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
   March 31, 1997                                              No. 1-11632



                           AMERICAN ANNUITY GROUP, INC.



   Incorporated under                                          IRS Employer
                                                               I.D.
   the Laws of Delaware                                        No. 06-1356481



                  250 East Fifth Street, Cincinnati, Ohio  45202
                                  (513) 333-5300






   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 May 1, 1997, there were 43,202,717 shares of the Registrant's Common
   Stock outstanding.










                                   Page 1 of 20




   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q
                                      PART I
                              FINANCIAL INFORMATION

                  AMERICAN ANNUITY GROUP, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEET
                              (Dollars in millions)
                                                 March 31,December 31,
                                                     1997        1996 
   Assets
     Investments:
       Fixed maturities:
         Held to maturity - at amortized cost 
          (market - $2,436.3 and $2,524.6)       $2,454.7    $2,495.7 
         Available for sale - at market
          (amortized cost - $3,508.9
           and $3,254.9)                          3,507.7     3,325.6 
       Equity securities - at market 
          (cost - $20.7 and $16.1)                   57.1        51.0 
       Investment in affiliate                       18.2        16.5 
       Mortgage loans on real estate                 67.9        68.1 
       Real estate                                   38.0        37.6 
       Policy loans                                 235.0       236.0 
       Short-term investments                        40.3        41.4 
         Total investments                        6,418.9     6,271.9 

     Cash                                            25.5        42.7 
     Accrued investment income                       97.9        94.8 
     Unamortized insurance acquisition costs,
       net                                          206.4       194.7 
     Other assets                                   162.7       172.4 
     Assets held in separate accounts               253.5       247.6 

                                                 $7,164.9    $7,024.1 

   Liabilities and Capital
      Annuity benefits accumulated               $5,423.2    $5,365.6 
     Life, accident and health reserves             581.4       575.4 
     Notes payable                                  121.8       114.9 
     Payable to affiliates, net                      18.7        14.5 
     Deferred taxes on unrealized gains              12.1        33.3 
     Accounts payable, accrued expenses and
       other liabilities                            187.8       111.3 
     Liabilities related to separate accounts       253.5       247.6 
         Total liabilities                        6,598.5     6,462.6 
     
     Mandatorily redeemable preferred
       securities of subsidiary trusts              150.0        75.0 

     Stockholders' Equity:
       Series B Preferred Stock
         (at redemption value)                         -         49.0 
       Common Stock, $1 par value
         -100,000,000 shares authorized
         -43,201,074 and 43,255,705 shares
            outstanding                              43.2        43.3 
       Capital surplus                              358.8       358.5 
       Accumulated deficit at December 31, 1992    (212.6)     (212.6)
       Retained earnings since January 1, 1993      204.5       186.5 
       Unrealized gains on marketable securities,
         net                                         22.5        61.8 
           Total stockholders' equity               416.4       486.5 



    
                                                 $7,164.9    $7,024.1 




























































                                        2



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

                  AMERICAN ANNUITY GROUP, INC. AND SUBSIDIARIES
                          CONSOLIDATED INCOME STATEMENT
                     (In millions, except per share amounts)


                                                     Three months ended        
                                                         March 31,           
                                                       1997       1996  
   Revenues:
     Net investment income                           $119.6     $112.1  
     Realized gains on sales of investments             0.3        0.3  
     Life, accident and health premiums                25.4       24.2  
     Equity in net earnings of affiliate                1.8        1.0  
     Other income                                       2.6        1.4 
                                                      149.7      139.0  
   Costs and Expenses:
     Annuity benefits                                  68.8       68.0  
     Life, accident and health benefits                24.2       21.6 
     Amortization of insurance acquisition costs        7.7        6.0  
     Interest and other debt expenses                   2.6        4.1    
     Trust preferred distribution requirement           2.1         -  
     Other expenses                                    18.1       16.6  
                                                      123.5      116.3  
   Income before income taxes and extraordinary
     item                                              26.2       22.7  
   Provision for income taxes                           8.2        8.0   
   Income before extraordinary item                    18.0       14.7  
   Extraordinary item - loss on prepayment of debt       -        (1.6)
   Net Income                                        $ 18.0     $ 13.1 
                                                    

     Preferred dividend requirement                     1.0        0.4   
     Net income applicable to Common Stock           $ 17.0     $ 12.7 
                                                    

     Average common shares outstanding                 43.2       43.1 

                                                    
   Earnings per common share:
     Continuing operations                            $0.39      $0.33  
     Extraordinary item                                  -       (0.04)
     Net income                                       $0.39      $0.29  

















                                        3


 
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

                  AMERICAN ANNUITY GROUP, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                  (In millions)

