<PAGE>
 -----------------------------------------------------------------------------
                       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
September 30, 2000                                          No. 1-7361



                         AMERICAN FINANCIAL CORPORATION




Incorporated under                                          IRS Employer I.D.
the Laws of Ohio                                            No. 31-0624874


                 One East Fourth Street, Cincinnati, Ohio 45202
                                 (513) 579-2121






     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 November 1, 2000, there were 10,593,000 shares of the Registrant's
Common Stock outstanding, all of which were owned by American Financial Group,
Inc.












                                  Page 1 of 20
 -----------------------------------------------------------------------------

<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q
                                     PART I
                              FINANCIAL INFORMATION

                 AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                             (Dollars In Thousands)
<TABLE>
<CAPTION>
                                                              September 30,       December 31,
                                                                      2000               1999
                                                              ------------        -----------
<S>                                                           <C>                <C>
Assets:
  Cash and short-term investments                              $   267,642        $   389,018
  Investments:
    Fixed maturities - at market
      (amortized cost - $10,143,017 and $10,101,005)             9,966,717          9,862,205
    Other stocks - at market
      (cost - $180,030 and $229,201)                               317,530            409,701
    Investment in investee corporation                             153,262            159,984
    Policy loans                                                   214,631            217,171
    Real estate and other investments                              266,777            265,288
                                                               -----------        -----------
        Total investments                                       10,918,917         10,914,349

  Recoverables from reinsurers and prepaid
    reinsurance premiums                                         1,849,782          2,105,818
  Agents' balances and premiums receivable                         822,113            656,924
  Deferred acquisition costs                                       747,437            660,672
  Other receivables                                                239,702            222,438
  Variable annuity assets (separate accounts)                      576,464            354,371
  Prepaid expenses, deferred charges and other assets              456,864            384,567
  Cost in excess of net assets acquired                            318,377            335,652
                                                               -----------        -----------

                                                               $16,197,298        $16,023,809
                                                               ===========        ===========

Liabilities and Capital:
  Unpaid losses and loss adjustment expenses                   $ 4,621,129        $ 4,795,449
  Unearned premiums                                              1,417,810          1,325,766
  Annuity benefits accumulated                                   5,473,096          5,519,528
  Life, accident and health reserves                               587,668            520,644
  Payable to American Financial Group, Inc.                        311,003            370,965
  Long-term debt:
    Holding companies                                              166,302            112,557
    Subsidiaries                                                   190,976            239,733
  Variable annuity liabilities (separate accounts)                 576,464            354,371
  Accounts payable, accrued expenses and other
    liabilities                                                    965,897            970,495
                                                               -----------        -----------
        Total liabilities                                       14,310,345         14,209,508
<PAGE>
  Minority interest                                                493,035            490,194

  Shareholders' Equity:
    Preferred stock (liquidation value $72,154)                     72,154             72,154
    Common Stock, no par value
      - 20,000,000 shares authorized
      - 10,593,000 shares outstanding                                9,625              9,625
    Capital surplus                                                971,472            960,782
    Retained earnings                                              349,467            296,246
    Unrealized loss on marketable securities, net                   (8,800)           (14,700)
                                                               -----------        -----------
        Total shareholders' equity                               1,393,918          1,324,107
                                                               -----------        -----------

                                                               $16,197,298        $16,023,809
                                                               ===========        ===========
</TABLE>



                                                   2
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                 AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                 (In Thousands)
<TABLE>
<CAPTION>
                                                   Three months ended            Nine months ended
                                                      September 30,                September 30,
                                                  -----------------------    --------------------------
                                                        2000        1999             2000          1999
                                                        ----        ----             ----          ----
<S>                                              <C>           <C>            <C>           <C>
Income:
  Property and casualty insurance
    premiums                                      $  661,077    $585,560       $1,856,935    $1,680,561
  Life, accident and health premiums                  66,523      26,463          166,146        77,418
  Investment income                                  217,667     215,872          640,830       632,048
  Realized gains (losses) on sales of:
    Securities                                       (15,223)     (5,744)         (20,563)        5,981
    Subsidiaries                                      (5,962)       -              19,038          -
    Other investments                                 27,230        -              27,230          -
  Other income                                        53,760      47,374          150,118       105,501
                                                  ----------    --------       ----------    ----------
                                                   1,005,072     869,525        2,839,734     2,501,509
Costs and Expenses:
  Property and casualty insurance:
    Losses and loss adjustment expenses              562,308     423,402        1,463,456     1,188,050
    Commissions and other underwriting
      expenses                                       195,267     171,824          556,272       506,646
  Annuity benefits                                    72,139      66,516          203,783       194,977
  Life, accident and health benefits                  50,699      17,365          124,308        52,238
  Interest charges on borrowed money                  18,313      16,494           50,411        49,715
  Other operating and general expenses               104,127      99,161          334,972       263,084
                                                  ----------    --------       ----------    ----------
                                                   1,002,853     794,762        2,733,202     2,254,710
                                                  ----------    --------       ----------    ----------

Operating earnings before income taxes                 2,219      74,763          106,532       246,799
Provision (credit) for income taxes                   (1,010)     25,283           31,608        82,211
                                                  ----------    --------       ----------    ----------

Net operating earnings                                 3,229      49,480           74,924       164,588

Minority interest expense, net of tax                 (3,124)     (8,982)         (14,471)      (30,900)
Equity in net earnings (loss) of investee,
  net of tax                                         (13,570)     (9,618)          (4,368)        1,715
                                                  ----------    --------       ----------    ----------
Earnings (loss) before extraordinary
  items and accounting change                        (13,465)     30,880           56,085       135,403
Extraordinary items - gain (loss) on
  prepayment of debt                                    -                            -           (3,849)
Cumulative effect of accounting change                  -           -                -           (3,854)
                                                  ----------    --------       ----------    ----------
Net Earnings (Loss)                              ($   13,465)   $ 30,880       $   56,085    $  127,700
                                                  ==========    ========       ==========    ==========
</TABLE>
                                        3
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                 AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                             (Dollars in Thousands)
<TABLE>
<CAPTION>
                                                      Common Stock                    Unrealized
                                        Preferred      and Capital     Retained      Gain (Loss)
                                            Stock          Surplus     Earnings    on Securities            Total
                                        ---------     ------------     --------    -------------       ----------
<S>                                      <C>             <C>          <C>              <C>            <C>
Balance at January 1, 2000                $72,154         $970,407     $296,246         ($14,700)      $1,324,107

