|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
June 30, 2002   | Commission File
No. 1-11632    
|---------------------------------------------- | -------------------------------
|GREAT AMERICAN FINANCIAL RESOURCES, INC.      
|Incorporated under
the Laws of Delaware        | IRS Employer I.D.No. 06-1356481
|250 East Fifth Street, Cincinnati, Ohio  45202
|(513) 333-5300                                











GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q

PART I

FINANCIAL INFORMATION



|GREAT AMERICAN FINANCIAL RESOURCES, INC. AND SUBSIDIARIES
|---------------------------------------------------------
|CONSOLIDATED BALANCE SHEET                               
|(Dollars in millions)                                    
|                                                         
|                                                         
|                                                         
|                                                         
|Assets                                                   
|Investments:                                             
|Fixed maturities - at market                             
|(amortized cost - $6,683.0 and $6,302.1)                 
|Equity securities - at market                            
|(cost - $40.6 and $37.8)                                 
|Mortgage loans on real estate                            
|Real estate                                              
|Policy loans                                             
|Short-term investments                                   
|Total investments                                        
|                                                         
|Cash                                                     
|Accrued investment income                                
|Unamortized insurance acquisition costs, net             
|Other assets                                             
|Variable annuity assets (separate accounts)              
|                                                         
|                                                         
|                                                         
|Liabilities and Capital                                  
|Annuity benefits accumulated                             
|Life, accident and health reserves                       
|Notes payable                                            
|Payable to affiliates, net                               
|Deferred taxes on unrealized gains                       
|Accounts payable, accrued expenses and other             
|liabilities                                              
|Variable annuity liabilities (separate accounts)         
|Total liabilities                                        
|                                                         
|                                                         
|Mandatorily redeemable preferred securities              
|of subsidiary trusts                                     
|                                                         
|                                                         
|Stockholders' Equity:                                    
|Common Stock, $1 par value                               
|-100,000,000 shares authorized                           
|- 42,427,014 and 42,353,464 shares outstanding           
|Capital surplus                                          
|Retained earnings                                        
|Unrealized gains on marketable securities, net           
|Total stockholders' equity                               
|                                                         
|                                                         
|                                                         





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



GREAT AMERICAN FINANCIAL RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT

(In millions, except per share amounts)





|                                         | Three months ended
June 30, | Six months ended
June 30,
|---------------------------------------- | --------------------------- | -------------------------
|                                        
|                                         | 2002                        | 2001                     
|Revenues:                                |                             |                          
|Life, accident and health premiums       | $ 72.7                      | $ 70.5                   
|Net investment income                    | 128.7                       | 124.9                    
|Realized losses on investments           | (20.6)                      | (22.7)                   
|Other income                             | 23.4                        | 23.9                     
|                                         | 204.2                       | 196.6                    
|Costs and Expenses:                      |                             |                          
|Annuity benefits                         | 70.9                        | 70.7                     
|Life, accident and health benefits       | 59.4                        | 52.3                     
|Insurance acquisition expenses           | 25.2                        | 19.8                     
|Trust preferred distribution requirement | 3.3                         | 4.7                      
|Interest and other debt expenses         | 2.7                         | 2.7                      
|Other expenses                           | 37.2                        | 39.3                     
|                                         | 198.7                       | 189.5                    
|                                         |                             |                          
|Operating earnings before income taxes   | 5.5                         | 7.1                      
|Provision (credit) for income taxes      | (2.4)                       | 1.5                      
|                                         |                             |                          
|Income before accounting change          | 7.9                         | 5.6                      
|Cumulative effect of accounting change,  |                             |                          
|net of tax                               | -                           | (5.5)                    
|                                         |                             |                          
|Net Income                               | $  7.9                      | $  0.1                   
|                                         |                             |                          
|                                         |                             |                          
|Earnings per common share:               |                             |                          
|Basic earnings per common share:         |                             |                          
|Income before accounting change          | $ 0.19                      | $ 0.13                   
|Accounting change                        | -                           | (0.13)                   
|Net income                               | $ 0.19                      | $   -                    
|                                         |                             |                          
|Diluted earnings per common share:       |                             |                          
|Income before accounting change          | $ 0.18                      | $ 0.13                   
|Accounting change                        | -                           | (0.13)                   
|Net income                               | $ 0.18                      | $   -                    
|                                         |                             |                          
|Average number of common shares:         |                             |                          
|Basic                                    | 42.4                        | 42.3                     
|Diluted                                  | 42.8                        | 42.7                     
|                                         |                             |                          
|                                         |                             |                          





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



GREAT AMERICAN FINANCIAL RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(In millions)

|                                           | Six months ended
|------------------------------------------ | ----------------
|                                           | June 30,        
|                                           | 2002            
|Common Stock:                              |                 
|Balance at beginning of period             | $ 42.3          
|Common Stock issued                        | 0.1             
|Balance at end of period                   | $ 42.4          
|                                           |                 
|                                           |                 
|Capital Surplus:                           |                 
|Balance at beginning of period             | $346.7          
|Common Stock issued                        | 1.6             
|Common Stock retired                       | (1.1)           
|Balance at end of period                   | $347.2          
|                                           |                 
|                                           |                 
|Retained Earnings:                         |                 
|Balance at beginning of period             | $270.0          
|Net income                                 | 19.3            
|Balance at end of period                   | $289.3          
|                                           |                 
|                                           |                 
|Unrealized Gains, Net:                     |                 
|Balance at beginning of period             | $ 89.8          
|Change during period                       | 39.8            
|Balance at end of period                   | $129.6          
|                                           |                 
|                                           |                 
|Comprehensive Income:                      |                 
|Net income                                 | $ 19.3          
|Other comprehensive income - change in net |                 
|unrealized gains                           | 39.8            
|Comprehensive income                       | $ 59.1          
|                                           |                 





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



GREAT AMERICAN FINANCIAL RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In millions)



|                                                         | Six months ended
|-------------------------------------------------------- | ----------------
|                                                         | June 30,        
|                                                         | 2002            
|Cash Flows from Operating Activities:                    |                 
|Net income                                               | $ 19.3          
|Adjustments:                                             |                 
|Cumulative effect of accounting change                   | -               
|Increase in life, accident and health reserves           | 36.2            
|Benefits to annuity policyholders                        | 146.5           
|Amortization of insurance acquisition costs              | 50.0            
|Depreciation and amortization                            | 12.2            
|Realized losses on investments                           | 30.2            
|Increase in insurance acquisition costs                  | (80.8)          
|Decrease in other liabilities                            | (36.3)          
|Other, net                                               | (7.1)           
|                                                         | 170.2           
|                                                         |                 
|Cash Flows from Investing Activities:                    |                 
|Purchases of and additional investments in:              |                 
|Fixed maturity investments                               | (1,517.8)       
|Equity securities                                        | (1.1)           
|Real estate, mortgage loans and other assets             | (12.5)          
|Purchase of subsidiary                                   | (48.5)          
|Cash and short-term investments of acquired subsidiary   | 4.6             
|Maturities and redemptions of fixed maturity investments | 607.3           
|Sales of:                                                |                 
|Fixed maturity investments                               | 697.4           
|Equity securities                                        | 0.5             
|Real estate, mortgage loans and other assets             | 5.6             
|Decrease in policy loans                                 | 4.5             
|                                                         | (260.0)         
|                                                         |                 
|Cash Flows from Financing Activities:                    |                 
|Fixed annuity receipts                                   | 361.2           
|Annuity surrenders, benefits and withdrawals             | (278.5)         
|Net transfers to variable annuity assets                 | (2.9)           
|Additions to notes payable                               | -               
|Reductions of notes payable                              | (0.1)           
|Issuance of Common Stock                                 | 1.7             
|Retirement of Common Stock                               | (1.1)           
|                                                         | 80.3            
|                                                         |                 
|Net decrease in cash and short-term investments          | (9.5)           
|Beginning cash and short-term investments                | 170.9           
|Ending cash and short-term investments                   | $161.4          
|                                                         |                 

5



GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





A.

