SEC Filing | American Financial Group, Inc.

- ------------------------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended Commission File June 30, 2000 No. 1-13653 AMERICAN FINANCIAL GROUP, INC. Incorporated under IRS Employer I.D. the Laws of Ohio No. 31-1544320 One East Fourth Street, Cincinnati, Ohio 45202 (513) 579-2121 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of August 1, 2000, there were 58,549,936 shares of the Registrant's Common Stock outstanding, excluding 18,666,614 shares owned by subsidiaries. Page 1 of 20 - -------------------------------------------------------------------------------

AMERICAN FINANCIAL GROUP, INC. 10-Q PART I FINANCIAL INFORMATION AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollars In Thousands) June 30, December 31, 2000 1999 ----------- ----------- Assets: Cash and short-term investments $ 244,000 $ 390,630 Investments: Fixed maturities - at market (amortized cost - $10,306,647 and $10,101,105) 10,006,247 9,862,205 Other stocks - at market (cost - $229,816 and $229,201) 314,116 409,701 Investment in investee corporation 174,141 159,984 Policy loans 214,629 217,171 Real estate and other investments 275,793 269,032 ----------- ----------- Total investments 10,984,926 10,918,093 Recoverables from reinsurers and prepaid reinsurance premiums 2,003,153 2,105,818 Agents' balances and premiums receivable 781,362 656,924 Deferred acquisition costs 743,216 660,672 Other receivables 264,269 223,753 Variable annuity assets (separate accounts) 529,614 354,371 Prepaid expenses, deferred charges and other assets 524,090 411,742 Cost in excess of net assets acquired 324,028 332,072 ----------- ----------- $16,398,658 $16,054,075 =========== =========== Liabilities and Capital: Unpaid losses and loss adjustment expenses $ 4,786,360 $ 4,795,449 Unearned premiums 1,478,966 1,325,766 Annuity benefits accumulated 5,473,529 5,519,528 Life, accident and health reserves 546,836 520,644 Long-term debt: Holding companies 580,804 492,923 Subsidiaries 241,882 239,733 Variable annuity liabilities (separate accounts) 529,614 354,371 Accounts payable, accrued expenses and other liabilities 1,003,482 976,413 ----------- ----------- Total liabilities 14,641,473 14,224,827

Minority interest 479,508 489,270 Shareholders' Equity: Common Stock, no par value - 200,000,000 shares authorized - 58,533,490 and 58,419,952 shares outstanding 58,533 58,420 Capital surplus 741,702 742,220 Retained earnings 588,942 557,538 Unrealized loss on marketable securities, net (111,500) (18,200) ----------- ----------- Total shareholders' equity 1,277,677 1,339,978 ----------- ----------- $16,398,658 $16,054,075 =========== =========== 2

AMERICAN FINANCIAL GROUP, INC. 10-Q AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS (In Thousands, Except Per Share Data) Three months ended Six months ended June 30, June 30, -------------------- ------------------------ 2000 1999 2000 1999 ---- ---- ---- ---- Income: Property and casualty insurance premiums $623,721 $557,535 $1,195,858 $1,095,001 Life, accident and health premiums 49,704 23,971 99,623 48,611 Investment income 213,031 211,465 422,511 415,375 Realized gains (losses) on sales of: Securities (3,907) 7,292 (5,340) 11,741 Subsidiary 25,000 - 25,000 - Other income 43,930 29,973 92,123 56,978 -------- -------- ---------- ---------- 951,479 830,236 1,829,775 1,627,706 Costs and Expenses: Property and casualty insurance: Losses and loss adjustment expenses 483,497 398,819 901,148 764,648 Commissions and other underwriting expenses 182,573 166,601 361,005 334,822 Annuity benefits 65,483 63,520 131,644 128,461 Life, accident and health benefits 36,885 15,994 73,609 34,873 Interest charges on borrowed money 16,799 17,513 32,825 30,947 Other operating and general expenses 138,779 88,119 231,474 164,728 -------- -------- ---------- ---------- 924,016 750,566 1,731,705 1,458,479 -------- -------- ---------- ---------- Operating earnings before income taxes 27,463 79,670 98,070 169,227 Provision for income taxes 7,201 25,784 30,362 55,867 -------- -------- ---------- ---------- Net operating earnings 20,262 53,886 67,708 113,360 Minority interest expense, net of tax (5,964) (9,540) (15,860) (20,506) Equity in net earnings of investee, net of tax 2,027 727 9,202 11,333 -------- -------- ---------- ---------- Earnings before extraordinary items and accounting change 16,325 45,073 61,050 104,187 Extraordinary items - loss on prepayment of debt - (3,738) - (3,738) Cumulative effect of accounting change - - - (3,854) -------- -------- ---------- ---------- Net Earnings $ 16,325 $ 41,335 $ 61,050 $ 96,595 ======== ======== ========== ==========

Basic earnings (loss) per Common Share: Before extraordinary items and accounting change $.28 $.75 $1.04 $1.72 Loss on prepayment of debt - (.06) - (.06) Cumulative effect of accounting change - - - (.06) ---- ---- ----- ----- Net earnings available to Common Shares $.28 $.69 $1.04 $1.60 ==== ==== ===== ===== Diluted earnings (loss) per Common Share: Before extraordinary items and accounting change $.28 $.74 $1.04 $1.70 Loss on prepayment of debt - (.06) - (.06) Cumulative effect of accounting change - - - (.06) ---- ---- ----- ----- Net earnings available to Common Shares $.28 $.68 $1.04 $1.58 ==== ==== ===== ===== Average number of Common Shares: Basic 58,547 59,962 58,507 60,459 Diluted 58,944 60,579 58,698 61,141 Cash dividends per Common Share $.25 $.25 $.50 $.50 3

