SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C.  20549


                                    FORM 10-Q


             Quarterly Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


   For the Quarterly Period Ended                              Commission File
   June 30, 1997                                               No. 1-11632



                           AMERICAN ANNUITY GROUP, INC.



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



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






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



   As of August 1, 1997, there were 43,213,201 shares of the Registrant's
   Common Stock outstanding.


                                   Page 1 of 21
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q
                                      PART I
                              FINANCIAL INFORMATION

                  AMERICAN ANNUITY GROUP, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEET
                              (Dollars in millions)





                                                   June 30, December 31,
                                                      1997         1996 
   Assets
     Investments:
       Fixed maturities:
         Held to maturity - at amortized cost 
          (market - $2,409.9 and $2,524.6)        $2,389.3   $2,495.7 
         Available for sale - at market
          (amortized cost - $3,593.5 and $3,254.9) 3,671.6    3,325.6 
       Equity securities - at market 
          (cost - $20.7 and $16.1)                    66.5       51.0 
       Investment in affiliates                       24.5       16.5 
       Mortgage loans on real estate                  65.9       68.1 
       Real estate                                    39.0       37.6 
       Policy loans                                  235.9      236.0 
       Short-term investments                         36.8       41.4 
         Total investments                         6,529.5    6,271.9 

     Cash                                             39.6       42.7 
     Accrued investment income                        94.8       94.8 
     Unamortized insurance acquisition costs, net    211.9      194.7 
     Other assets                                    166.2      172.4 
     Assets held in separate accounts                262.5      247.6 

                                                  $7,304.5   $7,024.1 

   Liabilities and Capital
      Annuity benefits accumulated                $5,469.5   $5,365.6 
     Life, accident and health reserves              589.5      575.4 
     Notes payable                                    70.0      114.9 
     Payable to affiliates, net                       25.4       14.5 
     Deferred taxes on unrealized gains               39.3       33.3 
     Accounts payable, accrued expenses and other
       liabilities                                   138.5      111.3 
     Liabilities related to separate accounts        262.5      247.6 
         Total liabilities                         6,594.7    6,462.6 
     
     Mandatorily redeemable preferred securities
       of subsidiary trusts                          225.0       75.0 

     Stockholders' Equity:
       Series B Preferred Stock (at redemption value)   -        49.0 
       Common Stock, $1 par value
         -100,000,000 shares authorized
         -43,212,147 and 43,255,705 shares
          outstanding                                 43.2       43.3 
       Capital surplus                               359.0      358.5 
       Accumulated deficit at December 31, 1992     (212.6)    (212.6)
       Retained earnings since January 1, 1993       222.2      186.5 
       Unrealized gains on marketable securities,
        net                                           73.0       61.8 
           Total stockholders' equity                484.8      486.5 
    
                                                  $7,304.5   $7,024.1 
                                        2
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

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






                                         Three months ended   Six months ended
                                                June 30,            June 30,  
                                               1997    1996        1997   1996 
   Revenues:
     Net investment income                   $123.1  $115.5      $242.7 $227.6 
     Realized gains (losses)
       on sales of investments                 (0.1)    0.6         0.2    0.9 
     Life, accident and health premiums        27.3    31.3        52.7   55.5 
     Equity in net earnings of affiliates       1.5     1.8         3.3    2.8 
     Other income                               2.7     1.7         5.3    3.1 
                                              154.5   150.9       304.2  289.9 
   Costs and Expenses:
     Annuity benefits                          70.6    68.8       139.4  136.8 
     Life, accident and health benefits        25.8    26.9        50.0   48.5 
     Amortization of insurance acquisition
       costs                                    8.5     8.2        16.2   14.2 
     Interest and other debt expenses           2.4     3.9         5.0    8.0 
     Trust preferred distribution requirement   3.9      -          6.0     -  
     Other expenses                            17.4    17.8        35.5   34.4 
                                              128.6   125.6       252.1  241.9 

   Income before income taxes
     and extraordinary item                    25.9    25.3        52.1   48.0 
   Provision for income taxes                   8.2     9.0        16.4   17.0 
    
   Income before extraordinary item            17.7    16.3        35.7   31.0 
                                                    
   Extraordinary item - loss on prepayment
    of debt                                      -     (2.7)         -    (4.3)