                                                    Three months ended  
                                                         March 31,      
                                                      1997       1996 
   Preferred Stock:
     Balance at beginning of period                 $ 49.0     $ 17.0 
     Retired during the period                       (49.0)        -  
       Balance at end of period                     $   -      $ 17.0 
    
   Common Stock:
     Balance at beginning of period                 $ 43.3     $ 43.1 
     Retired during the period                        (0.1)        -  
       Balance at end of period                     $ 43.2     $ 43.1 
    

   Capital Surplus:
     Balance at beginning of period                 $358.5     $361.1 
     Common Stock retired                             (0.7)        -  
     Preferred Stock retired                           2.0         -  
     Preferred dividends declared                     (1.0)        -  
       Balance at end of period                     $358.8     $361.1 


   Accumulated Deficit at December 31, 1992:       ($212.6)   ($212.6)


   Retained Earnings Since January 1, 1993:
     Balance at beginning of period                 $186.5     $131.4 
     Net income                                       18.0       13.1 
       Balance at end of period                     $204.5     $144.5 


   Unrealized Gains, Net:
     Balance at beginning of period                 $ 61.8     $ 89.3 
     Change during period                            (39.3)     (51.6)
       Balance at end of period                     $ 22.5     $ 37.7 




















                                        4



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

                  AMERICAN ANNUITY GROUP, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (In millions)

                                                    Three months ended  
                                                         March 31,      
                                                      1997       1996 
   Cash Flows from Operating Activities:
     Net income                                     $ 18.0     $ 13.1 
     Adjustments:
       Extraordinary losses on retirement of debt       -         1.6 
       Increase in life, accident and health
         reserves                                      6.1        5.9 
       Benefits to annuity policyholders              68.8       68.0 
       Amortization of insurance acquisition costs     7.7        6.0 
       Equity in net earnings of affiliate            (1.8)      (1.0)
       Depreciation and amortization                   1.1        2.8 
       Realized gains on investing activities         (0.3)      (0.3)
       Increase in insurance acquisition costs       (17.3)     (15.0)
       Increase in accrued investment income          (3.1)      (7.9)
       Increase in other assets                      (10.2)      (0.3)
       Increase (decrease) in other liabilities       14.8       (3.9)
       Other, net                                     (2.0)      (3.3)
                                                      81.8       65.7 

   Cash Flows from Investing Activities:
     Purchases of and additional investments in:
       Fixed maturity investments                   (381.2)    (342.5)
       Equity securities                              (7.1)      (0.1)
       Real estate, mortgage loans and other assets   (2.9)     (16.9)
     Maturities and redemptions of fixed maturity
       investments                                    79.7       65.4 
     Sales of:
       Fixed maturity investments                    172.9       99.7 
       Equity securities                               3.6        0.1 
       Real estate, mortgage loans and other assets    2.4       10.8 
     Decrease (increase) in policy loans               1.0       (2.0)
                                                    (131.6)    (185.5)

   Cash Flows from Financing Activities:
     Fixed annuity receipts                          133.4      137.2 
     Annuity surrenders, benefits and withdrawals   (134.7)    (113.8)
     Additions to notes payable                        7.0       31.2 
     Reductions of notes payable                      (0.1)     (36.1)
     Issuance of trust preferred securities           74.7         -  
     Retirement of Common Stock                       (0.8)        -  
     Retirement of Preferred Stock                   (47.0)        -  
     Cash dividends paid                              (1.0)        -  
                                                      31.5       18.5 

   Net decrease in cash and short-term investments   (18.3)    (101.3)

   Cash and short-term investments at beginning of
     period                                           84.1      169.4 
   Cash and short-term investments at end of
     period                                         $ 65.8     $ 68.1 



                                        5



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


   A. Description of the Company

      American Annuity Group, Inc. ("AAG" or "the Company") markets (i)
      individual and group annuities nationwide in savings and retirement
      markets, (ii) individual life insurance and annuity policies with the
      sponsorship of state associations of funeral directors as well as
      individual and large operators of funeral homes across the country and
      (iii) various forms of supplemental life and health insurance through
      payroll deduction plans and financial institutions.

      American Financial Group, Inc. ("AFG") and its subsidiaries owned
      35,059,995 shares (81%) of AAG's Common Stock at May 1, 1997.

   B. Accounting Policies

      Basis of Presentation  The accompanying consolidated financial
      statements for AAG and its subsidiaries are unaudited, but 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.  