AMERICAN FINANCIAL GROUP, INC. 10-Q AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Dollars in Thousands) Common Stock Unrealized Common and Capital Retained Gain (Loss) Shares Surplus Earnings on Securities Total ---------- ------------ -------- ------------- ---------- Balance at January 1, 2000 58,419,952 $800,640 $557,538 ($ 18,200) $1,339,978 Net earnings - - 61,050 - 61,050 Change in unrealized - - - (93,300) (93,300) ---------- Comprehensive income (loss) (32,250) Dividends on Common Stock - - (29,245) - (29,245) Shares issued: Exercise of stock options 14,682 331 - - 331 Employee stock purchase plan 38,270 940 - - 940 401-K plan company match 99,716 2,119 - - 2,119 Directors fees paid in stock 1,914 48 - - 48 Shares repurchased (41,044) (562) (579) - (1,141) Tax effect of intercompany dividends - (3,200) - - (3,200) Repurchase of trust preferred securities - - 178 - 178 Other - (81) - - (81) ---------- -------- -------- -------- ---------- Balance at June 30, 2000 58,533,490 $800,235 $588,942 ($111,500) $1,277,677 ========== ======== ======== ======== ========== Balance at January 1, 1999 60,928,322 $831,649 $527,028 $357,500 $1,716,177 Net earnings - - 96,595 - 96,595 Change in unrealized - - - (178,900) (178,900) ---------- Comprehensive income (loss) (82,305) Dividends on Common Stock - - (30,226) - (30,226) Shares issued: Exercise of stock options 64,759 1,793 - - 1,793 Dividend reinvestment plan 6,099 222 - - 222 Employee stock purchase plan 31,588 1,165 - - 1,165 401-K plan company match 57,888 2,171 - - 2,171 Portion of bonuses paid in stock 26,900 1,039 - - 1,039 Directors fees paid in stock 1,204 45 - - 45 Shares repurchased (1,381,199) (18,867) (29,952) - (48,819) Tax effect of intercompany dividends - (3,200) - - (3,200) Other - 2,693 - - 2,693 ---------- -------- -------- -------- ---------- Balance at June 30, 1999 59,735,561 $818,710 $563,445 $178,600 $1,560,755 ========== ======== ======== ======== ========== 4

AMERICAN FINANCIAL GROUP, INC. 10-Q AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (In Thousands) Six months ended June 30, ------------------------ 2000 1999 ---- ---- Operating Activities: Net earnings $ 61,050 $ 96,595 Adjustments: Extraordinary items - 3,738 Cumulative effect of accounting change - 3,854 Equity in net earnings of investee (9,202) (11,333) Depreciation and amortization 64,026 44,124 Annuity benefits 131,644 128,461 Realized gains on investing activities (33,330) (16,519) Deferred annuity and life policy acquisition costs (70,617) (59,181) Decrease (increase) in reinsurance and other receivables (34,508) 5,133 Increase in other assets (58,323) (54,061) Increase in insurance claims and reserves 170,303 10,181 Increase (decrease) in other liabilities (8,926) 55,884 Increase (decrease) in minority interest (1,629) 4,335 Dividends from investee - 2,400 Other, net (2,591) (3,344) -------- ---------- 207,897 210,267 -------- ---------- Investing Activities: Purchases of and additional investments in: Fixed maturity investments (942,929) (1,153,888) Equity securities (20,126) (47,901) Subsidiaries - (183,886) Real estate, property and equipment (39,819) (38,594) Maturities and redemptions of fixed maturity investments 348,447 619,073 Sales of: Fixed maturity investments 380,062 654,858 Equity securities 30,678 33,241 Real estate, property and equipment 4,810 9,201 Cash and short-term investments of acquired subsidiaries, net 259 19,413 Decrease in other investments 2,337 22,042 -------- ---------- (236,281) (66,441) -------- ----------

Financing Activities: Fixed annuity receipts 251,100 219,250 Annuity surrenders, benefits and withdrawals (387,667) (358,081) Net transfers from fixed to variable annuity assets (34,150) (8,660) Additional long-term borrowings 110,172 468,100 Reductions of long-term debt (26,981) (271,481) Issuances of Common Stock 1,004 2,449 Repurchases of Common Stock - (48,040) Repurchases of trust preferred securities (2,479) (5,509) Cash dividends paid (29,245) (30,004) -------- ---------- (118,246) (31,976) -------- ---------- Net Increase (Decrease) in Cash and Short-term Investments (146,630) 111,850 Cash and short-term investments at beginning of period 390,630 296,721 -------- ---------- Cash and short-term investments at end of period $244,000 $ 408,571 ======== ========== 5

AMERICAN FINANCIAL GROUP, INC. 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying consolidated financial statements for American Financial Group, Inc. ("AFG") and subsidiaries are unaudited; however, management believes that all adjustments (consisting only of normal recurring accruals unless otherwise disclosed herein) necessary for fair presentation have been made. The results of operations for interim periods are not necessarily indicative of results to be expected for the year. The financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary to be in conformity with generally accepted accounting principles. Certain reclassifications have been made to prior years to conform to the current year's presentation. All significant intercompany balances and transactions have been eliminated. All acquisitions have been treated as purchases. The results of operations of companies since their formation or acquisition are included in the consolidated financial statements. The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Changes in circumstances could cause actual results to differ materially from those estimates. INVESTMENTS All fixed maturity securities are considered "available for sale" and reported at fair value with unrealized gains and losses reported as a separate component of shareholders' equity. Short-term investments are carried at cost; loans receivable are carried primarily at the aggregate unpaid balance. Premiums and discounts on mortgage-backed securities are amortized over their expected average lives using the interest method. Gains or losses on sales of securities are recognized at the time of disposition with the amount of gain or loss determined on the specific identification basis. When a decline in the value of a specific investment is considered to be other than temporary, a provision for impairment is charged to earnings and the carrying value of that investment is reduced. INVESTMENT IN INVESTEE CORPORATION Investments in securities of 20%- to 50%-owned companies are generally carried at cost, adjusted for AFG's proportionate share of their undistributed earnings or losses. COST IN EXCESS OF NET ASSETS ACQUIRED The excess of cost of subsidiaries and investees over AFG's equity in the underlying net assets ("goodwill") is being amortized over periods of 20 to 40 years. INSURANCE As discussed under "Reinsurance" below, unpaid losses and loss adjustment expenses and unearned premiums have not been reduced for reinsurance recoverable. To the extent that unrealized gains (losses) from securities classified as "available for sale" would result in adjustments to deferred acquisition costs and policyholder liabilities had those gains (losses) actually been realized, such balance sheet amounts are adjusted, net of deferred taxes.

