|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
March 31, 2003  | 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                                

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.  Yes X    No

Indicate by check mark whether the Registrant is an accelerated filer.    YesX    No
As of May 1, 2003, there were 42,499,899 shares of the Registrant's Common Stock outstanding.







GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q

PART I

FINANCIAL INFORMATION



GREAT AMERICAN FINANCIAL RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Dollars in millions)

|                                                 |           |             
|------------------------------------------------ | --------- | ------------
|                                                 |           |             
|                                                 | March 31, | December 31,
|                                                 | 2003      | 2002        
|Assets                                           |           |             
|Investments:                                     |           |             
|Fixed maturities - at market                     |           |             
|(amortized cost - $7,121.6 and $6,894.1)         | $7,445.7  | $7,181.1    
|Equity securities - at market                    |           |             
|(cost - $51.9 and $47.0)                         | 71.9      | 73.5        
|Mortgage loans on real estate                    | 16.3      | 18.9        
|Real estate                                      | 78.6      | 78.6        
|Policy loans                                     | 213.5     | 214.9       
|Short-term investments                           | 325.8     | 400.0       
|Total investments                                | 8,151.8   | 7,967.0     
|                                                 |           |             
|Cash                                             | 8.0       | 2.2         
|Accrued investment income                        | 95.8      | 95.3        
|Unamortized insurance acquisition costs, net     | 595.9     | 591.0       
|Other assets                                     | 266.5     | 252.0       
|Variable annuity assets (separate accounts)      | 431.1     | 455.1       
|                                                 |           |             
|                                                 | $9,549.1  | $9,362.6    
|                                                 |           |             
|Liabilities and Capital                          |           |             
|Annuity benefits accumulated                     | $6,610.5  | $6,453.9    
|Life, accident and health reserves               | 934.3     | 902.4       
|Notes payable                                    | 250.2     | 250.3       
|Payable to affiliates, net                       | 64.9      | 62.4        
|Deferred taxes on unrealized gains               | 96.2      | 93.3        
|Accounts payable, accrued expenses and other     |           |             
|liabilities                                      | 152.9     | 150.4       
|Variable annuity liabilities (separate accounts) | 431.1     | 455.1       
|Total liabilities                                | 8,540.1   | 8,367.8     
|                                                 |           |             
|                                                 |           |             
|Mandatorily redeemable preferred securities      |           |             
|of subsidiary trusts                             | 142.9     | 142.9       
|                                                 |           |             
|                                                 |           |             
|Stockholders' Equity:                            |           |             
|Common Stock, $1 par value                       |           |             
|-100,000,000 shares authorized                   |           |             
|-42,488,314 and 42,456,843 shares outstanding    | 42.5      | 42.4        
|Capital surplus                                  | 347.9     | 347.6       
|Retained earnings                                | 290.2     | 281.9       
|Unrealized gains on marketable securities, net   | 185.5     | 180.0       
|Total stockholders' equity                       | 866.1     | 851.9       
|                                                 |           |             
|                                                 | $9,549.1  | $9,362.6    
|                                                 |           |             





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



GREAT AMERICAN FINANCIAL RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(In millions, except per share amounts)





|Three months ended                                
|--------------------------------------------------
|March 31,                                         
|                                                  
|Revenues:                                         
|Life, accident and health premiums                
|Net investment income                             
|Realized losses on investments                    
|Other income                                      
|                                                  
|Costs and Expenses:                               
|Annuity benefits                                  
|Life, accident and health benefits                
|Insurance acquisition expenses                    
|Trust preferred distribution requirement          
|Interest and other debt expenses                  
|Other expenses                                    
|                                                  
|                                                  
|Operating earnings before income taxes            
|Provision for income taxes                        
|                                                  
|Income before accounting change                   
|Cumulative effect of accounting change, net of tax
|                                                  
|Net Income (Loss)                                 
|                                                  
|Earnings per common share:                        
|Basic earnings (loss) per common share:           
|Income before accounting change                   
|Accounting change                                 
|Net income (loss)                                 
|                                                  
|Diluted earnings (loss) per common share:         
|Income before accounting change                   
|Accounting change                                 
|Net income (loss)                                 
|                                                  
|Average number of common shares:                  
|Basic                                             
|Diluted                                           
|                                                  





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



GREAT AMERICAN FINANCIAL RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(In millions)

|                                                 | Three months ended
|------------------------------------------------ | ------------------
|                                                 | March 31,         
|                                                 | 2003              
|Common Stock:                                    |                   
|Balance at beginning of period                   | $ 42.4            
|Common Stock issued                              | 0.1               
|Balance at end of period                         | $ 42.5            
|                                                 |                   
|                                                 |                   
|Capital Surplus:                                 |                   
|Balance at beginning of period                   | $347.6            
|Common Stock issued                              | 0.7               
|Common Stock retired                             | (0.4)             
|Balance at end of period                         | $347.9            
|                                                 |                   
|                                                 |                   
|Retained Earnings:                               |                   
|Balance at beginning of period                   | $281.9            
|Net income (loss)                                | 8.3               
|Balance at end of period                         | $290.2            
|                                                 |                   
|                                                 |                   
|Unrealized Gains, Net:                           |                   
|Balance at beginning of period                   | $180.0            
|Change during period                             | 5.5               
|Balance at end of period                         | $185.5            
|                                                 |                   
|                                                 |                   
|                                                 |                   
|                                                 |                   
|Comprehensive Income (Loss):                     |                   
|Net income (loss)                                | $  8.3            
|Other comprehensive income (loss)- change in net |                   
|unrealized gains                                 | 5.5               
|Comprehensive income (loss)                      | $ 13.8            
|                                                 |                   





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



GREAT AMERICAN FINANCIAL RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In millions)



|                                                         | Three months ended
|-------------------------------------------------------- | ------------------
|                                                         | March 31,         
|                                                         | 2003              
|Cash Flows from Operating Activities:                    |                   
|Net income (loss)                                        | $  8.3            
|Adjustments:                                             |                   
|Cumulative effect of accounting change                   | -                 
|Increase in life, accident and health reserves           | 31.9              
|Benefits to annuity policyholders                        | 74.8              
|Amortization of insurance acquisition costs              | 27.3              
|Depreciation and amortization                            | 1.1               
|Realized losses on investments                           | 8.3               
|Increase in insurance acquisition costs                  | (44.7)            
|Increase in other assets                                 | (19.7)            
|Decrease in other liabilities                            | (11.8)            
|Increase (decrease) in payable to affiliates, net        | 2.5               
|Other, net                                               | (0.8)             
|                                                         | 77.2              
|                                                         |                   
|Cash Flows from Investing Activities:                    |                   
|Purchases of and additional investments in:              |                   
|Fixed maturity investments                               | (1,040.8)         
|Equity securities                                        | (5.0)             
|Real estate, mortgage loans and other assets             | (1.4)             
|Maturities and redemptions of fixed maturity investments | 353.7             
|Sales of:                                                |                   
|Fixed maturity investments                               | 461.1             
|Equity securities                                        | -                 
|Real estate, mortgage loans and other assets             | 2.3               
|Decrease in policy loans                                 | 1.4               
|                                                         | (228.7)           
|                                                         |                   
|Cash Flows from Financing Activities:                    |                   
|Fixed annuity receipts                                   | 214.5             
|Annuity surrenders, benefits and withdrawals             | (140.3)           
|Net transfers(to)from variable annuity assets            | 8.6               
|Reductions of notes payable                              | (0.1)             
|Issuance of Common Stock                                 | 0.8               
|Retirement of Common Stock                               | (0.4)             
|                                                         | 83.1              
|                                                         |                   
|Net decrease in cash and short-term investments          | (68.4)            
|Beginning cash and short-term investments                | 402.2             
|Ending cash and short-term investments                   | $333.8            
|                                                         |                   

5



GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





A.

