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, 1998                                       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 August 1, 1998, 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)

                                                  June 30,   December 31,
                                                     1998           1997
Assets:
Cash and short-term investments              $    274,984    $   231,227
Investments:
  Bonds and redeemable preferred stocks:
    Held to maturity - at amortized cost
      (market - $2,910,700 and $3,202,300)      2,822,029      3,120,106
    Available for sale - at market
      (amortized cost - $7,819,968 
      and $7,225,736)                           8,149,168      7,532,836
  Other stocks - principally at market
    (cost - $182,109 and $153,322)                437,309        446,222
  Investment in investee corporation              239,649        200,714
  Loans receivable                                408,647        512,608
  Real estate and other investments               218,891        215,472
     Total investments                         12,275,693     12,027,958

Recoverables from reinsurers and prepaid
  reinsurance premiums                          1,076,346        998,743
Agents' balances and premiums receivable          729,577        691,005
Deferred acquisition costs                        558,029        521,898
Other receivables                                 267,160        261,454
Deferred tax asset                                  4,299         41,413
Assets held in separate accounts                  343,590        300,491
Prepaid expenses, deferred charges and        
  other assets                                    336,470        364,385
Cost in excess of net assets acquired             298,327        299,408

                                              $16,164,475    $15,737,982
<PAGE>
Liabilities and Capital:
Unpaid losses and loss adjustment expenses    $ 4,368,302    $ 4,225,336
Unearned premiums                               1,323,952      1,328,910
Annuity benefits accumulated                    5,589,107      5,528,111
Life, accident and health reserves                752,671        709,899
Payable to American Financial Group, Inc.         321,913        352,766
Other long-term debt:
  Holding companies                               335,877        286,661
  Subsidiaries                                    213,980        194,084
Liabilities related to separate accounts          343,590        300,491
Accounts payable, accrued expenses and other
  liabilities                                     900,614        908,622
     Total liabilities                         14,150,006     13,834,880

Minority interest                                 520,523        509,619

Shareholders' Equity:
  Preferred Stock
    - $72,154 liquidation value                    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                                 944,728        936,154
  Retained earnings                               136,739         34,350
  Net unrealized gain on marketable 
    securities, net of deferred income 
      taxes                                       330,700        341,200
     Total shareholders' equity                 1,493,946      1,393,483

                                              $16,164,475    $15,737,982
                                2
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
          AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF EARNINGS
               (In Thousands, Except Per Share Data)


<TABLE>
<CAPTION>
                                                Three months ended        Six months ended
                                                    June 30,                  June 30,
                                                  1998         1997         1998         1997
<S>                                        <C>           <C>           <C>           <C>
Income:
  Property and casualty insurance
    premiums                                $  707,294    $  698,381    $1,383,466    $1,362,143
  Life, accident and health premiums            48,460        27,331        95,276        52,696
  Investment income                            229,207       214,583       449,438       427,335
  Equity in net earnings of investee            17,996        17,228        31,914        32,008
  Realized gains on sales of:
    Securities                                   7,142         4,198        14,588         6,011
    Investee and subsidiary                      1,716          -            9,420           731
    Other investments                             -             -            6,843          -
  Other income                                  26,317        25,823        63,850        52,247
                                             1,038,132       987,544     2,054,795     1,933,171

Costs and Expenses:
  Property and casualty insurance:
    Losses and loss adjustment expenses        564,078       495,187     1,063,903       964,511
    Commissions and other underwriting
      expenses                                 191,027       193,304       384,632       377,605
  Annuity benefits                              69,111        70,607       140,221       139,437
  Life, accident and health benefits            36,555        25,825        74,661        49,988
  Interest charges on borrowed money            18,023        22,515        35,054        46,126
  Minority interest expense                     10,946         4,274        23,087        13,727
  Other operating and general expenses          83,133        82,335       159,832       150,069
                                               972,873       894,047     1,881,390     1,741,463

Earnings before income taxes and                             
  extraordinary items                           65,259        93,497       173,405       191,708
Provision for income taxes                      25,673        32,783        67,409        69,004

Earnings before extraordinary items             39,586        60,714       105,996       122,704

Extraordinary items - loss on prepayment
  of debt                                          (36)          (23)         (721)          (78)