REINSURANCE In the normal course of business, AFG's insurance subsidiaries cede reinsurance to other companies to diversify risk and limit maximum loss arising from large claims. To the extent that any reinsuring companies are unable to meet obligations under the agreements covering reinsurance ceded, AFG's insurance subsidiaries would remain liable. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. AFG's insurance subsidiaries report as 6

AMERICAN FINANCIAL GROUP, INC. 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED assets (a) the estimated reinsurance recoverable on unpaid losses, including an estimate for losses incurred but not reported, and (b) amounts paid to reinsurers applicable to the unexpired terms of policies in force. AFG's insurance subsidiaries also assume reinsurance from other companies. Income on reinsurance assumed is recognized based on reports received from ceding reinsurers. DEFERRED ACQUISITION COSTS Policy acquisition costs (principally commissions, premium taxes and other underwriting expenses) related to the production of new business are deferred ("DPAC"). For the property and casualty companies, DPAC is limited based upon recoverability without any consideration for anticipated investment income and is charged against income ratably over the terms of the related policies. For the annuity companies, DPAC is amortized, with interest, in relation to the present value of expected gross profits on the policies. UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES The net liabilities stated for unpaid claims and for expenses of investigation and adjustment of unpaid claims are based upon (a) the accumulation of case estimates for losses reported prior to the close of the accounting period on the direct business written; (b) estimates received from ceding reinsurers and insurance pools and associations; (c) estimates of unreported losses based on past experience; (d) estimates based on experience of expenses for investigating and adjusting claims and (e) the current state of the law and coverage litigation. These liabilities are subject to the impact of changes in claim amounts and frequency and other factors. In spite of the variability inherent in such estimates, management believes that the liabilities for unpaid losses and loss adjustment expenses are adequate. Changes in estimates of the liabilities for losses and loss adjustment expenses are reflected in the Statement of Earnings in the period in which determined. ANNUITY BENEFITS ACCUMULATED Annuity receipts and benefit payments are recorded as increases or decreases in "annuity benefits accumulated" rather than as revenue and expense. Increases in this liability for interest credited are charged to expense and decreases for surrender charges are credited to other income. LIFE, ACCIDENT AND HEALTH RESERVES Liabilities for future policy benefits under traditional life, accident and health policies are computed using the net level premium method. Computations are based on anticipated investment yield, mortality, morbidity and surrenders and include provisions for unfavorable deviations. Reserves established for accident and health claims are modified as necessary to reflect actual experience and developing trends. VARIABLE ANNUITY ASSETS AND LIABILITIES Separate accounts related to variable annuities represent deposits invested in underlying investment funds on which Great American Financial Resources, Inc. ("GAFRI", formerly American Annuity Group, Inc.), an 83%-owned subsidiary, earns a fee. The investment funds are selected and may be changed only by the policyholder.

PREMIUM RECOGNITION Property and casualty premiums are earned over the terms of the policies on a pro rata basis. Unearned premiums represent that portion of premiums written which is applicable to the unexpired terms of policies in force. On reinsurance assumed from other insurance companies or written through various underwriting organizations, unearned premiums are based on reports received from such companies and organizations. For traditional life, accident and health products, premiums are recognized as revenue when legally collectible from policyholders. For interest-sensitive life and universal life products, premiums are recorded in a policyholder account which is reflected as a 7

AMERICAN FINANCIAL GROUP, INC. 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED liability. Revenue is recognized as amounts are assessed against the policyholder account for mortality coverage and contract expenses. POLICYHOLDER DIVIDENDS Dividends payable to policyholders are included in "Accounts payable, accrued expenses and other liabilities" and represent estimates of amounts payable on participating policies which share in favorable underwriting results. The estimate is accrued during the period in which the related premium is earned. Changes in estimates are included in income in the period determined. Policyholder dividends do not become legal liabilities unless and until declared by the boards of directors of the insurance companies. MINORITY INTEREST For balance sheet purposes, minority interest represents the interests of noncontrolling shareholders in AFG subsidiaries, including American Financial Corporation ("AFC") preferred stock and preferred securities issued by trust subsidiaries of AFG. For income statement purposes, minority interest expense represents those shareholders' interest in the earnings of AFG subsidiaries as well as AFC preferred dividends and accrued distributions on the trust preferred securities. INCOME TAXES AFC files consolidated federal income tax returns which include all 80%-owned U.S. subsidiaries, except for certain life insurance subsidiaries and their subsidiaries. Because holders of AFC Preferred Stock hold in excess of 20% of AFC's voting rights, AFG (parent) and its direct subsidiary, AFC Holding Company ("AFC Holding" or "AFCH"), own less than 80% of AFC, and therefore, file separate returns. Deferred income taxes are calculated using the liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases and are measured using enacted tax rates. Deferred tax assets are recognized if it is more likely than not that a benefit will be realized. STOCK-BASED COMPENSATION As permitted under Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," AFG accounts for stock options and other stock-based compensation plans using the intrinsic value based method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." BENEFIT PLANS AFG provides retirement benefits to qualified employees of participating companies through contributory and noncontributory defined contribution plans contained in AFG's Retirement and Savings Plan. Under the retirement portion of the plan, company contributions are invested primarily in securities of AFG and affiliates. Under the savings portion of the plan, AFG matches a specific portion of employee contributions. Contributions to benefit plans are charged against earnings in the year for which they are declared.