Great American Financial Resources, Inc. ("GAFRI" or "the Company"), through its subsidiaries, markets 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 82% of GAFRI's Common Stock at May 1, 2003.

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.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Interest income on non-investment grade asset-backed 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.  These impairment losses are included in realized gains and losses.

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 completed the transitional test for goodwill impairment (as of January 1, 2002) in the fourth quarter of 2002.  The resulting write-down was reported by restating first quarter 2002 results for the cumulative effect of a change in accounting principle.

Reinsurance

To the extent that any reinsuring companies are unable to meet obligations under agreements covering reinsurance ceded, GAFRI's insurance subsidiaries would remain liable.  GAFRI reviews the financial condition of its reinsurers and monitors the amount of reinsurance it has with each company.

Insurance Acquisition Costs and Expenses

Insurance acquisition expenses in the income statement reflect primarily the amortization of DPAC and VOBA.  In addition, certain commission costs are expensed as paid and included in insurance acquisition expenses.  All other uncapitalized acquisition costs such as marketing and underwriting expenses are included in "Other Expenses."

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

DPAC related to annuities and universal life insurance products is deferred to the extent deemed recoverable and 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 life and variable annuity 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.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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 on marketable securities, net" in the stockholders' equity section of the Balance Sheet.

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.

Life and health insurance contracts are reviewed periodically using actuarial assumptions revised based on actual and anticipated experience, to determine if there is a potential premium deficiency.  If any such deficiency exists, it is recognized by a charge to income and a reduction in unamortized acquisition costs.

Present Value of Future Profits

These amounts are amortized with interest in relation to expected gross profits of the acquired policies for annuities and universal life products and in relation to the premium paying period for traditional life and health insurance products.

Annuity Benefits Accumulated

Reserves for two-tier annuities (annuities with different stated account values depending on whether a policyholder annuitizes, dies or surrenders) are generally recorded at the lower-tier value plus an additional reserve for expected deaths and annuitizations ("EDAR") that require payment of the upper-tier value.  The liability for EDAR is accrued for and modified using the same assumptions as used in determining DPAC and DPAC amortization.

Reserves for traditional single-tier fixed annuities are generally recorded at the stated annuitization value.

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.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



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.

Stock-Based Compensation





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



The following table illustrates the effect on net income and earnings per share had compensation cost been recognized and determined based on the fair values at grant dates consistent with the method prescribed by SFAS No. 123.  For SFAS No. 123 purposes, the fair value per option granted of $6.13 for the first quarter of 2003 and $4.63 for the first quarter of 2002 was calculated using the Black-Scholes option pricing model and the following assumptions:  dividend yield of less than 1%; expected volatility of 20%; risk-free interest rate of 3% for 2003 and 5% for 2002; and expected option life of 7.5 years.



| | Three months ended                      
| | ----------------------------------------
| | March 31,                               
| |                                         
| | Net income (loss), as reported          
| | Pro forma stock option expense          
| |                                         
| | Adjusted net income (loss)              
| |                                         
| | Earnings (Loss) per share (as reported):
| | Basic                                   
| | Diluted                                 
| |                                         
| | Earning (Loss) per share (adjusted):    
| | Basic                                   
| | Diluted                                 

Benefit Plans

Under the savings fund portion of the Plan, GAFRI matches a percentage of employee contributions.  Employees have been permitted to direct the investment of their contributions to independently managed investment funds.  Matching contributions to the savings fund portion of the Plan for the year 2003 will be invested in accordance with participant elections.  Company contributions to the Plan are charged against earnings in the year for which they are declared.

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





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



Statement of Cash Flows

C.	Acquisition

On June 28, 2002, GAFRI's principal insurance subsidiary acquired Manhattan National Life Insurance Company ("MNL") from a subsidiary of Conseco, Inc. for $48.5 million in cash.  At December 31, 2002, the Company reinsured 90% of the business in force.

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 and universal 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.  In 2001, Loyal reinsured a substantial portion of its life insurance business and has reduced its marketing efforts in that line of business.

GA Life of Puerto Rico ("GAPR") sells in-home life and supplemental health products through a network of company-employed agents.  Sales in Puerto Rico accounted for more than 20% of GAFRI's life, accident and health premiums in the first three months of 2003 and 2002.

Corporate and other consists primarily of GAFRI (parent) and AAG Holding (intermediate holding company).





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



The following table shows GAFRI's revenues and operating profit by significant business segment (in millions):



|                                                | Three months ended
|----------------------------------------------- | ------------------
|                                                | March 31,         
|                                                | 2003              
|Revenues                                        |                   
|Life and annuity products                       | $140.4            
|Supplemental insurance products                 | 62.3              
|GA Life of Puerto Rico                          | 18.8              
|Corporate and other                             | 2.6               
|Total operating revenues                        | 224.1             
|                                                |                   
|Realized losses on investments                  | (8.3)             
|Total revenues per statement of operations      | $215.8            
|                                                |                   
|                                                |                   
|Operating profit - pretax                       |                   
|Life and annuity products                       | $ 21.4            
|Supplemental insurance products                 | 2.1               
|GA Life of Puerto Rico                          | 3.1               
|Corporate and other                             | (7.3)             
|Pretax earnings from operations                 | 19.3              
|                                                |                   
|Realized losses on investments                  | (8.3)             
|Total pretax income per statement of operations | $ 11.0            

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 classified by reporting units and compared to their fair value.  The fair value was estimated using the expected present value of future cash flows.  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.  The second step of the initial impairment test, measuring the amount of impairment loss, was completed in the fourth quarter of 2002 with a resulting $17.7 million after tax ($0.41 per share) impairment charge reported by restating first quarter 2002 results for the cumulative effect of a change in accounting principle.

The impairment charge recorded in 2002 was primarily related to a decrease in estimated future earnings based upon lower forecasted new business sales over the next few years.

