American General Finance Corp.

1921–1967

Among the largest consumer-credit companies in the United States, American General Finance Corp. (AGF) issues and services loans, insurance policies, and credit card accounts to individuals and families through over 1,200 branches in 39 states. Enjoying tremendous growth and steadily increasing assets, AGF is regarded as unique in the industry for its focus on extending its services to individuals and families with total incomes of less than $50,000, many of whom have credit lines considered "imperfect." AGF is a subsidiary of the American General Corp., an insurance and financial services conglomerate based in Houston, Texas.

AGF traces its history to 1921, when a small company known as Interstate Finance Corp. was established in the southwestern Indiana city of Evansville for the purpose of underwriting sales for the Inland Motor Truck Company, also based in Evansville. Interstate began issuing consumer loans in 1928, and, by the following year, the rapidly growing company was writing credit-related insurance policies.

By 1942, Interstate Finance had established three branch offices and, according to one advertisement, offered "friendly financing" in the form of personal loans ranging from $10 to $300, business loans, and a wide range of insurance coverage. The following year, Interstate purchased a local loan company known as the Evansville Morris Plan Co., representing the first in a series of acquisitions that would continue into the 1980s and would prove integral to the company's growth strategy. During this time, Evansville's economy and population were booming, bolstered by the emergence of several local shipyards during World War II, and the insurance and lending businesses in the area also enjoyed steady growth.

By the mid 1950s, Interstate had established five branch offices in Evansville, as well as executive offices downtown. During the postwar period of heightened consumerism, Interstate advertisements began emphasizing the financing they made available for automobiles, appliances, televisions, radios, and furniture. The company also strengthened its insurance division, purchasing the Merit Life Insurance Company in 1957. In 1967, Interstate Finance was incorporated as CrediThrift Financial, and, over the next ten years, the company steadily increased its presence, purchasing the assets of Morlan Pacific and establishing branch offices throughout the country.

In 1982, American General acquired CrediThrift for $150 million, as part of its plan to embark on one of the most aggressive acquisitions programs in the insurance industry.

1973–1988

By the early 1980s, CrediThrift oversaw operations at 537 branch offices, and its growth and success had attracted the attention of industry leaders, including Houston-based American General Corp., one of the largest providers of retirement annuities, life-insurance products, and loans in the United States. In 1982, American General acquired CrediThrift for $150 million, as part of its plan to embark on one of the most aggressive acquisitions programs in the insurance industry. Unlike many of American General's acquisitions, CrediThrift was accorded considerable autonomy and was allowed to retain many of its top executives, including CEO and chairperson Wendell L. Dixon, who had been with the company since 1973 and had helped define the terms of the company's sale.

With greater financial resources, CrediThrift began diversifying its offerings. In 1984, the company launched a Visa/MasterCard program through which it offered a credit card called the More Card. Acquisitions also continued under the parentage of American General. In 1983, CrediThrift purchased the assets of General Finance, and, five years later, it acquired CommoLoCo Operations, a loan company based in Puerto Rico, as well as Manufacturers Hanover Consumer Credit Division ("Manny Hanny"), for which it paid $750 million.

In 1988, CrediThrift reported profits of $85 million on sales of $930 million. The Manny Hanny purchase had effectively doubled the size of CrediThrift's operations. As the company was becoming an increasingly important subsidiary of American General, it proved slow to incorporate and consolidate the operations of its recent acquisitions, which resulted in lower earnings figures for its parent and prompted criticism from Wall Street analysts.

Furthermore, CEO and chairperson Dixon, then aged 65, retired from CrediThrift in 1988. American General Corp. assumed a greater interest in its subsidiary's day-to-day operations, and dramatic changes in CrediThrift's corporate culture began to take place. First, a management development program, Model-Netics, was installed at CrediThrift, and, in a process referred to as "enculturation," the company gradually adopted its parent's management techniques and policies. Then, American General executives were gradually placed in leadership positions within the Evansville company.