AFG and many of its subsidiaries provide health care and life insurance benefits to eligible retirees. AFG also provides postemployment benefits to former or inactive employees (primarily those on disability) who were not deemed retired under other company plans. The projected future cost of providing these benefits is expensed over the period the employees earn such benefits. Under AFG's stock option plan, options are granted to officers, directors and key employees at exercise prices equal to the fair value of the shares at the dates of grant. No compensation expense is recognized for stock option grants. 8

AMERICAN FINANCIAL GROUP, INC. 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED START-UP COSTS Prior to 1999, GAFRI deferred certain costs associated with introducing new products and distribution channels and amortized them on a straight-line basis over 5 years. In 1999, GAFRI implemented Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up Activities." The SOP requires that (i) costs of start-up activities be expensed as incurred and (ii) unamortized balances of previously deferred costs be expensed and reported as the cumulative effect of a change in accounting principle. Accordingly, AFG expensed previously capitalized start-up costs of $3.8 million (net of minority interest and taxes) or $.06 per diluted share, effective January 1, 1999. DERIVATIVES The Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," during the second quarter of 1998. SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including derivative instruments that are embedded in other contracts, and for hedging activities and must be implemented no later than January 1, 2001. SFAS No. 133 requires the recognition of all derivatives (both assets and liabilities) in the balance sheet at fair value. Changes in fair value of derivative instruments are included in current income or as a component of comprehensive income (outside current income) depending on the type of derivative. Implementation of SFAS No. 133 is not expected to have a material effect on AFG's financial position or results of operations. EARNINGS PER SHARE Basic earnings per share is calculated using the weighted average number of shares of common stock outstanding during the period. The calculation of diluted earnings per share includes the following dilutive effect of common stock options: second quarter of 2000 and 1999 - 397,000 shares and 617,000 shares; six months of 2000 and 1999 - 191,000 shares and 682,000 shares, respectively. STATEMENT OF CASH FLOWS For cash flow purposes, "investing activities" are defined as making and collecting loans and acquiring and disposing of debt or equity instruments and property and equipment. "Financing activities" include obtaining resources from owners and providing them with a return on their investments, borrowing money and repaying amounts borrowed. Annuity receipts, benefits and withdrawals are also reflected as financing activities. All other activities are considered "operating". Short-term investments having original maturities of three months or less when purchased are considered to be cash equivalents for purposes of the financial statements. B. ACQUISITIONS AND SALES OF SUBSIDIARIES WORLDWIDE INSURANCE COMPANY In April 1999, AFG acquired Worldwide Insurance Company for $157 million in cash. Worldwide is a provider of direct response private passenger automobile insurance. UNITED TEACHER ASSOCIATES In October 1999, GAFRI acquired United Teacher Associates Insurance Company of Austin, Texas ("UTA") for $81 million in cash, pending post-closing adjustments under which GAFRI may receive as much as several million dollars. UTA provides supplemental health products and retirement annuities, and purchases blocks of insurance policies from other insurers.

GREAT AMERICAN LIFE INSURANCE COMPANY OF NEW YORK AND CONSOLIDATED FINANCIAL In February 1999, GAFRI acquired Great American Life Insurance Company of New York, formerly Old Republic Life Insurance Company of New York, for $27 million in cash. In July 1999, GAFRI acquired Consolidated Financial Corporation, an insurance agency, for $21 million in cash. 9

AMERICAN FINANCIAL GROUP, INC. 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED COMMERCIAL LINES DIVISION In connection with the 1998 sale of its Commercial lines division to Ohio Casualty Corporation, AFG deferred a gain of $103 million related to the insurance business ceded which is being recognized over the estimated remaining settlement period (weighted average of 4.25 years) of the claims ceded. AFG will receive an additional payment expected to be at least $25 million from Ohio Casualty based on retention and growth through May 2000 of the businesses sold. This earn-out was recognized as additional "gain on sale of subsidiary" in the second quarter of 2000. The actual payment is subject to final determination and should be received in the third quarter. C. SEGMENTS OF OPERATIONS AFG's property and casualty group is engaged primarily in private passenger automobile and specialty insurance businesses. The Personal group writes nonstandard and preferred/standard private passenger auto and other personal insurance coverage. The Specialty group includes a highly diversified group of specialty business units. Some of the more significant areas are inland and ocean marine, California workers' compensation, agricultural-related coverages, executive and professional liability, U.S.-based operations of Japanese companies, fidelity and surety bonds, collateral protection, and umbrella and excess coverages. AFG's annuity and life business markets primarily retirement products as well as life and supplemental health insurance. In addition, AFG owns a significant portion of the voting equity securities of Chiquita Brands International, Inc. (an investee corporation - see Note D). The following table (in thousands) shows AFG's revenues and operating profit (loss) by significant business segment. Operating profit (loss) represents total revenues less operating expenses. Three months ended Six months ended June 30, June 30, ---------------------- ------------------------ 2000 1999 2000 1999 ---- ---- ---- ---- Revenues (a) Property and casualty insurance: Premiums earned: Personal $316,333 $300,765 $ 613,646 $ 586,582 Specialty 307,388 258,115 582,211 508,703 Other lines - primarily discontinued - (1,345) 1 (284) -------- -------- ---------- ---------- 623,721 557,535 1,195,858 1,095,001 Investment and other income 129,311 116,694 250,478 218,962 -------- -------- ---------- ---------- 753,032 674,229 1,446,336 1,313,963 Annuities and life (b) 188,294 149,858 369,782 303,874 Other 10,153 6,149 13,657 9,869 -------- -------- ---------- ---------- $951,479 $830,236 $1,829,775 $1,627,706 ======== ======== ========== ==========

Operating Profit (Loss) Property and casualty insurance: Underwriting: Personal ($ 26,392) ($ 2,434) ($ 37,325) $ 2,046 Specialty (14,680) 972 (25,178) 1,321 Other lines - primarily discontinued (1,277) (6,423) (3,792) (7,836) -------- -------- ---------- ---------- (42,349) (7,885) (66,295) (4,469) Investment and other income 93,482 73,368 178,007 138,089 -------- -------- ---------- ---------- 51,133 65,483 111,712 133,620 Annuities and life (2,209) 30,918 25,305 65,898 Other (c) (21,461) (16,731) (38,947) (30,291) -------- -------- ---------- ---------- $ 27,463 $ 79,670 $ 98,070 $ 169,227 ======== ======== ========== ========== [FN] (a) Revenues include sales of products and services as well as other income earned by the respective segments. (b) Represents primarily investment income. (c) Includes holding company expenses. 10