F.	Unamortized Insurance Acquisition Costs

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



|                                                  | March 31, | December 31,
|------------------------------------------------- | --------- | ------------
|                                                  | 2003      | 2002        
|                                                  |          
|Deferred policy acquisition costs                 | $649.9    | $647.8      
|Present value of future profits acquired ("PVFP") | 68.4      | 66.8        
|Unearned revenues                                 | (122.4)   | (123.6)     
|                                                  | $595.9    | $591.0      







GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



The PVFP amounts in the table above are net of $59.5 million and $57.3 million of accumulated amortization at March 31, 2003 and December 31, 2002, respectively.  Amortization of the PVFP was $2.2 million and $1.7 million during the first three months of 2003 and 2002, respectively.  During each of the next five years, the PVFP is expected to decrease at a rate of approximately 13% of the balance at the beginning of each respective year.

G.	Notes Payable

Notes payable consisted of the following (in millions):



|                                                  | March 31, | December 31,
|------------------------------------------------- | --------- | ------------
|                                                  | 2003      | 2002        
|                                                  |          
|Direct obligations of GAFRI                       | $  1.6    | $  1.7      
|Obligations of AAG Holding (guaranteed by GAFRI): |           |             
|6-7/8% Senior Notes due 2008                      | 100.0     | 100.0       
|Bank Credit Line                                  | 148.6     | 148.6       
|Total                                             | $250.2    | $250.3      

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 March 31, 2003, the weighted-average interest rate on amounts borrowed under the credit line was 2.13%.



At March 31, 2003, scheduled principal payments on debt for the remainder of 2003 and the subsequent five years were as follows (in millions):



|2003 | 2004   | 2005 | 2006 | 2007 | 2008  
|---- | ------ | ---- | ---- | ---- | ------
|$0.1 | $148.8 | $0.2 | $0.2 | $0.1 | $100.1

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) | 03/31/03    | 12/31/02    | 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



In May 2003, a newly formed wholly-owned subsidiary trust of GAFRI intends to issue $20 million of trust preferred securities at an interest rate of 7.35% for the first five years and "3 month LIBOR + 4.1%" thereafter.  The proceeds from this transaction will be used primarily to pay down bank debt.  The preferred securities and related debentures are redeemable in 2033.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued



I.	Stockholders' Equity

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

At March 31, 2003, there were 4.5 million shares of GAFRI Common Stock reserved for issuance under GAFRI's stock option plans for employees and directors.  Under these plans, 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 three months ended March 31 included the following (in millions):



|                                                                            | 2003   | 2002  
|--------------------------------------------------------------------------- | ------ | ------
|                                                                            | Pretax | Taxes 
|Unrealized holding gains (losses) on
  securities arising during the period | $0.1   | $0.1  
|Realized losses on securities                                               | 8.3    | (3.0) 
|Change in net unrealized gains on
  marketable securities                   | $8.4   | ($2.9)

J.	Earnings Per Share

The number of common shares outstanding used in calculating diluted earnings per share in the first quarter of 2003 includes 0.1 million shares compared to 0.4 million shares for the first quarter of 2002, for the effect of the assumed exercise of GAFRI's stock options.

K.	Contingencies

There have been no significant changes to the matters discussed and referred to in Note O "Contingencies" of GAFRI's Annual Report on Form 10-K for 2002.

L.	Additional Information

Statutory Information



|                              | March 31, | December 31,
|----------------------------- | --------- | ------------
|                              | 2003      | 2002        
|Capital and surplus           | $402.4    | $418.6      
|Asset valuation reserve       | 53.2      | 61.2        
|Interest maintenance reserve  | 30.5      | 26.0        
|                              |           |             
|Three months ended March 31, 
|                              | 2003      | 2002        
|Pretax income from operations | $11.4     | $13.5       
|Net loss                      | (13.1)    | (0.1)       

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, 2002, GALIC and GAPR may pay $41.9 million and $25.8 million, respectively, in dividends in 2003 without prior approval.  In the first quarter of 2003, GAPR paid a dividend of $1.2 million to GAFRI.





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       |         
|--------------------------------------------------------------------- | ------ | -------- | ------ | --------- | ---------- | --------
|MARCH 31, 2003                                                        | GAFRI  | HOLDING  | TRUSTS | SUBS      | ENTRIES    | CONS    
|                                                                      |        |          |        |           |            |         
|Assets                                                                |        |          |        |           |            |         
|Cash and investments                                                  | $  3.5 | $     -  | $   -  | $8,157.8  | ($    1.5) | $8,159.8
|Investment in subsidiaries                                            | 813.6  | 1,208.4  | -      | 1.3       | (2,023.3)  | -       
|Notes receivable from AAG Holding                                     | 102.4  | -        | 154.6  | -         | (257.0)    | -       
|Unamortized insurance acquisition 
    costs, net                     | -      | -        | -      | 595.9     | -          | 595.9   
|Other assets                                                          | 16.8   | 3.4      | 3.0    | 306.1     | 33.0       | 362.3   
|Variable annuity assets 
    (separate accounts)                      | -      | -        | -      | 431.1     | -          | 431.1   
|                                                                      | $936.3 | $1,211.8 | $157.6 | $9,492.2  | ($2,248.8) | $9,549.1
|                                                                      |        |          |        |           |            |         
|Liabilities and Capital                                               |        |          |        |           |            |         
|Insurance liabilities                                                 | $   -  | $     -  | $   -  | $7,551.0  | ($    6.2) | $7,544.8
|Notes payable to GAFRI                                                | -      | 102.4    | -      | 0.1       | (102.5)    | -       
|Notes payable to Trusts                                               | -      | 154.6    | -      | -         | (154.6)    | -       
|Other notes payable                                                   | 1.6    | 248.6    | -      | -         | -          | 250.2   
|Other liabilities                                                     | 68.6   | 13.7     | 2.9    | 238.9     | (10.1)     | 314.0   
|Variable annuity liabilities
    (separate accounts)                  | -      | -        | -      | 431.1     | -          | 431.1   
|                                                                      | 70.2   | 519.3    | 2.9    | 8,221.1   | (273.4)    | 8,540.1 
|                                                                      |        |          |        |           |            |         
|Mandatorily redeemable preferred 
    securities of subsidiary trusts | -      | -        | 150.0  | -         | (7.1)      | 142.9   
|                                                                      |        |          |        |           |            |         
|Total stockholders' equity                                            | 866.1  | 692.5    | 4.7    | 1,271.1   | (1,968.3)  | 866.1   
|                                                                      | $936.3 | $1,211.8 | $157.6 | $9,492.2  | ($2,248.8) | $9,549.1