Net Earnings                                $   39,550    $   60,691    $  105,275    $  122,626
</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 on   Comprehensive
                                     Stock       Surplus   Earnings    Securities          Income
<S>                              <C>           <C>        <C>           <C>             <C>                         <C>
Balance at January 1, 1998         $72,154      $945,779   $ 34,350      $341,200

Net earnings                          -             -       105,275          -           $105,275
Dividends on Preferred Stock          -             -        (2,886)         -               -
Capital contribution from parent      -            8,354       -             -               -
Change in unrealized                  -             -          -          (10,500)        (10,500)
Other                                 -              220       -             -               -

Balance at June 30, 1998           $72,154      $954,353   $136,739      $330,700         $94,775



Balance at January 1, 1997        $162,760      $929,371   $  1,364      $183,400   
Net earnings                          -             -       122,626          -           $122,626
Dividends on Preferred Stock          -             -       (11,742)         -               -
Capital contribution from parent      -            8,353       -             -               -
Change in unrealized                  -             -          -           49,300          49,300
Other                                 -             (160)      -             -               -

Balance at June 30, 1997          $162,760      $937,564   $112,248      $232,700        $171,926
</TABLE>

                                4
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

          AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF CASH FLOWS
                          (In Thousands)

                                                       Six months ended
                                                             June 30,
                                                        1998         1997
Operating Activities:
  Net earnings                                    $  105,275   $  122,626
  Adjustments:                                    
   Extraordinary items                                   721           78
   Depreciation and amortization                      51,233       36,057
   Annuity benefits                                  140,221      139,437
   Equity in net earnings of investee                (31,914)     (32,008)
   Changes in reserves on assets                       1,083          506
   Realized gains on investing activities            (44,411)      (6,742)
   Increase in reinsurance and other            
     receivables                                    (121,030)     (77,692)
   Increase in other assets                          (43,744)     (18,136)
   Increase in insurance claims      
     and reserves                                    167,165       65,484
   Increase (decrease) in other liabilities           33,618     (122,376)
   Increase in minority interest                      11,462       15,761
   Dividends from investee                             2,400        2,400
   Other, net                                        (11,790)      (3,889)
                                                     260,289      121,506
Investing Activities:
  Purchases of and additional investments in:
   Fixed maturity investments                     (1,243,852)  (1,205,788)
   Equity securities                                 (33,137)     (16,555)
   Subsidiaries                                      (30,325)      (4,900)
   Real estate, property and equipment               (34,932)     (22,872)
  Maturities and redemptions of fixed maturity
   investments                                       772,496      360,774
  Sales of:
   Fixed maturity investments                        358,597      698,990
   Equity securities                                  12,194        9,552
   Subsidiary                                           -           2,500
   Real estate, property and equipment                30,989        1,914
  Cash and short-term investments of acquired
   (former) subsidiaries                              20,841          (70)
  Increase (decrease) in other investments            (4,843)      (2,233)
                                                    (151,972)    (178,688)
<PAGE>
Financing Activities:
  Fixed annuity receipts                             238,198      259,708
  Annuity surrenders, benefits and withdrawals      (354,790)    (288,531)
  Additional long-term borrowings                    202,248        7,053
  Reductions of long-term debt                      (134,164)     (54,820)
  Borrowings from AFG                                   -          44,100
  Payments to AFG                                    (22,500)    (101,500)
  Capital contribution                                 9,334        9,333
  Issuances of trust preferred securities               -         149,353
  Cash dividends paid                                 (2,886)     (11,742)
                                                     (64,560)      12,954

Net Increase (Decrease) in Cash and Short-term 
  Investments                                         43,757      (44,228)

Cash and short-term investments at beginning
  of period                                          231,227      404,831

Cash and short-term investments at end of period  $  274,984   $  360,603
                                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.