 Net earnings                                -                -          56,085             -              56,085
 Change in unrealized                        -                -            -               5,900            5,900
                                                                                                       ----------
   Comprehensive income                                                                                    61,985

 Capital contribution from parent            -               9,200         -                -               9,200
 Dividends on Preferred Stock                -                -          (2,886)            -              (2,886)
 Other                                       -               1,490           22             -               1,512
                                          -------         --------     --------          -------       ----------

Balance at September 30, 2000             $72,154         $981,097     $349,467         ($ 8,800)      $1,393,918
                                          =======         ========     ========          =======       ==========






Balance at January 1, 1999                $72,154         $952,984     $157,218         $348,300       $1,530,656

Net earnings                                 -                -         127,700             -             127,700
Change in unrealized                         -                -            -            (274,500)        (274,500)
                                                                                                       ----------
  Comprehensive income (loss)                                                                            (146,800)

Capital contribution from parent             -               9,200         -                -               9,200
Dividends on Preferred Stock                 -                -          (2,886)            -              (2,886)
Other                                        -               4,062         -                -               4,062
                                          -------         --------     --------         --------       ----------

Balance at September 30, 1999             $72,154         $966,246     $282,032         $ 73,800       $1,394,232
                                          =======         ========     ========         ========       ==========
</TABLE>








                                        4

<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                 AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In Thousands)
<TABLE>
<CAPTION>
                                                                      Nine months ended
                                                                        September 30,
                                                                 --------------------------
                                                                       2000            1999
                                                                       ----            ----
<S>                                                             <C>             <C>
Operating Activities:
   Net earnings                                                  $   56,085      $  127,700
   Adjustments:
     Extraordinary items                                               -              3,849
     Cumulative effect of accounting change                            -              3,854
     Equity in net (earnings) loss of investee                        4,368          (1,715)
     Depreciation and amortization                                   94,135          68,548
     Annuity benefits                                               203,783         194,977
     Realized gains on investing activities                         (40,246)        (20,733)
     Deferred annuity and life policy acquisition costs            (106,844)        (87,009)
     Increase in reinsurance and other receivables                  (57,246)       (123,522)
     Increase in other assets                                       (55,739)        (59,794)
     Increase in insurance claims and reserves                      286,781         116,590
     Increase in other liabilities                                    4,973          81,495
     Increase (decrease) in minority interest                          (376)         17,026
     Dividends from investee                                           -              3,600
     Other, net                                                      10,588          (4,928)
                                                                 ----------      ----------
                                                                    400,262         319,938
                                                                 ----------      ----------
Investing Activities:
   Purchases of and additional investments in:
     Fixed maturity investments                                  (1,237,409)     (1,547,160)
     Equity securities                                              (22,547)        (56,041)
     Subsidiaries                                                      -           (204,942)
     Real estate, property and equipment                            (57,238)        (63,496)
   Maturities and redemptions of fixed maturity
     investments                                                    465,637         801,833
   Sales of:
     Fixed maturity investments                                     651,578         885,901
     Equity securities                                               67,473          45,887
     Subsidiaries                                                    35,000            -
     Real estate, property and equipment                              8,156          24,394
   Cash and short-term investments of acquired (former)
     subsidiaries, net                                             (131,880)         19,454
   Decrease in other investments                                      8,695          12,734
                                                                 ----------      ----------
                                                                   (212,535)        (81,436)
                                                                 ----------      ----------
<PAGE>
Financing Activities:
   Fixed annuity receipts                                           359,884         330,744
   Annuity surrenders, benefits and withdrawals                    (564,454)       (518,713)
   Net transfers from fixed to variable annuity assets              (44,305)        (13,589)
   Additional long-term borrowings                                  131,341         212,232
   Reductions of long-term debt                                    (133,343)       (366,464)
   Borrowings from AFG                                               10,500         254,100
   Payments to AFG                                                  (78,413)       (121,300)
   Capital Contribution                                              14,000          14,000
   Repurchases of trust preferred securities                         (1,427)         (5,509)
   Cash dividends paid                                               (2,886)         (2,886)
                                                                 ----------      ----------
                                                                   (309,103)       (217,385)
                                                                 ----------      ----------

Net Increase (Decrease) in Cash and Short-term Investments         (121,376)         21,117

Cash and short-term investments at beginning
   of period                                                        389,018         289,944
                                                                 ----------      ----------

Cash and short-term investments at end of period                 $  267,642      $  311,061
                                                                 ==========      ==========
</TABLE>

                                        5
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.   ACCOUNTING POLICIES

     BASIS OF PRESENTATION The accompanying consolidated financial statements
     for American Financial Corporation ("AFC") and subsidiaries are unaudited;
     however, 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.

     Certain reclassifications have been made to prior years to conform to the
     current year'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 All fixed maturity securities are considered "available for
     sale" and reported at fair value with unrealized gains and losses reported
     as a separate component of shareholders' equity. Short-term investments are
     carried at cost; loans receivable are carried primarily at the aggregate
     unpaid balance. Premiums and discounts on mortgage-backed securities are
     amortized over their expected average lives using the interest method.

     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.

     INVESTMENT IN INVESTEE CORPORATION Investments in securities of 20%- to
     50%-owned companies are generally carried at cost, adjusted for AFC's
     proportionate share of their undistributed earnings or losses.

     COST IN EXCESS OF NET ASSETS ACQUIRED The excess of cost of subsidiaries
     and investees over AFC's equity in the underlying net assets ("goodwill")
     is being amortized over periods of 20 to 40 years.

     INSURANCE As discussed under "Reinsurance" below, unpaid losses and loss
     adjustment expenses and unearned premiums have not been reduced for
     reinsurance recoverable. To the extent that unrealized gains (losses) from
     securities classified as "available for sale" would result in adjustments
     to deferred acquisition costs and policyholder liabilities had those gains
     (losses) actually been realized, such balance sheet amounts are adjusted,
     net of deferred taxes.
<PAGE>
          REINSURANCE In the normal course of business, AFC's insurance
     subsidiaries cede reinsurance to other companies to diversify risk and
     limit maximum loss arising from large claims. To the extent that any
     reinsuring companies are unable to meet obligations under the agreements
     covering reinsurance ceded, AFC's insurance subsidiaries would remain
     liable. Amounts recoverable from reinsurers are estimated in a manner
     consistent with the claim liability associated with the reinsured policies.
     AFC's insurance subsidiaries report as


                                        6


<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

     assets (a) the estimated reinsurance recoverable on unpaid losses,
     including an estimate for losses incurred but not reported, and (b) amounts
     paid to reinsurers applicable to the unexpired terms of policies in force.
     AFC's insurance subsidiaries also assume reinsurance from other companies.
     Income on reinsurance assumed is recognized based on reports received from
     ceding reinsurers.

