial instruments  as hedges.
Hedge accounting requires a high correlation between changes in fair values
or  cash flows of the derivative financial instrument and the specific item
being hedged, both at inception and throughout the life of the hedge.
<PAGE>
<PAGE> 42

Notes to Consolidated Financial Statements, Continued


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

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

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


Use of Estimates

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


Fair Value of Financial Instruments

The  fair  values disclosed  in  Note  23.  are  based on  estimates  using
discounted  cash flows when  quoted market prices  are not  available.  The
assumptions  used, including the discount rate and estimates of future cash
flows,  significantly affect  the valuation techniques  employed.   In that
regard,  the   derived  fair value  estimates  cannot be  substantiated  by
comparison to independent markets and, in many cases, could not be realized
in  immediate settlement  of  the  instrument.    The  fair  value  amounts
presented can be  misinterpreted, and  the reader should  exercise care  in
drawing conclusions from such data.



Note 3.  Accounting Changes       

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

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

Notes to Consolidated Financial Statements, Continued


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



Note 4.  Purchases of Assets from Affiliates

A subsidiary of AGFC purchased finance receivables and other  assets from a
subsidiary of  AGFI for  $9.5 million during  1997.   Subsidiaries of  AGFC
purchased assets,  primarily  finance  receivables,  from  subsidiaries  of
American General for $62.2 million during 1996.

The cash paid for  the purchases of assets from affiliates  as shown in the
Consolidated Statements of Cash Flows consisted of the following:

                                       1997          1996  
                                     (dollars in thousands)
Net finance receivables,
  less allowance for finance
  receivable losses                  $ 8,281        $59,448 
Other assets                           1,255          2,728 

Cash paid                            $ 9,536        $62,176



Note 5.  Finance Receivables

Real  estate loans  generally have  maximum original  terms of  360 months.
Non-real estate  loans collateralized  by  consumer goods,  automobiles  or
other chattel  security,  or that  are  unsecured, generally  have  maximum
original terms of  60 months.   Retail sales  contracts are  collateralized
principally by consumer  goods and automobiles, and  generally have maximum
original  terms of  60  months.   Revolving retail  and  private label  are
secured by purchase  money security  interests in the  goods purchased  and
generally require  minimum monthly payments based  on outstanding balances.
Credit  card  receivables  were  unsecured  and  required  minimum  monthly
payments  based on outstanding balances.  At  December 31, 1998, 95% of the
net finance receivables were  secured by the real and/or  personal property
of the borrower.  At December 31, 1998, real estate loans accounted for 60%
of the amount and 7% of the number of net  finance receivables outstanding.
<PAGE>
<PAGE> 44

Notes to Consolidated Financial Statements, Continued


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

                         Amount       Percent 
                        (dollars in thousands)

1999                    $1,185,247         13%
2000                     1,381,704         15
2001                       977,305         10
2002                       563,202          6
2003                       332,651          3
2004 and thereafter      5,032,055         53

                        $9,472,164        100%


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

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

                                         1998        1997        1996   
                                            (dollars in thousands)
Loans:
  Principal cash collections          $3,065,357  $2,802,268  $2,584,894
  Percent of average net receivables      43.35%      45.83%      46.73%

Retail sales finance:
  Principal cash collections          $1,610,869  $1,448,758  $1,736,907
  Percent of average net receivables     127.35%     118.13%      92.93%

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


Unused  credit limits  on  private  label  extended  by  AGFC-Utah  to  its
customers were  $2.3 billion  at  December 31,  1998  and $2.7  billion  at
December 31, 1997.  These amounts, in part or in total, can be cancelled at
the discretion of AGFC-Utah, and are  not indicative of the amount expected
to be  funded.   Any such amounts  of credit  limits on private  label that
would be  funded would be fully  participated to the Company  pursuant to a
participation agreement.