   Net Income                                $ 17.7  $ 13.6      $ 35.7 $ 26.7 
                                                    

     Preferred dividend requirement              -      0.3         1.0    0.7 

     Net income applicable to Common Stock   $ 17.7  $ 13.3      $ 34.7 $ 26.0 


     Average common shares outstanding         43.2    43.1        43.2   43.1 


   Earnings per common share:
     Continuing operations                    $0.41   $0.37       $0.80  $0.70 
     Extraordinary item                          -    (0.06)         -   (0.10)
     Net income                               $0.41   $0.31       $0.80  $0.60 





                                        3
   <PAGE>
                                                       
                        AMERICAN ANNUITY GROUP, INC. 10-Q

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

                                                     Six months ended  
                                                         June 30,      
                                                      1997       1996 
   Preferred Stock:
     Balance at beginning of period                 $ 49.0     $ 17.0 
     Retired during the period                       (49.0)        -  
       Balance at end of period                     $   -      $ 17.0 
    
   Common Stock:
     Balance at beginning of period                 $ 43.3     $ 43.1 
     Retired during the period                        (0.1)        -  
       Balance at end of period                     $ 43.2     $ 43.1 
    

   Capital Surplus:
     Balance at beginning of period                 $358.5     $361.1 
     Common Stock issuance                             0.2        0.1 
     Common Stock retired                             (0.7)        -  
     Preferred Stock retired                           2.0         -  
     Preferred dividends declared                     (1.0)      (0.3)
       Balance at end of period                     $359.0     $360.9 


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


   Retained Earnings Since January 1, 1993:
     Balance at beginning of period                 $186.5     $131.4 
     Net income                                       35.7       26.7 
       Balance at end of period                     $222.2     $158.1 


   Unrealized Gains, Net:
     Balance at beginning of period                 $ 61.8     $ 89.3 
     Change during period                             11.2      (75.5)
       Balance at end of period                     $ 73.0     $ 13.8 



                                        4
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

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

                                                     Six months ended  
                                                          June 30,      
                                                      1997       1996 
   Cash Flows from Operating Activities:
     Net income                                     $ 35.7     $ 26.7 
     Adjustments:
       Extraordinary losses on retirement of debt       -         4.3 
       Increase in life, accident and health
       reserves                                       14.1       18.0 
       Benefits to annuity policyholders             139.4      136.8 
       Amortization of insurance acquisition costs    16.2       14.2 
       Equity in net earnings of affiliates           (3.3)      (2.8)
       Depreciation and amortization                   2.6        3.6 
       Realized gains on investing activities         (0.2)      (0.9)
       Increase in insurance acquisition costs       (34.8)     (31.8)
       Increase in accrued investment income            -        (6.5)
       Increase in other assets                      (15.3)      (3.8)
       Increase (decrease) in other liabilities       16.8       (0.9)
       Other, net                                     (6.7)      (4.9)
                                                     164.5      152.0 

   Cash Flows from Investing Activities:
     Purchases of and additional investments in:
       Fixed maturity investments                   (780.9)    (613.6)
       Equity securities                              (7.5)        -  
       Real estate, mortgage loans and other assets   (5.7)     (19.4)
       Affiliates                                     (4.9)        -  
     Maturities and redemptions of fixed maturity
       investments                                   197.4      138.4 
     Sales of:
       Fixed maturity investments                    393.9      161.9 
       Equity securities                               3.9        1.1 
       Real estate, mortgage loans and other assets    4.8       16.0 
     Decrease (increase) in policy loans               0.1       (2.9)
                                                    (198.9)    (318.5)

   Cash Flows from Financing Activities:
     Fixed annuity receipts                          259.7      280.6 
     Annuity surrenders, benefits and withdrawals   (288.5)    (241.7)
     Additions to notes payable                        7.0       76.5 
     Reductions of notes payable                     (52.0)     (78.7)
     Issuance of trust preferred securities          149.3         -  
     Issuance of Common Stock                           -         0.1 
     Retirement of Common Stock                       (0.8)        -  
     Retirement of Preferred Stock                   (47.0)        -  
     Cash dividends paid                              (1.0)      (0.3)
                                                      26.7       36.5 

   Net decrease in cash and short-term investments    (7.7)    (130.0)