1989–1990

To oversee operations during this transition period, American General sent two of its Houston executives to Evansville: CFO Edwin G. Pickett and Michael G. Atnip, a personal assistant of American General CEO Harold S. Hook. Primary among their concerns for the future of CrediThrift was the standardization of operations among its finance holdings. Toward that end, the company's chief consumer finance companies--CrediThrift, General Finance, and Manufacturers Hanover--were consolidated and the company was renamed American General Finance Corp. (AGF).

In 1989, after one year at AGF, Pickett left the company. Also that year, Atnip was named senior vice-president of administration, and John J. Bolger, who had assumed leadership upon Dixon's retirement, was replaced by American General executive Roy W. Haley. Several other AGF officials resigned from the company during this time, and two of the company's board members were replaced by American General Corp. executives.

Despite the high turnover rate among its top officials, AGF reported record profits in 1990. Under Haley, AGF became the sixth largest consumer finance company in the United States in 1990. According to Credit Magazine, AGF attributed much of its success to the high quality of its customer service. Relying heavily on feedback from customers, AGF found that its services were generally regarded as superior to those of banks, which were cited as impersonal and, often, uncooperative. In addition to emphasizing personal service, AGF worked to decrease the amount of time involved in processing loan applications.

Employing the services of the telemarketing agency Telenational Marketing, AGF established a one-hour loan service in such test locations as Fresno, California; Orlando, Florida; and Shreveport, Louisiana. Under the program, customers called a toll-free phone number and provided Telenational operators with background information and authorization for the transmittal of credit reports. Telenational operators received the credit reports by facsimile machine and then faxed the completed application to AGF, where loan officers evaluated the information and returned the customers call within an hour, either granting or declining the loan. Another program initiated during this time involved a new line of credit cards, referred to as Private Label cards, which AGF serviced for retailers across the country. Successful in its own right, the Private Label credit card program also afforded AGF access to a wider clientele to which it could market insurance and other financing services.

1990–1993

In April of 1990, American General Corp. became the subject of a takeover bid by the Torchmark Corporation, an insurance company based in Birmingham, Alabama, which offered $6.4 billion to acquire the company. When the bid was refused, Torchmark undertook a proxy battle to win seats on the American General board and announced that, if successful, it would sell off AGF. Although American General won its battle with Torchmark, CEO Hook announced in May of 1990 that American General would be put up for sale, stating that "we recognized that ... we were in play. We wanted to be in control of the process." Hook's decision to sell American General was reportedly prompted by his desire to retain the assets of AGF, reflecting the importance and economic potential of AGF as part of the American General package. Moreover, as a subsidiary, AGF was prepared to be sold off separately if a buyer was ultimately not found.

Hook took American General off the auction block later that year, and, while several other subsidiaries were then divested, AGF remained under the auspices of American General. Over the next year, operations at AGF were successfully consolidated, and, in the Evansville Courier and Press, Atnip stated: "I think we can honestly say that to a large extent it (management shakeup) is behind us now. ... I think we're out of the valley of despair." By 1992, AGF had extended loans to 2.3 million American families. Acquisitions that year included Provident Financial Corp. of South Carolina and Credit Centers Inc. of Mississippi.

Under the leadership of Haley's successor, president and CEO Daniel Leitch III, AGF experienced record setting highs in several areas, including earnings, lending volume, and insurance sales. Investment gains for 1993 were reported at $4.6 million, up from $1.3 million the previous year, while the company's customer base increased by nearly 400,000. Furthermore, the company's credit card division experienced profit increases of 30 percent, due to continued sales of the More Card as well as rapidly increasing sales of its Private Label credit cards. Card servicing growth prompted AGF to begin construction on a new, 25,000 square foot facility in Evansville. Through a new computer automation program known as CLASS (Customer Lending and Solicitation System), implemented in 1993, AGF hoped to streamline operations and provide faster service to customers at all of its branches. Espousing what Leitch referred to as a "high-tech, high touch" approach, AGF thus sought to incorporate the benefits of technology while maintaining its reputation for personal service. As it entered the mid-1990s, the company was committed to becoming the national leader in each of the markets it served.