Unused credit limits on loan and  retail revolving lines of credit extended
by the  Company to its customers  were $466.1 million at  December 31, 1998
and $225.3 million  at December 31,  1997.   These amounts, in  part or  in
total,  can be  cancelled at  the discretion  of the  Company, and  are not
indicative of the amount expected to be funded.
<PAGE>
<PAGE> 45

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

California      $1,461,438            15%    $  842,690            11%
N. Carolina        728,801             8        696,261             9
Illinois           593,789             6        434,029             5
Florida            574,693             6        518,837             7
Ohio               559,964             6        465,489             6
Indiana            502,653             5        438,369             6
Virginia           367,995             4        356,928             4
Georgia            351,347             4        310,485             4
Other            4,331,484            46      3,763,948            48 

                $9,472,164           100%    $7,827,036           100%



Note 6.  Allowance for Finance Receivable Losses

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

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

Balance at beginning of year        $363,126      $385,272      $482,243
Provision for finance receivable
  losses                             207,529       242,453       409,646
Allowance reclassified to assets
  held for sale                         -             -          (70,000)
Allowance related to acquired
  receivables                         17,297           354           152 
Charge-offs, net of recoveries      (215,029)     (264,953)     (436,769)

Balance at end of year              $372,923      $363,126      $385,272


See Note  2.  for information  on the  determination of  the allowance  for
finance receivable losses.
<PAGE>
<PAGE> 46

Notes to Consolidated Financial Statements, Continued


Note 7.  Investment Securities

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

                                   Fair Value           Amortized Cost  
                                 1998       1997       1998       1997  
                                        (dollars in thousands)
Fixed-maturity investment              
  securities:              
  Bonds:
    Corporate securities       $575,336   $507,844   $546,135   $482,620
    Mortgage-backed securities  175,014    177,727    168,346    170,929
    States and political
      subdivisions              184,255    173,081    173,508    163,615
    Other                        42,871     45,222     29,297     34,018
  Redeemable preferred stocks    11,194     18,737     10,916     18,400
Total                           988,670    922,611    928,202    869,582
Non-redeemable preferred
  stocks                          2,910      2,332      2,731      2,264
Other long-term investments       4,219      3,468      4,219      3,468

Total investment securities    $995,799   $928,411   $935,152   $875,314



At  December  31,  the gross  unrealized  gains  and  losses on  investment
securities were as follows:

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

Total investment securities    $63,528     $53,837   $ 2,881     $   740
<PAGE>
<PAGE> 47

Notes to Consolidated Financial Statements, Continued


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

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

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

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


Contractual maturities of  fixed-maturity securities at  December 31,  1998
were as follows:
                                            Fair       Amortized
                                            Value         Cost  
                                          (dollars in thousands) 
Fixed maturities, excluding
  mortgage-backed securities:
    Due in 1 year or less                 $ 12,681      $ 12,512
    Due after 1 year through 5 years       154,640       147,156
    Due after 5 years through 10 years     526,415       494,524
    Due after 10 years                     119,920       105,664
Mortgage-backed securities                 175,014       168,346

Total                                     $988,670      $928,202


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

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



Note 8.  Notes Receivable from Parent

Notes receivable from AGFI  totaled $182.9 million at December 31, 1998 and
$185.0 million at December 31, 1997.   Interest revenue on notes receivable
from parent totaled $17.5 million in 1998, $16.8 million in 1997, and $19.4
million in 1996.  



Note 9.  Costs In Excess of Net Assets Acquired

Goodwill,  resulting from the  excess of the  purchase price paid  over the
fair value  of  separately identified  tangible and  intangible net  assets
acquired, totaled $245.7 million at December 31, 1998 and $254.4 million at
December  31, 1997.    Accumulated amortization  totaled  $93.4 million  at
December 31, 1998 and $84.7 million at December 31, 1997.
<PAGE>
<PAGE> 48

Notes to Consolidated Financial Statements, Continued


Other  assets  includes  a customer  base  valuation  of  $91.5 million  at
December 31,  1998 and $30.5 million  at December 31, 1997,  which is being
amortized  to operating  expenses on  a straight-line  basis over  6 to  25
years.



Note 10.  Assets Held for Sale

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

The Company  hired an outside advisor  to market the portfolios.   Based on
negotiations with  prospective purchasers subsequent to year  end 1996, the
Company  determined that  a  write-down of  $137.0  million ($88.1  million
aftertax) at  December 31, 1996 was necessary to reduce the carrying amount
of the  assets held  for sale  to net  realizable value, after  considering
related expenses.