      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  Debt securities are classified as "held to maturity" and
      reported at amortized cost if AAG has the positive intent and ability to
      hold them to maturity.  Debt and equity securities are classified as
      "available for sale" and reported at fair value with unrealized gains
      and losses reported as a separate component of stockholders' equity if
      the securities are not classified as held to maturity or bought and held
      principally for selling in the near term.  Only in certain limited
      circumstances, such as significant issuer credit deterioration or if
      required by insurance or other regulators, may a company change its
      intent to hold a certain security to maturity without calling into
      question its intent to hold other debt securities to maturity in the
      future.

      Short-term investments are carried at cost; mortgage loans on real
      estate are generally carried at amortized cost; policy loans are stated
      at the aggregate unpaid balance.

      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.  Premiums and discounts on mortgage-backed
      securities are amortized over their expected average lives using the
      interest method.





    




























































                                        6



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


      Investment in Affiliate  AAG's investments in equity securities of
      companies that are 20% to 50% owned by AFG and its subsidiaries are
      carried at cost, adjusted for a proportionate share of their
      undistributed earnings or losses.  

      Insurance Acquisition Costs  Unamortized insurance acquisition costs
      consist primarily of deferred policy acquisition costs and the present
      value of future profits of acquired companies.  Certain commission costs
      are expensed as paid and are included in amortization of life insurance
      acquisition costs.

      Deferred Policy Acquisition Costs ("DPAC")  DPAC (principally
      commissions, advertising, underwriting, policy issuance and sales
      expenses that vary with and are primarily related to the production of
      new business) is deferred to the extent that such costs are deemed
      recoverable.

      DPAC related to annuities and universal life insurance products is
      amortized, with interest, in relation to the present value of expected
      gross profits on the policies.  These expected gross profits consist
      principally of estimated future net investment income and surrender,
      mortality and other policy charges, less estimated future interest on
      policyholders' funds, policy administration expenses and death benefits
      in excess of account values.  DPAC is reported net of unearned revenue
      relating to certain policy charges that represent compensation for
      future services.  These unearned revenues are recognized as income using
      the same assumptions and factors used to amortize DPAC.

      DPAC related to traditional life and health insurance is amortized over
      the expected premium paying period of the related policies, in
      proportion to the ratio of annual premium revenues to total anticipated
      premium revenues.  Such anticipated premium revenues were estimated
      using the same assumptions used for computing liabilities for future
      policy benefits.

      To the extent that realized gains and losses result in adjustments to
      the amortization of DPAC, such adjustments are reflected as components
      of realized gains.

      To the extent that unrealized gains (losses) from securities classified
      as "available for sale" would result in adjustments to DPAC, unearned
      revenues and policyholder liabilities had those gains (losses) actually
      been realized, such balance sheet amounts are adjusted, net of deferred
      taxes.

      Present Value of Future Profits  Included in insurance acquisition costs
      are amounts representing the present value of future profits on business
      in force of the acquired insurance companies, which represent the
      portion of the costs to acquire such companies that is allocated to the
      value of the right to receive future cash flows from insurance contracts
      existing at the date of acquisition.

      These amounts are amortized with interest over the estimated
      remaining life of the acquired policies for annuities and universal
      life products and over the expected premium paying period for
      traditional life and health insurance products.
                                        7



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


      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 Benefit Reserves  Liabilities for future
      policy benefits under traditional ordinary life, accident and health
      policies are computed using the net level premium method.  Computations
      are based on anticipated investment yields, mortality, morbidity and
      surrenders and include provisions for unfavorable deviations.  Reserves
      are modified as necessary to reflect actual experience and developing
      trends.  

      The liability for future policy benefits for interest sensitive life
      policies is equal to the sum of the accumulated fund balances under such
      policies.

      Assets Held In and Liabilities Related To Separate Accounts  Investment
      annuity deposits and related liabilities primarily represent deposits
      maintained by several banks under a previously offered tax-deferred
      annuity program.  The Company receives an annual fee from each bank for
      sponsoring the program; if depositors elect to purchase an annuity from
      the Company, funds are transferred to the Company.

      Life, Accident and Health Premiums and Benefits  For traditional life,
      accident and health products, premiums are recognized as revenue when
      legally collectible from policyholders.  Policy reserves have been
      established in a manner which allocates policy benefits and expenses on
      a basis consistent with the recognition of related premiums and
      generally results in the recognition of profits over the premium-paying
      period of the policies.

      For interest-sensitive life and universal life products, premiums are
      recorded in a policyholder account which is reflected as a liability. 
      Revenue is recognized as amounts are assessed against the policyholder
      account for mortality coverage and contract expenses.  Surrender
      benefits reduce the account value.  Death benefits are expensed when
      incurred, net of the account value.

      Income Taxes  AAG, Great American Life Insurance Company ("GALIC") and
      all other material 80%-owned U.S. non-life subsidiaries are consolidated
      for federal income tax purposes with American Financial Corporation
      ("AFC"), the common stock of which is owned by AFG.  AAG's other life
      insurance subsidiaries will likely be required to file separate federal
      income tax returns through the sixth year from their acquisition or
      formation.