   AFC's Common Stock is owned by AFC Holding Company, a wholly-owned
   subsidiary of American Financial Group, Inc. ("AFG").  AFC's
   ownership of subsidiaries and significant affiliates was as
   follows:
 
                                                     June 30,   December 31,
                                                        1998    1997    1996
      American Annuity Corporation ("AAG")                81%     81%     81%
      American Financial Enterprises, Inc. ("AFEI")(*)    80%     80%     83%
      American Premier Underwriters, Inc.(*)              81%     81%     81%
      Chiquita Brands International, Inc.                 37%     39%     43%

      (*) AFG owned the remaining 20% of AFEI and 19% of American Premier at
          June 30, 1998 and December 31, 1997.
 <PAGE>
   Investments  Debt securities are classified as "held to maturity"
   and reported at amortized cost if AFC 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
   shareholders' 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.

   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.

   Short-term investments are carried at cost; loans receivable are
   stated primarily at the aggregate unpaid balance.
                                6
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


   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 40 years.

   Insurance  As discussed under "Reinsurance" below, unpaid losses
   and loss adjustment expenses and unearned premiums have not been
   reduced for reinsurance recoverable.

       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 reinsurance policies.  AFC's
   insurance subsidiaries report as 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, the deferral of
   acquisition costs is limited based upon their recoverability
   without any consideration for anticipated investment income.  DPAC
   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.
<PAGE>   
   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 ordinary life, accident and
   health policies are computed using a net level premium method.
   Computations are based on anticipated investment yield, mortality,
   morbidity and surrenders and include provisions for unfavorable
   deviations.  Reserves are modified as necessary to reflect actual
   experience and developing trends.
                                7
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


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

       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.

       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 the interests of noncontrolling shareholders in AFC
   subsidiaries, including preferred securities issued by trust
   subsidiaries of AAG, and the AFG direct ownership interest in
   American Premier Underwriters, Inc. ("American Premier" or "APU")
   and AFEI.  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.

   Issuances of Stock by Subsidiaries and Investees  Changes in AFC's
   equity in a subsidiary or an investee caused by issuances of the
   subsidiary's or investee's stock are accounted for as gains or
   losses where such issuance is not part of a broader reorganization.
 <PAGE>
   Income Taxes  AFC and American Premier have each filed consolidated
   federal income tax returns which include all 80%-owned U.S.
   subsidiaries, except for certain life insurance subsidiaries and
   their subsidiaries.  At the close of business on December 31, 1996,
   AFG contributed 81% of the common stock of American Premier to AFC.
   Accordingly, AFC and American Premier will file a consolidated
   return for 1997.

   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.
                                8
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


   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 (approximately 6% of covered
   compensation in 1997) are invested primarily in securities of AFG
   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  Costs associated with introducing new products and
   distribution channels are deferred by AAG until normal operations 
   are reached.  These deferred costs are amortized on a straight-line
   basis over 5 years.  See Management's Discussion and Analysis -
   "New Accounting Standards to be Implemented."

   Comprehensive Income  Effective January 1, 1998, AFC implemented
   Statement of Financial Accounting Standards ("SFAS") No. 130,
   "Reporting Comprehensive Income."  SFAS No. 130 uses the term
   "comprehensive income" to describe the total of net earnings plus
   other comprehensive income.  For AFC, other comprehensive income
   represents the change in net unrealized gain on marketable
   securities net of deferred taxes and a reclassification adjustment
   for gains and losses included in net earnings.  Implementation of
   this statement had no impact on net earnings or shareholders'
   equity.  Prior periods have been restated to conform to the current
   presentation.

   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.
                                9
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


B. Segments of Operations  AFC operates its property and casualty
   insurance business in three major segments:  nonstandard
   automobile, specialty lines, and commercial and personal lines.
   AFC's annuity and life business primarily sells tax-deferred
   annuities to employees of primary and secondary educational
   institutions and hospitals.  In addition, AFC has owned significant
   portions of the voting equity securities of certain companies
   (investee corporation - see Note C).

   The Financial Accounting Standards Board issued SFAS No. 131,
   "Disclosures about Segments of an Enterprise and Related
   Information", which is scheduled to become effective during the
   fourth quarter of 1998.  The implementation of SFAS No. 131 is not
   expected to have a material effect on the segments currently
   disclosed by AFC.

   The following table (in thousands) shows AFC's revenues by
   significant business segment.