          DEFERRED ACQUISITION COSTS Policy acquisition costs (principally
     commissions, premium taxes and other underwriting expenses) related to the
     production of new business are deferred ("DPAC"). For the property and
     casualty companies, DPAC is limited based upon recoverability without any
     consideration for anticipated investment income and is charged against
     income ratably over the terms of the related policies. For the annuity
     companies, DPAC is amortized, with interest, in relation to the present
     value of expected gross profits on the policies.

          UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES The net liabilities stated
     for unpaid claims and for expenses of investigation and adjustment of
     unpaid claims are based upon (a) the accumulation of case estimates for
     losses reported prior to the close of the accounting period on the direct
     business written; (b) estimates received from ceding reinsurers and
     insurance pools and associations; (c) estimates of unreported losses based
     on past experience; (d) estimates based on experience of expenses for
     investigating and adjusting claims and (e) the current state of the law and
     coverage litigation. These liabilities are subject to the impact of changes
     in claim amounts and frequency and other factors. In spite of the
     variability inherent in such estimates, management believes that the
     liabilities for unpaid losses and loss adjustment expenses are adequate.
     Changes in estimates of the liabilities for losses and loss adjustment
     expenses are reflected in the Statement of Earnings in the period in which
     determined.

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

          VARIABLE ANNUITY ASSETS AND LIABILITIES Separate accounts related to
     variable annuities represent deposits invested in underlying investment
     funds on which Great American Financial Resources, Inc. ("GAFRI", formerly
     American Annuity Group, Inc.), an 83%-owned subsidiary, earns a fee. The
     investment funds are selected and may be changed only by the policyholder.
<PAGE>
          PREMIUM RECOGNITION Property and casualty premiums are earned over the
     terms of the policies on a pro rata basis. Unearned premiums represent that
     portion of premiums written which is applicable to the unexpired terms of
     policies in force. On reinsurance assumed from other insurance companies or
     written through various underwriting organizations, unearned premiums are
     based on reports received from such companies and organizations. For
     traditional life, accident and health products, premiums are recognized as
     revenue when legally collectible from policyholders. 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.

                                        7
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

          POLICYHOLDER DIVIDENDS Dividends payable to policyholders are included
     in "Accounts payable, accrued expenses and other liabilities" and represent
     estimates of amounts payable on participating policies which share in
     favorable underwriting results. The estimate is accrued during the period
     in which the related premium is earned. Changes in estimates are included
     in income in the period determined. Policyholder dividends do not become
     legal liabilities unless and until declared by the boards of directors of
     the insurance companies.

     MINORITY INTEREST For balance sheet purposes, minority interest represents
     (i) the interests of noncontrolling shareholders in AFC subsidiaries,
     including preferred securities issued by trust subsidiaries of GAFRI, and
     (ii) the American Financial Group, Inc. ("AFG") direct ownership interest
     in American Premier Underwriters, Inc. ("American Premier" or "APU") and
     American Financial Enterprises, Inc. For income statement purposes,
     minority interest expense represents those shareholders' interest in the
     earnings of AFC subsidiaries as well as accrued distributions on the trust
     preferred securities.

     INCOME TAXES AFC files consolidated federal income tax returns which
     include all 80%-owned U.S. subsidiaries, except for certain life insurance
     subsidiaries and their subsidiaries. Deferred income taxes are calculated
     using the liability method. Under this method, deferred income tax assets
     and liabilities are determined based on differences between financial
     reporting and tax bases and are measured using enacted tax rates. Deferred
     tax assets are recognized if it is more likely than not that a benefit will
     be realized.

     BENEFIT PLANS AFC provides retirement benefits to qualified employees of
     participating companies through contributory and noncontributory defined
     contribution plans contained in AFC's Retirement and Savings Plan. Under
     the retirement portion of the plan, company contributions are invested
     primarily in securities of AFC and affiliates. Under the savings portion of
     the plan, AFC matches a specific portion of employee contributions.
     Contributions to benefit plans are charged against earnings in the year for
     which they are declared.

     AFC and many of its subsidiaries provide health care and life insurance
     benefits to eligible retirees. AFC also provides postemployment benefits to
     former or inactive employees (primarily those on disability) who were not
     deemed retired under other company plans. The projected future cost of
     providing these benefits is expensed over the period the employees earn
     such benefits.

     START-UP COSTS Prior to 1999, GAFRI deferred certain costs associated with
     introducing new products and distribution channels and amortized them on a
     straight-line basis over 5 years. In 1999, GAFRI implemented Statement of
     Position ("SOP") 98-5, "Reporting on the Costs of Start-Up Activities." The
     SOP requires that (i) costs of start-up activities be expensed as incurred
     and (ii) unamortized balances of previously deferred costs be expensed and
     reported as the cumulative effect of a change in accounting principle.
     Accordingly, AFC expensed previously capitalized start-up costs of $3.8
     million (net of minority interest and taxes) effective January 1, 1999.

                                        8
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

     DERIVATIVES The Financial Accounting Standards Board issued SFAS No. 133,
     "Accounting for Derivative Instruments and Hedging Activities," during the
     second quarter of 1998. SFAS No. 133 establishes accounting and reporting
     standards for derivative instruments, including derivative instruments that
     are embedded in other contracts, and for hedging activities and must be
     implemented no later than January 1, 2001. SFAS No. 133 requires the
     recognition of all derivatives (both assets and liabilities) in the balance
     sheet at fair value. Changes in fair value of derivative instruments are
     included in current income or as a component of comprehensive income
     (outside current income) depending on the type of derivative.
     Implementation of SFAS No. 133 is not expected to have a material effect on
     AFC's financial position or results of operations.

     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 obtaining resources from owners and providing them with a return on
     their investments, borrowing money and repaying amounts borrowed. Annuity
     receipts, benefits and withdrawals are also reflected as financing
     activities. 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.