      AAG and GALIC have separate tax allocation agreements with AFC which
      designate how tax payments are shared by members of the tax group.  In
      general, both companies compute taxes on a separate return basis.  GALIC
      is obligated to make payments to (or receive benefits from) AFC based on
      taxable income without regard to temporary differences.  In accordance
      with terms of AAG's indentures, AAG receives GALIC's tax allocation
      payments for the benefit of AAG's deductions arising from current
      operations.  If GALIC's taxable income (computed on a statutory
      accounting basis) exceeds a current period net operating loss of AAG,
      the taxes payable by GALIC associated with the excess are payable to
      AFC.  If the AFC tax group utilizes any of AAG's net operating losses or
      deductions that originated prior to AAG's entering AFC's consolidated
      tax group, AFC will pay to AAG an amount equal to the benefit received.


























































                                        8



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


      Deferred income tax assets and liabilities are determined based on
      differences between financial reporting and tax bases and are measured
      using enacted tax rates.  The Company recognizes deferred tax assets if
      it is more likely than not that a benefit will be realized.  Current and
      deferred tax assets and liabilities of companies in AFC's consolidated
      tax group are aggregated with other amounts receivable from or payable
      to affiliates.

      Stock-Based Compensation  As permitted under Statement of Financial
      Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
      Compensation", AAG 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."  Earnings Per Share  Earnings per share are
      calculated on the basis of the weighted average number of shares of
      common stock outstanding during the period.  The effect of assumed
      exercise of common stock options in 1997 was not deemed dilutive and
      is therefore not reflected in the earnings per share presentation for
      that period.  AAG had no stock options outstanding prior to the
      fourth quarter of 1996.

      New accounting standards issued in 1997 revise current rules for
      computing and presenting earnings per share beginning with financial
      statements issued for periods ending after December 15, 1997.  The
      new rules require the presentation of basic and diluted earnings per
      share for entities with potentially dilutive securities. 
      Implementation of these new rules will not materially affect AAG's
      reported earnings per share amounts.

      Benefit Plans  AAG sponsors an Employee Stock Ownership Retirement Plan
      ("ESORP") covering all employees who are qualified as to age and length
      of service.  The ESORP, which invests primarily in securities of AAG, is
      a trusteed, noncontributory plan for the benefit of the employees of AAG
      and its subsidiaries.  Contributions are discretionary by the directors
      of AAG and are charged against earnings in the year for which they are
      declared.  Qualified employees having vested rights in the plan are
      entitled to benefit payments at age 60.

      AAG and certain of its subsidiaries provide certain benefits to eligible
      retirees.  The projected future cost of providing these benefits is
      expensed over the period the employees earn such benefits.

      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 annuity receipts, benefits and withdrawals and
      obtaining resources from owners and providing them with a return on
      their investments.  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.





                                        9



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


   C. Investments

      The carrying value of AAG's fixed maturity portfolio was comprised of
      the following at March 31, 1997:
                                           Held to  Available
                                          Maturity   for Sale Total  
         U. S. Government and government
           agencies and authorities            1%       4%       5%  
         Public utilities                      6        3        9   
         Mortgage-backed securities           11       23       34   
         All other corporate                  23       29       52   
                                              41%      59%     100%  

      "Investing activities" related to fixed maturity investments in AAG's
      Statement of Cash Flows for the three months ending March 31, consisted
      of the following (in millions):
                                           Held to  Available
                                          Maturity   for Sale Total  
         1997
         Purchases                          ($ 0.2) ($381.0) ($381.2)
         Maturities and paydowns              40.6     39.1     79.7 
         Sales                                  -     172.9    172.9 

         1996
         Purchases                          ($22.2) ($320.3) ($342.5)
         Maturities and paydowns              23.1     42.3     65.4 
         Sales                                  -      99.7     99.7 


   D. Investment in Affiliate

      Investment in affiliate (carrying value of $18.2 million at March 31,
      1997) reflects AAG's 5% ownership (2.7 million shares) of the common
      stock of Chiquita Brands International which is accounted for under the
      equity method.  AFG and its other subsidiaries own an additional 38%
      interest in the common stock of Chiquita.  Chiquita is a leading
      international marketer, producer and distributor of bananas and other
      quality fresh and processed food products.  The market value of AAG's
      investment in Chiquita was $41.4 million at March 31, 1997 and $34.1
      million at December 31, 1996.    