                                            Six months ended June 30,
                                                    1998         1997
      Property and casualty insurance:
       Premiums earned:
         Nonstandard automobile               $  580,565   $  574,604
         Specialty lines                         517,875      482,711  
         Commercial and personal lines           263,332      286,647
         Other lines (a)                          21,694       18,181
                                               1,383,466    1,362,143
       Investment and other income               253,556      216,274
                                               1,637,022    1,578,417
      Annuities and life (b)                     373,992      302,426
      Other                                       11,867       20,320
                                               2,022,881    1,901,163
      Equity in net earnings of investee          31,914       32,008

                                              $2,054,795   $1,933,171

      (a) NSA operations in the United Kingdom have been reclassified to
          other lines.
      (b) Represents primarily investment income.

C. Investment in Investee Corporation  Investment in investee
   corporation reflects AFC's ownership of 24 million shares of
   Chiquita common stock.  The market value of this investment was
   $337 million and $391 million at June 30, 1998 and December 31,
   1997, respectively.  Chiquita is a leading international marketer,
   producer and distributor of bananas and other quality fresh and
   processed food products.
<PAGE>
   Summarized financial information for Chiquita follows (in
   millions):  
                                            Six months ended June 30,
                                                    1998         1997
         Net Sales                                $1,461       $1,278
         Operating Income                            144          139
         Net Income                                   94           84

D. Payable to American Financial Group  In December 1997, AFC and APU
   entered into a ten-year reciprocal Master Credit Agreement with AFG
   and AFC's direct parent, AFC Holding Company, under which funds are
   made available to each other at one percent over LIBOR.  At
   June 30, 1998 and December 31, 1997, AFC and APU had outstanding
   net borrowings due AFG and AFC Holding under the Master Credit
   Agreement of $321.9 million and $352.8 million (including accrued
   interest payable), respectively.
                                10
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


E. Other Long-Term Debt  The carrying value of long-term debt
   consisted of the following (in thousands):

                                                     June 30,December 31,
                                                          1998       1997
      Holding Companies:
       AFC notes payable to banks due December 2002   $ 97,000   $ 45,000
       AFC 9-3/4% Debentures due April 2004             79,049     79,792
       APU 9-3/4% Subordinated Notes due August 1999    90,733     92,127
       APU 10-5/8% Subordinated Notes due April 2000    43,299     43,889
       APU 10-7/8% Subordinated Notes due May 2011      17,558     17,586
       Other                                             8,238      8,267
   
                                                      $335,877   $286,661
      Subsidiaries:
       AAG 6-7/8% Senior Notes due June 2008          $100,000   $   -
       AAG notes payable to banks due
         in installments to December 2003               57,000    107,000
       AAG 11-1/8% Senior Subordinated Notes              -        24,080
       Notes payable secured by real estate             44,114     49,525
       Other                                            12,866     13,479
   
                                                      $213,980   $194,084

   At June 30, 1998, sinking fund and other scheduled principal
   payments on debt for the balance of 1998 and the subsequent five
   years were as follows (in thousands):

                     Holding
                   Companies  Subsidiaries        Total
       1998          $  -          $   967    $    967
       1999           89,853         2,039      91,892
       2000           42,042         8,751      50,793
       2001             -            1,473       1,473
       2002          102,349         1,364     103,713
       2003             -           58,402      58,402

   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.

   In February 1998, AFC entered into a new unsecured credit agreement
   with a group of banks under which AFC can borrow up to $300 million
   through December 2002.  Borrowings bear interest at floating rates
   based on prime or Eurodollar rates.
<PAGE>
   In January 1998, AAG replaced its existing bank lines with a new
   $200 million unsecured credit agreement.  Loans under the credit
   agreement mature from 2000 to 2003 and bear interest at floating
   rates based on prime or Eurodollar rates.  In February 1998, AAG
   borrowed $50 million under the line and retired its 11-1/8% Notes
   (including $24.3 million principal amount held by AAG and its
   subsidiaries).  In June 1998, AAG sold $100 million principal
   amount of 6-7/8% Senior Notes due 2008 to the public and used the
   net proceeds to reduce outstanding indebtedness under the credit
   agreement.
                                11
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


F. Minority Interest  Minority interest in AFC's balance sheet is
   comprised of the following (in thousands):

                                             June 30,  December 31,
                                                1998          1997
       Interest of AFG (parent) and of
         noncontrolling shareholders
         in subsidiaries' common stock      $295,523      $284,619
       Preferred securities issued by                     
         subsidiary trusts                   225,000       225,000

                                            $520,523      $509,619

   Trust Issued Preferred Securities  Wholly-owned subsidiary trusts
   of AAG have issued $225 million of preferred securities and, in
   turn, purchased $225 million of newly authorized AAG subordinated
   debt issues which provide interest and principal payments to fund
   the respective trusts' obligations.  The preferred securities are
   mandatorily redeemable upon maturity or redemption of the
   subordinated debt.