AMERICAN FINANCIAL GROUP, INC. 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED D. INVESTMENT IN INVESTEE CORPORATION Investment in investee corporation reflects AFG's ownership of 24 million shares (36%) of Chiquita common stock. The market value of this investment was $94 million and $114 million at June 30, 2000 and December 31, 1999, respectively. Chiquita is a leading international marketer, producer and distributor of quality fresh fruits and vegetables and processed foods. Summarized financial information for Chiquita follows (in millions): Six months ended June 30, ------------------------- 2000 1999 ---- ---- Net Sales $1,260 $1,370 Operating Income 112 113 Income before Extraordinary Item 46 56 Extraordinary Gain on Debt Prepayment 2 - Net Income 48 56 E. LONG-TERM DEBT The carrying value of long-term debt consisted of the following (in thousands): June 30, December 31, 2000 1999 -------- ----------- Holding Companies: AFG 7-1/8% Senior Debentures due April 2009 $300,849 $300,766 AFG 7-1/8% Senior Debentures due December 2007 79,600 79,600 AFC notes payable under bank line 174,000 68,000 APU 10-5/8% Subordinated Notes - 23,786 APU 10-7/8% Subordinated Notes due May 2011 11,636 11,661 Other 14,719 9,110 -------- -------- $580,804 $492,923 ======== ======== Subsidiaries: GAFRI 6-7/8% Senior Notes due June 2008 $100,000 $100,000 GAFRI notes payable under bank line 99,000 97,000 Notes payable secured by real estate 31,458 31,704 Other 11,424 11,029 -------- -------- $241,882 $239,733 ======== ========

In April 2000, AFG redeemed the APU 10-5/8% Notes at maturity using funds borrowed under the AFC bank line. At June 30, 2000, sinking fund and other scheduled principal payments on debt for the balance of 2000 and the subsequent five years were as follows (in millions): Holding Companies Subsidiaries Total --------- ------------ -------- 2000 $ - $ .9 $ .9 2001 1.7 1.7 3.4 2002 184.1 38.6 222.7 2003 - 63.6 63.6 2004 - 14.2 14.2 2005 - 9.6 9.6 Debentures purchased in excess of scheduled payments may be applied to satisfy any sinking fund requirement. The scheduled principal payments shown above assume that debentures previously purchased are applied to the earliest scheduled retirements. AFC and GAFRI each have an unsecured credit agreement with a group of banks under which they can borrow up to $300 million and $200 million, respectively. 11

AMERICAN FINANCIAL GROUP, INC. 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Borrowings bear interest at floating rates based on prime or Eurodollar rates. Loans mature December 2002 under the AFC credit agreement and from 2000 to 2003 under the GAFRI credit agreement. F. MINORITY INTEREST Minority interest in AFG's balance sheet is comprised of the following (in thousands): June 30, December 31, 2000 1999 -------- ----------- Interest of noncontrolling shareholders in subsidiaries' common stock $ 90,691 $ 97,516 Preferred securities issued by subsidiary trusts 316,663 319,600 AFC preferred stock 72,154 72,154 -------- ----------- $479,508 $489,270 ======== ======== PREFERRED SECURITIES Wholly-owned subsidiary trusts of AFCH and GAFRI have issued $325 million of preferred securities and, in turn, purchased a like amount of AFCH and GAFRI subordinated debt which provides interest and principal payments to fund the respective trusts' obligations. The preferred securities must be redeemed upon maturity or redemption of the subordinated debt. AFCH and GAFRI effectively provide unconditional guarantees of their respective trusts' obligations and AFG guarantees AFCH's obligations. The preferred securities consisted of the following (in thousands): Date of June 30, December 31, Optional Issuance Issue (Maturity Date) 2000 1999 Redemption Dates ------------- ------------------------ -------- ----------- ---------------------- October 1996 AFCH 9-1/8% TOPrS (2026) $98,750 $100,000 On or after 10/22/2001 November 1996 GAFRI 9-1/4% TOPrS (2026) 72,913 74,600 On or after 11/7/2001 March 1997 GAFRI 8-7/8% Pfd (2027) 70,000 70,000 On or after 3/1/2007 May 1997 GAFRI 7-1/4% ROPES (2041) 75,000 75,000 Prior to 9/28/2000 and after 9/28/2001 In the first six months of 2000, AFCH and GAFRI repurchased $1.3 million and $1.7 million of their preferred securities for $1.1 million and $1.4 million in cash, respectively. AFC PREFERRED STOCK AFC's Preferred Stock is voting, cumulative, and consists of the following: Series J, no par value; $25.00 liquidating value per share; annual dividends per share $2.00; redeemable at AFC's option at $25.75 per share beginning December 2005 declining to $25.00 at December 2007 and thereafter; 2,886,161 shares (stated value $72.2 million) outstanding at June 30, 2000 and December 31, 1999.

MINORITY INTEREST EXPENSE Minority interest expense is comprised of (in thousands): Six months ended June 30, ------------------ 2000 1999 ---- ---- Interest of noncontrolling shareholders in earnings of subsidiaries $ 4,063 $ 8,649 Accrued distributions by subsidiaries on preferred securities: Trust issued securities, net of tax 8,911 8,971 AFC preferred stock 2,886 2,886 ------- ------- $15,860 $20,506 ======= ======= 12