   Cash and short-term investments at
    beginning of period                               84.1      169.4 
   Cash and short-term investments at end of
    period                                          $ 76.4     $ 39.4 
                                        5
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


   A. Description of the Company

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

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

   B. Accounting Policies

      Basis of Presentation  The accompanying consolidated financial
      statements for AAG and its subsidiaries are unaudited, but management
      believes that all adjustments (consisting only of normal recurring
      accruals unless otherwise disclosed herein) necessary for fair
      presentation have been made.  The results of operations for interim
      periods are not necessarily indicative of results to be expected for the
      year.  The financial statements have been prepared in accordance with
      the instructions to Form 10-Q and therefore do not include all
      information and footnotes necessary to be in conformity with generally
      accepted accounting principles.  

      The preparation of the financial statements requires management to make
      estimates and assumptions that affect the amounts reported in the
      financial statements and accompanying notes.  Changes in circumstances
      could cause actual results to differ materially from those estimates.

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

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

      Gains or losses on sales of securities are recognized at the time of
      disposition with the amount of gain or loss determined on the specific
      identification basis.  When a decline in the value of a specific
      investment is considered to be other than temporary, a provision for
      impairment is charged to earnings and the carrying value of that
      investment is reduced.  Premiums and discounts on mortgage-backed
      securities are amortized over their expected average lives using the
      interest method.



    
                                        6
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


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

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

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

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

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

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

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

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

      These amounts are amortized with interest over the estimated
      remaining life of the acquired policies for annuities and universal
      life products and over the expected premium paying period for
      traditional life and health insurance products.
                                        7
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


      Annuity Benefits Accumulated  Annuity receipts and benefit payments are
      recorded as increases or decreases in "annuity benefits accumulated"
      rather than as revenue and expense.  Increases in this liability for
      interest credited are charged to expense and decreases for surrender
      charges are credited to other income.

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

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

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

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

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

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

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


                                        8
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


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

      Stock-Based Compensation  As permitted under Statement of Financial
      Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
      Compensation", AAG accounts for stock options and other stock-based
      compensation plans using the intrinsic value based method prescribed
      by Accounting Principles Board Opinion No. 25, "Accounting for Stock
      Issued to Employees."

      Earnings Per Share  Earnings per share are calculated on the basis of
      the weighted average number of shares of common stock outstanding
      during the period.  The effect of assumed exercise of common stock
      options in 1997 was not deemed dilutive and is therefore not
      reflected in the earnings per share presentation for that period. 
      AAG had no stock options outstanding prior to the fourth quarter of
      1996.

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

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

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

      Statement of Cash Flows  For cash flow purposes, "investing activities"
      are defined as making and collecting loans and acquiring and disposing
      of debt or equity instruments and property and equipment.  "Financing
      activities" include annuity receipts, benefits and withdrawals and
      obtaining resources from owners and providing them with a return on
      their investments.  All other activities are considered "operating." 
      Short-term investments having original maturities of three months or
      less when purchased are considered to be cash equivalents for purposes
      of the financial statements.


                                        9
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


   C. Investments

      The carrying value of AAG's fixed maturity portfolio was comprised of
      the following at June 30, 1997:
                                             Held to    Available
                                            Maturity    for Sale      Total    
         U. S. Government and government
           agencies and authorities            1%          4%          5%
         Public utilities                      6           3           9 
         Mortgage-backed securities           11          23          34 
         All other corporate                  21          31          52 
                                              39%         61%        100%  

      "Investing activities" related to fixed maturity investments in AAG's
      Statement of Cash Flows for the six months ending June 30, consisted of
      the following (in millions):
                                            Held to    Available    
                                           Maturity     for Sale    Total  
         1997 
         Purchases                              -         ($780.9)   ($780.9)
         Maturities and paydowns            $105.6           91.8      197.4   
         Sales                                  -           393.9      393.9

         1996 
         Purchases                          ($87.9)       ($525.7)   ($613.6)
         Maturities and paydowns              53.4           85.0      138.4
         Sales                                  -           161.9      161.9


   D. Investment in Affiliates

      Investment in affiliates reflects primarily AAG's 5% ownership (2.7
      million shares; carrying value of $19.6 million at June 30, 1997) of the
      common stock of Chiquita Brands International which is accounted for
      under the equity method.  AFG and its other subsidiaries own an
      additional 38% interest in the common stock of Chiquita.  Chiquita is a
      leading international marketer, producer and distributor of bananas and
      other quality fresh and processed food products.  The market value of
      AAG's investment in Chiquita was $36.7 million at June 30, 1997 and
      $34.1 million at December 31, 1996.    