Great American Financial Resources, Inc. ("GAFRI" or "the Company") markets retirement products, primarily fixed and variable annuities, and various forms of life and supplemental health insurance through independent agents, payroll deduction plans, financial institutions and in-home sales.

American Financial Group, Inc. ("AFG") and its subsidiaries owned 83% of GAFRI's Common Stock at August 1, 2002.

B.

Basis of Presentation

Certain reclassifications have been made to prior periods to conform to the current period'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

Gains or losses on securities are 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 cost basis of that investment is reduced.

Emerging Issues Task Force Issue No. 99-20 ("EITF 99-20") established a new standard for recognizing interest income and impairment on certain asset-backed investments.  Interest income on these investments is recorded at a yield based on projected cash flows.  The yield is adjusted prospectively to reflect actual cash flows and changes in projected amounts.  Impairment losses on these investments must be recognized when (i) the fair value of the security is less than its cost basis and (ii) there has been an adverse change in the expected cash flows.  The new standard became effective on April 1, 2001.  Impairment losses at initial application of this rule were recognized as the cumulative effect of an accounting change.  Subsequent impairments are recognized as a component of net realized gains and losses.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Goodwill

GAFRI implemented Statement of Financial Accounting Standards ("SFAS") No. 142, under which goodwill is no longer amortized but is subject to an impairment test at least annually.  As required under SFAS No. 142, GAFRI will complete the transitional test for goodwill impairment (as of January 1, 2002) by the end of 2002.  Any resulting write-down will be reported by restating first quarter 2002 results for the cumulative effect of a change in accounting principle.

Insurance Acquisition Costs and Expenses

Deferred Policy Acquisition Costs ("DPAC")

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.

To the extent that realized gains and losses result in adjustments to the amortization of DPAC related to annuities, such adjustments are reflected as components of realized gains.  DPAC related to annuities is also adjusted, net of tax, for the change in amortization that would have been recorded if the unrealized gains (losses) from securities had actually been realized.  This adjustment is included in unrealized gains (losses) on marketable securities.

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.

Present Value of Future Profits

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.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued





Annuity Benefits Accumulated

Life, Accident and Health Reserves

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

Variable Annuity Assets and Liabilities

Life, Accident and Health Premiums and Benefits

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

Deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis 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.







GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued





Stock-Based Compensation

Benefit Plans

GAFRI 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.

Derivatives

Earnings Per Share

Statement of Cash Flows

C.	Acquisition

Manhattan National Life Insurance





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued





D.	Segments of Operations

GAFRI's life and annuity operations offer fixed and variable annuity products and traditional life insurance products.  GAFRI's annuity products are sold through managing general agents and independent agents to employees of primary and secondary educational institutions, hospitals and in the non-qualified markets.  Traditional term, universal and whole life insurance products are sold through national marketing organizations.

GAFRI's supplemental insurance businesses (United Teacher Associates Insurance Company ("UTA") and Loyal American Life Insurance Company) offer a variety of supplemental health and life products.  UTA offers its products through independent agents.  At December 31, 2001, Loyal reinsured a substantial portion of its life insurance business and has begun reducing its marketing efforts.

GA Life of Puerto Rico sells in-home life and supplemental health products through a network of company-employed agents.  Sales in Puerto Rico accounted for approximately 20% of GAFRI's life, accident and health premiums in the first six months of 2002 and 2001.

Corporate and other consists primarily of GAFRI (parent) and AAG Holding (intermediate holding company).  The following table shows GAFRI's revenues and operating profit by significant business segment (in millions):



|                                    | Three months ended | Six months ended |       
|----------------------------------- | ------------------ | ---------------- | ------
|                                    | June 30,           | June 30,         |       
|                                    | 2002               | 2001             | 2002  
|Revenues                            |                    |                  |       
|Life and annuity products           | $146.8             | $141.4           | $293.2
|Supplemental insurance products     | 58.9               | 59.5             | 116.5 
|GA Life of Puerto Rico              | 17.7               | 15.8             | 35.0  
|Corporate and other                 | 1.4                | 2.6              | 3.3   
|Total operating revenues            | 224.8              | 219.3            | 448.0 
|                                    |                    |                  |       
|Realized losses on investments      | (20.6)             | (22.7)           | (30.2)
|Total revenues per income statement | $204.2             | $196.6           | $417.8
|                                    |                    |                  |       
|                                    |                    |                  |       
|Operating profit - pretax           |                    |                  |       
|Life and annuity products           | $ 29.8             | $ 35.6           | $ 59.3
|Supplemental insurance products     | 2.6                | 0.3              | 3.7   
|GA Life of Puerto Rico              | 2.8                | 2.5              | 5.7   
|Corporate and other                 | (9.1)              | (8.6)            | (17.2)
|Pretax earnings from operations     | 26.1               | 29.8             | 51.5  
|                                    |                    |                  |       
|Realized losses on investments      | (20.6)             | (22.7)           | (30.2)
|Total pretax income per income      |                    |                  |       
|statement                           | $  5.5             | $  7.1           | $ 21.3







GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued





E.	Goodwill

Effective January 1, 2002, goodwill is no longer amortized but is subject to annual impairment testing under a two step process.  Under the first step, an entity's net assets are broken down into reporting units and compared to their fair value.  If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any.  GAFRI has completed the first step of its transitional impairment test and has identified potential impairment of goodwill primarily in its supplemental insurance segment.  The second step of the impairment test, that will measure the amount of impairment loss, will be completed by the end of the year with any resulting impairment charge reported by restating first quarter 2002 results for the cumulative effect of a change in accounting principle.  Net intangible assets, which are included in other assets on the Consolidated Balance Sheet, totaled approximately $41 million at June 30, 2002 and December 31, 2001.  Management estimates that the impairment charge will be between 25% and 50% of the net carrying value of goodwill at June 30, 2002.

If the $0.4 million and $0.8 million ($0.01 per share and $0.02 per share) of goodwill amortization had not been expensed in the second quarter and first six months of 2001, net earnings for those periods would have been $0.5 million and $18.8 million ($0.01 per share and $0.44 per share), respectively.

F.	Unamortized Insurance Acquisition Costs

Unamortized insurance acquisition costs consisted of the following (in millions):



|                                         | June 30, | December 31,
|---------------------------------------- | -------- | ------------
|                                         | 2002     | 2001        
|                                         |         
|Deferred policy acquisition costs        | $659.8   | $621.0      
|Present value of future profits acquired | 93.6     | 71.2        
|Unearned revenues                        | (137.2)  | (136.1)     
|                                         | $616.2   | $556.1      

G.	Notes Payable

Notes payable consisted of the following (in millions):





|                                                  | June 30, | December 31,
|------------------------------------------------- | -------- | ------------
|                                                  | 2002     | 2001        
|                                                  |         
|Direct obligations of GAFRI                       | $  1.8   | $  1.9      
|Obligations of AAG Holding (guaranteed by GAFRI): |          |             
|6-7/8% Senior Notes due 2008                      | 100.0    | 100.0       
|Bank Credit Line                                  | 121.1    | 121.1       
|Total                                             | $222.9   | $223.0      

