Philip M. Hanley        Bryan A. Binyon
                              Sr. VP & CFO            Treasurer
                              812-468-5420            812-468-5195


                    AMERICAN GENERAL FINANCE CORPORATION TO
                      INCREASE ALLOWANCE FOR LOAN LOSSES

      Evansville, IN, January 10, 1996 - American General Finance Corporation
today announced that it will report an increase in the allowance for losses on
finance receivables of $216 million in the fourth quarter of 1995.  This
action will result in a fourth quarter after-tax charge of approximately $140
million to AGF earnings.

      This increase was determined by extensive internal analysis, together
with credit loss development projections supplied by Fair, Isaac and Co.,
Inc., a nationally recognized credit consulting firm, and the supporting
opinion of Ernst & Young LLP, the company s independent auditors.  At year-end
1995, the allowance for finance receivable losses will be approximately $482
million, or 5.9% of receivables, compared to $226 million, or 2.9% of
receivables at year-end 1994.  The increased allowance represents the
company s best  estimate of the  net credit losses on outstanding finance
receivables.

      The comprehensive analysis of the finance receivable portfolio and the
corresponding increase in the allowance during the fourth quarter was in
response to the unexpected rise in delinquencies beginning in the third
quarter of 1995.  At year-end 1995, 60-day+ delinquencies are estimated to be
4.1% of receivables, compared to 3.8% at September 30, 1995, 3.0% at June 30,
1995, and 2.9% at December 31, 1994.

      American General Finance recognizes that its strength is in its
traditional branch office network.  Non-branch initiatives of the last few
years have generated high receivables growth. These initiatives, however, 
were followed by an unacceptable rise in delinquencies.  The non-branch
initiatives have been analyzed and the underperforming programs have been
restructured or discontinued. Management believes the increase in the
allowance and the other actions taken address the overall credit quality issue
and position the company to return to the levels of earnings achieved over the
last few years.

      To support the increased allowance and reflect its commitment to
American General Finance as one of its core businesses, American General
Corporation contributed $80 million of internally generated capital to
American General Finance in December 1995.  This contribution was to enable
American General Finance Corporation to maintain leverage below its target
level of 6.5 to 1 debt to tangible net worth.

      The company expects to report fourth quarter and preliminary year-end
1995 results on Monday, January 29, 1996.

      American General Finance Corporation and its subsidiaries are engaged in
the consumer finance and related credit insurance business.  The company,
headquartered in Evansville, Indiana, has assets of $9.5 billion and operates







over 1,370 offices in 39 states, Puerto Rico, and the U.S. Virgin Islands. 
Products and services are provided to more than 3 million low-to-middle income
American families.  The company offers consumer and home equity loans, retail
sales financing, credit cards, and credit related insurance.