   E. Unamortized Insurance Acquisition Costs

      Unamortized insurance acquisition costs consisted of the following (in
      millions):
                                                  June 30, December 31,
                                                     1997         1996 
           Deferred policy acquisition costs       $293.0       $272.2 
           Present value of future profits acquired  68.8         72.5 
           Unearned revenues                       (149.9)      (150.0)
                                                   $211.9       $194.7 



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

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued






   F. Notes Payable

      Notes payable consisted of the following (in millions):

                                                  June 30, December 31,
                                                     1997         1996 
           
           Direct obligations of AAG                $ 1.3       $  1.3 
           Obligations of AAG Holding:                    
             Bank Credit Line due September 1999       -          44.7 
             9-1/2% Senior Notes due August 2001     40.8         40.8 
             11-1/8% Senior Subordinated Notes
               due February 2003                     24.1         24.1     
           Other subsidiary debt                      3.8          4.0 
                Total                               $70.0       $114.9 

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

      AAG Holding has a $75 million revolving credit agreement with four
      banks.  Loans under the credit agreement mature in 1999 and bear
      interest at floating rates based on prime or Eurodollar rates and are
      collateralized by 25% of the Common Stock of GALIC.  At December 31,
      1996, the weighted average interest rate on amounts borrowed under the
      bank credit line was 6.68%.  AAG Holding also has a $40 million
      unsecured bank line of credit maturing on September 30, 1997 with terms
      similar to the $75 million credit agreement.  There were no amounts
      outstanding under these lines of credit at June 30, 1997.  

      AAG Holding has called for redemption on August 15, 1997 all of its
      outstanding 9-1/2% Senior Notes at a price of $1,040.71 per $1,000
      principal amount.  AAG expects to record a third quarter
      extraordinary pretax loss of $2.4 million on the redemption. 

      At June 30, 1997, scheduled principal payments on debt for the last six
      months of 1997 and the subsequent five years are shown below (in
      millions).  The scheduled principal payments assume that Notes
      previously purchased are applied to the earliest scheduled retirements.

                              AAG                         
                     AAG    Holding   Other    Total
                            
            1997     $0.1     -      $0.3     $ 0.4       
            1998      0.1     -       0.6       0.7
            1999      0.1     -       0.7       0.8
            2000      0.1     -       0.7       0.8
            2001      0.1  $40.8*     0.5      41.4
            2002      0.1     -       0.4       0.5



            *  Represents the AAG Holding 9-1/2% Senior Notes being   
               redeemed in August 1997.
                                        11
   <PAGE>





                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

        In the first two quarters of 1996, the Company repurchased $60.0
        million principal amount of its Notes (including $13.8 million
        purchased by GALIC) realizing a pretax extraordinary loss of
        approximately $6.4 million.

   G.   Mandatorily Redeemable Preferred Securities of Subsidiary Trusts

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

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

        In private offerings in March 1997 and May 1997, wholly-owned
        subsidiary trusts of AAG Holding issued $75 million of 8-7/8%
        trust preferred securities and $75 million of 7-1/4% Remarketed
        Par Securities ("ROPES"), respectively, and used the proceeds to
        purchase related debentures of AAG Holding which are scheduled to
        mature in 2027 and 2041, respectively.  The 8-7/8% preferred
        securities and related debentures are redeemable on or after March
        1, 2007; the 7-1/4% ROPES and related debentures are redeemable
        prior to September 28, 2000 and after September 28, 2001.

        AAG and AAG Holding effectively provide an unconditional guarantee
        of the trusts' obligations. 

   H.   Stockholders' Equity

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

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

        At June 30, 1997, there were 2.5 million shares of AAG Common Stock
        reserved for issuance upon exercise of stock options.  As of that date,
        AAG had options for 1.7 million shares outstanding.  The options vest
        at a rate of 20% per year and expire ten years from the date of grant.