AAG Holding has an unsecured credit agreement with a group of banks under which it can borrow up to $155 million.  Borrowings bear interest at floating rates based on prime or Eurodollar rates and mature on December 31, 2004.  At June 30, 2002, the weighted-average interest rate on amounts borrowed under the credit line was 2.64%.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued





At June 30, 2002, scheduled principal payments on debt for the remainder of 2002 and the subsequent five years were as follows (in millions):



|2002 | 2003 | 2004   | 2005 | 2006 | 2007
|---- | ---- | ------ | ---- | ---- | ----
|$0.1 | $0.2 | $121.3 | $0.2 | $0.2 | $0.1

H.	Mandatorily Redeemable Preferred Securities of Subsidiary Trusts

Wholly-owned subsidiary trusts of GAFRI issued preferred securities and, in turn, purchased a like amount of subordinated debt which provides interest and principal payments to fund the trusts' obligations.  The preferred securities are mandatorily redeemable upon maturity or redemption of the subordinated debt.  GAFRI effectively provides an unconditional guarantee of the trusts' obligations. The preferred securities consisted of the following:



|Date of       |                       |             |             | Optional            
|------------- | --------------------- | ----------- | ----------- | --------------------
|Issuance      | Issue (Maturity Date) | 06/30/02    | 12/31/01    | Redemption Dates    
|November 1996 | 9-1/4% TOPrS   (2026) | $72,912,500 | $72,912,500 | Currently redeemable
|March 1997    | 8-7/8% Pfd     (2027) | 70,000,000  | 70,000,000  | On or after 3/1/2007

I.	Stockholders' Equity

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

At June 30, 2002, there were 4.8 million shares of GAFRI Common Stock reserved for issuance under GAFRI's employee stock option plan.  Under the plan, the exercise price of each option equals the market price of GAFRI Common Stock at the date of grant.  Options generally become exercisable at the rate of 20% per year commencing one year after grant.  All options expire ten years after the date of grant.

The change in net unrealized gains on marketable securities for the six months ended June 30 included the following (in millions):



|                                                                   | 2002   | 2001   
|------------------------------------------------------------------ | ------ | -------
|                                                                   | Pretax | Taxes  
|Unrealized holding gains on securities
  arising during the period | $30.4  | ($10.4)
|Adoption of EITF 99-20                                             | -      | -      
|Realized losses on securities                                      | 30.2   | (10.4) 
|Change in net unrealized gains on
  marketable securities          | $60.6  | ($20.8)

J.	Earnings Per Share

The number of common shares outstanding used in calculating diluted earnings per share in the second quarter and first six months of 2002 and 2001 includes 0.4 million shares for the effect of the assumed exercise of GAFRI's dilutive stock options.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



K.	Contingencies

In March 2000, a jury in Dallas, Texas, returned a verdict against GALIC with total damages of $11.2 million in a lawsuit brought by two former agents of GALIC.  The agents had alleged that their agency agreement with GALIC had been wrongfully terminated. On August 6, 2002, the Texas Fifth District Court of Appeals issued an opinion reversing the verdict in its entirety and finding that GALIC had no liability to the plaintiffs based on the facts of the case.  The plaintiffs have no further appeal rights in this case.

L.	Additional Information

Statutory Information



|                              | June 30, | December 31,
|----------------------------- | -------- | ------------
|                              | 2002     | 2001        
|Capital and surplus           | $331.4   | $388.4      
|Asset valuation reserve       | 73.4     | 76.9        
|Interest maintenance reserve  | 12.8     | 11.0        
|                              |          |             
|Six months ended June 30,    
|                              | 2002     | 2001        
|Pretax income from operations | $33.2    | $30.7       
|Net income from operations    | 19.9     | 24.1        
|Net income(loss)              | (16.1)   | 9.3         

The decrease in GALIC's statutory capital and surplus reflects the effect of acquiring Manhattan National Life Insurance Company on June 28, 2002.  GALIC expects to reinsure up to 90% of Manhattan's business in force in the second half of 2002; any such reinsurance will result in an increase in GALIC's statutory capital and surplus.

In January 2001, GAFRI's insurance subsidiaries implemented the codification of statutory accounting principles.  The cumulative effect of these changes at implementation was not material.

Dividends which can be paid by GAFRI's insurance subsidiaries without prior approval of regulatory authorities are subject to restrictions relating to capital and surplus and statutory net income.  Based on capital and surplus at December 31, 2001, GALIC and GA Life of Puerto Rico may pay $38.8 million and $24.6 million, respectively, in dividends in 2002 without prior approval.  In the first six months of 2002, GALIC paid $23.0 million in dividends.

Effective December 31, 2001, Loyal entered into a reinsurance treaty whereby a substantial portion of its life insurance was ceded to an unaffiliated company.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued





|Condensed Consolidating InformationGAFRI has guaranteed all of the outstanding debt of AAG Holding and the preferred securities of the Trusts.  Condensed consolidating financial statements for GAFRI are as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CONDENSED CONSOLIDATING BALANCE SHEET

(In millions)







|                                                                      |        | AAG      | TOTAL  | ALL OTHER | CONS       |         
|--------------------------------------------------------------------- | ------ | -------- | ------ | --------- | ---------- | --------
|JUNE 30, 2002                                                         | GAFRI  | HOLDING  | TRUSTS | SUBS      | ENTRIES    | CONS    
|                                                                      |        |          |        |           |            |         
|Assets                                                                |        |          |        |           |            |         
|Cash and investments                                                  | $ 13.9 | $     -  | $   -  | $7,402.8  | ($    1.4) | $7,415.3
|Investment in subsidiaries                                            | 738.9  | 1,114.9  | -      | 1.0       | (1,854.8)  | -       
|Notes receivable from AAG Holding                                     | 102.4  | -        | 154.7  | -         | (257.1)    | -       
|Unamortized insurance acquisition 
    costs, net                     | -      | -        | -      | 616.2     | -          | 616.2   
|Other assets                                                          | 18.6   | 2.4      | 4.6    | 344.7     | 39.2       | 409.5   
|Variable annuity assets 
    (separate accounts)                      | -      | -        | -      | 518.5     | -          | 518.5   
|                                                                      | $873.8 | $1,117.3 | $159.3 | $8,883.2  | ($2,074.1) | $8,959.5
|                                                                      |        |          |        |           |            |         
|Liabilities and Capital                                               |        |          |        |           |            |         
|Insurance liabilities                                                 | $   -  | $     -  | $   -  | $6,969.1  | ($    5.3) | $6,963.8
|Notes payable to GAFRI                                                | -      | 102.4    | -      | 0.1       | (102.5)    | -       
|Notes payable to Trusts                                               | -      | 154.7    | -      | -         | (154.7)    | -       
|Other notes payable                                                   | 1.8    | 221.1    | -      | -         | -          | 222.9   
|Other liabilities                                                     | 63.5   | 0.4      | 4.6    | 240.9     | (6.5)      | 302.9   
|Variable annuity liabilities
    (separate accounts)                  | -      | -        | -      | 518.5     | -          | 518.5   
|                                                                      | 65.3   | 478.6    | 4.6    | 7,728.6   | (269.0)    | 8,008.1 
|                                                                      |        |          |        |           |            |         
|Mandatorily redeemable preferred 
    securities of subsidiary trusts | -      | -        | 150.0  | -         | (7.1)      | 142.9   
|                                                                      |        |          |        |           |            |         
|Total stockholders' equity                                            | 808.5  | 638.7    | 4.7    | 1,154.6   | (1,798.0)  | 808.5   
|                                                                      | $873.8 | $1,117.3 | $159.3 | $8,883.2  | ($2,074.1) | $8,959.5