|                                                                      |        |          |        |          |            |         
|--------------------------------------------------------------------- | ------ | -------- | ------ | -------- | ---------- | --------
|DECEMBER 31, 2002                                                     |        |          |        |          |            |         
|                                                                      |        |          |        |          |            |         
|Assets                                                                |        |          |        |          |            |         
|Cash and investments                                                  | $  3.5 | $     -  | $   -  | $7,967.3 | ($    1.6) | $7,969.2
|Investment in subsidiaries                                            | 801.1  | 1,193.4  | -      | 0.9      | (1,995.4)  | -       
|Notes receivable from AAG Holding                                     | 102.4  | -        | 154.6  | -        | (257.0)    | -       
|Unamortized insurance acquisition 
    costs, net                     | -      | -        | -      | 591.0    | -          | 591.0   
|Other assets                                                          | 18.3   | 1.4      | 4.7    | 287.9    | 35.0       | 347.3   
|Variable annuity assets 
    (separate accounts)                      | -      | -        | -      | 455.1    | -          | 455.1   
|                                                                      | $925.3 | $1,194.8 | $159.3 | $9,302.2 | ($2,219.0) | $9,362.6
|                                                                      |        |          |        |          |            |         
|Liabilities and Capital                                               |        |          |        |          |            |         
|Insurance liabilities                                                 | $   -  | $     -  | $   -  | $7,361.8 | ($    5.5) | $7,356.3
|Notes payable to GAFRI                                                | -      | 102.4    | -      | 0.1      | (102.5)    | -       
|Notes payable to Trusts                                               | -      | 154.6    | -      | -        | (154.6)    | -       
|Other notes payable                                                   | 1.7    | 248.6    | -      | -        | -          | 250.3   
|Other liabilities                                                     | 71.7   | 7.4      | 4.7    | 231.3    | (9.0)      | 306.1   
|Variable annuity liabilities
    (separate accounts)                  | -      | -        | -      | 455.1    | -          | 455.1   
|                                                                      | 73.4   | 513.0    | 4.7    | 8,048.3  | (271.6)    | 8,367.8 
|                                                                      |        |          |        |          |            |         
|Mandatorily redeemable preferred 
    securities of subsidiary trusts | -      | -        | 150.0  | -        | (7.1)      | 142.9   
|                                                                      |        |          |        |          |            |         
|Total stockholders' equity                                            | 851.9  | 681.8    | 4.6    | 1,253.9  | (1,940.3)  | 851.9   
|                                                                      | $925.3 | $1,194.8 | $159.3 | $9,302.2 | ($2,219.0) | $9,362.6





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In millions)







|FOR THE THREE MONTHS ENDED              |       | AAG     | TOTAL  | ALL OTHER | CONS    |       
|--------------------------------------- | ----- | ------- | ------ | --------- | ------- | ------
|MARCH 31, 2003                          | GAFRI | HOLDING | TRUSTS | SUBS      | ENTRIES | CONS  
|                                        |       |         |        |           |         |       
|Revenues:                               |       |         |        |           |         |       
|Life, accident and health premiums      | $  -  | $  -    | $ -    | $ 74.1    | $  -    | $ 74.1
|Net investment income and other revenue | 5.1   | -       | -      | 139.8     | (3.2)   | 141.7 
|Interest income on AAG Holding notes    | -     | -       | 3.5    | -         | (3.5)   | -     
|Equity in earnings of subsidiaries      | 7.4   | 15.4    | -      | -         | (22.8)  | -     
|                                        | 12.5  | 15.4    | 3.5    | 213.9     | (29.5)  | 215.8 
|                                        |       |         |        |           |         |       
|Costs and Expenses:                     |       |         |        |           |         |       
|Insurance benefits and expenses         | -     | -       | -      | 161.7     | -       | 161.7 
|Interest expense on AAG Holding notes   | -     | 3.5     | -      | -         | (3.5)   | -     
|Other interest and debt expenses        | -     | 5.1     | -      | -         | 0.8     | 5.9   
|Other expenses                          | 1.5   | 1.8     | -      | 34.5      | (0.6)   | 37.2  
|                                        | 1.5   | 10.4    | -      | 196.2     | (3.3)   | 204.8 
|                                        |       |         |        |           |         |       
|Earnings before income taxes            | 11.0  | 5.0     | 3.5    | 17.7      | (26.2)  | 11.0  
|Provision for income taxes              | 2.7   | 1.6     | -      | 4.8       | (6.4)   | 2.7   
|                                        |       |         |        |           |         |       
|Net income                              | $ 8.3 | $ 3.4   | $3.5   | $ 12.9    | ($19.8) | $  8.3







|FOR THE THREE MONTHS ENDED              |         |       |      |          |          |         
|--------------------------------------- | ------- | ----- | ---- | -------- | -------- | --------
|MARCH 31, 2002                          |         |       |      |          |          |         
|                                        |         |       |      |          |          |         
|Revenues:                               |         |       |      |          |          |         
|Life, accident and health premiums      | $  -    | $  -  | $ -  | $ 70.9   | $   -    | $ 70.9  
|Net investment income and other revenue | 5.6     | -     | -    | 142.0    | (4.9)    | 142.7   
|Interest income on AAG Holding notes    | -       | -     | 3.5  | -        | (3.5)    | -       
|Equity in earnings of subsidiaries      | 12.2    | 20.9  | -    | -        | (33.1)   | -       
|                                        | 17.8    | 20.9  | 3.5  | 212.9    | (41.5)   | 213.6   
|                                        |         |       |      |          |          |         
|Costs and Expenses:                     |         |       |      |          |          |         
|Insurance benefits and expenses         | -       | -     | -    | 156.3    | -        | 156.3   
|Interest expense on AAG Holding notes   | -       | 3.5   | -    | -        | (3.5)    | -       
|Other interest and debt expenses        | -       | 5.1   | -    | -        | 0.8      | 5.9     
|Other expenses                          | 2.0     | 2.1   | -    | 33.6     | (2.1)    | 35.6    
|                                        | 2.0     | 10.7  | -    | 189.9    | (4.8)    | 197.8   
|                                        |         |       |      |          |          |         
|Earnings before income taxes            | 15.8    | 10.2  | 3.5  | 23.0     | (36.7)   | 15.8    
|Provision for income taxes              | 4.4     | 3.4   | -    | 6.6      | (10.0)   | 4.4     
|                                        |         |       |      |          |          |         
|Income before accounting change         | $11.4   | $6.8  | $3.5 | $16.4    | ($ 26.7) | $11.4   
|                                        |         |       |      |          |          |         
|Accounting change, net                  | (17.7)  | -     | -    | (17.7)   | 17.7     | (17.7)  
|Net income (loss)                       | ($ 6.3) | $ 6.8 | $3.5 | ($  1.3) | ($  9.0) | ($  6.3)
|                                        |         |       |      |          |          |         







GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In millions)





|FOR THE THREE MONTHS ENDED                                    |        | AAG     | TOTAL  | ALL OTHER | CONS    |          
|------------------------------------------------------------- | ------ | ------- | ------ | --------- | ------- | ---------
|MARCH 31, 2003                                                | GAFRI  | HOLDING | TRUSTS | SUBS      | ENTRIES | CONS     
|                                                              |        |         |        |           |         |          
|Cash Flows from Operating Activities:                         |        |         |        |           |         |          
|Net income                                                    | $ 8.3  | $ 3.4   | $ 3.5  | $ 12.9    | ($19.8) | $  8.3   
|Adjustments:                                                  |        |         |        |           |         |          
|Equity in net earnings of
      subsidiaries and affiliates   | (6.0)  | (10.4)  | -      | -         | 16.4    | -        
|Increase in life, accident and health
      reserves          | -      | -       | -      | 31.9      | -       | 31.9     
|Benefits to annuity policyholders                             | -      | -       | -      | 74.8      | -       | 74.8     
|Amortization of insurance acquisition
      costs             | -      | -       | -      | 27.3      | -       | 27.3     
|Depreciation and amortization                                 | -      | 0.1     | -      | 1.0       | -       | 1.1      
|Realized losses on investments                                | 0.2    | -       | -      | 8.1       | -       | 8.3      
|Increase in insurance acquisition
      costs                 | -      | -       | -      | (44.7)    | -       | (44.7)   
|Decrease (increase) in other assets                           | 1.2    | -       | -      | (20.9)    | -       | (19.7)   
|Decrease in other liabilities                                 | (5.5)  | -       | -      | (6.3)     | -       | (11.8)   
|Increase payable to affiliates, net                           | 2.3    | -       | -      | 0.2       | -       | 2.5      
|Capital contribution from parent (to
      subsidiary)        | (11.8) | 11.8    | -      | -         | -       | -        
|Dividends from subsidiaries(to parent)                        | 11.2   | (9.9)   | -      | (1.3)     | -       | -        
|Other, net                                                    | -      | 5.0     | -      | (5.7)     | (0.1)   | (0.8)    
|                                                              | (0.1)  | -       | 3.5    | 77.3      | (3.5)   | 77.2     
|                                                              |        |         |        |           |         |          
|Cash Flows from Investing Activities:                         |        |         |        |           |         |          
|Purchases of investments and other 
    assets                | -      | -       | -      | (1,047.2) | -       | (1,047.2)
|Maturities and redemptions of fixed 
    maturity investments | -      | -       | -      | 353.7     | -       | 353.7    
|Sales of investments and other assets                         | -      | -       | -      | 463.4     | -       | 463.4    
|Decrease in policy loans                                      | -      | -       | -      | 1.4       | -       | 1.4      
|                                                              | -      | -       | -      | (228.7)   | -       | (228.7)  
|                                                              |        |         |        |           |         |          
|Cash Flows from Financing Activities:                         |        |         |        |           |         |          
|Fixed annuity receipts                                        | -      | -       | -      | 214.5     | -       | 214.5    
|Annuity surrenders, benefits and
    withdrawals              | -      | -       | -      | (140.3)   | -       | (140.3)  
|Net transfers from variable annuity
    assets                | -      | -       | -      | 8.6       | -       | 8.6      
|Reductions of notes payable                                   | (0.1)  | -       | -      | -         | -       | (0.1)    
|Issuance of Common Stock                                      | 0.8    | -       | -      | -         | -       | 0.8      
|Retirement of Common Stock                                    | (0.4)  | -       | -      | -         | -       | (0.4)    
|Trust dividend requirements                                   | -      | -       | (3.5)  | -         | 3.5     | -        
|                                                              | 0.3    | -       | (3.5)  | 82.8      | 3.5     | 83.1     
|                                                              |        |         |        |           |         |          
|Net increase (decrease) in cash and 
  short-term investments | 0.2    | -       | -      | (68.6)    | -       | (68.4)   
|Beginning cash and short-term investments                     | 1.9    | -       | -      | 400.3     | -       | 402.2    
|                                                              |        |         |        |           |         |          
|Ending cash and short-term investments                        | $ 2.1  | $  -    | $ -    | $331.7    | $  -    | $333.8   





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In millions)





|FOR THE THREE MONTHS ENDED                                    |         | AAG     | TOTAL  | ALL OTHER | CONS    |        
|------------------------------------------------------------- | ------- | ------- | ------ | --------- | ------- | -------
|MARCH 31, 2002                                                | GAFRI   | HOLDING | TRUSTS | SUBS      | ENTRIES | CONS   
|                                                              |         |         |        |           |         |        
|Cash Flows from Operating Activities:                         |         |         |        |           |         |        
|Net income (loss)                                             | ($ 6.3) | $ 6.8   | $ 3.5  | ($ 1.3)   | ($ 9.0) | ($ 6.3)
|Adjustments:                                                  |         |         |        |           |         |        
|Cumulative effect of accounting change                        | 17.7    | -       | -      | 17.7      | (17.7)  | 17.7   
|Equity in net earnings of
      subsidiaries and affiliates   | (9.1)   | (14.1)  | -      | -         | 23.2    | -      
|Increase in life, accident and health
      reserves          | -       | -       | -      | 14.9      | -       | 14.9   
|Benefits to annuity policyholders                             | -       | -       | -      | 75.6      | -       | 75.6   
|Amortization of insurance acquisition
      costs             | -       | -       | -      | 24.8      | -       | 24.8   
|Depreciation and amortization                                 | -       | 0.1     | -      | 4.9       | -       | 5.0    
|Realized losses (gains) on investments                        | (0.3)   | -       | -      | 9.9       | -       | 9.6    
|Increase in insurance acquisition
      costs                 | -       | -       | -      | (38.6)    | -       | (38.6) 
|Decrease (increase) in other assets                           | (2.2)   | -       | -      | 1.9       | -       | (0.3)  
|Decrease in other liabilities                                 | (2.0)   | -       | -      | (17.7)    | -       | (19.7) 
|Decrease payable to affiliates, net                           | (0.6)   | -       | -      | (8.9)     | -       | (9.5)  
|Capital contribution from parent (to
      subsidiary)        | (8.6)   | 8.6     | -      | -         | -       | -      
|Dividends from subsidiaries (to parent)                       | 11.1    | (1.1)   | -      | (10.0)    | -       | -      
|Other, net                                                    | -       | (0.3)   | -      | 3.0       | -       | 2.7    
|                                                              | (0.3)   | -       | 3.5    | 76.2      | (3.5)   | 75.9   
|                                                              |         |         |        |           |         |        
|Cash Flows from Investing Activities:                         |         |         |        |           |         |        
|Purchases of investments and other 
    assets                | -       | -       | -      | (893.1)   | -       | (893.1)
|Maturities and redemptions of fixed 
    maturity investments | -       | -       | -      | 285.8     | -       | 285.8  
|Sales of investments and other assets                         | -       | -       | -      | 397.1     | -       | 397.1  
|Decrease in policy loans                                      | -       | -       | -      | 2.9       | -       | 2.9    
|                                                              | -       | -       | -      | (207.3)   | -       | (207.3)
|                                                              |         |         |        |           |         |        
|Cash Flows from Financing Activities:                         |         |         |        |           |         |        
|Fixed annuity receipts                                        | -       | -       | -      | 169.9     | -       | 169.9  
|Annuity surrenders, benefits and
    withdrawals              | -       | -       | -      | (135.9)   | -       | (135.9)
|Net transfers to variable annuity
    assets                  | -       | -       | -      | (5.6)     | -       | (5.6)  
|Reductions of notes payable                                   | (0.1)   | -       | -      | -         | -       | (0.1)  
|Issuance of Common Stock                                      | 1.1     | -       | -      | -         | -       | 1.1    
|Retirement of Common Stock                                    | (0.5)   | -       | -      | -         | -       | (0.5)  
|Trust dividend requirements                                   | -       | -       | (3.5)  | -         | 3.5     | -      
|                                                              | 0.5     | -       | (3.5)  | 28.4      | 3.5     | 28.9   
|                                                              |         |         |        |           |         |        
|Net increase (decrease) in cash and 
  short-term investments | 0.2     | -       | -      | (102.7)   | -       | (102.5)
|Beginning cash and short-term investments                     | 0.9     | -       | -      | 170.0     | -       | 170.9  
|                                                              |         |         |        |           |         |        
|Ending cash and short-term investments                        | $ 1.1   | $  -    | $  -   | $ 67.3    | $  -    | $ 68.4 