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

                                        12
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

   I.   Contingencies

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

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

   J.   Additional Information

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

                                             June 30, December 31,
                                                1997         1996 
                Policyholders' surplus        $287.3       $285.0 
                Asset valuation reserve         92.6         91.4 
                Interest maintenance reserve    21.4         24.7 

                                            Six months ended June 30,   
                                                1997         1996 
                Net income from operations    $ 34.4       $ 31.7 
                Net income                      35.5         30.1 

          The amount of dividends which can be paid by GALIC without prior
          approval of regulatory authorities is subject to restrictions
          relating to capital and surplus and statutory net income.  Based on
          net income for the year ended December 31, 1996, GALIC may pay $66.2
          million in dividends in 1997 without prior approval.  In the first
          six months of 1997, AAG received $35.0 million in capital
          distributions from GALIC.
                                        13
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued


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


                                                       June 30,December 31,
                                                          1997        1996
             Balance Sheet                                        
             Investments                                $6,450      $6,272
             Unamortized insurance acquisition costs       212         195
             Assets held in separate accounts              262         247 
             Other assets                                  268         278 

             Insurance reserves                         $6,061      $5,942
             AAG Holding Company notes payable:
               Due parent                                  165         166
               Due others                                   65         110
             Liabilities related to separate accounts      262         247 
             Other liabilities                             142          96

             Mandatorily redeemable preferred securities      
               of subsidiary trusts                     $  225      $   75

             Stockholder's equity                       $  272      $  356   


                                                          Six months ended 
                                                              June 30,     
                                                          1997        1996
             Income Statement                                 
             Revenues                                   $  299           *  
             Pretax income                                  47           *
             Net income                                     30           *



                * AAG Holding was formed on November 1, 1996.


   K.        Subsequent Event

             AAG plans to move most of the operations of Loyal
             American Life Insurance Company from Mobile, Alabama to
             the Cincinnati, Ohio area.  The estimated cost of the
             relocation is expected to be less than $4 million and
             will be expensed in the third quarter of 1997.  The
             relocation should be substantially completed during
             1997.





                                        14
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

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


   GENERAL

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

   LIQUIDITY AND CAPITAL RESOURCES  

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


                                                Six months ended
                                                    June 30,      
                                                 1997   1996
                                                            
             Earnings to fixed charges            5.3    6.4
                                                             
             Earnings to fixed charges plus
               preferred dividends                4.7    5.7
                                                     
                                                            
                                              June 30,   December 31,
                                                 1997   1996     1995
             Consolidated debt to capital,
               excluding unrealized gains         21%    19%    33%
                                                     
             Consolidated debt to capital,
               including unrealized gains         19%    17%    28%

   For purposes of the calculations of consolidated debt to capital,
   consolidated debt includes the Company's notes payable and $75 million of
   ROPES which were issued in May 1997.  Capital represents the sum of notes
   payable, redeemable preferred securities of subsidiary trusts, preferred
   stock and common equity.
                                                     
   The National Association of Insurance Commissioners' ("NAIC") risk-based
   capital ("RBC") formulas determine the amount of capital that an insurance
   company needs to ensure that it has an acceptable expectation of not
   becoming financially impaired.  At June 30, 1997, the capital ratios of each
   of AAG's insurance subsidiaries exceeded the RBC requirements by substantial
   amounts.
                                        15
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

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

   Sources and Uses of Funds  The ability to pay interest and principal on
   debt, dividends on preferred securities, obligations related to discontinued
   manufacturing operations and other holding company costs is largely
   dependent upon payments from Great American Life Insurance Company ("GALIC")
   in the form of capital distributions.  The amount of capital distributions
   which can be paid by GALIC is subject to restrictions relating to statutory
   surplus and earnings.  The maximum amount of dividends payable by GALIC in
   1997 without prior regulatory approval is $66 million.  In the first six
   months of 1997, GALIC made $35 million in such payments.

   In 1995 and 1996, AAG issued shares of its Series B Preferred Stock to its
   affiliates for $49 million in cash.  In 1996 and 1997, subsidiary trusts
   sold preferred securities for cash proceeds of $225 million.  Approximately
   half of the aggregate proceeds was used to retire debt and the Series B
   preferred; another 14% was contributed to GALIC as capital; the remainder is
   being used for general corporate purposes.