   The preferred securities are summarized as follows:

       Date of                                        Optional
       Issuance      Issue (Maturity Date)    Amount  Redemption Dates

       November 1996 9-1/4% TOPrS (2026) $75,000,000  On or after 11/7/2001
       March 1997    8-7/8% Pfd   (2027)  75,000,000  On or after 3/1/2007
       May 1997      7-1/4% ROPES (2041)  75,000,000  Prior to 9/28/2000 and
                                                         after 9/28/2001

   AAG effectively provides unconditional guarantees of its trusts'
   obligations.

   Minority Interest Expense  Minority interest expense is comprised
   of (in thousands):                               
                                                 Six months ended
                                                     June 30,
                                                   1998       1997
       Interest of AFG (parent) and
         noncontrolling shareholders in
         earnings of subsidiaries               $13,571    $ 7,744
       Accrued distributions on trust issued
         preferred securities                     9,516      5,983

                                                $23,087    $13,727

G. 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.  AFC's Preferred Stock consisted of the
   following:
<PAGE>
        Series J, no par value; $25.00 liquidating value per share;
        annual dividends per share $2.00; redeemable at $25.75 per
        share beginning December 2005 declining to $25.00 at December
        2007; 2,886,161 shares (stated value $72.2 million)
        outstanding at June 30, 1998 and December 31, 1997.
                               12
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


H. Unrealized Gain on Marketable Securities  The change in net
   unrealized gain on marketable securities for the six months ended
   June 30 included the following (in millions):
<TABLE>
<CAPTION>
                                                                  Minority
                                              Pretax      Taxes   Interest    Net
   <S>                                      <C>        <C>       <C>        <C>
                     1998
   Unrealized holding gains (losses) on
     securities arising during the period    ($  6.8)   $ 2.5     ($ .2)    ($ 4.5)
   Less reclassification adjustment for
     realized gains included in net income   (  10.1)     3.5        .6       (6.0)
   Change in net unrealized gain on
     marketable securities                   ($ 16.9)   $ 6.0      $ .4     ($10.5)


                     1997
   Unrealized holding gains (losses) on
     securities arising during the period     $ 87.2   ($30.6)    ($4.1)     $52.5
   Less reclassification adjustment for
     realized gains included in net income      (5.4)     1.9        .3       (3.2)
   Change in net unrealized gain on
     marketable securities                    $ 81.8   ($28.7)    ($3.8)     $49.3
</TABLE>

I. Extraordinary Items  Extraordinary items represent AFC's
   proportionate share of losses related to debt retirements by the
   following companies.  Amounts shown are net of minority interest
   and income tax benefits (in thousands):

                                       Six months ended
                                            June 30,
                                         1998      1997
        Holding Companies:
          AFC (parent)                  ($ 35)     ($36)
          APU (parent)                    (37)      (42)
        Subsidiaries:
          AAG                            (649)        -
     
                                        ($721)     ($78)
<PAGE>
J. Cash Flows - Fixed Maturity Investments  "Investing activities"
   related to fixed maturity investments in AFC's Statement of Cash
   Flows consisted of the following (in thousands):

                                       Held to      Available
                                      Maturity       For Sale        Total
        1998
        Purchases                     $    826     $1,243,026   $1,243,852
        Maturities and redemptions     374,625        397,871      772,496
        Sales                           31,940(*)     326,657      358,597

        1997
        Purchases                     $  1,675     $1,204,113   $1,205,788
        Maturities and redemptions     197,546        163,228      360,774
        Sales                             -           698,990      698,990

        (*) Sold (at a gain of $.2 million) due to significant deterioration
            in the issuers' creditworthiness.
                                13
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


K. Commitments and Contingencies  Other than as described in "Legal
   Proceedings" in Part II of this report, there have been no
   significant changes to the matters discussed and referred to in
   Note O "Commitments and Contingencies" in AFC's Annual Report on
   Form 10-K for 1997.