B.   ACQUISITIONS AND SALES OF SUBSIDIARIES

     STONEWALL INSURANCE COMPANY In September 2000, AFC sold Stonewall Insurance
     Company for $35.6 million (including a $25.6 million dividend to AFC
     immediately prior to the sale) realizing a pretax loss of $6 million.
     Stonewall was a non-operating property and casualty subsidiary with
     approximately $320 million in assets, primarily engaged in the run-off of
     approximately $170 million in asbestos and environmental liabilities
     associated with policies written through 1991.

     COMMERCIAL LINES DIVISION In 1998, AFC sold its Commercial lines division
     to Ohio Casualty Corporation. In August 2000, AFC received an additional
     payment of $25 million from Ohio Casualty based on retention and growth
     through May 2000 of the businesses sold. This earn-out was recognized as
     additional "gain on sale of subsidiary" in the second quarter of 2000.

     START-UP MANUFACTURING BUSINESSES Since 1998, AFC subsidiaries have made
     loans to two start-up manufacturing businesses which were previously owned
     by unrelated third-parties. During 2000, the former owners chose to forfeit
     their equity interests to AFC rather than invest additional capital. Total
     loans extended to these businesses prior to forfeiture amounted to $49.7
     million and the accumulated losses of the two businesses were approximately
     $29.7 million.

     WORLDWIDE INSURANCE COMPANY In April 1999, AFC acquired Worldwide Insurance
     Company for $157 million in cash. Worldwide is a provider of direct
     response private passenger automobile insurance.
<PAGE>
     UNITED TEACHER ASSOCIATES In October 1999, GAFRI acquired United Teacher
     Associates Insurance Company of Austin, Texas ("UTA") for $81 million in
     cash, pending post-closing adjustments under which GAFRI may receive as
     much as several million dollars. UTA provides supplemental health products
     and retirement annuities, and purchases blocks of insurance policies from
     other insurers.





                                        9
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

     GREAT AMERICAN LIFE INSURANCE COMPANY OF NEW YORK AND CONSOLIDATED
     FINANCIAL In February 1999, GAFRI acquired Great American Life Insurance
     Company of New York, formerly Old Republic Life Insurance Company of New
     York, for $27 million in cash. In July 1999, GAFRI acquired Consolidated
     Financial Corporation, an insurance agency, for $21 million in cash.

C.   SEGMENTS OF OPERATIONS AFC's property and casualty group is engaged
     primarily in private passenger automobile and specialty insurance
     businesses. The Personal group writes nonstandard and preferred/standard
     private passenger auto and other personal insurance coverage. The Specialty
     group includes a highly diversified group of specialty business units. Some
     of the more significant areas are inland and ocean marine, California
     workers' compensation, agricultural-related coverages, executive and
     professional liability, U.S.-based operations of Japanese companies,
     fidelity and surety bonds, collateral protection, and umbrella and excess
     coverages. AFC's annuity and life business markets primarily retirement
     products as well as life and supplemental health insurance. In addition,
     AFC owns a significant portion of the voting equity securities of Chiquita
     Brands International, Inc. (an investee corporation - see Note D).

     The following table (in thousands) shows AFC's revenues and operating
     profit (loss) by significant business segment. Operating profit (loss)
     represents total revenues less operating expenses.
<TABLE>
<CAPTION>
                                                   Three months ended            Nine months ended
                                                      September 30,                September 30,
                                                -----------------------      -------------------------
                                                      2000         1999             2000          1999
                                                      ----         ----             ----          ----
      <S>                                      <C>            <C>            <C>           <C>
        Revenues (a)
        Property and casualty insurance:
          Premiums earned:
            Personal                            $  326,591     $288,454       $  940,237    $  875,036
            Specialty                              334,846      296,254          917,057       804,957
            Other lines - primarily
              discontinued                            (360)         852             (359)          568
                                                ----------     --------       ----------     ---------
                                                   661,077      585,560        1,856,935     1,680,561
          Investment and other income               98,703      110,923          349,181       329,885
                                                ----------     --------       ----------    ----------
                                                   759,780      696,483        2,206,116     2,010,446
        Annuities and life (b)                     226,792      161,474          596,574       465,348
        Other                                       18,500       11,568           37,044        25,715
                                                ----------     --------       ----------    ----------
                                                $1,005,072     $869,525       $2,839,734    $2,501,509
                                                ==========     ========       ==========    ==========
<PAGE>
        Operating Profit (Loss)
        Property and casualty insurance:
          Underwriting:
            Personal                           ($   34,704)   ($  3,167)     ($   72,029)  ($    1,121)
            Specialty                              (56,580)      (9,246)         (81,758)       (7,925)
            Other lines - primarily
              discontinued                          (5,214)       2,747           (9,006)       (5,089)
                                                ----------     --------       ----------    ----------
                                                   (96,498)      (9,666)        (162,793)      (14,135)
          Investment and other income               57,450       66,006          235,457       204,095
                                                ----------     --------       ----------    ----------
                                                   (39,048)      56,340           72,664       189,960
        Annuities and life                          50,501       29,152           75,806        95,050
        Other (c)                                   (9,234)     (10,729)         (41,938)      (38,211)
                                                ----------     --------       ----------    ----------
                                                $    2,219     $ 74,763       $  106,532    $  246,799
                                                ==========     ========       ==========    ==========
</TABLE>

        (a)  Revenues include sales of products and services as well as other
             income earned by the respective segments.
        (b)  Represents primarily investment income.
        (c)  Includes holding company expenses.







                                       10
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

D.   INVESTMENT IN INVESTEE CORPORATION Investment in investee corporation
     reflects AFC's ownership of 24 million shares (36%) of Chiquita common
     stock. The market value of this investment was $75 million and $114 million
     at September 30, 2000 and December 31, 1999, respectively and $47 million
     at November 1, 2000. Chiquita is a leading international marketer, producer
     and distributor of quality fresh fruits and vegetables and processed foods.
     Summarized financial information for Chiquita follows (in millions):

                                           Nine months ended September 30,
                                           -------------------------------
                                                     2000             1999
                                                     ----             ----
          Net Sales                                $1,725           $1,937
          Operating Income                             88               93
          Net Income (Loss)                            (6)              19

E.   PAYABLE TO AMERICAN FINANCIAL GROUP AFC has a reciprocal Master Credit
     Agreement with various AFG holding companies under which these companies
     make funds available to each other for general corporate purposes.

