A.M. Best Affirms Ratings of American General's Subsidiaries.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Sept. 19, 2001

A.M. Best Co. has affirmed the A+ (Superior) financial strength ratings of American General Corporation's principal life insurance subsidiaries and removed the companies from under review; the ratings outlook remains positive.

The rating action follows the recent completion of American International Group's (NYSE: AIG) acquisition of American General.

A.M. Best notes that the combination has enhanced AIG's U.S.-based financial services platform by both substantially increasing its scale of operations and by considerably diversifying its earnings streams. In addition to providing a higher level of protection from earnings volatility arising from a downturn in any one business unit, this strategic transaction provides the organization the ability to accelerate top line growth through cross-selling opportunities and through leveraging its multiple distribution channels. As one of the fastest growing providers of retirement savings and investment products in the Unites States, AGC further complements AIG's life and retirement savings businesses, as well as provides AIG the opportunity to extend consumer finance expertise internationally.

While the acquisition will modestly increase AIG's financial leverage in the short term as a result of the addition of AGC's corporate debt, A.M. Best notes AIG's ability to reduce corporate financial leverage in the medium term to levels more commensurate with its rating. Specifically, A.M. Best believes that a reduction in dividend yield on converted AGC shares to levels commensurate with AIG's shares, expense savings and increased operating efficiencies should provide the impetus for reduced leverage and corresponding fixed charge coverage improvements. However, A.M. Best continues to review the potential for management and infrastructure changes within the organization and the longer-term strategic implications on AGC's businesses.

The following A+ (Superior) financial strength ratings were affirmed for American General group of companies:

      All American Life Insurance Co.
      Merit Life Insurance Co.
      American General Life & Accident
      Old Line Life Insurance Co. of America
      American General Assurance Co.
      American General Life of PA
      United States Life Insurance of NY
      Variable Annuity Life Insurance Co.
      American General Annuity Insurance
      American General Life Insurance Co.
      Franklin Life Insurance Co.
      American General Life Insurance Co. NY
      American Franklin Life Insurance
      North Central Life Insurance Co.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.