|                                                                      |        |          |        |          |            |         
|--------------------------------------------------------------------- | ------ | -------- | ------ | -------- | ---------- | --------
|DECEMBER 31, 2001                                                     |        |          |        |          |            |         
|                                                                      |        |          |        |          |            |         
|Assets                                                                |        |          |        |          |            |         
|Cash and investments                                                  | $ 11.4 | $     -  | $   -  | $6,956.8 | ($    1.7) | $6,966.5
|Investment in subsidiaries                                            | 689.1  | 1,080.6  | -      | 1.9      | (1,771.6)  | -       
|Notes receivable from AAG Holding                                     | 102.4  | -        | 154.6  | -        | (257.0)    | -       
|Unamortized insurance acquisition 
    costs, net                     | -      | -        | -      | 556.1    | -          | 556.1   
|Other assets                                                          | 17.2   | 1.4      | 4.7    | 282.2    | 42.7       | 348.2   
|Variable annuity assets 
    (separate accounts)                      | -      | -        | -      | 529.6    | -          | 529.6   
|                                                                      | $820.1 | $1,082.0 | $159.3 | $8,326.6 | ($1,987.6) | $8,400.4
|                                                                      |        |          |        |          |            |         
|Liabilities and Capital                                               |        |          |        |          |            |         
|Insurance liabilities                                                 | $   -  | $     -  | $   -  | $6,475.3 | ($    4.7) | $6,470.6
|Notes payable to GAFRI                                                | -      | 102.4    | -      | 0.1      | (102.5)    | -       
|Notes payable to Trusts                                               | -      | 154.6    | -      | -        | (154.6)    | -       
|Other notes payable                                                   | 1.9    | 221.1    | -      | -        | -          | 223.0   
|Other liabilities                                                     | 69.4   | 10.8     | 4.6    | 209.4    | (8.7)      | 285.5   
|Variable annuity liabilities
    (separate accounts)                  | -      | -        | -      | 529.6    | -          | 529.6   
|                                                                      | 71.3   | 488.9    | 4.6    | 7,214.4  | (270.5)    | 7,508.7 
|                                                                      |        |          |        |          |            |         
|Mandatorily redeemable preferred 
    securities of subsidiary trusts | -      | -        | 150.0  | -        | (7.1)      | 142.9   
|                                                                      |        |          |        |          |            |         
|Total stockholders' equity                                            | 748.8  | 593.1    | 4.7    | 1,112.2  | (1,710.0)  | 748.8   
|                                                                      | $820.1 | $1,082.0 | $159.3 | $8,326.6 | ($1,987.6) | $8,400.4





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



CONDENSED CONSOLIDATING INCOME STATEMENT

(In millions)







|FOR THE THREE MONTHS ENDED              |       | AAG     | TOTAL  | ALL OTHER | CONS    |       
|--------------------------------------- | ----- | ------- | ------ | --------- | ------- | ------
|JUNE 30, 2002                           | GAFRI | HOLDING | TRUSTS | SUBS      | ENTRIES | CONS  
|                                        |       |         |        |           |         |       
|Revenues:                               |       |         |        |           |         |       
|Life, accident and health premiums      | $  -  | $  -    | $ -    | $ 72.7    | $  -    | $ 72.7
|Net investment income and other revenue | 6.1   | -       | -      | 129.8     | (4.4)   | 131.5 
|Interest income on AAG Holding notes    | -     | -       | 3.5    | -         | (3.5)   | -     
|Equity in earnings of subsidiaries      | 1.9   | 11.0    | -      | -         | (12.9)  | -     
|                                        | 8.0   | 11.0    | 3.5    | 202.5     | (20.8)  | 204.2 
|                                        |       |         |        |           |         |       
|Costs and Expenses:                     |       |         |        |           |         |       
|Insurance benefits and expenses         | -     | -       | -      | 155.5     | -       | 155.5 
|Interest expense on AAG Holding notes   | -     | 3.5     | -      | -         | (3.5)   | -     
|Other interest and debt expenses        | -     | 5.1     | -      | -         | 0.9     | 6.0   
|Other expenses                          | 2.5   | 2.5     | -      | 34.2      | (2.0)   | 37.2  
|                                        | 2.5   | 11.1    | -      | 189.7     | (4.6)   | 198.7 
|                                        |       |         |        |           |         |       
|Earnings (loss) before income taxes     | 5.5   | (0.1)   | 3.5    | 12.8      | (16.2)  | 5.5   
|Provision (credit) for income taxes     | (2.4) | (0.2)   | -      | 3.0       | ( 2.8)  | (2.4) 
|                                        |       |         |        |           |         |       
|Net income                              | $ 7.9 | $ 0.1   | $3.5   | $  9.8    | ($13.4) | $  7.9







|FOR THE SIX MONTHS ENDED                |       |       |      |        |          |       
|--------------------------------------- | ----- | ----- | ---- | ------ | -------- | ------
|JUNE 30, 2002                           |       |       |      |        |          |       
|                                        |       |       |      |        |          |       
|Revenues:                               |       |       |      |        |          |       
|Life, accident and health premiums      | $  -  | $  -  | $ -  | $143.6 | $   -    | $143.6
|Net investment income and other revenue | 11.7  | -     | -    | 271.8  | (9.3)    | 274.2 
|Interest income on AAG Holding notes    | -     | -     | 7.0  | -      | (7.0)    | -     
|Equity in earnings of subsidiaries      | 14.1  | 31.9  | -    | -      | (46.0)   | -     
|                                        | 25.8  | 31.9  | 7.0  | 415.4  | (62.3)   | 417.8 
|                                        |       |       |      |        |          |       
|Costs and Expenses:                     |       |       |      |        |          |       
|Insurance benefits and expenses         | -     | -     | -    | 311.8  | -        | 311.8 
|Interest expense on AAG Holding notes   | -     | 7.0   | -    | -      | (7.0)    | -     
|Other interest and debt expenses        | -     | 10.2  | -    | -      | 1.7      | 11.9  
|Other expenses                          | 4.5   | 4.6   | -    | 67.8   | (4.1)    | 72.8  
|                                        | 4.5   | 21.8  | -    | 379.6  | (9.4)    | 396.5 
|                                        |       |       |      |        |          |       
|Earnings before income taxes            | 21.3  | 10.1  | 7.0  | 35.8   | (52.9)   | 21.3  
|Provision for income taxes              | 2.0   | 3.2   | -    | 9.6    | (12.8)   | 2.0   
|                                        |       |       |      |        |          |       
|Net income                              | $19.3 | $ 6.9 | $7.0 | $ 26.2 | ($ 40.1) | $ 19.3
|                                        |       |       |      |        |          |       







GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



CONDENSED CONSOLIDATING INCOME STATEMENT

(In millions)







|FOR THE THREE MONTHS ENDED              |       | AAG     | TOTAL  | ALL OTHER | CONS    |       
|--------------------------------------- | ----- | ------- | ------ | --------- | ------- | ------
|JUNE 30, 2001                           | GAFRI | HOLDING | TRUSTS | SUBS      | ENTRIES | CONS  
|                                        |       |         |        |           |         |       
|Revenues:                               |       |         |        |           |         |       
|Life, accident and health premiums      | $  -  | $  -    | $ -    | $ 70.5    | $  -    | $ 70.5
|Net investment income and other revenue | 6.5   | -       | -      | 124.2     | (4.6)   | 126.1 
|Interest income on AAG Holding notes    | -     | -       | 4.9    | -         | (4.9)   | -     
|Equity in earnings of subsidiaries      | 4.9   | 14.5    | -      | -         | (19.4)  | -     
|                                        | 11.4  | 14.5    | 4.9    | 194.7     | (28.9)  | 196.6 
|                                        |       |         |        |           |         |       
|Costs and Expenses:                     |       |         |        |           |         |       
|Insurance benefits and expenses         | -     | -       | -      | 142.8     | -       | 142.8 
|Interest expense on AAG Holding notes   | -     | 4.9     | -      | -         | (4.9)   | -     
|Other interest and debt expenses        | 0.1   | 5.0     | -      | -         | 2.3     | 7.4   
|Other expenses                          | 4.2   | 2.1     | -      | 35.1      | (2.1)   | 39.3  
|                                        | 4.3   | 12.0    | -      | 177.9     | (4.7)   | 189.5 
|                                        |       |         |        |           |         |       
|Earnings before income taxes            | 7.1   | 2.5     | 4.9    | 16.8      | (24.2)  | 7.1   
|Provision for income taxes              | 1.5   | 0.7     | -      | 4.5       | (5.2)   | 1.5   
|                                        |       |         |        |           |         |       
|Income before accounting change         | 5.6   | 1.8     | 4.9    | 12.3      | (19.0)  | 5.6   
|                                        |       |         |        |           |         |       
|Cumulative effect of accounting change, |       |         |        |           |         |       
|net of tax                              | (5.5) | -       | -      | (5.5)     | 5.5     | (5.5) 
|                                        |       |         |        |           |         |       
|Net income                              | $ 0.1 | $ 1.8   | $4.9   | $  6.8    | ($13.5) | $  0.1







|FOR THE SIX MONTHS ENDED                |       |       |      |        |         |       
|--------------------------------------- | ----- | ----- | ---- | ------ | ------- | ------
|JUNE 30, 2001                           |       |       |      |        |         |       
|                                        |       |       |      |        |         |       
|Revenues:                               |       |       |      |        |         |       
|Life, accident and health premiums      | $  -  | $  -  | $ -  | $139.7 | $  -    | $139.7
|Net investment income and other revenue | 13.4  | -     | -    | 270.1  | (9.6)   | 273.9 
|Interest income on AAG Holding notes    | -     | -     | 9.8  | -      | (9.8)   | -     
|Equity in earnings of subsidiaries      | 27.3  | 47.0  | -    | -      | (74.3)  | -     
|                                        | 40.7  | 47.0  | 9.8  | 409.8  | (93.7)  | 413.6 
|                                        |       |       |      |        |         |       
|Costs and Expenses:                     |       |       |      |        |         |       
|Insurance benefits and expenses         | -     | -     | -    | 287.4  | -       | 287.4 
|Interest expense on AAG Holding notes   | -     | 9.8   | -    | -      | (9.8)   | -     
|Other interest and debt expenses        | 0.1   | 10.2  | -    | -      | 4.4     | 14.7  
|Other expenses                          | 7.3   | 4.7   | -    | 70.6   | (4.4)   | 78.2  
|                                        | 7.4   | 24.7  | -    | 358.0  | (9.8)   | 380.3 
|                                        |       |       |      |        |         |       
|Earnings before income taxes            | 33.3  | 22.3  | 9.8  | 51.8   | (83.9)  | 33.3  
|Provision for income taxes              | 9.8   | 7.5   | -    | 15.3   | (22.8)  | 9.8   
|                                        |       |       |      |        |         |       
|Income before accounting change         | 23.5  | 14.8  | 9.8  | 36.5   | (61.1)  | 23.5  
|                                        |       |       |      |        |         |       
|Cumulative effect of accounting change, |       |       |      |        |         |       
|net of tax                              | (5.5) | -     | -    | (5.5)  | 5.5     | (5.5) 
|                                        |       |       |      |        |         |       
|Net income                              | $18.0 | $14.8 | $9.8 | $ 31.0 | ($55.6) | $ 18.0
|                                        |       |       |      |        |         |       







GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In millions)





|FOR THE SIX MONTHS ENDED                                      |        | AAG     | TOTAL  | ALL OTHER | CONS    |          
|------------------------------------------------------------- | ------ | ------- | ------ | --------- | ------- | ---------
|JUNE 30, 2002                                                 | GAFRI  | HOLDING | TRUSTS | SUBS      | ENTRIES | CONS     
|                                                              |        |         |        |           |         |          
|Cash Flows from Operating Activities:                         |        |         |        |           |         |          
|Net income                                                    | $19.3  | $ 6.9   | $ 7.0  | $ 26.2    | ($40.1) | $ 19.3   
|Adjustments:                                                  |        |         |        |           |         |          
|Equity in net earnings of
      subsidiaries and affiliates   | (11.4) | (21.8)  | -      | -         | 33.2    | -        
|Increase in life, accident and health
      reserves          | -      | -       | -      | 36.2      | -       | 36.2     
|Benefits to annuity policyholders                             | -      | -       | -      | 146.5     | -       | 146.5    
|Amortization of insurance acquisition
      costs             | -      | -       | -      | 50.0      | -       | 50.0     
|Depreciation and amortization                                 | -      | 0.2     | -      | 12.0      | -       | 12.2     
|Realized (gains) losses                                       | (0.9)  | -       | -      | 31.1      | -       | 30.2     
|Increase in insurance acquisition
      costs                 | -      | -       | -      | (80.8)    | -       | (80.8)   
|Decrease in other liabilities                                 | (6.0)  | -       | -      | (30.3)    | -       | (36.3)   
|Other, net                                                    | 1.4    | (9.7)   | -      | 1.3       | (0.1)   | (7.1)    
|                                                              | 2.4    | (24.4)  | 7.0    | 192.2     | (7.0)   | 170.2    
|                                                              |        |         |        |           |         |          
|Cash Flows from Investing Activities:                         |        |         |        |           |         |          
|Purchases of investments and other 
    assets                | -      | -       | -      | (1,531.4) | -       | (1,531.4)
|Purchase of subsidiary                                        | -      | -       | -      | (43.9)    | -       | (43.9)   
|Maturities and redemptions of fixed 
    maturity investments | -      | -       | -      | 607.3     | -       | 607.3    
|Sales of investments and other assets                         | 2.3    | -       | -      | 701.2     | -       | 703.5    
|Decrease in policy loans                                      | -      | -       | -      | 4.5       | -       | 4.5      
|                                                              | 2.3    | -       | -      | (262.3)   | -       | (260.0)  
|                                                              |        |         |        |           |         |          
|Cash Flows from Financing Activities:                         |        |         |        |           |         |          
|Fixed annuity receipts                                        | -      | -       | -      | 361.2     | -       | 361.2    
|Annuity surrenders, benefits and
    withdrawals              | -      | -       | -      | (278.5)   | -       | (278.5)  
|Net transfers to variable annuity
    assets                  | -      | -       | -      | (2.9)     | -       | (2.9)    
|Reductions of notes payable                                   | (0.1)  | -       | -      | -         | -       | (0.1)    
|Issuance of Common Stock                                      | 1.7    | -       | -      | -         | -       | 1.7      
|Capital contribution from parent (to
    subsidiary)          | (28.8) | 28.8    | -      | -         | -       | -        
|Dividends from subsidiaries(to parent)                        | 27.4   | (4.4)   | -      | (23.0)    | -       | -        
|Retirement of Common Stock                                    | (1.1)  | -       | -      | -         | -       | (1.1)    
|Trust dividend requirements                                   | -      | -       | (7.0)  | -         | 7.0     | -        
|                                                              | (0.9)  | 24.4    | (7.0)  | 56.8      | 7.0     | 80.3     
|                                                              |        |         |        |           |         |          
|Net increase (decrease) in cash and 
  short-term investments | 3.8    | -       | -      | (13.3)    | -       | (9.5)    
|Beginning cash and short-term investments                     | 0.9    | -       | -      | 170.0     | -       | 170.9    
|                                                              |        |         |        |           |         |          
|Ending cash and short-term investments                        | $ 4.7  | $  -    | $ -    | $156.7    | $  -    | $161.4   





