The Federal Trade Commission yesterday ordered American General Insurance Co. to divest itself of Fidelity & Deposit Co. of Maryland.

In a unanimous decision, the FTC ruled that the 1969 merger violated the nation's antitrust laws by substantially lessening competition in the businesses of underwriting fidelity and surety bonds.

American General, a diversified insurance company based in Houston, acquired Fidelity & Deposit, a specialist in fidelity and surety underwriting based in Baltimore, for stock valued at $107.5 million. At the time of acquisition both firms competed for underwriting business in the nationwide fidelity and surety markets, the commission found.

Surety is a form of property liability insurance generally issued in the form of a bond guaranteeing indemnity for breach of performance of specific acts, like construction buildings. Fidelity is a category of property liability insurance generally issued in bond form providing indemnity against loss caused by default or dishonesty.

In 1968, the year before the merger, American General ranked sixth nationally in the surety business with more than $15 million in direct premiums, and 12th in fidelity with about $4.5 million in direct premiums, the FTC said. F&D was the second ranked surety underwriter in the U.S. with about $27.5 million in direct premiums, and was third ranked in fidelity with about $10.4 million in direct "American General's acquisition of F&D created the leading firm in both the fidelity and surety markets through the combination of two substantial actual competitors," the commission said in opinion written by Calvin J. Collier. The two markets were "moderately concentrated" before the acquisition and even more concentrated afterwards, the agency said. "These measures of the changes in market structure provide persuasive proof that this horizontal acquisition had the probable effect of substantially lessening competition."

In its opinion, the commission sustained with modifications an initial decision by Administrative Law Judge Montgomery K. Hyun. The FTC's order also prohibits American General from acquiring any underwriter of fidelity and surety bonds for a 10-year period without prior approval of the commission.

In Houston, a spokesman for American General said the company as yet had no comment on the decision. The FTC's order is final unless American General appeals to the courts.