Torchmark Corp. said Monday it has dropped its $6.4 billion bid for much bigger rival American General Corp., citing the nation's fourth-largest insurance company's failure to respond formally to the offer by last Wednesday.

However, Birmingham, Ala.-based Torchmark said it would still propose a slate of fiveindependent nominees for election to the American General board of directors at the May 2 annual meeting.If the slate is elected, Torchmark said, it would be committed to assess independently what deal, including a merger, would be in American General shareholders' best interests.

American General, which previously indicated the bid was unwelcome, responded that it would not allow Torchmark to nominate the slate of directors

because the nomination was not received in time under its bylaws.

It is seeking a court order to block Torchmark from soliciting votes for its nominees to the company's 15-member board, six of whom are up for re- election.

Torchmark said it has withdrawn its $50-a-share offer because American General, whose $4.2 billion in annual revenues nearly triple Torchmark's, did not respond as required by March 28.

Torchmark said it would make another proposal to merge with American General only if shareholders expressed support by electing the Torchmark nominees or by voting in favor of a merger resolution.

In early trading, investors quickly shed American General shares, knocking the stock down $2.375 to $36.25. It was the second-most active issue on the New York Stock Exchange in a broadly lower market.

Torchmark last Wednesday proposed to pay half of the $6.4 billion bid in cash, with the other half funded with Torchmark stock. The company did not say how it would finance the $3.2 billion cash portion of the offer.

American General previously questioned how Torchmark would finance the cash part of the deal, but had said its board would consider the offer at the board meeting.

If the bid had succeeded, the acquisition would have topped the $5.2 billion BAT Industries buy-out of California's Farmers Group as the biggest in the insurance industry.

The Value Line Investment Survey ranks American General as the No. 4 insurance company in the United States based on premiums written.

American General in recent years has shed some of its less-profitable operations. But it remains among the nation's largest premium writers in individual health and life insurance.

It also has a large consumer finance division, part of which it acquired in when it bought Manufacturers Hanover's consumer finance division in 1988.

Torchmark, a smaller but faster-growing insurance concern, is about half the size of American General.