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In millions)





|FOR THE SIX MONTHS ENDED                                      |        | AAG     | TOTAL  | ALL OTHER | CONS    |        
|------------------------------------------------------------- | ------ | ------- | ------ | --------- | ------- | -------
|JUNE 30, 2001                                                 | GAFRI  | HOLDING | TRUSTS | SUBS      | ENTRIES | CONS   
|                                                              |        |         |        |           |         |        
|Cash Flows from Operating Activities:                         |        |         |        |           |         |        
|Net income                                                    | $18.0  | $14.8   | $ 9.8  | $ 31.0    | ($55.6) | $ 18.0 
|Adjustments:                                                  |        |         |        |           |         |        
|Cumulative effect of accounting change                        | 5.5    | -       | -      | 5.5       | (5.5)   | 5.5    
|Equity in net earnings of
      subsidiaries and affiliates   | (19.6) | (23.7)  | -      | -         | 43.3    | -      
|Increase in life, accident and health
      reserves          | -      | -       | -      | 21.5      | -       | 21.5   
|Benefits to annuity policyholders                             | -      | -       | -      | 140.0     | -       | 140.0  
|Amortization of insurance acquisition
      costs             | -      | -       | -      | 41.1      | -       | 41.1   
|Depreciation and amortization                                 | 0.3    | 2.4     | -      | 2.1       | -       | 4.8    
|Realized losses                                               | 1.2    | -       | -      | 23.3      | -       | 24.5   
|Increase in insurance acquisition
      costs                 | -      | -       | -      | (73.5)    | -       | (73.5) 
|Decrease in other liabilities                                 | (3.1)  | -       | -      | (10.4)    | -       | (13.5) 
|Other, net                                                    | 10.0   | 1.1     | -      | (23.0)    | 0.2     | (11.7) 
|                                                              | 12.3   | (5.4)   | 9.8    | 157.6     | (17.6)  | 156.7  
|                                                              |        |         |        |           |         |        
|Cash Flows from Investing Activities:                         |        |         |        |           |         |        
|Purchases of investments and other 
    assets                | -      | -       | -      | (548.9)   | -       | (548.9)
|Maturities and redemptions of fixed 
    maturity investments | -      | -       | -      | 234.5     | -       | 234.5  
|Sales of investments and other assets                         | -      | -       | -      | 220.1     | -       | 220.1  
|Decrease in policy loans                                      | -      | -       | -      | 2.8       | -       | 2.8    
|                                                              | -      | -       | -      | (91.5)    | -       | (91.5) 
|                                                              |        |         |        |           |         |        
|Cash Flows from Financing Activities:                         |        |         |        |           |         |        
|Fixed annuity receipts                                        | -      | -       | -      | 271.8     | -       | 271.8  
|Annuity surrenders, benefits and
    withdrawals              | -      | -       | -      | (341.3)   | -       | (341.3)
|Net transfers to variable annuity
    assets                  | -      | -       | -      | (1.4)     | -       | (1.4)  
|Additions to notes payable                                    | -      | 4.7     | -      | -         | -       | 4.7    
|Reductions of notes payable                                   | -      | (11.9)  | -      | (0.3)     | -       | (12.2) 
|Issuance of Common Stock                                      | 0.4    | -       | -      | -         | -       | 0.4    
|Retirement of Common Stock                                    | (0.3)  | -       | -      | -         | -       | (0.3)  
|Capital contribution from parent (to
    subsidiary)          | (12.6) | 12.6    | -      | (8.0)     | 8.0     | -      
|Trust dividend requirements                                   | -      | -       | (9.8)  | -         | 9.8     | -      
|                                                              | (12.5) | 5.4     | (9.8)  | (79.2)    | 17.8    | (78.3) 
|                                                              |        |         |        |           |         |        
|Net increase (decrease) in cash and 
  short-term investments | (0.2)  | -       | -      | (13.1)    | 0.2     | (13.1) 
|Beginning cash and short-term investments                     | 3.2    | -       | -      | 84.5      | (0.2)   | 87.5   
|                                                              |        |         |        |           |         |        
|Ending cash and short-term investments                        | $ 3.0  | $  -    | $  -   | $ 71.4    | $  -    | $ 74.4 





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations

GENERAL

Great American Financial Resources, Inc. ("GAFRI" 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 and for the payment of interest and principal on borrowings and stockholder dividends.

Forward-Looking Statements

Actual results could differ materially from those contained in or implied by such forward-looking statements for a variety of factors including:

- changes in economic conditions, including interest rates, performance of securities markets, and the availability of capital;
- regulatory actions;
- changes in legal environment;
- tax law changes;
- availability of reinsurance; and
- competitive pressures.

Forward-looking statements included in this Form 10-Q are made only as of the date of this report and under Section 27A of The Securities Act and Section 21E of The Exchange Act; we do not have any obligation to update any forward-looking statement to reflect subsequent events or circumstances.

LIQUIDITY AND CAPITAL RESOURCES

Ratios

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 June 30, 2002, the capital ratio of GAFRI's principal insurance subsidiary was 4.9 times its authorized control level RBC.

Sources and Uses of Funds







GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued

GAFRI's insurance subsidiaries are subject to restrictions relating to statutory surplus and earnings.  The maximum amount of dividends payable in 2002 by GALIC without prior regulatory approval is $38.8 million.  In the first six months of 2002, GALIC paid $23.0 million in dividends.

The Company has an unsecured credit agreement with a group of banks under which it can borrow up to $155 million until December 31, 2004.  At June 30, 2002, GAFRI had over $30 million available under the credit line.

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

2002 Acquisition



|Total Assets                 | $297.8
|---------------------------- | ------
|Capital and Surplus          | 23.1  
|Asset Valuation Reserve      | 0.4   
|Interest Maintenance Reserve | 1.2   

Investments

At June 30, 2002, GAFRI had pretax net unrealized gains of $190.7 million on fixed maturities and $26.8 million on equity securities.  Individual portfolio securities are sold creating gains or losses as market opportunities exist.  Since all of these securities are carried at market value in the balance sheet, there is virtually no effect on liquidity or financial condition upon the sale and ultimate realization of unrealized gains and losses.

The NAIC assigns quality ratings to publicly traded as well as privately placed securities.  At June 30, 2002, 93% of GAFRI's fixed maturity portfolio was comprised of investment grade bonds (NAIC rating of "1" or "2").  Management believes that a high quality investment portfolio is more likely to generate a stable and predictable investment return.

At June 30, 2002, GAFRI's mortgage-backed securities ("MBSs") portfolio represented more than one-third of its fixed maturity investments.  MBSs are subject to significant prepayment risk due to the fact that, in periods of declining interest rates, mortgages may be repaid more rapidly than scheduled as borrowers refinance higher rate mortgages to take advantage of the lower current rates.  As a result, holders of MBSs may receive prepayments on their securities, which cannot be reinvested at an interest rate comparable to the rate on the prepaid MBSs.  The majority of MBSs held by GAFRI were purchased at a discount.  Management believes that the discounted nature of the MBSs will reduce the effect of prepayments on earnings over the anticipated life of the MBS portfolio.