   E. Unamortized Insurance Acquisition Costs

      Unamortized insurance acquisition costs consisted of the following (in
      millions):
                                                 March 31, December 31,
                                                     1997         1996 
           Deferred policy acquisition costs       $289.6       $272.2 
           Present value of future profits
                acquired                             70.6         72.5 
           Unearned revenues                       (153.8)      (150.0)
                                                   $206.4       $194.7 




                                        10



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


   F. Notes Payable

      Notes payable consisted of the following (in millions):

                                                 March 31, December 31,
                                                     1997         1996 
           
           Direct obligations of AAG               $  1.3       $  1.3 
           Obligations of AAG Holding:                    
             Bank Credit Line due September 1999     51.7         44.7 
             9-1/2% Senior Notes due August 2001     40.8         40.8 
             11-1/8% Senior Subordinated Notes
               due February 2003                     24.1         24.1     
           Other subsidiary debt                      3.9          4.0 
                Total                              $121.8       $114.9 


      In connection with the anticipated establishment of a new unsecured
      line of credit, the Company transferred all the outstanding stock of
      GALIC to AAG Holding Company, Inc., a wholly-owned subsidiary of the
      Company, on November 1, 1996.  In connection with that transaction,
      AAG Holding assumed all of the Company's obligations under the 9-1/2%
      Senior Notes, 11-1/8% Senior Subordinated Notes and the bank lines of
      credit.  The Company has guaranteed the obligations of AAG Holding
      under this indebtedness.

      AAG Holding has a $75 million revolving credit agreement with four
      banks.  Loans under the credit agreement mature in 1999 and bear
      interest at floating rates based on prime or Eurodollar rates and are
      collateralized by 25% of the Common Stock of GALIC.  At March 31, 1997
      and December 31, 1996, the weighted average interest rate on amounts
      borrowed under the bank credit line was 6.59% and 6.68%, respectively. 
      AAG Holding also has a short-term $40 million unsecured bank line of
      credit with terms similar to the $75 million credit agreement.  There
      were no amounts outstanding under this line at March 31, 1997.  

      At March 31, 1997, scheduled principal payments on debt for the balance
      of 1997 and the subsequent five years are shown below (in millions). 
      The scheduled principal payments assume that Notes purchased are applied
      to the earliest scheduled retirements.

                             AAG 
                      AAG Holding   Other     Total                    
            1997     $0.1   $  -     $0.4     $ 0.5       
            1998      0.1      -      0.6       0.7
            1999      0.1    51.7     0.7      52.5
            2000      0.1      -      0.7       0.8
            2001      0.1    40.8     0.5      41.4
            2002      0.1      -      0.4       0.5


      In the first three months of 1996, the Company repurchased $22.1
      million principal amount of its 11-1/8% Senior Subordinated Notes
      realizing a pre-tax extraordinary loss of approximately $2.5 million.


                                        11



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


   G. Mandatorily Redeemable Preferred Securities of Subsidiary Trusts

      In November 1996, a wholly-owned subsidiary trust of AAG Holding
      issued three million units of 9-1/4% Trust Originated Preferred
      Securities ("TOPrS") for $75 million in cash.  The Trust then
      purchased $75 million of newly issued AAG Holding 9-1/4% Subordinated
      Debentures due 2026, which, along with related interest and principal
      payments received, are the only assets of the Trust.

      The TOPrS are mandatorily redeemable upon maturity or redemption of
      the Subordinated Debentures.  The Subordinated Debentures are
      redeemable by AAG Holding on or after November 7, 2001.  

      In a private offering in March 1997, a wholly-owned subsidiary trust
      of AAG Holding issued $75 million of 8-7/8% preferred securities
      similar to the TOPrS issued in November 1996 with related debentures
      of AAG Holding due 2027.  The 8-7/8% preferred securities and related
      debentures are redeemable on or after March 1, 2007.
     
      AAG and AAG Holding effectively provide an unconditional guarantee of
      the trusts' obligations. 

   H. Stockholders' Equity

      The Company is authorized to issue 25,000,000 shares of Preferred Stock,
      par value $1.00 per share.  

      On March 27, 1997, AAG retired all of its outstanding Series B Preferred
      Stock for approximately $47 million.

      At March 31, 1997, there were 2.5 million shares of AAG Common Stock
      reserved for issuance upon exercise of stock options.  As of that date,
      AAG had options for 1.7 million shares outstanding.  The options vest at
      a rate of 20% per year and expire ten years from the date of grant.

      "Retained earnings since January 1, 1993" reflects AAG's results
      since the acquisition of GALIC.

   I. Contingencies

      The Company is continuing its clean-up activities at certain of its
      former manufacturing operations and third-party sites, in some cases in
      accordance with consent agreements with federal and state environmental
      agencies.  Changes in regulatory standards and further investigations
      could affect estimated costs in the future.  Management believes that
      reserves recorded are sufficient to satisfy the known liabilities and
      that the ultimate cost will not, individually, or in the aggregate, have
      a material adverse effect on the financial condition or results of
      operations of AAG.