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

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



Note 11.  Long-term Debt

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

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

Senior debt            $5,162,012   $3,941,486   $5,332,847   $4,047,006
<PAGE>
<PAGE> 49

Notes to Consolidated Financial Statements, Continued


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

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

Senior debt            6.96%   7.34%   7.28%         6.67%    7.18%


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

                          Carrying Value    
                      (dollars in thousands)        

1999                        $  562,519
2000                         1,284,488
2001                           945,073
2002                           561,729
2003                         1,038,058
2004-2009                      770,145

Total                       $5,162,012


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

Certain debt  agreements  contain  restrictions  on  consolidated  retained
earnings for certain purposes (see Note 18.).



Note 12.  Short-term Notes Payable

AGFC and one of its subsidiaries issue commercial  paper with terms ranging
from 1 to 270 days.  Included in commercial paper borrowings are extendible
commercial  notes that AGFC sells with initial  maturities of up to 90 days
which  may  be  extended  by  AGFC to  390  days.    Information concerning
short-term notes payable  for commercial  paper and to  banks under  credit
facilities was as follows:

                                         1998        1997        1996   
                                            (dollars in thousands)

Maximum borrowings at any month end   $3,676,177  $3,176,805  $3,015,920
Average borrowings                    $3,362,788  $2,923,726  $2,305,848
Weighted average interest rate,
  at December 31:
    Money market yield                     5.29%       5.80%       5.54%
    Semi-annual bond equivalent yield      5.35%       5.87%       5.60%
Weighted average interest rate,
  giving effect to interest
  rate swap agreements and
  commitment fees at December 31,          5.82%       6.47%       6.01%
<PAGE>
<PAGE> 50

Notes to Consolidated Financial Statements, Continued


Note 13.  Credit Facilities

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

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

Uncommitted credit facilities:
  Company uncommitted facilities               $  141,000    $  141,000
  Shared uncommitted facilities                   150,000       200,000
  Borrowings                                         -             -   

  Remaining availability                       $  291,000    $  341,000



Note 14.  Derivative Financial Instruments 

AGFC  makes limited use of  derivative financial instruments  to manage the
cost of  its  debt and  is neither  a  dealer nor  a  trader in  derivative
financial  instruments.  AGFC has  generally limited its  use of derivative
financial  instruments  to  interest  rate  swap  and  treasury  rate  lock
agreements.

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

Fixed interest rates contracted to be paid on interest rate swap agreements
approximated the rates on  fixed-rate term debt with maturities  similar to
the  derivative  financial instruments  at  the date  of  contract.   As an
alternative to fixed-rate  term debt, AGFC's interest  rate swap agreements
did not have a  material effect on the Company's  weighted-average interest
rate or reported interest expense in  any of the three years ended December
31, 1998.
<PAGE>
<PAGE> 51

Notes to Consolidated Financial Statements, Continued


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

                                             December 31,           
                                   1998          1997          1996 
                                        (dollars in thousands)

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

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


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

              Notional       Weighted Average
               Amount         Interest Rate  
            (dollars in 
             thousands)

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

              $935,000            6.94%


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

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

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


Treasury rate lock  agreements have been used to hedge  against the risk of
rising interest  rates  on anticipated  long-term  debt issuances.    These
agreements  provide  for future  cash settlements  that  are a  function of
specified  U.S.  Treasury rates.    At December  31,  1998,  there were  no
treasury rate  lock  agreements  in effect.    At December  31,  1997,  the
notional  amount of  these agreements  was $390.0  million.  AGFC's  use of
treasury  rate lock  agreements  did  not have  a  material  effect on  the
Company's weighted-average interest  rate or reported  interest expense  in
1998 or 1997.
<PAGE>
<PAGE> 52

Notes to Consolidated Financial Statements, Continued


AGFC  is exposed  to  credit  risk  in  the  event  of  non-performance  by
counterparties to  derivative  financial  instruments.    AGFC  limits  its
exposure  to credit  risk by  entering into agreements  with counterparties
having  strong  credit ratings  and by  basing the  amount  and term  of an
agreement on these  credit ratings.   Furthermore, AGFC regularly  monitors
counterparty credit ratings throughout the term of the agreements.