F.   LONG-TERM DEBT The carrying value of long-term debt consisted of the
     following (in thousands):
<TABLE>
<CAPTION>
                                                               September 30,     December 31,
                                                                       2000             1999
                                                               ------------      -----------
       <S>                                                        <C>              <C>
          Holding Companies:
            AFC notes payable under bank line                      $140,000         $ 68,000
            APU 10-5/8% Subordinated Notes                             -              23,786
            APU 10-7/8% Subordinated Notes due May 2011              11,623           11,661
            Other                                                    14,679            9,110
                                                                   --------         --------

                                                                   $166,302         $112,557
                                                                   ========         ========
          Subsidiaries:
            GAFRI 6-7/8% Senior Notes due June 2008                $100,000         $100,000
            GAFRI notes payable under bank line                      48,500           97,000
            Notes payable secured by real estate                     31,331           31,704
            Other                                                    11,145           11,029
                                                                   --------         --------

                                                                   $190,976         $239,733
                                                                   ========         ========
</TABLE>
<PAGE>
     In April 2000, AFC redeemed the APU 10-5/8% Notes at maturity using funds
     borrowed under the AFC bank line.

     At September 30, 2000, sinking fund and other scheduled principal payments
     on debt for the balance of 2000 and the subsequent five years were as
     follows (in millions):

                             Holding
                           Companies       Subsidiaries              Total
                           ---------       ------------           --------
          2000                $  -                $  .4             $   .4
          2001                   1.7                1.7                3.4
          2002                 150.0                1.6              151.6
          2003                   -                 50.1               50.1
          2004                   -                 14.2               14.2
          2005                   -                  9.7                9.7

     Debentures purchased in excess of scheduled payments may be applied to
     satisfy any sinking fund requirement. The scheduled principal payments
     shown above assume that debentures previously purchased are applied to the
     earliest scheduled retirements.





                                       11
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

     AFC and GAFRI each have an unsecured credit agreement with a group of banks
     under which they can borrow up to $300 million and $190 million,
     respectively. Borrowings bear interest at floating rates based on prime or
     Eurodollar rates. Loans mature December 2002 under the AFC credit agreement
     and from 2000 to 2003 under the GAFRI credit agreement.

G.   MINORITY INTEREST Minority interest in AFC's balance sheet is comprised of
     the following (in thousands):
<TABLE>
<CAPTION>
                                                            September 30,     December 31,
                                                                    2000             1999
                                                            ------------      -----------
       <S>                                                     <C>             <C>
          Interest of AFG (parent) and noncontrolling
            shareholders in subsidiaries' common stock          $275,122        $ 270,594
          Preferred securities issued by
            subsidiary trusts                                    217,913          219,600
                                                                --------         --------

                                                                $493,035         $490,194
                                                                ========         ========
</TABLE>

     TRUST ISSUED PREFERRED SECURITIES Wholly-owned subsidiary trusts of GAFRI
     have issued $225 million of preferred securities and, in turn, purchased a
     like amount of GAFRI subordinated debt which provides interest and
     principal payments to fund the respective trusts' obligations. The
     preferred securities must be redeemed upon maturity or redemption of the
     subordinated debt. GAFRI effectively provides unconditional guarantees of
     its respective trusts' obligations.

     The preferred securities consisted of the following (in thousands):
<TABLE>
<CAPTION>

     Date of                                    September 30,  December 31,     Optional
     Issuance        Issue (Maturity Date)              2000          1999      Redemption Dates
     -------------   ------------------------   ------------   -----------      -----------------------
    <S>             <C>                              <C>           <C>         <C>
     November 1996   GAFRI 9-1/4% TOPrS (2026)        $72,913       $74,600     On or after 11/7/2001
     March 1997      GAFRI 8-7/8% Pfd   (2027)         70,000        70,000     On or after 3/1/2007
     May 1997        GAFRI 7-1/4% ROPES (2041)         75,000        75,000     Prior to 9/28/2000 and
                                                                                   after 9/28/2001
</TABLE>

     In the first six months of 2000, GAFRI repurchased $1.7 million of its
     trust preferred securities for $1.4 million in cash.
<PAGE>
     MINORITY INTEREST EXPENSE Minority interest expense is comprised of (in
     thousands):

                                                             Nine months ended
                                                                September 30,
                                                           --------------------
                                                              2000         1999
                                                              ----         ----
          Interest of AFG (parent) and noncontrolling
            shareholders in earnings of subsidiaries       $ 5,508      $21,842
          Accrued distributions by subsidiaries
            on trust issued preferred securities,
            net of tax                                       8,963        9,058
                                                           -------      -------

                                                           $14,471      $30,900
                                                           =======      =======










                                       12
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


H.   SHAREHOLDERS' EQUITY At September 30, 2000 and December 31, 1999, AFG
     beneficially owned all of the outstanding shares of AFC's Common Stock.

     PREFERRED STOCK Under provisions of both the Nonvoting (4.0 million shares
     authorized and Voting (4.0 million shares authorized) Cumulative Preferred
     Stock, the Board of Directors may divide the authorized stock into series
     and set specific terms and conditions of each series. At September 30, 2000
     and December 31, 1999, the outstanding voting shares of AFC's Preferred
     Stock consisted of the following:

          SERIES J, no par value; $25.00 liquidating value per share; annual
          dividends per share $2.00; redeemable at AFC's option at $25.75 per
          share beginning December 2005 declining to $25.00 at December 2007 and
          thereafter; 2,886,161 shares (stated value $72.2 million).