   AAG Holding has called for redemption all of its outstanding 9-1/2% Senior
   Notes for approximately $42.5 million on August 15, 1997.  AAG Holding
   expects to finance the redemption with funds borrowed under its bank credit
   lines.  

   At June 30, 1997, AAG Holding had $115 million available under its bank
   lines of credit.  AAG Holding expects to expand and extend its credit lines
   in the near future.

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

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

   The NAIC assigns quality ratings to publicly traded as well as privately
   placed securities.  These ratings range from Class 1 (highest quality) to
   Class 6 (lowest quality).  The following table shows the Company's fixed
   maturity portfolio by NAIC designation (and comparable Standard & Poor's
   Corporation rating) as of June 30, 1997:

         NAIC                                       % of Total 
         Rating  Comparable S&P Rating             Market Value
            1    AAA, AA, A                               68%  
            2    BBB                                      26   
                      Total investment grade              94   
            3    BB                                        3   
            4    B                                         3   
            5    CCC, CC, C                                *   
            6    D                                         -   
                      Total non-investment grade           6   
                      Total fixed maturities             100%  
                         
         * less than 1%
                                        16
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

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


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

   AAG invests primarily in fixed income investments which, including loans and
   short-term investments, comprised 98% of its investment portfolio at June
   30, 1997.  AAG generally invests in securities with intermediate-term
   maturities with an objective of optimizing interest yields while maintaining
   an appropriate relationship of maturities between AAG's assets and expected
   liabilities.

   At June 30, 1997, less than 2% of AAG's total assets were invested in
   mortgage loans and real estate, the majority of which had been purchased
   within the last four years.

   At June 30, 1997, AAG's mortgage-backed securities ("MBSs") portfolio
   represented approximately one-third of its fixed maturity investments. 
   Interest only (I/O), principal only (P/O) and other "high risk" MBSs
   represented less than one percent of total assets.  AAG invests primarily in
   MBSs which have a reduced risk of prepayment.  In addition, the majority of
   MBSs held by AAG were purchased at a discount.  Management believes that the
   structure and discounted nature of the MBSs will minimize the effect of
   prepayments on earnings over the anticipated life of the MBS portfolio.

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

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

     

     
                                        17
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

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

   RESULTS OF OPERATIONS

   General   GALIC's principal products are Flexible Premium Deferred Annuities
   ("FPDAs") and Single Premium Deferred Annuities ("SPDAs").  The following
   table summarizes AAG's annuity premiums (in millions):

                              Three months ended    Six months ended
                                  June 30,              June 30,   
                                  1997    1996       1997   1996    
        GALIC:
          FPDAs - first year      $ 10    $  9       $ 18   $ 19  
          FPDAs - renewal           46      52         89    101 
          SPDAs                     57      72        127    142 
                                   113     133        234    262 
        Other Companies:
          Pre-need annuities        10      11         22     19 
          Variable annuities         9      -          16     -  
                                    19      11         38     19 
                                  $132    $144       $272    $281
                                      
   The decrease in SPDA sales in 1997 resulted from substantially reduced
   writings from AAG's largest producer in 1996 (see "Management's Discussion
   and Analysis - Contingencies").

   Pretax Operating Earnings  Pretax earnings from operations (before realized
   gains (losses) and equity in net earnings of affiliates) for the second
   quarter and first six months of 1997 were $24.5 million and $48.6 million,
   respectively, compared to $22.9 million and $44.3 million for the same
   periods in 1996.  The improvement in 1997 reflects the growth in invested
   assets as well as a decrease in the effective average crediting rate on
   annuity policies.

   Net Investment Income  Net investment income increased 7% in both the second
   quarter and first six months of 1997 compared to the same periods in 1996
   due to an increase in the Company's average fixed maturity investment base. 
   Investment income is reflected net of investment expenses of $2.0 million in
   1997 and $3.2 million in 1996.

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

   Equity in Net Earnings of Affiliates  Equity in net earnings of affiliates
   represents AAG's proportionate share of the results of Chiquita Brands
   International.  Chiquita reported net income before extraordinary item for
   the second quarter and first six months of 1997 of $41.1 million and $84.4
   million compared to $43.1 million and $67.3 million for the same periods in
   1996.  

   Other Income   Other income increased $1.0 million and $2.2 million in the
   second quarter and first six months of 1997 compared to the same periods in
   1996 due primarily to increased revenues from certain non-insurance
   subsidiaries and additional annuity fees. 