More than 90% of GAFRI's MBSs are rated "AAA" with substantially all being investment grade quality.  The market in which these securities trade is highly liquid.  Aside from interest rate risk, GAFRI does not believe a material risk (relative to earnings or liquidity) is inherent in holding such investments.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued



Summarized information for the unrealized gains and losses recorded in GAFRI's balance sheet at June 30, 2002, is shown in the following table (dollars in millions).  Approximately $476 million of "Fixed maturities and $11 million of "Equity Securities" had no unrealized gains or losses at June 30, 2002.



|                                                     | Securities 
with 
Unrealized | Securities 
with 
Unrealized
|---------------------------------------------------- | ---------------------------- | ----------------------------
|                                                     | Gains                        | Losses                      
|Fixed maturities                                     |                              |                             
|Market value of securities                           | $5,454                       | $  944                      
|Amortized cost of securities                         | $5,207                       | $1,000                      
|Gross unrealized gain or loss                        | $  247                       | $   56                      
|Market value as % of amortized cost                  | 105%                         | 94%                         
|Number of security positions                         | 1,087                        | 220                         
|Concentration of gains or losses by type or industry |                              |                             
|(exceeding 5% of unrealized):                        |                              |                             
|Mortgage-backed securities                           | $102.5                       | $ 6.6                       
|Banks                                                | 21.6                         | -                           
|U.S. government                                      | 13.0                         | 0.9                         
|State and municipal                                  | 12.2                         | 3.0                         
|Asset-backed securities                              | 10.6                         | 9.3                         
|Air transportation                                   | 3.6                          | 4.3                         
|Telephone communications                             | 2.2                          | 7.5                         
|Cable television                                     | 0.1                          | 4.0                         
|Percentage rated investment grade                    | 98%                          | 76%                         
|                                                     |                              |                             
|Equity securities                                    |                              |                             
|Market value of securities                           | $54.0                        | $2.3                        
|Cost of securities                                   | $26.5                        | $3.0                        
|Gross unrealized gain or loss                        | $27.5                        | $0.7                        
|Market value as % of cost                            | 204%                         | 76%                         
|                                                     |                              |                             

GAFRI's investment in equity securities of Provident Financial Group, a Cincinnati-based commercial banking and financial services company, represents $25.9 million of the $27.5 million in unrealized gains on equity securities at June 30, 2002.

The table below sets forth the scheduled maturities of fixed maturity securities (by separate gain/loss segments and in total) at June 30, 2002, based on their market values.



|                                   | Securities 
with 
Unrealized | Securities 
with 
Unrealized
|---------------------------------- | ---------------------------- | ----------------------------
|Maturity                           | Gains                        | Losses                      
|One year or less                   | 6%                           | 4%                          
|After one year through five years  | 16                           | 19                          
|After five years through ten years | 18                           | 33                          
|After ten years                    | 15                           | 17                          
|                                   | 55                           | 73                          
|Mortgage-backed securities         | 45                           | 27                          
|                                   | 100%                         | 100%                        
|                                   |                              |                             





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued



GAFRI realized aggregate losses of $3.8 million during the second quarter of 2002 on $71.3 million in sales of fixed maturity securities (14 issuers; 17 issues) that had unrealized losses at March 31, 2002.  Market values of twelve of the issues increased $2 million from March 31 to date of sale while the other five decreased $1.3 million in total.

Although GAFRI had the ability to continue holding these investments, its intent to hold them changed due primarily to deterioration in the issuer's credit, decisions to lessen exposure to a particular credit or industry, or to modify asset allocation within the portfolio.  None of the securities were sold out of a necessity to raise cash.  GAFRI has the ability and intent to hold securities with unrealized losses at June 30, 2002, for a period of time sufficient to allow for a recovery in market value.

The table below (dollars in millions) summarizes the length of time securities have been in an unrealized gain or loss position at June 30, 2002.

|                                                       | Aggregate
MarketValue | Aggregate 
Unrealized Gain (Loss) | Market 
Value as 
% of Cost Basis
|------------------------------------------------------ | --------------------- | --------------------------------- | ---------------------------------
|Fixed Maturities                                       |                       |                                   |                                  
|                                                       |                       |                                   |                                  
|Securities with unrealized gains:                      |                       |                                   |                                  
|Exceeding $500,000 at 6/30 and for:                    |                       |                                   |                                  
|Less than one year (106 issues)                        | $1,153                | $  76                             | 107.0%                           
|More than one year (31 issues)                         | 371                   | 38                                | 111.5                            
|Less than $500,000 at 6/30 and an unrealized gain for: |                       |                                   |                                  
|Less than one year (409 issues)                        | 2,192                 | 51                                | 102.3                            
|More than one year (541 issues)                        | 1,738                 | 82                                | 105.0                            
|                                                       | $5,454                | $ 247                             | 104.7%                           
|                                                       |                       |                                   |                                  
|Securities with unrealized losses:                     |                       |                                   |                                  
|Exceeding $500,000 at 6/30 and for:                    |                       |                                   |                                  
|Less than one year (23 issues)                         | $  140                | ($  23)                           | 85.9%                            
|More than one year (8 issues)                          | 48                    | (11)                              | 80.7                             
|Less than $500,000 at 6/30 and an unrealized loss for: |                       |                                   |                                  
|Less than one year (125 issues)                        | 574                   | (14)                              | 97.6                             
|More than one year (64 issues)                         | 182                   | (8)                               | 95.9                             
|                                                       | $  944                | ($  56)                           | 94.9%                            
|                                                       |                       |                                   |                                  
|Equity Securities                                      |                       |                                   |                                  
|                                                       |                       |                                   |                                  
|Securities with unrealized gains:                      |                       |                                   |                                  
|Exceeding $500,000 at 6/30 and for:                    |                       |                                   |                                  
|Less than one year (1 issue)                           | $  6.4                | $  1.3                            | 125.0%                           
|More than one year (2 issues)                          | 42.3                  | 25.9                              | 258.1                            
|Less than $500,000 at 6/30 and an unrealized gain for: |                       |                                   |                                  
|Less than one year (2 issues)                          | 5.2                   | 0.2                               | 105.1                            
|More than one year (1 issue)                           | 0.1                   | 0.1                               | 284.8                            
|                                                       | $ 54.0                | $ 27.5                            | 203.8%                           
|                                                       |                       |                                   |                                  
|Securities with unrealized losses:                     |                       |                                   |                                  
|Exceeding $500,000 at 6/30 and for:                    |                       |                                   |                                  
|Less than one year (0 issues)                          | $  -                  | $  -                              | - %                              
|More than one year (0 issues)                          | -                     | -                                 | -                                
|Less than $500,000 at 6/30 and an unrealized loss for: |                       |                                   |                                  
|Less than one year (4 issues)                          | 1.5                   | (0.4)                             | 76.7                             
|More than one year (2 issues)                          | 0.8                   | (0.3)                             | 75.4                             
|                                                       | $  2.3                | ($ 0.7)                           | 76.2%                            
|                                                       |                       |                                   |                                  





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued

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 (accounted for as a realized loss) and the cost basis of that investment is reduced, regardless of whether the security is actually sold.  The determination of whether unrealized losses are "other than temporary" requires judgment based on subjective as well as objective factors.  A listing of factors considered and resources used is contained in the discussion of "Investments under Management's Discussion and Analysis in GAFRI's 2001 Form 10-K.

Based on its analysis, management believes (i) GAFRI will recover its cost basis in the securities with unrealized losses and (ii) that GAFRI has the ability and intent to hold the securities until they mature or recover in value.  Should either of these beliefs change with regard to a particular security, a charge for impairment would likely be required.  While it is not possible to accurately predict if or when a specific security will become impaired, charges for other than temporary impairment could be material to results of operations in a future period.  Management believes it is not likely that future impairment charges will have a significant effect on GAFRI's liquidity.

