The bidding war between Prudential PLC and American International Group sets up two alternative futures for American General, a major seller of annuities and life insurance through banks and independent agents.

American General announced March 12 that it had accepted a bid from Britain's Prudential PLC. On Tuesday, AIG announced a counteroffer.

It is unclear that Prudential can match AIG's financial wherewithal, and a failure to do so would make the decision simple for American General.

But if the two suitors find themselves in a financial standoff, there remains the question of which represents the more compelling strategic fit. Many analysts believe that here, too, AIG is the winner.

"The value of a relationship with AIG has to be more than whatever American General would get from Pru," said Colin Devine, an equity analyst at Citigroup Inc.'s Salomon Smith Barney in New York. For one thing, he said, "SunAmerica is light years ahead of Jackson National in terms of distribution through stockbrokers."

Cathy Seifert, an equity analyst at Standard & Poor's in New York, said that if AIG ends up the winner, American General will be able to keep distributing its products through banks and in addition could use AIG's channels - such as the Web site and SunAmerica Inc., which specializes in variable annuities and retirement products for financial planners - to leverage its insurance distribution.

Both AIG and Prudential see American General as a quick way to immediately add scale in business areas where they would like to be bigger. AIG's counteroffer would help improve its position in the domestic life insurance market.

"AIG has to address its lack of life insurance expertise," Mr. Devine said. "AIG is a world-class company, but it's not a player in life insurance, and American General is the fifth-biggest life insurer in the U.S."

Buying American General would bring Prudential PLC into the booming U.S. annuity market in a big way.

Analysts and American General executives thought that deal was a good strategic fit. American General, they said, fit well with Prudential's main U.S. operation, Lansing, Mich.-based Jackson National Life Insurance.

Robert M. Devlin, chairman and chief executive officer of American General, said Jackson National and American General's operations would complement each other. Jackson National's strong broker-dealer distribution of its fixed and variable annuities would beef up American General's distribution capabilities, he said, and American General is a strong manufacturer and bank distributor of fixed annuities.

The major advantage for American General's executives if Prudential wins the bidding war is that they would run the show for Pru in the United States.

Other analysts floated the possibility that Mr. Devlin could be in line to succeed AIG's chief executive officer, Maurice R. Greenberg. But in a conference call Wednesday, Mr. Greenberg dismissed the issue.

"This is about an acquisition, not a succession," he said.

An American General buy would not necessarily finish AIG's work on the acquisition front, Mr. Greenberg said.

In fact, as late as Tuesday, Edward E. Matthews, AIG's vice chairman of investments and financial services, said the company was planning to buy life insurance or mutual fund companies.

"We'd make an acquisition, as long as the price is right," he said.

To be sure, not everyone is convinced that AIG wants to buy American General for strategic reasons alone.

"This is an opportunistic financial move as much as a strategic decision," Ms. Seifert said. "The Pru deal wasn't being accepted by investors. AIG saw it and took advantage."

Prudential has made no secret of its desire to have a bigger presence in the United States. American General is also much stronger as a distributor through banks, a channel in which the AIG's SunAmerica Inc. has not been successful, analysts said.

Analysts said AIG is the clear favorite to land American General, because the worth of Prudential's deal has slipped since its announcement. It was worth $26 billion then but just $20 billion on Tuesday.

American International Group offered $23 billion, a price that would remain fixed unless AIG's share price shifted dramatically.

American General shares, which closed at $36.80 on Tuesday, before the AIG announcement, rose $5.20, to $42, on Wednesday. AIG's stock slid $3.37, to $76.84.

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