     UNREALIZED LOSS ON MARKETABLE SECURITIES The change in unrealized gain
     (loss) on marketable securities for the nine months ended September 30
     included the following (in millions):
<TABLE>
<CAPTION>
                                                                                Minority
                                                        Pretax       Taxes      Interest        Net
                                                        ------       -----      --------       -----
<S>                                                    <C>           <C>         <C>         <C>
                          2000
     --------------------------------------------
     Unrealized holding gains (losses) on
       securities arising during the period             ($ 9.9)       $4.3        ($3.0)      ($ 8.6)
     Reclassification adjustment for
       realized losses included in net income and
         unrealized losses of subsidiary sold             25.2        (8.8)        (1.9)        14.5
                                                         -----        ----         ----        -----
     Change in unrealized gain (loss) on
       marketable securities, net                        $15.3       ($4.5)       ($4.9)       $ 5.9
                                                         =====        ====         ====        =====

                          1999
     --------------------------------------------
     Unrealized holding gains (losses) on
       securities arising during the period            ($471.7)     $163.4        $36.9      ($271.4)
     Reclassification adjustment for
       realized gains included in net income              (6.0)        2.1           .8         (3.1)
                                                        ------      ------        -----       ------
     Change in unrealized gain (loss) on
       marketable securities, net                      ($477.7)     $165.5        $37.7      ($274.5)
                                                        ======      ======        =====       ======
</TABLE>
<PAGE>
I.   EXTRAORDINARY ITEMS Extraordinary items represents AFC's proportionate
     share of losses related to debt retirements by the following companies.
     Amounts shown are net of minority interest and income taxes (in thousands):

                                                         Nine months ended
                                                        September 30, 1999
                                                        ------------------
              Holding Companies:
                 AFC (parent)                                ($2,993)
                 APU (parent)                                   (856)
                                                              ------

                                                             ($3,849)
                                                              ======

J.   COMMITMENTS AND CONTINGENCIES Other than as disclosed in "Legal
     Proceedings" in Part II of this report, there have been no significant
     changes to the matters discussed and referred to in Note L "Commitments and
     Contingencies" of AFC's Annual Report on Form 10-K for 1999.








                                       13
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                                     ITEM 2

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

     GENERAL

     AFC and American Premier are organized as holding companies with almost all
     of their operations being conducted by subsidiaries. These parent
     corporations, however, have continuing cash needs for administrative
     expenses, the payment of principal and interest on borrowings, shareholder
     dividends, and taxes. Therefore, certain analyses are best done on a parent
     only basis while others are best done on a total enterprise basis. In
     addition, since most of its businesses are financial in nature, AFC does
     not prepare its consolidated financial statements using a
     current-noncurrent format. Consequently, certain traditional ratios and
     financial analysis tests are not meaningful.

     IT INITIATIVE In the third quarter of 1999, AFC initiated an
     enterprise-wide study of its information technology ("IT") resources, needs
     and opportunities. The initiative entails extensive effort and costs and
     has led to substantial changes in the area, which should result in
     significant cost savings, efficiencies and effectiveness in the future.
     While the costs (most of which will be expensed) precede the expected
     savings, management expects benefits to greatly exceed the costs incurred,
     all of which have been and will be funded through available working
     capital.

     FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of
     1995 encourages corporations to provide investors with information about
     the company's anticipated performance and provides protection from
     liability if future results are not the same as management's expectations.
     This document contains certain forward-looking statements that are based on
     assumptions which management believes are reasonable, but by their nature,
     inherently uncertain. Future results could differ materially from those
     projected. Factors that could cause such differences include, but are not
     limited to: changes in economic conditions especially with regard to
     availability of and returns on capital, regulatory actions, changes in
     legal environment, levels of catastrophe and other major losses,
     availability of reinsurance, and competitive pressures. AFC undertakes no
     obligation to update any forward-looking statements.

     LIQUIDITY AND CAPITAL RESOURCES

     RATIOS AFC's debt to total capital ratio at the parent holding company
     level (excluding amounts due AFG) was approximately 11% at September 30,
     2000 and 8% at December 31, 1999. Including amounts due AFG, the ratio was
     25% at September 30, 2000 and 27% at December 31, 1999.

     AFC's ratio of earnings to fixed charges, excluding and including preferred
     dividends, (on a total enterprise basis) was 2.26 and 2.08 for the first
     nine months of 2000 and 4.01 and 3.67 for the entire year of 1999.
<PAGE>
     SOURCES OF FUNDS Management believes the parent holding companies have
     sufficient resources to meet their liquidity requirements through
     operations. If funds generated from operations, including dividends and tax
     payments from subsidiaries, are insufficient to meet fixed charges in any
     period, these companies would be required to generate cash through
     borrowings, sales of securities or other assets, or similar transactions.






                                       14
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

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

     AFC has a revolving credit agreement with several banks under which it can
     borrow up to $300 million. This credit line provides ample liquidity and
     can be used to obtain funds for operating subsidiaries or, if necessary,
     for the parent companies. At September 30, 2000, there was $140 million
     borrowed under the line.

     In April 1999, AFC used funds borrowed under its credit agreement with AFG
     to retire outstanding holding company public debt and borrowings under its
     credit line.

     Dividend payments from subsidiaries have been very important to the
     liquidity and cash flow of the individual holding companies during certain
     periods in the past. However, the reliance on such dividend payments has
     been lessened in recent years by the combination of (i) reductions in the
     amounts and cost of debt at the holding companies from historical levels
     (and the related decrease in ongoing cash needs for interest and principal
     payments), (ii) AFC's ability to obtain financing in capital markets, as
     well as (iii) the sales of certain noncore investments.

     INVESTMENTS Approximately 91% of the fixed maturities held by AFC were
     rated "investment grade" (credit rating of AAA to BBB) by nationally
     recognized rating agencies at September 30, 2000. Investment grade
     securities generally bear lower yields and lower degrees of risk than those
     that are unrated and noninvestment grade. Management believes that the high
     quality investment portfolio should generate a stable and predictable
     investment return.

     AFC's equity securities are concentrated in a relatively limited number of
     major positions. This approach allows management to more closely monitor
     the companies and the industries in which they operate.

     RESULTS OF OPERATIONS

     GENERAL Pretax operating earnings for the third quarter and nine months
     ended September 30, 2000, were $2.2 million and $106.5 million,
     respectively, compared to $74.8 million and $246.8 million in the
     comparable 1999 periods. A decline in property and casualty underwriting
     results (including a $35 million third quarter charge for reserve
     strengthening in the California workers' compensation business) and second
     quarter special litigation charges were partially offset by higher realized
     gains and income from the sale of certain lease rights in the third
     quarter.

     PROPERTY AND CASUALTY INSURANCE - UNDERWRITING AFC's property and casualty
     group consists of two major business groups: Personal and Specialty.