                                        18
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q

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

   Annuity Benefits  Annuity benefits reflect interest credited to annuity
   policyholders' funds accumulated.  The majority of GALIC's fixed rate
   annuity products permit GALIC to change the crediting rate at any time
   (subject to minimum interest rate guarantees of 3% or 4% per annum).  As a
   result, management has been able to react to changes in market interest
   rates and maintain a desired interest rate spread without a substantial
   effect on persistency.  Annuity benefits increased 3% in the second quarter
   and 2% in the first six months of 1997 compared to the same periods in 1996
   due primarily to an increase in average annuity benefits accumulated.
     
   Amortization of Insurance Acquisition Costs  Amortization of insurance
   acquisition costs increased 4% in the second quarter and 14% in the first
   six months of 1997 compared to the same periods in 1996 due primarily to
   higher average DPAC balances.

   Interest and Other Debt Expenses  Interest expense on borrowings decreased
   38% in the second quarter and first six months of 1997 compared to the same
   periods in 1996 due primarily to the retirement of debt during 1996 and
   1997.
      
   Trust Preferred Distribution Requirement  Trust preferred distribution
   requirement represents amounts accrued on $225 million of preferred
   securities issued by subsidiaries of AAG in 1996 and 1997.

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

   NEW TAX LEGISLATION

   New federal tax legislation was signed into law in August 1997.  Management
   believes the legislation will not have a material affect on AAG's financial
   condition or results of operations.

                                       19  
   <PAGE>
                        AMERICAN ANNUITY GROUP, INC. 10-Q
                                     PART II
                                OTHER INFORMATION



                                      ITEM 2

                              Changes in Securities

   (a) None

   (b) None

   (c) On May 27, 1997, a wholly-owned subsidiary trust of AAG Holding Company,
   Inc. issued 75,000 Remarketed Par Securities ($1,000 per security
   liquidation amount) with a distribution rate of 7-1/4% for total
   consideration of $74.9 million.  The securities were initially sold to
   Lehman Brothers, Inc. who agreed that it would subsequently sell the
   securities only (i) to qualified institutional buyers in reliance on Rule
   144A of The Securities Act of 1933 (the "Securities Act"), and (ii) in
   offshore transactions complying with Rule 903 or Rule 904 of      
   Regulation S of the Securities Act.



                                      ITEM 4

               Submissions of Matters to a Vote of Security Holders

   The Registrant's annual shareholders' meeting was held May 22, 1997. 
   Proxies were solicited pursuant to Regulation 14A under the Securities
   Exchange Act of 1934.  All of the nominees for director proposed by the
   Registrant were elected to the Board of Directors.

   In addition to the election of directors, shareholders also voted (a) to
   approve an amendment to the AAG 1994 Stock Option Plan to increase the
   maximum number of options to be granted from 1,500,000 to 2,000,000
   [Proposal 2], (b) to approve the AAG 1997 Directors' Stock Option Plan
   [Proposal 3] and (c) to approve the AAG Directors' Compensation Plan
   [Proposal 4].  The votes cast for, against, and the number withheld or
   abstentions as to each matter voted on at the 1997 Annual Meeting is set
   forth below:

                                                             Withheld/
                                For             Against       Abstain 
   Election of Directors:
     Carl H. Lindner          40,616,441            NA         18,733
     S. Craig Lindner         40,616,899            NA         18,275
     Robert A. Adams          40,617,999            NA         17,175
     John T. Lawrence III     40,618,992            NA         16,182
     A. Leon Fergenson        40,617,139            NA         18,035
     Ronald G. Joseph         40,619,857            NA         15,317
     William R. Martin        40,619,825            NA         15,349
   Proposal 2                 39,376,456     1,242,486         16,232 
   Proposal 3                 40,536,777        77,904         20,493 
   Proposal 4                 40,541,540        71,316         22,318 



   NA - Not Applicable

                                        20
   <PAGE>

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



                                      ITEM 6

                         Exhibits and Reports on Form 8-K

   (a)   Exhibit 27 - Financial Data Schedule as of June 30, 1997.  For         
         submission in electronic filing only.

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













                                    Signature


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

                                      American Annuity Group, Inc.



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

                                        21