Fitch Affirms American General Finance Corp. IDRs at 'A+/F1'; Outlook Stable

Business Wire, Jan 18, 2008

CHICAGO -- Fitch Ratings has affirmed its long-term Issuer Default Rating (IDR) of 'A ' and short-term IDR of 'F1' for American General Finance Corporation (AGFC) and American General Finance Inc. (AGFI). The Rating Outlook is Stable. The ratings cover approximately $23 billion of debt outstanding as of Sept. 30, 2007.

The ratings for AGFC and AGFI reflect its sound financial profile and conservative growth on a stand-alone basis. The ratings also incorporate the benefit of its ownership by American International Group (AIG) ('AA/F1 ', Rating Outlook Stable). Rating concerns center on AGFC's limited diversity of its loan portfolio with concentrations in real estate products and asset quality deterioration due to sub-prime nature of portfolio.

Fitch believes AGFC's profitability will be pressured and remain below historical levels, based on current mortgage market conditions, exposure to subprime/nonprime consumers, and rising delinquencies. Profitability measures declined substantially for the nine months ended Sept. 30, 2007 versus 2006 as AGFC setup up a $178 million reserve for a financial remediation program, pursuant to terms of a Supervisory Agreement with the Office of Thrift Supervision (OTS), AIG Bank and Wilmington Financial Inc. (WFI), a subsidiary of AGFC. In addition, earnings were adversely affected by a substantial increase in provisioning due to deterioration in the mortgage and non-real estate portfolio. Provisioning for losses increased 100% to $238.2 million for the nine months ended Sept. 30, 2007 from the comparable period in 2006.

Asset quality performance has shown deterioration over the past year as the real estate market is under severe stress and has begun to affect the non-real estate loan portfolio. Fitch expects credit losses will deteriorate in 2008, relative to current levels, due to the current state of the real estate market and economic weakness. However, the decline in asset quality should not be as harsh as the industry as AGFC has stayed away from variable rate products and leverages its branch network for high servicing requirements of the subprime consumer. Annualized net losses to average owned receivables increased to 1.06% for the nine months ended Sept. 30, 2007, from 0.90% for the comparable period in 2006 but remain below historical levels.

Capitalization at the AGFC level, viewed in conjunction with AIG's financial profile and dividend capabilities is considered good for the rating category. AGFC has a diversified funding strategy, which in combination with the financial strength of its parent is consistent with its existing rating.

The following ratings have been affirmed:

American General Finance, Inc.

--Issuer Default Rating (IDR) 'A ';

--Short-term IDR and commercial paper 'F1'

American General Finance Corp.

--Issuer Default Rating (IDR) 'A ';

--Senior debt 'A ';

--Short-term IDR and commercial paper 'F1'.

AGFC Capital Trust I

--Preferred stock 'A'.

CommoLoco, Inc

--Short-term IDR and commercial paper 'F1'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.