AGFC's credit exposure  on derivative financial  instruments is limited  to
the  fair value of the  agreements that are favorable to  the Company.  See
Note 23. for  the fair values of  the interest rate swap  and treasury rate
lock agreements.  AGFC does not expect any counterparty to fail to meet its
obligation; however,  non-performance would not  have a material  impact on
the  consolidated  results of  operations  and  financial position  of  the
Company.

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


Note 15.  Short-term Notes Payable - Parent

Borrowings  from American  General  primarily provide  overnight  operating
liquidity when American General is in a surplus cash position.   Borrowings
from AGFI primarily  provide operating funds for  lending activities. These
borrowings are due on  demand at short-term rates  based on overnight  bank
investment rates or bank prime rates.  At December 31, 1998, 1997 and 1996,
AGFC had no borrowings outstanding with American General or AGFI.

Information concerning such borrowings was as follows:

                                          1998        1997        1996  
                                             (dollars in thousands)

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



Note 16.  Income Taxes

AGFC and  all of its  subsidiaries file a  consolidated federal  income tax
return  with American General  and the majority  of its subsidiaries.   The
Company  provides for  federal income  taxes as  if  filing a  separate tax
return, and pays such amounts to  American General in accordance with a tax
sharing agreement.  
<PAGE>
<PAGE> 53

Notes to Consolidated Financial Statements, Continued


Provision for income taxes is summarized as follows:

                                           Years Ended December 31,  
                                       1998          1997          1996  
                                            (dollars in thousands)  
Federal
  Current                            $ 90,531      $ 15,679      $ 67,675
  Deferred                             13,429        57,807       (40,681)
Total federal                         103,960        73,486        26,994
State                                   7,872         5,556         1,680 

Total                                $111,832      $ 79,042      $ 28,674


The  U.S.  statutory federal  income tax  rate  differs from  the effective
income tax rate as follows:
                                           Years Ended December 31,    
                                       1998          1997          1996 
 
Statutory federal income tax rate     35.00%        35.00%        35.00%
State income taxes                     1.67          1.67          1.37 
Amortization of goodwill               1.00          1.42          3.85
Nontaxable investment income           (.90)        (1.28)        (3.25)
Other, net                             (.25)         (.24)         (.96)

Effective income tax rate             36.52%        36.57%        36.01%


Net deferred tax assets were as follows:

                                                 December 31,      
                                             1998            1997  
                                            (dollars in thousands)

Deferred tax assets                        $176,936        $194,482
Deferred tax liabilities                   (153,384)       (150,789)

Net deferred tax assets                    $ 23,552        $ 43,693


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

State NOL carryforwards were $630.5 million at December 31, 1998 and $627.9
million at December  31, 1997 and expire in the years 2005 and 2006.  These
carryforwards resulted from a 1995 state  audit of a return and the state's
acceptance  of  an amended  return.   At December  31,  1998 and  1997, the
valuation  allowance relating to the  state NOL carryforwards totaled $39.5
million.
<PAGE>
<PAGE> 54

Notes to Consolidated Financial Statements, Continued


Note 17.  Capital Stock

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

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

Common  Shares -  At December  31, 1998  and 1997,  10,160,012 shares  were
issued and outstanding.



Note 18.  Retained Earnings

State  laws restrict the amounts  AGFC's insurance subsidiaries  may pay as
dividends without prior  notice to, or  in some cases prior  approval from,
their  respective state insurance departments.   At December  31, 1998, the
maximum amount of dividends which  the Company's insurance subsidiaries may
pay in  1999 without prior  approval was  $71.6 million.   At December  31,
1998, AGFC's insurance  subsidiaries had statutory  capital and surplus  of
$525.5  million.    Merit had  $52.7  million  of  accumulated earnings  at
December 31, 1998  for which  no federal  income tax  provisions have  been
required.  Merit would be liable for federal income taxes  on such earnings
if they were distributed as dividends or exceeded limits prescribed by  tax
laws.  No distributions are presently contemplated from these earnings.  If
such earnings  were to  become taxable  at December  31, 1998, the  federal
income tax would approximate $18.4 million.

Certain AGFC financing agreements effectively limit the amount of dividends
AGFC  may pay.  Under  the most restrictive  provision of these agreements,
$487.4  million  of  the  retained  earnings of  AGFC  was  free  from such
restrictions at December 31, 1998.