     The Personal group sells nonstandard and preferred/standard private
     passenger auto insurance and, to a lesser extent, homeowners' insurance.
     Nonstandard automobile insurance covers risk not typically accepted for
     standard automobile coverage because of the applicant's driving record,
     type of vehicle, age or other criteria.
<PAGE>
     The Specialty group includes a highly diversified group of business lines.
     Some of the more significant areas are inland and ocean marine, California
     workers' compensation, agricultural-related coverages, executive and
     professional liability, U.S.-based operations of Japanese companies,
     fidelity and surety bonds, collateral protection, and umbrella and excess
     coverages.




                                       15


<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

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

     Underwriting profitability is measured by the combined ratio which is a sum
     of the ratios of underwriting losses, loss adjustment expenses,
     underwriting expenses and policyholder dividends to premiums. When the
     combined ratio is under 100%, underwriting results are generally considered
     profitable; when the ratio is over 100%, underwriting results are generally
     considered unprofitable. The combined ratio does not reflect investment
     income, other income or federal income taxes.

     For certain lines of business and products where the credibility of the
     range of loss projections is less certain (primarily the various specialty
     businesses listed above), management believes that it is prudent and
     appropriate to use conservative assumptions until such time as the data,
     experience and projections have more credibility, as evidenced by data
     volume, consistency and maturity of the data. While this practice mitigates
     the risk of adverse development on this business, it does not eliminate it.

     Net written premiums and combined ratios for AFC's property and casualty
     insurance subsidiaries were as follows (dollars in millions):
<TABLE>
<CAPTION>
                                                  Three months ended          Nine months ended
                                                    September 30,               September 30,
                                                 --------------------       ---------------------
                                                      2000      1999            2000         1999
                                                      ----      ----            ----         ----
       <S>                                        <C>        <C>           <C>          <C>
          Net Written Premiums (GAAP)
          ---------------------------
            Personal                               $299.4     $287.3        $  997.3     $  839.2
            Specialty                               341.7      323.7           974.9        850.4
            Other lines                               (.3)        .7             (.3)         (.8)
                                                   ------     ------        --------     --------
                                                   $640.8     $611.7        $1,971.9     $1,688.8
                                                   ======     ======        ========     ========

          Combined Ratios (GAAP) (*)
          ----------------------
            Personal                                110.6%     101.1%          107.6%       100.2%
            Specialty                               116.8      103.2           108.9        101.0
            Aggregate (including
              discontinued lines)                   114.7      101.7           108.8        100.8

</TABLE>

          (*)  Combined ratios for the entire year of 1999 were: Personal -
               100.7%, Specialty - 102.7% and aggregate - 102.0%.
<PAGE>
     PERSONAL The Personal group's increase in net written premiums reflects
     firming market prices in the nonstandard auto market, expanded writings in
     certain private passenger automobile markets and premiums generated by
     Worldwide (AFC's direct marketing channel) since its acquisition in April
     1999. In the third quarter, these items were partially offset by the
     expected decline in premiums caused by rate increases implemented
     throughout 2000. The combined ratio for the third quarter and nine months
     of 2000 increased due to (i) increased auto claim frequency and severity
     (particularly in medical and health related costs), (ii) the impact of a
     very competitive pricing environment on policies written during 1999 and
     early 2000 and (iii) increased underwriting expenses associated with the
     direct and Internet marketing initiatives (adding approximately 1.5 points
     to the Personal group's combined ratio). In an effort to alleviate
     increasing losses, AFC has implemented rate increases of approximately 10%
     through the first nine months of the year and expects that rate increases
     will be 12% by the end of 2000. These rate actions are expected to continue
     to moderate premium growth in the private passenger auto insurance business
     for the remainder of 2000, with the full impact on earnings not likely to
     take effect until early 2001.





                                       16
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

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

     SPECIALTY The Specialty group's increase in net written premiums reflects
     the effect of (i) the January 2000 termination of reinsurance agreements
     relating to the California workers' compensation business which were in
     effect throughout 1999, (ii) rate increases in certain casualty markets
     (particularly California workers' compensation) and (iii) the realization
     of growth opportunities in certain commercial markets. Excluding the impact
     of the terminated reinsurance agreements, net written premiums were up
     approximately 1% for the third quarter and 10% for the nine months as
     premium levels moderated during the third quarter due to increasing rates
     and the absence of premiums from certain unprofitable business which is no
     longer being written.

     In response to continuing losses in the California workers' compensation
     business, rate increases for this business have been about 22% so far this
     year and are expected to be in excess of 40% on renewals in the fourth
     quarter. Rate increases implemented in the other specialty operations have
     been 10% through the first nine months of 2000 and are targeted to be 12%
     by year-end.

     In response to adverse development in prior year losses, AFC recorded a $35
     million pretax charge in the third quarter of 2000 to strengthen loss
     reserves in its California workers' compensation business. The combined
     ratio for the third quarter and nine months of 2000 reflects this reserve
     strengthening (a combined ratio effect of 10.4 points and 3.8 points for
     the third quarter and nine months, respectively) and the effect of a highly
     competitive pricing environment on policies written during 1999.

     LIFE, ACCIDENT AND HEALTH PREMIUMS AND BENEFITS The increase in life,
     accident and health premiums and benefits is due primarily to the
     acquisition of UTA in October 1999.

     START-UP MANUFACTURING BUSINESSES AFC's pretax operating earnings include
     losses of $4.1 million for the third quarter of 2000 ($6.7 million for the
     first nine months) from two start-up manufacturing businesses acquired in
     2000 from their former owners. The businesses are expected to reach
     "break-even" by the latter part of 2001.

     OTHER INCOME Other income increased $6.4 million (13%) in the third quarter
     of 2000 compared to 1999 as $11.2 million in income from the sale of
     certain lease rights and increased fee income generated by certain
     insurance operations were partially offset by a decrease in income from the
     sale of operating assets. For the nine months, other income increased $45
     million (42%) compared to 1999 primarily due to increased fee income
     generated by certain insurance operations and income from the lease rights
     sale and lease residuals.

     REALIZED GAINS Realized capital gains have been an important part of the
     return on investments in marketable securities. Individual securities are
     sold creating gains and losses as market opportunities exist.
<PAGE>
     GAIN ON SALE OF OTHER INVESTMENTS In September 2000, GAFRI realized a $27.2
     million pretax gain on the sale of its minority ownership in a company
     engaged in the production of ethanol. GAFRI's investment was repurchased by
     the ethanol company which, following the purchase, became wholly-owned by
     AFC's Chairman.