L. Subsequent Event  In July 1998, AAG reached a definitive agreement
   to sell its funeral services division for $164 million in cash.  At
   June 30, 1998, the carrying value of the funeral services division
   was approximately $125 million.  Completion of the sale, which is
   expected to occur in the fourth quarter of 1998, is subject to
   certain conditions, including receipt of regulatory approval.

                                14
<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 and shareholder dividends.  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.

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, regulatory
actions, level of catastrophe losses, 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 and excluding amounts due AFG) was approximately 18%
at June 30, 1998 and 17% at December 31, 1997.  Including amounts
due AFG, the ratio was 31% at June 30, 1998 and December 31, 1997.

AFC's ratio of earnings to fixed charges, excluding and including
preferred dividends, on a total enterprise basis are shown below.

                                       Six months       Year Ended
                                    Ended June 30,     December 31,
                                             1998             1997
  Earnings to fixed charges                  4.13             4.20
  Earnings to fixed charges plus
    preferred dividends                      3.77             3.52
<PAGE>
Sources of Funds  Management believes the parent holding companies
have sufficient resources to meet their liquidity requirements
through operations in the short-term and long-term future.  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.

AFC participates in a reciprocal Master Credit Agreement among the
various AFG holding companies under which funds are made available
to each other for general corporate purposes.  Amounts due AFG
under the Master Credit Agreement were $322 million at June 30, 
1998 and $345 million at December 31, 1997.

A new five-year, $300 million bank credit line was established by
AFC in February 1998, replacing two subsidiary holding company
lines.  The new credit line provides ample liquidity and can be
used to obtain funds for operating subsidiaries or, if necessary,
for the parent companies.  At June 30, 1998, there was $97 million
borrowed under the credit line.
                                15
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
               Management's Discussion and Analysis
   of Financial Condition and Results of Operations - Continued


Dividend payments from subsidiaries have been very important to the
liquidity and cash flow of the individual holding companies in the
past.  However, the reliance on such dividend payments has been
lessened by the combination of (i) strong capital at AFC's
insurance subsidiaries (and the related decreased likelihood of a
need for investment in those companies), (ii) the reductions of
debt at the holding companies (and the related decrease in ongoing
cash needs for interest and principal payments), (iii) AFC's
ability to obtain financing in capital markets, as well as (iv) the
sales of non-core investments.

Investments  Approximately 91% of the bonds and redeemable
preferred stocks held by AFC were rated "investment grade" (credit
rating of AAA to BBB) by nationally recognized rating agencies at
June 30, 1998.  Investment grade securities generally bear lower
yields and lower degrees of risk than those that are unrated and
non-investment 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 earnings before extraordinary items for the three
months and six months ended June 30, 1998 were $65.3 million and
$173.4 million, respectively, compared to $93.5 million and
$191.7 million in the comparable 1997 periods.  The decrease
reflects a deterioration in underwriting results in the property
and casualty operations due primarily to severe storms in the
midwestern part of the country during the 1998 second quarter and a
continuation of the adverse claims environment in the California
workers' compensation business.  These items were partially offset
by growth in investment income, higher realized gains on sales of
certain investments and income from the sale of real estate
properties (primarily in the first quarter).

Property and Casualty Insurance - Underwriting  AFC manages and
operates its property and casualty business as three major sectors.
The nonstandard automobile insurance companies (the "NSA Group")
insure risks not typically accepted for standard automobile
coverage because of the applicant's driving record, type of
vehicle, age or other criteria.  The specialty lines are a
diversified group of over twenty-five business lines that offer a
wide variety of specialty insurance products.  Some of the more
significant areas are California workers' compensation, executive
liability, inland and ocean marine, U.S.-based operations of
<PAGE>
Japanese companies, agricultural-related coverages, non-profit
liability, general aviation coverages, fidelity and surety bonds,
and umbrella and excess coverages.  The commercial and personal
lines provide coverages in workers' compensation, commercial multi-
peril, umbrella, commercial automobile, standard private passenger
automobile and homeowners insurance.