Note 19.  Benefit Plans

                          RETIREMENT INCOME PLANS

The Company participates in the  American General Retirement Plans  (AGRP),
which  are  noncontributory defined  benefit  pension  plans covering  most
employees.   Pension benefits are  based on the  participant's compensation
and length  of credited service.   American General's funding policy  is to
contribute  annually no more than the maximum deductible for federal income
tax purposes.  
<PAGE>
<PAGE> 55

Notes to Consolidated Financial Statements, Continued


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

Pension plan activity allocated to the Company for 1998, 1997, and 1996 was
immaterial.  Because net plan assets are not  calculated separately for the
Company, the remainder of the information presented herein is for AGFI.

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

                                                  December 31,        
                                           1998       1997       1996 
                                             (dollars in thousands)   

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

Prepaid pension expense                  $ 2,685    $ 4,649    $ 5,854


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

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

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


Additional assumptions concerning the determination of pension expense were
as follows:
                                           1998       1997       1996 
 
Weighted average discount rate             7.00%      7.25%      7.50%  
Expected long-term rate of
  return on plan assets                   10.25      10.00      10.00  
Rate of increase in 
  compensation levels                      4.25       4.00       4.00  
<PAGE>
<PAGE> 56

Notes to Consolidated Financial Statements, Continued


                POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

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

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

Because  plan information is not calculated separately for the Company, the
remaining information is for AGFI.

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



Note 20.  Lease Commitments, Rent Expense and Contingent Liabilities

The  approximate  annual  rental  commitments  for  leased  office   space,
automobiles  and data  processing and  related equipment  accounted for  as
operating  leases,  excluding  leases  on a  month-to-month  basis,  are as
follows:
                            Lease Commitments  
                         (dollars in thousands)        

1999                            $ 39,869
2000                              33,577
2001                              25,025
2002                              18,044
2003                              11,085
subsequent to 2003                12,445

Total                           $140,045


Taxes,  insurance and maintenance  expenses are obligations  of the Company
under certain leases.  In the normal course of business, leases that expire
will be renewed or replaced by  leases on other properties.  Future minimum
annual  rental commitments  will probably not  be less  than the  amount of
rental expense incurred in  1998.  Rental expense totaled  $36.1 million in
1998, $40.8 million in 1997, and $43.9 million in 1996.
<PAGE>
<PAGE> 57

Notes to Consolidated Financial Statements, Continued


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



Note 21.  Segment Information

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

The Company evaluates performance  of the segments based on income  or loss
before income taxes.  The accounting policies of the segments  are the same
as those disclosed  in Note 2., except that  segment operating expenses are
not reduced for the deferral of origination costs, the deferred origination
costs are not included  in finance receivables, and the amortization of the
deferred  origination  costs are  not included  as  a reduction  of finance
charge   revenue.    Intersegment  sales  and  transfers  are  intended  to
approximate the  amounts segments  would earn  if dealing with  independent
third parties.

The following tables  display information about  the Company's segments  as
well as reconciliations of the segment totals to the consolidated financial
statement amounts.  Adjustments for  revenues are primarily amortization of
deferred origination costs.  Reconciling items  for assets include deferred
origination  costs,  other  assets,  and  corporate  assets  which are  not
considered pertinent to determining segment performance.  Corporate  assets
include  cash,  prepaid  expenses,  deferred  charges,  fixed  assets,  and
goodwill.  Segment information prior to 1997 is not presented because it is
impractical to create comparable information.
<PAGE>
<PAGE> 58

Notes to Consolidated Financial Statements, Continued


Because  segment information is not  calculated separately for the Company,
the remainder of the information presented is for AGFI.