AMERICAN FINANCIAL GROUP, INC. 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED G. SHAREHOLDERS' EQUITY At June 30, 2000, there were 58,533,490 shares of AFG Common Stock outstanding, including 1,364,754 shares held by American Premier for possible distribution to certain creditors and other claimants upon proper claim presentation and settlement pursuant to the 1978 plan of reorganization of American Premier's predecessor, The Penn Central Corporation. Shares being held for distribution are not eligible to vote but otherwise are accounted for as issued and outstanding. AFG is authorized to issue 12.5 million shares of Voting Preferred Stock and 12.5 million shares of Nonvoting Preferred Stock, each without par value. At June 30, 2000, there were 6.8 million shares of AFG Common Stock reserved for issuance upon exercise of stock options. As of that date, AFG had options for 5.5 million shares outstanding. Options generally become exercisable at the rate of 20% per year commencing one year after grant; those granted to non-employee directors of AFG are fully exercisable upon grant. All options expire ten years after the date of grant. The change in unrealized gain (loss) on marketable securities for the six months ended June 30 included the following (in millions): Minority Pretax Taxes Interest Net ------ ----- -------- ------- 2000 ----------------------------------------- Unrealized holding gains (losses) on securities arising during the period ($157.3) $ 55.4 $ 5.6 ($ 96.3) Reclassification adjustment for realized losses included in net income 5.3 (1.9) (.4) 3.0 ------ ------ ----- ------ Change in unrealized gain (loss) on marketable securities, net ($152.0) $ 53.5 $ 5.2 ($ 93.3) ====== ====== ===== ====== 1999 ----------------------------------------- Unrealized holding gains (losses) on securities arising during the period ($292.3) $100.8 $20.0 ($171.5) Reclassification adjustment for realized gains included in net income (11.7) 4.1 .2 (7.4) ------ ------ ----- ------ Change in unrealized gain (loss) on marketable securities, net ($304.0) $104.9 $20.2 ($178.9) ====== ====== ===== ======

H. EXTRAORDINARY ITEMS Extraordinary items represents gains and losses related to debt retirements by the following companies. Amounts shown are net of income taxes (in thousands): Six months ended June 30, 1999 ---------------- Holding Companies: AFG (parent) $ 258 AFC (parent) (2,993) APU (parent) (1,003) ------ ($3,738) ====== I. COMMITMENTS AND CONTINGENCIES Other than as disclosed in "Legal Proceedings" in Part II of this report, there have been no significant changes to the matters discussed and referred to in Note L "Commitments and Contingencies" of AFG's Annual Report on Form 10-K for 1999. 13

AMERICAN FINANCIAL GROUP, INC. 10-Q ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations ------------------------------------------------ GENERAL AFG and its subsidiaries, AFC Holding, AFC and American Premier, are organized as holding companies with almost all of their operations being conducted by subsidiaries. These parent corporations, however, have continuing cash needs for administrative expenses, the payment of principal and interest on borrowings, shareholder dividends, and taxes. Therefore, certain analyses are best done on a parent only basis while others are best done on a total enterprise basis. In addition, since most of its businesses are financial in nature, AFG does not prepare its consolidated financial statements using a current-noncurrent format. Consequently, certain traditional ratios and financial analysis tests are not meaningful. IT INITIATIVE In the third quarter of 1999, AFG initiated an enterprise-wide study of its information technology ("IT") resources, needs and opportunities. AFG expects that the initiative will entail extensive effort and costs and may lead to substantial changes in the area, which should result in significant cost savings, efficiencies and effectiveness in the future. While the costs (most of which will be expensed) will precede any savings to be realized, management expects benefits to greatly exceed the costs incurred, all of which will be funded through available working capital. FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 encourages corporations to provide investors with information about the company's anticipated performance and provides protection from liability if future results are not the same as management's expectations. This document contains certain forward-looking statements that are based on assumptions which management believes are reasonable, but by their nature, inherently uncertain. Future results could differ materially from those projected. Factors that could cause such differences include, but are not limited to: changes in economic conditions especially with regard to availability of and returns on capital, regulatory actions, changes in legal environment, levels of catastrophe and other major losses, availability of reinsurance, and competitive pressures. AFG undertakes no obligation to update any forward-looking statements. LIQUIDITY AND CAPITAL RESOURCES RATIOS AFG's debt to total capital ratio (at the parent holding company level) was approximately 29% at June 30, 2000 and 25% at December 31, 1999. AFG's ratio of earnings to fixed charges (on a total enterprise basis) was 2.40 for the first six months of 2000 and 3.36 for the entire year of 1999.

SOURCES OF FUNDS Management believes the parent holding companies have sufficient resources to meet their liquidity requirements through operations. If funds generated from operations, including dividends and tax payments from subsidiaries, are insufficient to meet fixed charges in any period, these companies would be required to generate cash through borrowings, sales of securities or other assets, or similar transactions. AFC has a revolving credit agreement with several banks under which it can borrow up to $300 million. This credit line provides ample liquidity and can be used to obtain funds for operating subsidiaries or, if necessary, for the parent companies. At June 30, 2000, there was $174 million borrowed under the line. 14

AMERICAN FINANCIAL GROUP, INC. 10-Q Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued ------------------------------------------------------------ In April 1999, AFG issued $350 million principal amount of 7-1/8% senior debentures due 2009, using the proceeds to retire outstanding holding company public debt and borrowings under AFC's credit line. Dividend payments from subsidiaries have been very important to the liquidity and cash flow of the individual holding companies during certain periods in the past. However, the reliance on such dividend payments has been lessened in recent years by the combination of (i) reductions in the amounts and cost of debt at the holding companies from historical levels (and the related decrease in ongoing cash needs for interest and principal payments), (ii) AFG's ability to obtain financing in capital markets, as well as (iii) the sales of certain noncore investments. INVESTMENTS Approximately 91% of the fixed maturities held by AFG were rated "investment grade" (credit rating of AAA to BBB) by nationally recognized rating agencies at June 30, 2000. Investment grade securities generally bear lower yields and lower degrees of risk than those that are unrated and noninvestment grade. Management believes that the high quality investment portfolio should generate a stable and predictable investment return. AFG's equity securities are concentrated in a relatively limited number of major positions. This approach allows management to more closely monitor the companies and the industries in which they operate. RESULTS OF OPERATIONS GENERAL Pretax operating earnings for the three months and six months ended June 30, 2000 were $27.5 million and $98.1 million, respectively, compared to $79.7 million and $169.2 million in the comparable 1999 periods. A decline in property and casualty underwriting results, special litigation charges and the absence of realized gains on securities were partially offset by a $25 million gain recognized in connection with the 1998 sale of the Commercial lines division and an increase in other income, including sales of certain assets. Many investors and analysts focus on "core earnings" of companies, setting aside certain items included in net earnings. Such "core earnings" for AFG, consisting of net earnings adjusted to exclude: (i) realized gains, (ii) equity in investee earnings, (iii) special litigation charges in 2000 and (iv) a 1999 accounting change, were $23.8 million ($.40 per share, diluted) and $62.2 million ($1.06 per share) in the second quarter and six months of 2000 compared to $39.3 million ($.65 per share) and $85.6 million ($1.40 per share) in the second quarter and six months of 1999.