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.
                                16
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
               Management's Discussion and Analysis
   of Financial Condition and Results of Operations - Continued


For certain lines of business and products where the credibility of
the range of loss projections is less certain (primarily the
various specialty lines 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):

                                      Three months ended    Six months ended
                                              June 30,            June 30,
                                           1998     1997       1998      1997
  Net Written Premiums (GAAP)
    NSA Group                            $284.3   $320.9   $  606.7  $  642.1
    Specialty Operations                  272.6    257.6      519.5     522.0
    Commercial and Personal Operations    121.3    135.8      239.2     230.6
    Other lines (*)                         7.9      7.3       15.6      15.8
                                         $686.1   $721.6   $1,381.0  $1,410.5

  Combined Ratios (GAAP)
    NSA Group                              97.0%    96.9%      96.4%     96.8%
    Specialty Operations                  110.0     88.0      105.9      90.3
    Commercial and Personal Operations    116.7    102.7      110.4     102.9
    Aggregate (including other lines)     106.8     98.6      104.7      98.5

  (*) NSA operations in the United Kingdom have been reclassified to
      other lines.

  NSA Group  The NSA Group's net written premiums decreased 11% in
the second quarter and 5.5% in the first six months of the year
compared to the same 1997 periods.  The decline is due primarily to
stronger price competition in the industry.  Underwriting results
for the second quarter and the first six months of the year were
comparable to the previous periods.

  Specialty Operations  The Specialty Operations' net written
premiums increased 6% during the second quarter from the comparable
1997 period due primarily to the acquisition of a general aviation
division during 1997.  Net written premiums for the first six
months of 1998 were down slightly from 1997 due to the inclusion in
1997 of certain in-force amounts obtained under a reinsurance
agreement at the beginning of that year.  Underwriting results for
the second quarter and first six months of 1998 worsened from the
comparable periods in 1997 due to (i) losses from the midwestern
<PAGE>
storms in the second quarter of 1998, (ii) the continuation of the
adverse claims environment in the California workers' compensation
business, (iii) weak results in the general aviation business and
(iv) unusually good results in 1997 in executive liability and non-
profit organization lines.

  Commercial and Personal Operations  The Commercial and Personal
Operations' net written premiums declined 11% in the second quarter
from the comparable period in 1997 primarily due to a decrease in
personal automobile coverages in certain states and intense price
competition in the commercial casualty markets.  Net written
premiums were 4% higher in the first six months of 1998 due to the
initial impact of a reinsurance agreement for AFC's homeowners'
business (which is still in effect) which made first quarter 1997
premiums unusually low.  Excluding this impact, premiums declined
approximately 9% during the first six months of 1998.  The combined
ratio for the second quarter of 1998 includes 17 percentage points
due to losses from the midwestern storms.
                                17
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
               Management's Discussion and Analysis
   of Financial Condition and Results of Operations - Continued
                                 

Life, Accident and Health Premiums and Benefits  The increase in
life, accident and health premiums and benefits reflects primarily
AAG's acquisition of General Accident Life Assurance Company in
December 1997 and increased sales of pre-need life insurance.

Investment Income  Investment income increased $14.6 million (7%)
for the second quarter of 1998 and $22.1 million (5%) for the first
six months of 1998 compared to 1997 due primarily to an increase in
the average amount of investments held partially offset by
decreasing market interest rates.

Investee Corporations  Equity in net earnings of investee
corporations represents AFC's proportionate share of Chiquita's
earnings.  Chiquita reported net income for the second quarter and
first six months of 1998 of $53 million and $94 million,
respectively, compared to $41 million and $84 million for the same
periods in 1997.

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.
                                 
Gain on Sale of Investee and Subsidiary  Chiquita's public issuance
of shares of its common stock in the first and second quarters of
1998 resulted in pretax gains to AFC of $7.7 million and
$1.7 million in those periods.

Other Income  Other income increased $11.6 million (22%) during the
first six months of 1998 due primarily to income of $10.4 million
from the sale of operating real estate assets in the first quarter
of 1998.