At or for the Year Ended December 31, 1998:

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



At or for the Year Ended December 31, 1997:

                       Consumer    Centralized                  Total
                       Branches    Real Estate   Insurance     Segments
                                    (dollars in thousands)
Revenues:
  External:
    Finance charges   $1,223,312   $   79,769   $     -       $1,303,081
    Insurance              2,069         -         186,147       188,216
    Other                    534          132       69,243        69,909
  Intercompany            74,724          169      (72,740)        2,153 
Interest expense         376,263       50,011         -          426,274 
Provision for finance
  receivable losses      252,942        2,209         -          255,151
Pretax income            202,364       18,508       64,755       285,627
Assets                 6,545,245    1,050,335    1,000,176     8,595,756 
<PAGE>
<PAGE> 59

Notes to Consolidated Financial Statements, Continued


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

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

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

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


Interest Expense

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

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


Provision for finance receivable
  losses

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

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


Pretax Income

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

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


Assets

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

Total consolidated assets          $11,172,923   $9,289,500
<PAGE>
<PAGE> 60

Notes to Consolidated Financial Statements, Continued


Note 22.  Interim Financial Information (Unaudited)

Unaudited interim information is summarized below:


                                Total Revenues       
Three Months Ended          1998              1997   
                            (dollars in thousands)

    March 31             $  385,631        $  380,383
    June 30                 393,297           376,353
    September 30            403,867           378,010
    December 31             411,444           377,197

    Total                $1,594,239        $1,511,943


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

    March 31             $   73,808        $   66,214
    June 30                  75,645            25,519  (a)
    September 30             76,684            68,657
    December 31              80,091            55,723 

    Total                $  306,228        $  216,113


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

    March 31             $   46,006        $   41,761
    June 30                  47,117            16,196  (a)
    September 30             49,304            43,511
    December 31              51,969            35,603 

    Total                $  194,396        $  137,071


(a)  Includes loss on sale of non-strategic assets of $42.2  million ($27.0
     million aftertax).

<PAGE>
<PAGE> 61

Notes to Consolidated Financial Statements, Continued


Note 23.  Fair Value of Financial Instruments

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

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

Net finance receivables,
  less allowance for finance
  receivable losses         $9,099,241  $9,099,241  $7,463,910  $7,463,910 
Investment securities          995,799     995,799     928,411     928,411 
Cash and cash equivalents      129,500     129,500      91,076      91,076 


Liabilities

Long-term debt              (5,162,012) (5,332,847) (3,941,486) (4,047,006)
Commercial paper            (3,485,648) (3,485,648) (3,157,671) (3,157,671)


Off-Balance Sheet Financial
  Instruments

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



                  VALUATION METHODOLOGIES AND ASSUMPTIONS

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


Finance Receivables

Fair values of net finance receivables (which approximates  carrying amount
less  allowance  for  finance  receivable  losses)  were  estimated   using
projected  cash   flows,  computed  by  category   of  finance  receivable,
discounted at  the weighted-average interest rates  currently being offered
for  similar finance  receivables.   Cash flows  were based  on contractual
payment  terms adjusted  for delinquencies  and finance  receivable losses.
The  fair value  estimates  do  not reflect  the  value of  the  underlying
customer relationships or the related distribution system.
<PAGE>
<PAGE> 62

Notes to Consolidated Financial Statements, Continued


Investment Securities

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


Cash and Cash Equivalents

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


Long-term Debt

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


Commercial Paper

The carrying values of commercial paper approximate the fair values.


Unused Customer Credit Limits

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


Derivative Financial Instruments

Fair  values for  the Company's interest  rate swap and  treasury rate lock
agreements are  estimated using  cash  flows discounted  at current  market
rates.
<PAGE>
<PAGE> 63

                                  PART IV


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


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

         Consolidated Balance Sheets, December 31, 1998 and 1997

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

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

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

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

         Notes to Consolidated Financial Statements

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

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

    (3)  Exhibits:

         Exhibits  are listed  in the  Exhibit Index  beginning on  page 70
         herein.

(b) Reports on Form 8-K

    Current Report on Form 8-K  dated October 28, 1998, with respect to the
    issuance of an Earnings Release announcing  certain unaudited financial
    results of the Company for the quarter ended September 30, 1998.

    Current Report on Form 8-K dated October  30, 1998, with respect to the
    authorization for issuance of $400  million aggregate  principal amount
    of the Company's 5 3/4% Senior Notes due November 1, 2003.

    Current Report on Form 8-K dated December 7, 1998,  with respect to the
    authorization for  issuance of $200 million  aggregate principal amount
    of the Company's 5 7/8% Senior Notes due December 15, 2005.