PROPERTY AND CASUALTY INSURANCE - UNDERWRITING AFG's property and casualty group consists of two major business groups: Personal and Specialty. The Personal group sells nonstandard and preferred/standard private passenger auto insurance and, to a lesser extent, homeowners' insurance. Nonstandard automobile insurance covers risk not typically accepted for standard automobile coverage because of the applicant's driving record, type of vehicle, age or other criteria. The Specialty group includes a highly diversified group of business lines. Some of the more significant areas are inland and ocean marine, California workers' compensation, agricultural-related coverages, executive and professional liability, U.S.-based operations of Japanese companies, fidelity and surety bonds, collateral protection, and umbrella and excess coverages. 15

AMERICAN FINANCIAL GROUP, INC. 10-Q Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued ------------------------------------------------------------ Underwriting profitability is measured by the combined ratio which is a sum of the ratios of underwriting losses, loss adjustment expenses, underwriting expenses and policyholder dividends to premiums. When the combined ratio is under 100%, underwriting results are generally considered profitable; when the ratio is over 100%, underwriting results are generally considered unprofitable. The combined ratio does not reflect investment income, other income or federal income taxes. For certain lines of business and products where the credibility of the range of loss projections is less certain (primarily the various specialty businesses listed above), management believes that it is prudent and appropriate to use conservative assumptions until such time as the data, experience and projections have more credibility, as evidenced by data volume, consistency and maturity of the data. While this practice mitigates the risk of adverse development on this business, it does not eliminate it. Net written premiums and combined ratios for AFG's property and casualty insurance subsidiaries were as follows (dollars in millions): Three months ended Six months ended June 30, June 30, ----------------- --------------------- 2000 1999 2000 1999 ---- ---- ---- ---- Net Written Premiums (GAAP) Personal $348.1 $275.4 $ 697.9 $ 551.9 Specialty 335.5 278.5 633.2 526.7 Other lines - (1.6) - (1.5) ------ ------ -------- -------- $683.6 $552.3 $1,331.1 $1,077.1 ====== ====== ======== ======== Combined Ratios (GAAP) (*) ---------------------- Personal 108.4% 100.7% 106.0% 99.7% Specialty 104.7 99.7 104.2 99.8 Aggregate (including discontinued lines) 106.8 101.4 105.5 100.4 [FN] (*) Combined ratios for the entire year of 1999 were: Personal - 100.7%, Specialty - 102.7% and aggregate - 102.0%.

PERSONAL The Personal group's increase in net written premiums reflects firming market prices in the nonstandard auto market, expanded writings in certain private passenger automobile markets and premiums generated by Worldwide (AFG's direct marketing channel) since its acquisition in April 1999. The combined ratio for the second quarter and six months of 2000 increased due to (i) increased auto claim frequency and severity (particularly in medical and health related costs), (ii) the impact of a very competitive pricing environment on policies written during 1999 and (iii) increased underwriting expenses associated with the direct and Internet marketing initiatives. In an effort to alleviate increasing losses, AFG has implemented rate increases in excess of 5% through the first six months of the year and expects that rate increases will approach 10% by the end of 2000. These rate actions are expected to moderate premium growth in the private passenger auto insurance business for the remainder of 2000, with the full impact on earnings not likely to take effect until early 2001. SPECIALTY The Specialty group's increase in net written premiums reflects the effect of (i) the January 2000 termination of reinsurance agreements relating to the California workers' compensation business which were in effect throughout 1999, (ii) rate increases in certain casualty markets (particularly California 16

AMERICAN FINANCIAL GROUP, INC. 10-Q Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued ------------------------------------------------------------ workers' compensation) and (iii) the realization of growth opportunities in certain commercial markets. Excluding the impact of the terminated reinsurance agreements, net written premiums were up approximately 15%. In response to continuing losses, rate increases in the California workers' compensation business have been in excess of 20% so far this year. To further reduce the rate inadequacy in this market, AFG expects additional rate increases throughout the rest of 2000 and in 2001. Rate increases implemented in the other specialty operations have been in excess of 7% through the first half of 2000 and are expected to approximate 10% by year-end. Even with these rate actions, this group continues to experience solid retention. The combined ratio for the second quarter and six months of 2000 reflects the effect of a highly competitive pricing environment on policies written during 1999. LIFE, ACCIDENT AND HEALTH PREMIUMS AND BENEFITS The increase in life, accident and health premiums and benefits is due primarily to the acquisition of UTA in October 1999. OTHER INCOME Other income increased $14 million (47%) in the second quarter and $35.1 million (62%) in the first six months of 2000 compared to 1999 due primarily to increased income from the sale of operating assets and lease residuals and increased fee income generated by certain insurance operations. REALIZED GAINS Realized capital gains have been an important part of the return on investments in marketable securities. Individual securities are sold creating gains and losses as market opportunities exist. GAIN ON SALE OF SUBSIDIARY In the second quarter of 2000, AFG recognized a $25 million gain representing an earn-out related to the 1998 sale of its Commercial lines division. ANNUITY BENEFITS Annuity benefits reflect amounts accrued on annuity policyholders' funds accumulated. The majority of GAFRI's fixed rate annuity products permit GAFRI to change the crediting rate at any time (subject to minimum interest rate guarantees of 3% or 4% per annum). As a result, management has been able to react to changes in market interest rates and maintain a desired interest rate spread. INTEREST ON BORROWED MONEY Interest expense increased $1.9 million (6%) in the first six months of 2000 compared to 1999 as higher average indebtedness was partially offset by lower average interest rates on AFG's borrowings.