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;
- trends in mortality and morbidity;
- regulatory actions;
- changes in regulatory and legal environment;
- tax law changes;
- availability of reinsurance and ability of reinsurers to pay their obligations;
- competitive pressures; and
- changes in debt and claims paying ratings

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 statements to reflect subsequent events or circumstances.

Critical Accounting Policies







GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued



LIQUIDITY AND CAPITAL RESOURCES

Ratios

The National Association of Insurance Commissioners' ("NAIC") risk-based capital ("RBC") formula determines the amount of capital that an insurance company needs to ensure that it has an acceptable expectation of not becoming financially impaired.  At March 31, 2003, the capital ratio of GAFRI's principal insurance subsidiary was 5.4 times its authorized control level RBC.

Sources and Uses of Funds

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 March 31, 2003, GAFRI had $6 million available under the credit line. (See Notes G and H)

In recent years, the Company has entered into several reinsurance transactions in connection with certain of its life and supplemental health operations.  These transactions were entered into both in the normal course of business and as a source of additional capital and liquidity.  The Company may enter into additional reinsurance transactions in the future.

At March 31, 2003, GAFRI had a $250 million shelf registration in effect under which it could issue stock or debt through one or more public offerings.

GAFRI believes that it has sufficient resources to meet its liquidity requirements.

Independent Ratings



| |       |                |             | Standard   
| | ----- | -------------- | ----------- | -----------
| |       | A.M. Best      | Fitch       | & Poor's   
| | GALIC | A  (Excellent) | A+ (Strong) | A- (Strong)
| | AILIC | A  (Excellent) | A+ (Strong) | A- (Strong)
| | Loyal | A  (Excellent) | A+ (Strong) | Not rated  
| | UTA   | A- (Excellent) | Not rated   | Not rated  
| | GAPR  | A  (Excellent) | Not rated   | Not rated  







GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued

In evaluating a company, independent rating agencies review such factors as the company's: (i) capital adequacy; (ii) profitability; (iii) leverage and liquidity; (iv) book of business; (v) quality and estimated market value of assets; (vi) adequacy of policy reserves; (vii) experience and competency of management and (viii) operating profile.

Management believes that the ratings assigned by independent insurance rating agencies are important because potential policyholders often use a company's rating as an initial screening device in considering annuity products.  Management believes that (i) a rating of "A" by A.M. Best (its third highest rating) is necessary to successfully market tax-deferred annuities to public education employees and other not-for-profit groups and (ii) a rating in the "A" category by at least one rating agency is necessary to successfully compete in other annuity markets.

GAFRI's insurance entities also compete in markets other than the sale of tax-deferred annuities.  Ratings are an important competitive factor; management believes that these entities can successfully compete in these markets with their respective ratings.

The Company's insurance ratings were recently affirmed by Fitch (with a stable outlook), and affirmed by Moody's (with a negative outlook); its ratings were downgraded by Standard & Poor's (with a negative outlook).  GAFRI's operations could be materially and adversely affected by additional downgrades.  In connection with recent reviews by independent rating agencies, management indicated that it intends to maintain the capital of its significant insurance subsidiaries at levels currently indicated by the rating agencies as appropriate for the current ratings.  Items which could adversely affect capital levels include (i) a sustained decrease in the stock market in the remainder of 2003 or beyond; (ii) a significant period of low interest rates and a resulting significant narrowing of annuity "spread"; (iii) investment impairments; (iv) a change in reserving requirements for guaranteed minimum death benefits on variable annuities (See "MD&A - Guaranteed Minimum Death Benefits"); (v) adverse mortality, and (vi) higher than planned dividends paid due to liquidity needs by GAFRI and AAG Holding.

2002 Acquisition

Investments

The NAIC assigns quality ratings to publicly traded as well as privately placed securities.  At March 31, 2003, 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 March 31, 2003, GAFRI's mortgage-backed securities ("MBSs") portfolio represented approximately 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.  Due to the





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued

significant decline in the general level of interest rates in 2002, GAFRI has experienced an increase in the level of prepayments on its MBS portfolio; these prepayments have not been reinvested at interest rates comparable to the rates earned on the prepaid MBSs.  Partly as a result of this, the overall yield on GAFRI's fixed maturity portfolio dropped from 7.7% at January 1, 2002 to 6.7% at March 31, 2003.

More than 95% 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 referred to above, GAFRI does not believe a material risk (relative to earnings or liquidity) is inherent in holding such investments.

At March 31, 2003, GAFRI had pretax net unrealized gains of $324 million on fixed maturities and $20 million on equity securities.  Summarized information for the unrealized gains and losses recorded in GAFRI's balance sheet at March 31, 2003, is shown in the following table (dollars in millions).  Approximately $132 million of "Fixed Maturities" and $7 million of "Equity Securities" had no unrealized gains or losses at March 31, 2003.