                                        12



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


      In 1991, the Company identified possible deficiencies in procedures
      for reporting quality assurance information to the Defense
      Electronics Supply Center with respect to the Company's former
      manufacturing operations.  Over the last several years, the Company
      has been engaged in negotiations with the United States Government
      with respect to the settlement of claims the Government might have
      arising out of the reporting deficiencies.  The Company believes it
      has sufficient reserves to cover the estimated settlement amount.

   J. Additional Information

      Statutory Information of Great American Life Insurance Company 
      Insurance Companies are required to file financial statements with
      state insurance regulatory authorities prepared on an accounting
      basis prescribed or permitted by such authorities (statutory basis). 
      Certain statutory amounts for GALIC, AAG's primary insurance
      subsidiary, were as follows (in millions):

                                            March 31, December 31,
                                                1997         1996 
                Policyholders' surplus        $292.5       $285.0 
                Asset valuation reserve         92.6         91.4 
                Interest maintenance reserve    23.1         24.7 

                                             Three months ended March 31,
                                                1997         1996 
                Net income from operations    $ 16.8       $ 15.1 
                Net income                      18.2         14.9 

      The amount of dividends which can be paid by GALIC without prior
      approval of regulatory authorities is subject to restrictions
      relating to capital and surplus and statutory net income.  Based on
      net income for the year ended December 31, 1996, GALIC may pay
      approximately $66.2 million in dividends in 1997 without prior
      approval.  In the first three months of 1997, AAG received $15.0
      million in capital distributions from GALIC.




















                                        13



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


      Summary Financial Information of AAG Holding  AAG has guaranteed all
      of the outstanding debt of AAG Holding.  Summarized consolidated
      financial information for AAG Holding is as follows (in millions):


                                                      March 31,December 31,
                                                          1997        1996 
                Balance Sheet                                     
                Investments                             $6,378      $6,272
                Unamortized insurance acquisition
                  costs                                    206         195
                Assets held in separate accounts           254         247 
                Other assets                               252         278 

                Insurance reserves                      $6,006      $5,942
                Notes payable to parent                    165         166
                Notes payable of AAG Holding               117         110
                Liabilities related to separate
                  accounts                                 254         247 
                Other liabilities                          154          96

                Mandatorily redeemable preferred
                  securities of subsidiary trusts       $  150      $   75

                Stockholder's equity                    $  244      $  356   


                                                        Three months ended 
                                                              March 31,     
                                                          1997        1996
                Income Statement                              
                Revenues                                $  148           *  
                Pretax income from operations               24           *
                Net income                                  16           *

                                                              
                * AAG Holding was formed on November 1, 1996.



















                                        14



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

                       Management's Discussion and Analysis
                 of Financial Condition and Results of Operations


   GENERAL

   American Annuity Group, Inc. ("AAG" or "the Company") and its subsidiary,
   AAG Holding Company, Inc., are organized as holding companies with nearly
   all of their operations being conducted by their subsidiaries.  These
   companies, however, have continuing expenditures for administrative
   expenses, corporate services, satisfaction of liabilities in connection with
   discontinued operations, the payment of interest and principal on borrowings
   and shareholder dividends.

   LIQUIDITY AND CAPITAL RESOURCES  

   Ratios  The following ratios may be considered relevant indicators of AAG's
   liquidity and are typically presented by AAG in its prospectuses and similar
   documents.


                                                Three months ended
                                                    March 31,     
                                                 1997   1996
                                                            
             Earnings to fixed charges            5.9    6.3
                                                             
             Earnings to fixed charges plus
               preferred dividends                4.6    5.6
                                                     
                                                            
                                             March 31,   December 31,
                                                 1997   1996     1995
             Consolidated debt to capital,
               excluding unrealized gains         18%    19%    33%
                                                     
             Consolidated debt to capital,
               including unrealized gains         18%    17%    28%
                                                     
   The National Association of Insurance Commissioners' ("NAIC") risk-based
   capital ("RBC") formulas determine the amount of capital that an insurance
   company needs to ensure that it has an acceptable expectation of not
   becoming financially impaired.  At March 31, 1997, the capital ratios of
   each of AAG's insurance subsidiaries exceeded the RBC requirements by
   substantial amounts.