OTHER OPERATING AND GENERAL EXPENSES Other operating and general expenses for the second quarter and six months of 2000 include a $32.5 million charge related to an agreement to settle a lawsuit against a GAFRI subsidiary and an $8.8 million charge for an adverse California Supreme Court ruling against an AFG property and casualty subsidiary. Excluding these litigation charges, other expenses increased $9.4 million (11%) in the second quarter and $25.4 million (15%) for the six months of 2000 compared to 1999 primarily due to the inclusion of the operations of UTA following its acquisition in late 1999 and increased expenses from certain start-up operations. 17

AMERICAN FINANCIAL GROUP, INC. 10-Q Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued ------------------------------------------------------------ INVESTEE CORPORATION Equity in net earnings of investee represents AFG's proportionate share of Chiquita's earnings. Chiquita reported net income for the second quarter and first six months of 2000 of $12.8 million and $47.7 million, respectively, compared to $7.3 million and $56 million for the same periods in 1999. CUMULATIVE EFFECT OF ACCOUNTING CHANGE In the first quarter of 1999, GAFRI implemented Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities." The SOP requires that costs of start-up activities be expensed as incurred and that unamortized balances of previously deferred costs be expensed and reported as the cumulative effect of a change in accounting principle. Accordingly, AFG expensed previously capitalized start-up costs of $3.8 million (net of minority interest and taxes) in the first quarter of 1999. --------------------------------------------------------------- Item 3 Quantitative and Qualitative Disclosure of Market Risk ------------------------------------------------------ As of June 30, 2000, there were no material changes to the information provided in AFG's Form 10-K for 1999 under the caption "Exposure to Market Risk" in Management's Discussion and Analysis of Financial Condition and Results of Operations. 18

AMERICAN FINANCIAL GROUP, INC. 10-Q PART II OTHER INFORMATION Item 1 Legal Proceedings ----------------- In February 1994, the USX Corporation ("USX") paid nearly $600 million in satisfaction of antitrust judgments entered against its subsidiary, The Bessemer & Lake Erie Railroad ("B&LE"). In May 1994, USX/B&LE filed two lawsuits, one in state and the other in federal court, against American Premier as the reorganized successor of The Penn Central Corporation seeking to recover this amount (plus interest) under theories of indemnity and contribution law. In 1998, all pending suits were dismissed on American Premier's Motions for Summary Judgment. These decisions were appealed by USX/B&LE and each appellate court affirmed the decision of the lower court dismissing the lawsuits. Plaintiffs then petitioned for and were denied re-hearings by panels of federal and state appellate court judges. Plaintiffs did not appeal the federal courts' decisions to the U.S. Supreme Court and the time for doing so has now expired. Plaintiffs appealed the state decision to the Ohio Supreme Court, which, on August 4, 2000, agreed to allow an appeal of the state appellate court's decision. American Premier and its outside counsel continue to believe that American Premier will not suffer any material loss from the remaining state court appeal. In June 2000, Great American Life Insurance Company ("GALIC") entered into a Memorandum of Understanding to settle a purported class action lawsuit (Woodward v. Great American Life Insurance Company, Hamilton County Court of Common Pleas, Case No. A9900587, filed February 2, 1999). In the settlement, GALIC agreed to (i) create a fund against which certain former policyholders can submit claims for reimbursement of a portion of surrender charges incurred, (ii) record lump-sum credits to certain annuities and (iii) allow certain annuity holders to transfer their annuity value to other products issued by GALIC or its subsidiaries. The complaint filed in the lawsuit had sought unspecified money damages based on alleged (i) failure of GALIC to allow the tax-free transfer of the annuity value of certain annuities to other product providers, and (ii) misleading disclosures concerning GALIC's interest crediting practices. The settlement is subject to confirmatory discovery and court approval. 19

AMERICAN FINANCIAL GROUP, INC. 10-Q PART II OTHER INFORMATION - CONTINUED Item 4 Submission of Matters to a Vote of Security Holders --------------------------------------------------- AFG's Annual Meeting of Shareholders was held on May 9, 2000; the only issue voted upon was the election of a Board of Directors. Approximately 92.3% of the shares eligible to vote were represented at the meeting. All eight nominees were elected. The votes cast for and those withheld are set forth below: Name For Against Withheld Abstain ---- --- ------- -------- ------- Theodore H. Emmerich 52,118,674 N/A 696,421 N/A James E. Evans 52,126,622 N/A 688,473 N/A Thomas M. Hunt 52,113,081 N/A 702,014 N/A Carl H. Lindner 51,907,864 N/A 907,231 N/A Carl H. Lindner III 51,909,457 N/A 905,638 N/A Keith E. Lindner 51,905,707 N/A 909,388 N/A S. Craig Lindner 51,914,223 N/A 900,872 N/A William R. Martin 52,124,587 N/A 690,508 N/A - -------------------- N/A - Not Applicable Item 6 Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibit 27.1 - Financial Data Schedule as of June 30, 2000. For submission in electronic filing only. (b) Reports on Form 8-K: none --------------------------------------------------------------- Signature --------- Pursuant to the requirements of the Securities Exchange Act of 1934, American Financial Group, Inc. has duly caused this Report to be signed on its behalf by the undersigned duly authorized. American Financial Group, Inc. August 11, 2000 BY: Fred J. Runk ----------------------------------- Fred J. Runk Senior Vice President and Treasurer 20

5 This schedule contains summary financial information extracted from the American Financial Group, Inc. Form 10-Q for the six months ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-2000 JUN-30-2000 $244,000 10,494,504 781,362 0 0 0 0 0 16,398,658 0 822,686 0 0 58,533 1,219,144 16,398,658 0 1,829,775 0 0 231,474 0 32,825 98,070 30,362 67,708 0 0 0 $61,050 1.04 1.04 Includes an investment in investee corporation of $174 million.