    Current Report on Form 8-K dated December 23, 1998, with respect to the
    authorization for  the increase  from  $1  billion aggregate  principal
    amount of the Company's Medium Term Notes, Series E to $1.45 billion.
<PAGE>
<PAGE> 64

Reports on Form 8-K, Continued


    Current Report on Form 8-K dated January  27, 1999, with respect to the
    issuance of an Earnings Release announcing  certain unaudited financial
    results of the Company for the year ended December 31, 1998.

    Current Report on Form  8-K dated  March 9, 1999,  with respect  to the
    authorization for  issuance of  $200 million aggregate principal amount
    of the Company's 5.80% Senior Notes due March 15, 2002.

(c) Exhibits

    The exhibits required to be  included in this  portion of Item  14. are
    submitted as a separate section of this report.
<PAGE>
<PAGE> 65

Item 14(d).


Schedule I - Condensed Financial Information of Registrant

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

Finance receivables, net of unearned
  finance charges:
    Loans                                         $   786,243    $  716,277
    Retail sales finance                              108,820       111,848

Net finance receivables                               895,063       828,125
Allowance for finance receivable losses               (12,977)      (14,988)
Net finance receivables, less allowance
  for finance receivable losses                       882,086       813,137

Cash and cash equivalents                              71,230        51,496
Investments in subsidiaries                         1,589,208     2,668,839
Receivable from parent and subsidiaries             8,199,965     5,255,541
Notes receivable from parent and
  subsidiaries                                        182,930       185,027
Other assets                                           79,073       112,961

Total assets                                      $11,004,492    $9,087,001


Liabilities and Shareholder's Equity

Senior long-term debt, 5.37% - 8.50%,
  due 1999 - 2009                                 $ 5,155,917    $3,941,486
Short-term notes payable:
  Commercial paper                                  3,246,228     2,914,743
  Notes payable to subsidiaries                       774,186       676,449
Other liabilities                                     204,819       179,408

Total liabilities                                   9,381,150     7,712,086

Shareholder's equity: 
  Common stock                                          5,080         5,080
  Additional paid-in capital                          810,914       718,914
  Other equity                                         39,419        34,512 
  Retained earnings                                   767,929       616,409

Total shareholder's equity                          1,623,342     1,374,915

Total liabilities and shareholder's equity        $11,004,492    $9,087,001

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

Schedule I, Continued

<TABLE>
                    American General Finance Corporation
                       Condensed Statements of Income



<CAPTION>
                                                 Years Ended December 31,  
                                                 1998      1997      1996  
                                                  (dollars in thousands)
<S>                                            <C>       <C>       <C>
Revenues
  Interest received from affiliates            $768,231  $728,068  $578,400
  Dividends received from subsidiaries           58,233   195,334    60,970
  Finance charges                                   874       992     1,372
  Other                                          14,445    15,446    19,038

Total revenues                                  841,783   939,840   659,780

Expenses
  Interest expense                              553,496   524,462   495,498
  Operating expenses                              5,633    10,815    13,542

Total expenses                                  559,129   535,277   509,040

Income before income taxes and    
  equity in overdistributed net   
  income of subsidiaries                        282,654   404,563   150,740

Provision for Income Taxes                       78,665    73,348    31,537

Income before equity in overdistributed
  net income of subsidiaries                    203,989   331,215   119,203

Equity in Overdistributed Net Income 
  of Subsidiaries                                (9,593) (194,144)  (68,244)

Net Income                                     $194,396  $137,071  $ 50,959

<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 67

Schedule I, Continued

<TABLE>
                    American General Finance Corporation
                     Condensed Statements of Cash Flows

<CAPTION>
                                                   Years Ended December 31,
                                                 1998        1997        1996
                                                    (dollars in thousands)
<S>                                          <C>         <C>         <C>
Cash Flows from Operating Activities
Net Income                                   $  194,396  $  137,071  $   50,959 
Reconciling adjustments to net cash 
  provided by operating activities:
    Equity in overdistributed net income    
      of subsidiaries                             9,593     194,144      68,244 
    Change in other assets and other
      liabilities                                39,990     (11,710)     36,892 
    Change in taxes receivable and  
      payable                                    36,292      54,770     (25,553)
    Other, net                                   (4,266)     (5,186)    (14,229)
Net cash provided by operating activities       276,005     369,089     116,313 