|                                                       | Securities 
with 
Unrealized | Securities 
with 
Unrealized
|------------------------------------------------------ | ---------------------------- | ----------------------------
|                                                       | Gains                        | Losses                      
|Fixed maturities                                       |                              |                             
|Market value of securities                             | $6,731                       | $  583                      
|Amortized cost of securities                           | $6,351                       | $  639                      
|Gross unrealized gain or (loss)                        | $  380                       | ($   56)                    
|Market value as % of amortized cost                    | 106%                         | 91%                         
|Number of security positions                           | 1,273                        | 202                         
|Number individually exceeding $2 million gain or loss  | 7                            | 7                           
|Concentration of gains or (losses) by type or industry |                              |                             
|(exceeding 5% of unrealized):                          |                              |                             
|Mortgage-backed securities                             | $ 95.5                       | ($  6.6)                    
|Banks                                                  | 33.3                         | (0.1)                       
|U.S. government                                        | 27.4                         | -                           
|Electric services                                      | 24.9                         | (2.0)                       
|State and municipal                                    | 19.7                         | (2.5)                       
|Asset-backed securities                                | 12.0                         | (7.5)                       
|Natural gas transmission and distribution              | 7.1                          | (3.5)                       
|Petroleum refining                                     | 4.2                          | (2.8)                       
|Air transportation (generally collateralized)          | 3.2                          | (19.8)                      
|Percentage rated investment grade                      | 97%                          | 62%                         



|Equity securities               |      |     
|------------------------------- | ---- | ----
|Market value of securities      | $58  | $7  
|Cost of securities              | $37  | $8  
|Gross unrealized gain or (loss) | $21  | ($1)
|Market value as % of cost       | 157% | 88% 

GAFRI's investment in equity securities of Provident Financial Group, a Cincinnati-based commercial banking and financial services company, represents $15 million of the $21 million in unrealized gains on equity securities at March 31, 2003.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued



The table below sets forth the scheduled maturities of fixed maturity securities at March 31, 2003, based on their market values.  Securities that do not have a single maturity date are reported at average maturity.  Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.



|                                   | Securities 
with 
Unrealized | Securities 
with 
Unrealized
|---------------------------------- | ---------------------------- | ----------------------------
|Maturity*                          | Gains*                       | Losses*                     
|One year or less                   | 4%                           | 2%                          
|After one year through five years  | 18                           | 26                          
|After five years through ten years | 29                           | 23                          
|After ten years                    | 11                           | 28                          
|                                   | 62                           | 79                          
|Mortgage-backed securities         | 38                           | 21                          
|                                   | 100%                         | 100%                        



---

*Excludes $132 million of fixed maturities with no unrealized gains or losses.

GAFRI realized aggregate losses of $1.7 million during the first quarter of 2003 on $10.7 million in sales of fixed maturity securities (3 issues/issuers) that had individual unrealized losses greater than $500,000 at December 31, 2002.  Market values of two of the securities increased an aggregate of $2.2 million from December 31 to date of sale.  The market value of the remaining security decreased $263,000 from December 31 to the sale date.

Although GAFRI had the ability to continue holding these investments, its intent to hold them changed due primarily to deterioration in the issuers' creditworthiness, 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 March 31, 2003, for a period of time sufficient to allow for a recovery in market value.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued





The table below (dollars in millions) summarizes the length of time securities have been in an unrealized gain or loss position at March 31, 2003.

|                                               | Aggregate
MarketValue | Aggregate 
Unrealized Gain (Loss) | Market 
Value as 
% of Cost Basis
|---------------------------------------------- | --------------------- | --------------------------------- | ---------------------------------
|Fixed Maturities                               |                       |                                   |                                  
|                                               |                       |                                   |                                  
|Securities with unrealized gains at 3/31/03:   |                       |                                   |                                  
|Exceeding $500,000 and for:                    |                       |                                   |                                  
|Less than one year (224 issues)                | $2,845                | $194                              | 107.3%                           
|More than one year (30 issues)                 | 395                   | 39                                | 111.0                            
|Less than $500,000 and an unrealized gain for: |                       |                                   |                                  
|Less than one year (608 issues)                | 2,382                 | 85                                | 103.7                            
|More than one year (411 issues)                | 1,109                 | 62                                | 105.9                            
|                                               | $6,731                | $380                              | 106.0%                           
|                                               |                       |                                   |                                  
|Securities with unrealized losses at 3/31/03:  |                       |                                   |                                  
|Exceeding $500,000 and for:                    |                       |                                   |                                  
|Less than one year (24 issues)                 | $  138                | ($ 29)                            | 82.6%                            
|More than one year (8 issues)                  | 41                    | (10)                              | 80.4                             
|Less than $500,000 and an unrealized loss for: |                       |                                   |                                  
|Less than one year (121 issues)                | 313                   | (9)                               | 97.2                             
|More than one year (49 issues)                 | 91                    | (8)                               | 91.9                             
|                                               | $  583                | ($ 56)                            | 91.2%                            
|                                               |                       |                                   |                                  
|Equity Securities                              |                       |                                   |                                  
|                                               |                       |                                   |                                  
|Securities with unrealized gains at 3/31/03:   |                       |                                   |                                  
|Exceeding $500,000 and for:                    |                       |                                   |                                  
|Less than one year (2 issues)                  | $13                   | $ 5                               | 162.5%                           
|More than one year (1 issue)                   | 31                    | 15                                | 193.8                            
|Less than $500,000 and an unrealized gain for: |                       |                                   |                                  
|Less than one year (12 issues)                 | 10                    | 1                                 | 111.1                            
|More than one year (2 issues)                  | 4                     | -                                 | 100.0                            
|                                               | $58                   | $21                               | 156.8%                           
|                                               |                       |                                   |                                  
|Securities with unrealized losses at 3/31/03:  |                       |                                   |                                  
|Exceeding $500,000 and for:                    |                       |                                   |                                  
|Less than one year (0 issues)                  | $ -                   | $ -                               | - %                              
|More than one year (0 issues)                  | -                     | -                                 | -                                
|Less than $500,000 and an unrealized loss for: |                       |                                   |                                  
|Less than one year (5 issues)                  | 6                     | (1)                               | 85.7                             
|More than one year (1 issue)                   | 1                     | -                                 | 100.0                            
|                                               | $ 7                   | ($ 1)                             | 87.5%                            
|                                               |                       |                                   |                                  

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.  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 2002 Form 10-K.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued





Based on its analysis of the factors enumerated above, management believes that (i) GAFRI will recover its cost basis in the securities with unrealized losses and (ii) 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.  While management believes it is not likely that future impairment charges will have a significant effect on GAFRI's liquidity, impairment charges could have an effect on the Company's ratings.

Increased impairment charges in recent years reflect a rise in corporate defaults in the marketplace resulting from the weakened economy, fraud and other factors.

RESULTS OF OPERATIONS

General





|Three months ended                   
|-------------------------------------
|March 31,                            
|GAFRI (Consolidated):                
|Income before accounting change      
|Exclude realized losses, net of tax  
|Core net operating earnings          
|                                     
|Diluted Earnings Per Common Share:   
|Net income (loss)                    
|Excludes:                            
|Realized losses                      
|Accounting change                    
|Core net operating earnings per share

A lower yield on GAFRI's investment portfolio, due primarily to the low interest rate environment that began during 2002, resulted in narrower spreads in the Company's fixed annuity operations and caused GAFRI's first quarter 2003 core operating results to be lower than the same quarter of last year.  Continued spread compression could result in write-offs of DPAC.