     GAIN ON SALE OF SUBSIDIARIES In 2000, AFC recognized a $25 million second
     quarter pretax gain representing an earn-out related to the 1998 sale of
     its Commercial lines division and a $6 million third quarter pretax loss on
     the sale of Stonewall Insurance Company.


                                       17
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

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

     ANNUITY BENEFITS Annuity benefits reflect amounts accrued on annuity
     policyholders' funds accumulated. 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 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.

     INTEREST ON BORROWED MONEY Interest expense for the third quarter and nine
     months of 2000 increased compared to 1999 due primarily to higher average
     indebtedness.

     OTHER OPERATING AND GENERAL EXPENSES Other operating and general expenses
     for the nine months of 2000 include second quarter charges of $32.5 million
     related to an agreement to settle a lawsuit against a GAFRI subsidiary and
     $8.8 million for an adverse California Supreme Court ruling against an AFC
     property and casualty subsidiary. Other operating and general expenses
     increased $5.0 million (5%) in the third quarter and, excluding these
     litigation charges, $30.6 million (12%) for the nine months of 2000
     compared to 1999 primarily due to the inclusion of the operations of UTA
     following its acquisition in October 1999 and increased expenses from
     certain start-up operations.

     INVESTEE CORPORATION Equity in net earnings of investee represents AFC's
     proportionate share of Chiquita's earnings. Chiquita reported net losses
     for the third quarter of 2000 and 1999 of $53.7 million and $36.7 million,
     respectively. For the nine months of 2000, Chiquita reported a net loss of
     $6.0 million compared to net income of $19.4 million for the 1999 period.

     In 1993, the European Union ("EU") implemented a regulatory system
     governing the importation of bananas into the EU. This quota system, which
     has been ruled illegal by the World Trade Organization, has significantly
     impacted Chiquita's sales and market share in Europe as well as banana
     prices in other world-wide markets. To date, the United States government
     has been unable to obtain relief from the EU. These factors have led to a
     significant decline in Chiquita's operating results and in the quoted
     market value of AFC's Chiquita investment. Should AFC's management conclude
     that the decline in the quoted market price of its Chiquita investment is
     other than temporary, a writedown of the investment would be recognized.

     CUMULATIVE EFFECT OF ACCOUNTING CHANGE In the first quarter of 1999, GAFRI
     implemented Statement of Position 98-5, "Reporting on the Costs of Start-Up
     Activities." The SOP requires that costs of start-up activities be expensed
     as incurred and that unamortized balances of previously deferred costs be
     expensed and reported as the cumulative effect of a change in accounting
     principle. Accordingly, AFC expensed previously capitalized start-up costs
     of $3.8 million (net of minority interest and taxes) in the first quarter
     of 1999.

        ----------------------------------------------------------------


<PAGE>
                                     Item 3

             Quantitative and Qualitative Disclosure of Market Risk
             ------------------------------------------------------

     As of September 30, 2000, there were no material changes to the information
     provided in AFC's Form 10-K for 1999 under the caption "Exposure to Market
     Risk" in Management's Discussion and Analysis of Financial Condition and
     Results of Operations.


                                       18


<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q
                                     PART II
                                OTHER INFORMATION


                                     Item 1

                                Legal Proceedings
                                -----------------


     In February 1994, the USX Corporation ("USX") paid nearly $600 million in
     satisfaction of antitrust judgments entered against its subsidiary, The
     Bessemer & Lake Erie Railroad ("B&LE"). In May 1994, USX/B&LE filed two
     lawsuits, one in state and the other in federal court, against American
     Premier as the reorganized successor of The Penn Central Corporation
     seeking to recover this amount (plus interest) under theories of indemnity
     and contribution law.

     In 1998, all pending suits were dismissed on American Premier's Motions for
     Summary Judgment. These decisions were appealed by USX/B&LE and each
     appellate court affirmed the decision of the lower court dismissing the
     lawsuits. Plaintiffs then petitioned for and were denied re-hearings by
     panels of federal and state appellate court judges.

     Plaintiffs did not appeal the federal courts' decisions to the U.S. Supreme
     Court and the time for doing so has now expired.

     Plaintiffs appealed the state decision to the Ohio Supreme Court, which, on
     August 4, 2000, agreed to allow an appeal of the state appellate court's
     decision. On August 14, 2000, American Premier filed a Motion to Dismiss
     the appeal as being improvidently granted. On October 4, 2000, the Ohio
     Supreme Court granted this Motion and dismissed the appeal. Plaintiffs
     filed a Motion for Reconsideration of the dismissal on October 16, 2000.
     American Premier and its outside counsel continue to believe that American
     Premier will not suffer any material loss from the remaining state court
     appeal.

     In June 2000, Great American Life Insurance Company ("GALIC") entered into
     a Memorandum of Understanding to settle a purported class action lawsuit
     (Woodward v. Great American Life Insurance Company, Hamilton County Court
     of Common Pleas, Case No. A9900587, filed February 2, 1999). In the
     settlement, GALIC agreed to (i) create a fund against which certain former
     policyholders can submit claims for reimbursement of a portion of surrender
     charges incurred, (ii) record lump-sum credits to certain annuities and
     (iii) allow certain annuity holders to transfer their annuity value to
     other products issued by GALIC or its subsidiaries. The complaint filed in
     the lawsuit had sought unspecified money damages based on alleged (i)
     failure of GALIC to allow the tax-free transfer of the annuity value of
     certain annuities to other product providers, and (ii) misleading
     disclosures concerning GALIC's interest crediting practices. The settlement
     is set for a fairness hearing in the trial court on November 29, 2000.




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<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q
                                     PART II
                                OTHER INFORMATION


                                     Item 6

                        Exhibits and Reports on Form 8-K
                        --------------------------------


(a) Exhibit 27.1 - Financial Data Schedule as of September 30, 2000.  For
                   submission in electronic filing only.

(b) Reports on Form 8-K:  none



        ----------------------------------------------------------------



                                    Signature
                                    ---------


Pursuant to the requirements of the Securities Exchange Act of 1934, American
Financial Corporation has duly caused this Report to be signed on its behalf by
the undersigned duly authorized.



                                    American Financial Corporation




November 9, 2000                    BY:   Fred J. Runk
                                          -----------------------------------
                                          Fred J. Runk
                                          Senior Vice President and Treasurer










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