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                                                                   Exhibit 10.12


                  TAX ALLOCATION AND INDEMNIFICATION AGREEMENT

         This Agreement is made this 18th day of February, 2003 by and between
American Financial Corporation, an Ohio corporation (hereinafter called "AFC"),
and each and every one of those companies set forth on the signature page hereof
(collectively referred to as the "NSA Group Subsidiaries");

                                   WITNESSETH:

         WHEREAS, as a result of AFC's direct or indirect ownership of at least
80% of the voting power of all classes of outstanding stock of each of the NSA
Group Subsidiaries, AFC and the NSA Group Subsidiaries have comprised an
affiliated group (hereinafter "Affiliated Group"), as that term is defined under
Section 1504 of the Internal Revenue Code of 1954, as amended; and

         WHEREAS, each of the NSA Group Subsidiaries has satisfied its federal
income tax obligations by payments to (or receiving benefits from) AFC pursuant
to an Agreement of Allocation of Payment of Federal Income Taxes dated May 13,
1974, (the "Tax Allocation Agreement") and;

         WHEREAS, the Tax Allocation Agreement specifies that such federal
income tax obligations be computed with respect to GAAP income.

         WHEREAS, the NSA Group Subsidiaries' parent company, Infinity Property
and Casualty Corporation, has filed a registration statement under the
Securities Act for the purpose of selling a portion of its common stock
indirectly owned by AFC; and

         WHEREAS, upon completion of the public offering, the NSA Group
Subsidiaries will no longer be members of the Affiliated Group; and

         WHEREAS, AFC and the NSA Group Subsidiaries wish to provide for each of
their respective responsibilities and indemnification obligations with respect
to the payment of federal income taxes for taxable periods ending on or before
the completion of the public offering (the "Closing Date").

         NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, AFC and the NSA Group Subsidiaries do hereby agree as follows:

         (1) Each member's allocable federal income tax will be determined by
reference to, and consistent with the methodology employed under, the Tax
Allocation Agreement.

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         (2) AFC shall be responsible for, shall pay all taxes to be paid, and
shall indemnify the NSA Group Subsidiaries against any and all pre-closing
federal income taxes imposed on the Affiliated Group that would have been
allocated to members of the Affiliated Group, other than the NSA Group
Subsidiaries, for taxable periods or portions thereof ending on or before the
Closing Date. In the case of federal income taxes attributable to taxable
periods beginning on or before and ending after the Closing Date ("Straddle") if
any, the taxes for the pre-closing period shall be computed as if such taxable
period ended on the date of the Closing.

         (3) The NSA Group Subsidiaries shall be responsible for, shall pay all
taxes to be paid, and shall indemnify AFC against any and all pre-closing
federal income taxes imposed on the Affiliated Group that would have been
allocated to the NSA Group Subsidiaries for taxable periods or portions thereof
ending on or before the Closing Date. AFC shall include the income of the NSA
Group Subsidiaries for the pre-closing period in the Affiliated Group's federal
consolidated tax returns, and shall file and be responsible for remitting all
taxes reflected on such consolidated returns. AFC shall prepare and file all
federal tax returns required to be filed by or with respect to the Affiliated
Group for periods ending on or before or including the Closing Date and shall
pay all federal income taxes due with respect thereto.

         (4) Any refunds of federal income taxes with respect to taxes allocated
to the NSA Group Subsidiaries and paid for any period ending on or before the
Closing Date shall be for the account of the NSA Group Subsidiaries. AFC shall,
if the NSA Group Subsidiaries so requests and at the NSA Group Subsidiaries'
expense, cause the relevant entity to file for and obtain any refunds to which
the NSA Group Subsidiaries are entitled hereunder, including through the
prosecution of an administrative or federal proceeding which the NSA Group
Subsidiaries, at their discretion, choose to direct such entity to pursue. AFC
shall permit the NSA Group Subsidiaries to participate in, but not control (at
the NSA Group Subsidiaries' expense), the prosecution of any such refund claimed
and when deemed appropriate by AFC, shall cause a relevant entity to authorize
by appropriate power of attorney such persons as the NSA Group Subsidiaries
shall designate to represent such entity with respect to such refund claim.
Without imposing any duty of investigation upon AFC, AFC shall, and shall cause
its affiliated members, to notify the NSA Group Subsidiaries of the existence of
any facts known to the Affiliated Group that would constitute a reasonable basis
for claiming a refund of taxes to which the NSA Group Subsidiaries are entitled
hereunder. AFC shall forward to the NSA Group Subsidiaries any such refund
promptly after the refund is received.

         (5) AFC shall promptly notify the NSA Group Subsidiaries in writing
upon receipt by AFC or any of its affiliate members, of notice of any pending or
threatened audit, assessment, or judicial administrative proceeding involving
taxes with respect to the Affiliated Group for which the NSA Group Subsidiaries
would be required to indemnify AFC pursuant to Section (3) above, provided the
failure of AFC to give such notice shall not relieve the NSA Group Subsidiaries
of its indemnification obligations under Section (3), except to the extent the
NSA Group Subsidiaries is materially prejudiced thereby.


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         (6) The NSA Group Subsidiaries shall promptly notify AFC in writing
upon receipt by the NSA Group Subsidiaries of notice of any pending or
threatened audit, assessment, or judicial administrative proceeding involving
taxes with respect to the NSA Group Subsidiaries for which AFC would be required
to indemnify the NSA Group Subsidiaries pursuant to Section (2) above, provided
the failure of the NSA Group Subsidiaries to give such notice shall not relieve
AFC of its indemnification obligations under Section (2), except to the extent
AFC is materially prejudiced thereby.

         (7) The NSA Group Subsidiaries shall have the right to participate in,
but not control, at their own expense, a tax proceeding to the extent it relates
to pre-closing taxes which may be the subject of indemnification by the NSA
Group Subsidiaries pursuant to Section (3) and to employ counsel of its choice
at its expense. AFC shall not compromise or settle any such tax proceeding
without the prior written consent of the NSA Group Subsidiaries, which consent
shall not be unreasonably withheld. If AFC shall not assume the defense of such
tax proceeding, then the NSA Group Subsidiaries may assume sole control over
such tax proceeding, at its own expense, without relieving the NSA Group
Subsidiaries of its indemnification obligation under Section (3).

         (8) AFC shall have the right to control, at its own expense, a tax
proceeding to the extent it relates to pre-closing taxes which may be the
subject of indemnification by AFC pursuant to Section (2) and to employ counsel
of its choice at its expense.

         IN WITNESS WHEREOF, this Agreement is hereby made effective on the date
and year first above written by the undersigned.

                         AMERICAN FINANCIAL CORPORATION



                         BY:    /s/ James C. Kennedy
                            -----------------------------------
                           Name:  James C. Kennedy
                           Title: Vice President, Deputy General
                                  Counsel and Secretary

                         NSA GROUP SUBSIDIARIES

                         ATLANTA CASUALTY COMPANY



                         BY:   /s/ Samuel J. Simon
                            -----------------------------------
                           Name: Samuel J. Simon
                           Title: Vice President



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                          LEADER INSURANCE COMPANY



                          BY:   /s/ Samuel J. Simon
                             -----------------------------------
                            Name: Samuel J. Simon
                            Title:   Vice President

                          INFINITY INSURANCE COMPANY



                          BY:   /s/ Samuel J. Simon
                             -----------------------------------
                            Name: Samuel J. Simon
                            Title:   Vice President

                          WINDSOR INSURANCE COMPANY



                          BY:   /s/ Samuel J. Simon
                             -----------------------------------
                            Name: Samuel J. Simon
                            Title:   Vice President


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