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                   
|-------------------------------------
|March 31,                            
|                                     
|Annuity Premiums                     
|Single premium fixed rate annuities  
|Flexible premium fixed rate annuities
|Single premium variable annuities    
|Flexible premium variable annuities  
|                                     

Fixed annuity sales increased over the same period in the prior year reflecting the addition of several new agents and products, the volatile equity markets, and the relative attractiveness of fixed annuities compared to other interest bearing instruments.

Variable annuity premiums decreased over the same period in the prior year due primarily to volatile equity and bond markets.  Continued poor performance in the equity markets could result in a further reduction in variable premiums as well as a writeoff of DPAC and a charge to earnings to accrue for guaranteed minimum death benefits included in the variable products.  (See "MD&A - Guaranteed Minimum Death Benefits")

Life, Accident and Health Premiums and Benefits

|Three months ended
|------------------
|March 31,         
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  

GAFRI continues to experience adverse mortality in GALIC's life division.  Further adverse mortality could result in a charge to income due to a further reduction in unamortized insurance acquisition costs.  (See "MD&A - Insurance Acquisition Expenses").

Net Investment Income





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued

Realized Losses on Investments

Other Income

Real Estate Operations

|Three months ended
|------------------
|March 31,         
|                  
|Other income      
|Other expenses    

Annuity Benefits

The majority of GAFRI's fixed rate annuity products permit GAFRI to change the crediting rate at any time, subject to minimum interest rate guarantees (as determined by applicable law).  Approximately 45% of GAFRI's annuity benefits accumulated relate to policies that have a minimum guarantee of 3%; the balance have a guarantee of 4%.  Virtually all new sales of GAFRI's fixed annuities offer a minimum interest rate of 3%.  Historically, management has been able to react to changes in market interest rates and maintain a desired interest rate spread.  The recent interest rate environment has resulted in a spread compression, which could continue through at least the remainder of 2003.  Significant changes in projected investment yields could result in charges to earnings in the period the projections are modified.

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.

Insurance Acquisition Expenses

The increase in insurance acquisition expenses in the first quarter of 2003 compared to the same period in 2002 is due primarily to the amortization associated with GAFRI's purchase of MNL in June 2002.

The vast majority of GAFRI's DPAC asset relates to its fixed annuity, variable annuity and life insurance lines of business.  Continued spread compression, decreases in the stock market and adverse mortality could lead to writeoffs of DPAC in the future.





GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



Management's Discussion and Analysis

of Financial Condition and Results of Operations - Continued

Other Expenses

Income Taxes

Cumulative Effect of Accounting Change

Guaranteed Minimum Death Benefits

Proposed Accounting Standard

Statutory Actuarial Guidelines







GREAT AMERICAN FINANCIAL RESOURCES, INC. 10-Q



PART II

OTHER INFORMATION



Item 3



Quantitative and Qualitative Disclosure at Market Risk

Other than the effect that the recent interest rate environment has had on GAFRI's investment portfolio (See Management's Discussion and Analysis, "Investments" and "Net Investment Income"), as of March 31, 2003, there were no material changes to the information provided in GAFRI's Form 10-K for 2002 under the caption "Exposure to Market Risk" in Management's Discussion and Analysis of Financial Condition and Results of Operations.

Item 4



Evaluation of Disclosure Controls and Procedures

GAFRI's chief executive officer and chief financial officer, with the participation of management, have evaluated GAFRI's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-14c) as of a date within 90 days prior to filing this report.  Based on the evaluation, they concluded that the controls and procedures are effective.  There have been no significant changes in GAFRI's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

Item 6



Exhibits and Reports on Form 8-K





|Number | Exhibit Description                                                 
|------ | --------------------------------------------------------------------
|99     | Certification of Chief Executive Officer and Chief Financial Officer







|Date of Report | Items Reported                     
|-------------- | -----------------------------------
|May 2, 2003    | First Quarter 2003 Earnings Release

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.
|------------ |  | ----------------------------------------
|             |  |                                         
|             |  |                                         
|May 15, 2003 |  | BY:/s/Christopher P. Miliano            
|             |  | Christopher P. Miliano                  
|             |  | Chief Financial Officer                 











GREAT AMERICAN FINANCIAL RESOURCES, INC.



SARBANES-OXLEY SECTION 302(a) CERTIFICATIONS



|I, S. Craig Lindner, the principal executive officer of Great American Financial Resources, Inc., certify that:                                                                                                                                                                                                  
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.                                                                                                                                                                                                                                                                                                               
|Resources, Inc.,                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|2.                                                                                                                                                                                                                                                                                                               
|statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;                                                                       
|                                                                                                                                                                                                                                                                                                                 
|3.                                                                                                                                                                                                                                                                                                               
|information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                           
|                                                                                                                                                                                                                                                                                                                 
|4.                                                                                                                                                                                                                                                                                                               
|establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|information relating to the registrant, including its consolidated subsidiaries,    is made known to us by others within those entities, particularly during the    period in which this quarterly report is being prepared;                                                                                     
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|procedures as of a date within 90 days prior to the filing date of this quarterly    report (the "Evaluation Date"); and                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|effectiveness of the disclosure controls and procedures based on our evaluation as    of the Evaluation Date;                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                 
|5.                                                                                                                                                                                                                                                                                                               
|most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|controls which could adversely affect the registrant's ability to record, process,    summarize and report financial data and have identified for the registrant's    auditors any material weaknesses in internal controls; and                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|employees who have a significant role in the registrant's internal controls; and                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|6.                                                                                                                                                                                                                                                                                                               
|quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|Date:                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 





GREAT AMERICAN FINANCIAL RESOURCES, INC.



SARBANES-OXLEY SECTION 302(a) CERTIFICATIONS - CONTINUED



|I, Christopher P. Miliano, the principal financial officer of Great American Financial Resources, Inc., certify that:                                                                                                                                                                                            
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.                                                                                                                                                                                                                                                                                                               
|Resources, Inc.,                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|2.                                                                                                                                                                                                                                                                                                               
|statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;                                                                       
|                                                                                                                                                                                                                                                                                                                 
|3.                                                                                                                                                                                                                                                                                                               
|information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                           
|                                                                                                                                                                                                                                                                                                                 
|4.                                                                                                                                                                                                                                                                                                               
|establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|information relating to the registrant, including its consolidated subsidiaries,    is made known to us by others within those entities, particularly during the    period in which this quarterly report is being prepared;                                                                                     
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|procedures as of a date within 90 days prior to the filing date of this quarterly    report (the "Evaluation Date"); and                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|effectiveness of the disclosure controls and procedures based on our evaluation as    of the Evaluation Date;                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                 
|5.                                                                                                                                                                                                                                                                                                               
|most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|controls which could adversely affect the registrant's ability to record, process,    summarize and report financial data and have identified for the registrant's    auditors any material weaknesses in internal controls; and                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|employees who have a significant role in the registrant's internal controls; and                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|6.                                                                                                                                                                                                                                                                                                               
|quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|Date:                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                 
|