RESULTS OF OPERATIONS

General

|                                                                | Three months ended
June 30, | Six months ended
June 30, |       
|--------------------------------------------------------------- | --------------------------- | ------------------------- | ------
|                                                                | 2002                        | 2001                      | 2002  
|Revenues per income statement                                   | $204.2                      | $196.6                    | $417.8
|Add back realized losses on investments                         | 20.6                        | 22.7                      | 30.2  
|Core operating revenues                                         | 224.8                       | 219.3                     | 448.0 
|                                                                |                             |                           |       
|Expenses per income statement                                   | 198.7                       | 189.5                     | 396.5 
|                                                                |                             |                           |       
|Core operating earnings before tax                              | 26.1                        | 29.8                      | 51.5  
|Income tax expense                                              | 4.6                         | 9.5                       | 12.4  
|Net core operating earnings                                     | $ 21.5                      | $ 20.3                    | $ 39.1
|                                                                |                             |                           |       
|Net core operating earnings per
         common share (diluted) | $ 0.50                      | $ 0.47                    | $ 0.91

GAFRI's net core operating earnings in the second quarter of 2002 were favorably impacted by a reduction in crediting rates on certain fixed annuity products and the accompanying changes in actuarial assumptions, as well as a lower effective tax rate.  These favorable items more than offset the negative impact that the lower stock market had on GAFRI's variable annuity business and adverse development in GALIC's life division.

GAFRI's net core operating earnings in 2001 were favorably impacted by operating gains realized on the sale of certain real estate operations.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued

Retirement Products

|                                      | Three months ended | Six months ended
|------------------------------------- | ------------------ | ----------------
|                                      | June 30,           | June 30,        
|                                      | 2002               | 2001            
|Annuity Premiums                      |                    |                 
|Single premium fixed rate annuities   | $136               | $ 96            
|Flexible premium fixed rate annuities | 41                 | 41              
|Single premium variable annuities     | 27                 | 23              
|Flexible premium variable annuities   | 24                 | 24              
|                                      | $228               | $184            

Management believes that fixed annuity sales increased over the same period in the prior year due to the introduction of a new product, the volatile equity markets, and the relative attractiveness of fixed annuities compared to other interest bearing instruments.

Management believes that variable annuity premiums increased over the same period in the prior year due primarily to increased sales of a product attractive to policyholders with a short-term investment horizon.

Life, Accident and Health Premiums and Benefits

|Three months ended              | Six months ended
|------------------------------- | ----------------
|June 30,                        | June 30,        
|                                | 2002            
|Premiums                        |                 
|Supplemental insurance products | $48             
|GA Life of Puerto Rico          | 15              
|Life products                   | 10              
|                                | $73             
|                                |                 
|Benefits                        |                 
|Supplemental insurance products | $42             
|GA Life of Puerto Rico          | 9               
|Life products                   | 8               
|                                | $59             

Net Investment Income

Realized Losses on Investments

Other Income





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q

Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued

Real Estate Operations

|Three months ended | Six months ended
|------------------ | ----------------
|June 30,           | June 30,        
|                   | 2002            
|Other income       | $11.0           
|Other expenses     | 8.5             

Other income included a pretax gain on the sale of real estate assets of $2.1 million in the second quarter of 2001 and $10.6 million in the first six months of 2001.

Annuity Benefits

On its deferred annuities (annuities in the accumulation phase), GAFRI generally credits interest to policyholders' accounts at their current stated "surrender" interest rates.  Furthermore, for "two-tier" deferred annuities (annuities under which a higher interest amount can be earned if a policy is annuitized rather than surrendered), GAFRI accrues an additional liability to provide for expected deaths and annuitizations.  Changes in crediting rates, actual surrender, death and annuitization experience or modifications in actuarial assumptions can affect this accrual.  In the second quarter of 2002, this accrual was reduced due to decreases in crediting rates on certain fixed annuity products.  Partially offsetting this reduction was an increase in the accrual resulting from a modification in projected investment yields.

Insurance Acquisition Expenses

The increase in insurance acquisition expenses in the second quarter and the first six months of 2002 compared to the same periods in 2001 reflects (i) the accelerated write-off of variable annuity DPAC due to the effect of the lower stock market; (ii) adverse development in the Company's life division; and (iii) higher average DPAC balances.

Trust Preferred Distribution Requirement

Other Expenses

Income Taxes





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q

Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued



Cumulative Effect of Accounting Change



PART II

OTHER INFORMATION



Item 1



Legal Proceedings

In March 2000, a jury in Dallas, Texas, returned a verdict against GALIC with total damages of $11.2 million in a lawsuit brought by two former agents of GALIC.  The agents had alleged that their agency agreement with GALIC had been wrongfully terminated.  On August 6, 2002, the Texas Fifth District Court of Appeals issued an opinion reversing the verdict in its entirety and finding that GALIC has no liability to the plaintiff based on the facts of the case.



Item 3



Quantitative and Qualitative Disclosure at Market Risk

As of June 30, 2002, there were no material changes to the information provided in GAFRI's Form 10-K for 2001 under the caption "Exposure to Market Risk" in Management's Discussion and Analysis of Financial Condition and Results of Operations.



Item 4



Submission of Matters to a Vote of Security Holders



The Registrant's Annual Stockholders' Meeting was held May 21, 2002.  Proxies were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934.  All of the nominees for director proposed by the Registrant were elected to the Board of Directors.

The votes cast for, against, and the number withheld or abstentions as to each matter voted on at the 2002 Annual Meeting is set forth below:



|                       | For        | Against | Withheld/Abstain
|---------------------- | ---------- | ------- | ----------------
|Election of Directors: |            |         |                 
|Carl H. Lindner        | 41,732,905 | NA      | 17,202          
|S. Craig Lindner       | 41,732,972 | NA      | 17,135          
|Robert A. Adams        | 41,685,189 | NA      | 64,918          
|Ronald G. Joseph       | 41,736,405 | NA      | 13,702          
|John T. Lawrence III   | 41,736,762 | NA      | 13,345          
|William R. Martin      | 41,719,681 | NA      | 30,426          
|Charles R. Scheper     | 41,730,093 | NA      | 20,014          
|Ronald W. Tysoe        | 41,736,718 | NA      | 13,389          
|                       |            |         |                 

NA - Not Applicable





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q

PART II

OTHER INFORMATION - Continued



Item 6



Exhibits and Reports on Form 8-K

(a)  Exhibits:  None

(b)  Reports 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.

|                |  | GREAT AMERICAN FINANCIAL RESOURCES, Inc.
|--------------- |  | ----------------------------------------
|                |  |                                         
|                |  |                                         
|August 14, 2002 |  | BY:/s/Christopher P. Miliano            
|                |  | Christopher P. Miliano                  
|                |  | Chief Financial Officer                 













CERTIFICATION







In accordance with Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that to the best of my knowledge (i) the Quarterly Report on Form 10-Q (the "Form 10-Q") to which this Certification is attached fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Great American Financial Resources, Inc.



| | GREAT AMERICAN FINANCIAL RESOURCES, INC.
| | ----------------------------------------
| |                                         
| |                                         
| | BY:  /s/S. Craig Lindner                
| | S. Craig Lindner                        
| | Chief Executive Officer                 















CERTIFICATION







In accordance with Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that to the best of my knowledge (i) the Quarterly Report on Form 10-Q (the "Form 10-Q") to which this Certification is attached fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Great American Financial Resources, Inc.



| | GREAT AMERICAN FINANCIAL RESOURCES, INC.
| | ----------------------------------------
| |                                         
| |                                         
| | BY:  /s/Christopher P. Miliano          
| | Christopher P. Miliano                  
| | Chief Financial Officer                 
| |