Cash Flows from Investing Activities
  Finance receivables originated or purchased
    from subsidiaries                          (776,714)   (720,788) (1,261,633)
  Principal collections on finance receivables   78,835      78,274      85,678 
  Finance receivables sold to subsidiaries      637,803   1,253,983   1,308,035 
  Capital contributions to subsidiaries,  
    net of return of capital                  1,074,945     (42,456)     40,662 
  Change in receivable from parent
    and subsidiaries                         (2,944,424)   (855,241)   (375,559)
  Purchase of assets from affiliate                -         (9,536)       -    
  Other, net                                    (18,998)      3,221     (27,473)
Net cash used for investing activities       (1,948,553)   (292,543)   (230,290)
    
Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt    2,022,189     726,950      77,817 
  Repayment of long-term debt                  (810,350) (1,195,750)   (540,860)
  Change in commercial paper                    331,485     147,554     611,910
  Change in notes receivable or payable 
    with parent and subsidiaries                 99,834     354,863     110,826 
  Capital contributions from parent              92,000      27,000        -    
  Dividends paid                                (42,876)   (137,137)   (147,574)
Net cash provided by (used for) 
  financing activities                        1,692,282     (76,520)    112,119 

Increase (decrease) in cash and cash equivalents 19,734          26      (1,858)
Cash and cash equivalents at beginning of year   51,496      51,470      53,328 
Cash and cash equivalents at end of year     $   71,230  $   51,496  $   51,470

<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 68

Schedule I, Continued


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




Note 1.  Accounting Policies

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



Note 2.  Receivable from Subsidiaries

AGFC  provides  funding to  most of  its  finance subsidiaries  for lending
activities.   Such funding is made  at 215 basis points  over the borrowing
cost rate.



Note 3.  Long-Term Debt

Senior  long-term debt  maturities for  the five  years after  December 31,
1998,  were as  follows:  1999,  $562.5 million; 2000,  $1.3 billion; 2001,
$945.1 million; 2002, $561.7 million; and 2003, $1.0 billion.
<PAGE>
<PAGE> 69

                                 Signatures


Pursuant to  the requirements  of Section  13 or  15(d)  of the  Securities
Exchange Act  of 1934,  the registrant  has duly caused  this report  to be
signed on its behalf by the undersigned, thereunto duly authorized on March
19, 1999.

                                       AMERICAN GENERAL FINANCE CORPORATION


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

Pursuant to the requirements  of the Securities Exchange Act of  1934, this
report has  been signed below  by the  following persons on  behalf of  the
registrant and in the capacities indicated on March 19, 1999.


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


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


/s/  W. Tal Bratton                         Jon P. Newton
     W. Tal Bratton                    (Director)       
(Director)
<PAGE>
<PAGE> 70

                                Exhibit Index


Exhibits                                                                    Page

(3)  a.  Restated  Articles of  Incorporation of  American General  Finance
         Corporation  (formerly  Credithrift  Financial Corporation)  dated
         July 22, 1988  and amendments  thereto dated August  25, 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. 1-6155).

     b.  By-laws of American General Finance Corporation.  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.
         1-6155). 

(4)  a.  The following instruments are filed pursuant to Item 601(b)(4)(ii)
         of Regulation S-K, which requires with certain exceptions that all
         instruments be filed which  define the rights of holders  of long-
         term  debt of the Company  and its consolidated  subsidiaries.  In
         the aggregate, the outstanding issuances of debt under each of the
         Indentures referred to under items (1) and (2) below exceed 10% of
         the total assets of the Company on a consolidated basis.
 
         (1)  Indenture dated as of  October 1, 1994 from American  General
              Finance   Corporation   to   The   Chase    Manhattan   Bank.
              Incorporated  by reference to Exhibit 4(a) filed as a part of
              the   Company's   Registration    Statement   on   Form   S-3
              (Registration No. 33-55803).

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

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

(12)     Computation of ratio of earnings to fixed charges.                   71

(23)     Consent of Ernst & Young LLP, Independent Auditors                   72

(27)     Financial Data Schedule                                              73
<PAGE>