                                        15



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

                       Management's Discussion and Analysis
           of Financial Condition and Results of Operations - Continued

   Sources and Uses of Funds  The ability to pay interest and principal on
   debt, dividends on preferred securities, obligations related to discontinued
   manufacturing operations and other holding company costs is largely
   dependent upon payments from Great American Life Insurance Company ("GALIC")
   in the form of capital distributions.  The amount of capital distributions
   which can be paid by GALIC is subject to restrictions relating to statutory
   surplus and earnings.  The maximum amount of dividends payable by GALIC in
   1997 without prior regulatory approval is $66 million.  In the first quarter
   of 1997, GALIC made approximately $15 million in such payments.

   In 1995 and 1996, AAG issued shares of its Series B Preferred Stock to its
   affiliates for $49 million in cash.  In 1996 and 1997, subsidiary trusts
   sold preferred securities for cash proceeds of $150 million.  Approximately
   half of the aggregate proceeds was used to retire debt and the Series B
   preferred; another 20% was contributed to GALIC as capital; the remainder is
   being used for general corporate purposes.  

   At March 31, 1997, AAG Holding had approximately $63 million available under
   its bank lines of credit.  AAG Holding expects to expand and extend its
   credit lines in the near future.

   Based upon the current level of operations and anticipated growth, AAG
   believes that it will have sufficient resources to meet its liquidity
   requirements.  

   Investments  Insurance laws restrict the types and amounts of investments
   which are permissible for life insurers.  These restrictions are designed to
   ensure the safety and liquidity of insurers' investment portfolios.  The
   NAIC has developed a model investment law which management believes will not
   have a material impact on AAG.

   The NAIC assigns quality ratings to publicly traded as well as privately
   placed securities.  These ratings range from Class 1 (highest quality) to
   Class 6 (lowest quality).  The following table shows the Company's fixed
   maturity portfolio by NAIC designation (and comparable Standard & Poor's
   Corporation rating) as of March 31, 1997:

         NAIC                                       % of Total 
         Rating  Comparable S&P Rating             Market Value
            1    AAA, AA, A                               68%  
            2    BBB                                      26   
                      Total investment grade              94   
            3    BB                                        3   
            4    B                                         3   
            5    CCC, CC, C                                *   
            6    D                                         -   
                      Total non-investment grade           6   
                      Total fixed maturities             100%  
                         
         * less than 1%






                                        16



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

                       Management's Discussion and Analysis
           of Financial Condition and Results of Operations - Continued


   Management believes that the high credit quality of AAG's investment
   portfolio should generate a stable and predictable investment return.

   AAG invests primarily in fixed income investments which, including loans and
   short-term investments, comprised over 98% of its investment portfolio at
   March 31, 1997.  AAG generally invests in securities with intermediate-term
   maturities with an objective of optimizing interest yields while maintaining
   an appropriate relationship of maturities between AAG's assets and expected
   liabilities.

   At March 31, 1997, AAG had approximately $20 million in net unrealized
   losses on its fixed maturity portfolio compared to net unrealized gains of
   $100 million at December 31, 1996.  This decrease, representing
   approximately 2% of the carrying value of AAG's fixed maturity portfolio,
   resulted from an increase in the general level of interest rates.

   At March 31, 1997, AAG had less than 2% of total assets invested in mortgage
   loans and real estate.  The majority of mortgage loans and real estate was
   purchased within the last four years.

   At March 31, 1997, AAG's mortgage-backed securities ("MBSs") portfolio
   represented approximately one-third of fixed maturity investments.  As of
   March 31, 1997, interest only (I/O), principal only (P/O) and other "high
   risk" MBSs represented less than one percent of total assets.  AAG invests
   primarily in MBSs which have a reduced risk of prepayment.  In addition, the
   majority of MBSs held by AAG were purchased at a discount.

   Management believes that the structure and discounted nature of the MBSs
   will minimize the effect of prepayments on earnings over the anticipated
   life of the MBS portfolio.

   Approximately 90% of AAG's MBSs are rated "AAA" with substantially all being
   of investment grade quality.  The majority are collateralized by GNMA, FNMA
   and FHLMC single-family residential pass-through certificates.  The market
   in which these securities trade is highly liquid.  Aside from interest rate
   risk, AAG does not believe a material risk (relative to earnings or
   liquidity) is inherent in holding such investments.

   Contingencies  A managing general agency which produced approximately one-
   fifth of GALIC's premiums in 1996 and one-sixth of its premiums in the first
   quarter of 1997 was named a defendant in a lawsuit filed in July 1996 by two
   regulatory agencies in California.  The managing general agency has settled
   the allegations brought against it by agreeing, among other things, to
   modify certain sales practices.  In April 1997, the managing general agency
   stopped writing GALIC annuities until procedures could be implemented to
   bring the agency's marketing practices into compliance with the settlement. 
   The regulatory agencies have taken a position that GALIC may be responsible
   for certain acts of its insurance agents in connection with the sale of
   GALIC's annuities.  GALIC is engaged in discussions with the regulatory
   agencies to resolve this matter.  The ultimate outcome is not expected to
   have a material adverse impact on the financial condition of the Company.