Annuity Benefits  Annuity benefits reflect interest credited to
annuity policyholders' funds accumulated.  The majority of AAG's
fixed rate annuity products permit AAG 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.

Interest on Borrowed Money  Interest expense decreased $4.5 million
(20%) during the second quarter and $11.1 million (24%) during the
first six months of 1998.  The decrease reflects a decrease in
average amounts borrowed and a decrease in average rates.

Minority Interest Expense  Minority interest expense increased
$6.7 million (156%) during the second quarter and $9.4 million
(68%) during the first six months of 1998.  Dividends paid by
subsidiaries on their trust issued preferred securities have varied
as the securities were issued over the past few years.
<PAGE>
Other Operating and General Expenses  Other operating and general
expenses increased $9.8 million (7%) during the first six months of
1998 compared to 1997 due primarily to the inclusion of the
operations of General Accident following its acquisition in late
1997.

New Accounting Standard to be Implemented  Statement of Position 
98-5, "Reporting on the Costs of Start-Up Activities," was issued
during the second quarter of 1998.  The SOP is effective for fiscal
years beginning after December 15, 1998, and requires that costs of
start-up activities be expensed as incurred.  The SOP requires that
unamortized balances of previously deferred costs be expensed no
later than the first quarter of 1999 and reported as the cumulative
effect of a change in accounting principle.  AAG had $11 million in
capitalized start-up costs at June 30, 1998.
                                18
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                              PART II
                         OTHER INFORMATION


                              Item 1
                                 
                         Legal Proceedings
                                 
Since 1994, AFC and its subsidiary, American Premier, have
disclosed the existence of lawsuits which had been filed by USX
Corporation and one of its former subsidiaries seeking $600
million.  The disclosures stated that the companies believed they
had sufficient defenses and did not expect to suffer any material
loss from the litigation.

On May 29, 1998, AFC's subsidiary, American Premier, received
notice that the largest and last of the lawsuits had been dismissed
in state court.  This decision is similar to one issued earlier in
the year by the United States District Court for the Northern
District of Ohio granting American Premier's Motion for Summary
Judgment in separate cases based on the same facts.  All of USX's
claims against American Premier have now been dismissed with
prejudice.  Although USX has appealed the earlier District Court
decision and will likely appeal the May 1998 state court decision,
AFC and American Premier continue to believe that they will not
suffer a material loss from this litigation.


                              Item 4
                                 
        Submission of Matters to a Vote of Security Holders

AFC's Annual Meeting of Shareholders was held on May 28, 1998; the
only issue voted upon was the election of a Board of Directors.
All of the eight nominees were elected.  The votes cast for and
those withheld are set forth below:

         Name               For       Against    Withheld   Abstain

  Theodore H. Emmerich   12,962,032     N/A        18,638      N/A
  James E. Evans         12,962,131     N/A        18,539      N/A
  Thomas M. Hunt         12,962,230     N/A        18,440      N/A
  Carl H. Lindner        12,962,032     N/A        18,638      N/A
  Carl H. Lindner III    12,962,230     N/A        18,440      N/A
  Keith E. Lindner       12,962,131     N/A        18,539      N/A
  S. Craig Lindner       12,962,131     N/A        18,539      N/A
  William R. Martin      12,962,131     N/A        18,539      N/A
____________________
N/A - Not Applicable
<PAGE>                                 
                              Item 5
                                 
                         Other Information

Shareholder Proposals

The Proxy Form used by the Company for its Annual Meeting of
Shareholders typically grants authority to management's proxies to
vote in their discretion on any matters that come before the
Meeting as to which adequate notice has not been received.  In
order for a notice to be deemed adequate for the 1999 Annual
Meeting, it must be received by March 7, 1999.  In order for a
proposal to be considered for inclusion in the Company's proxy
statement for that Meeting, it must be received by December 31,
1998.
                               19
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                              PART II
                   OTHER INFORMATION - CONTINUED


                              Item 6
                                 
                 Exhibits and Reports on Form 8-K

(a) Exhibit 27 - Financial Data Schedule - Included in Report filed
      electronically with the Securities and Exchange Commission.

(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



August 12, 1998                 BY:Fred J. Runk
                                   Fred J. Runk
                                   Senior Vice President and Treasurer


                                20