     

     

































































                                        17



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

                       Management's Discussion and Analysis
           of Financial Condition and Results of Operations - Continued

   RESULTS OF OPERATIONS

   General  GALIC's principal products are Flexible Premium Deferred Annuities
   ("FPDAs") and Single Premium Deferred Annuities ("SPDAs").  The following
   table summarizes AAG's annuity premiums (in millions):
                     
                                     Three months ended          
                                          March 31,              
                                       1997      1996
             GALIC:
               FPDAs - first year      $  8      $ 10
               FPDAs - renewal           43        49
               SPDAs                     70        70
             Other Companies             19         8
                                       $140      $137  

   The increase in other companies annuity premiums reflects increased sales of
   variable and pre-need funeral products.

   Pretax Operating Earnings  Pretax earnings from operations (before realized
   gains and equity in net earnings of affiliate) for the first quarter of
   1997 and 1996 were $24.1 million and $21.4 million, respectively.  The
   improvement in 1997 reflects the growth in invested assets as well as a
   decrease in the effective average crediting rate on annuity policies.

   Net Investment Income  Net investment income increased 7% over the
   comparable 
   three month period in 1996 due to an increase in the Company's average fixed
   maturity investment base.  Investment income is reflected net of investment
   expenses of $1.0 million in 1997 and $1.6 million in 1996.

   Realized Gains  Individual securities are sold from time to time as market
   opportunities appear to present optimal situations under AAG's investment
   strategies.

   Equity in Net Earnings of Affiliate  Equity in net earnings of affiliate
   represents AAG's proportionate share of the results of Chiquita Brands
   International.  Chiquita reported first quarter net income of $43.3 million
   in 1997 and $24.2 million in 1996.  

   Other Income   Other income increased to $2.6 million in the first quarter
   of 1997 from $1.4 million in the first quarter of 1996.  This increase
   represents primarily increased revenues from certain non-insurance
   subsidiaries and additional annuity fees. 

   Annuity Benefits  Annuity benefits reflect interest credited to annuity
   policyholders' funds accumulated.  The majority of GALIC's fixed rate
   annuity products permit GALIC 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 without a substantial
   effect on persistency.



                                        18



   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

                       Management's Discussion and Analysis
           of Financial Condition and Results of Operations - Continued

     
   Amortization of Insurance Acquisition Costs  Amortization of insurance
   acquisition costs increased 28% over the comparable period in 1996 due
   primarily to higher average DPAC balances.

   Interest and Other Debt Expenses  Interest expense on borrowings decreased
   37% in the first quarter of 1997 compared to the same period in 1996 due
   primarily to repurchases of debt during 1996 and the refinancing of
   approximately $50 million of indebtedness through the issuance of preferred
   securities by subsidiary trusts.
      
   Preferred Distribution Requirement of Subsidiary Trusts  Preferred
   distribution requirement of subsidiary trusts represents amounts accrued on
   $150 million of preferred securities issued by subsidiaries of AAG in 1996
   and 1997.

   Other Expenses  Other expenses increased in the first quarter of 1997
   compared to the same period in 1996 reflecting additional costs relating to
   expanded distribution networks and improvements in customer service
   capacities.

   Income Taxes  AAG's effective tax rate decreased in 1997 due to a reduction
   of the valuation allowance associated with certain deferred tax assets.

































                                       19 



    
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q
                                     PART II
                                OTHER INFORMATION



                                      ITEM 2

                              Changes in Securities

   (a) None

   (b) None

   (c)     On March 11, 1997, a wholly-owned subsidiary trust of AAG
           Holding Company, Inc. issued 75,000 Trust Preferred
           Securities ($1,000 per security liquidation amount) with a
           distribution rate of 8-7/8% for total consideration of
           $74.7 million.  The securities were sold to a limited
           number of institutional investors in reliance on the
           exemption contained in Section 4(2) of the Securities Act
           of 1933.



                                      ITEM 6

                         Exhibits and Reports on Form 8-K


   (a) Exhibit 27 - Financial Data Schedule as of March 31, 1997.  For
       submission in electronic filing only.

   (b) Report on Form 8-K - None.


                                    Signature


   Pursuant to the requirements of the Securities Exchange Act of 1934, the
   Registrant has duly caused this report to be signed on its behalf by the
   undersigned duly authorized.


                                      American Annuity Group, Inc.



   May 13, 1997                       BY:William J. Maney
                                         Senior Vice President, Treasurer
                                           and Chief Financial Officer









                                        20