--------------------------------------------------------------------------------
                       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, 2002                                                   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, 2002, 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 30
--------------------------------------------------------------------------------

<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,
                                                                 2002             2001
                                                         ------------      -----------
<S>                                                     <C>              <C>
ASSETS:
  Cash and short-term investments                         $   869,544      $   543,644
  Investments:
    Fixed maturities - at market
      (amortized cost - $11,314,846 and $10,593,205)       11,777,646       10,748,605
    Other stocks - at market
      (cost - $172,290 and $187,810)                          278,390          313,710
    Policy loans                                              215,003          211,288
    Real estate and other investments                         244,531          262,801
                                                          -----------      -----------
        Total investments                                  12,515,570       11,536,404

  Recoverables from reinsurers and prepaid
    reinsurance premiums                                    2,678,900        2,286,509
  Agents' balances and premiums receivable                    790,144          666,171
  Deferred acquisition costs                                  902,114          818,323
  Other receivables                                           288,386          254,137
  Variable annuity assets (separate accounts)                 437,000          529,590
  Prepaid expenses, deferred charges and other assets         476,482          451,362
  Goodwill                                                    312,594          312,134
                                                          -----------      -----------

                                                          $19,270,734      $17,398,274
                                                          ===========      ===========
<PAGE>
LIABILITIES AND CAPITAL:
  Unpaid losses and loss adjustment expenses              $ 5,006,795      $ 4,777,580
  Unearned premiums                                         1,908,904        1,640,955
  Annuity benefits accumulated                              6,233,334        5,832,120
  Life, accident and health reserves                          939,878          638,522
  Payable to reinsurers                                       465,449          296,462
  Payable to American Financial Group, Inc.                   318,400          356,689
  Long-term debt:
    Holding companies                                         162,143          228,252
    Subsidiaries                                              270,723          270,752
  Variable annuity liabilities (separate accounts)            437,000          529,590
  Amounts due brokers for securities purchased                249,151           31,417
  Accounts payable, accrued expenses and other
    liabilities                                             1,060,649          857,267
                                                          -----------      -----------
        Total liabilities                                  17,052,426       15,459,606

  Minority interest                                           495,047          460,737

  Shareholders' Equity:
    Preferred Stock - at 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                                           988,981          984,125
    Retained earnings                                         338,901          255,127
    Unrealized gain on marketable securities, net             313,600          156,900
                                                          -----------      -----------
        Total shareholders' equity                          1,723,261        1,477,931
                                                          -----------      -----------

                                                          $19,270,734      $17,398,274
                                                          ===========      ===========
</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,
                                             -----------------------        -------------------------
                                                 2002           2001              2002           2001
                                                 ----           ----              ----           ----
<S>                                         <C>         <C>               <C>            <C>
INCOME:
  Property and casualty insurance
    premiums                                 $605,012     $  664,381        $1,827,855     $1,988,667
  Life, accident and health premiums           80,972         69,116           224,616        208,807
  Investment income                           216,874        219,137           651,351        643,301
  Realized gains (losses) on:
    Securities                                (23,096)           (22)          (88,386)       (33,328)
    Subsidiaries                              (10,769)         7,065           (10,769)         5,479
  Other income                                 66,451         56,759           176,468        171,966
                                             --------     ----------        ----------     ----------
                                              935,444      1,016,436         2,781,135      2,984,892

COSTS AND EXPENSES:
  Property and casualty insurance:
    Losses and loss adjustment expenses       443,625        626,642         1,345,575      1,649,269
    Commissions and other underwriting
      expenses                                158,848        189,327           495,803        567,203
  Annuity benefits                             68,685         74,016           215,226        213,996
  Life, accident and health benefits           69,579         53,952           184,891        160,246
  Interest charges on borrowed money           12,296         14,236            34,944         47,886
  Other operating and general expenses        133,614        116,345           368,525        338,721
                                             --------     ----------        ----------     ----------
                                              886,647      1,074,518         2,644,964      2,977,321
                                             --------     ----------        ----------     ----------

Operating earnings (loss) before
  income taxes                                 48,797        (58,082)          136,171          7,571
Provision (credit) for income taxes            14,555        (20,581)           22,943         (1,282)
                                             --------     ----------        ----------     ----------

Net operating earnings (loss)                  34,242        (37,501)          113,228          8,853

Minority interest expense, net of tax          (7,356)        (7,984)          (18,735)       (19,091)
Equity in net losses of
  investees, net of tax                        (2,746)        (6,395)           (7,833)       (12,042)
                                             --------     ----------        ----------     ----------
Earnings (loss) before cumulative
  effect of accounting change                  24,140        (51,880)           86,660        (22,280)
Cumulative effect of accounting change           -              -                 -           (10,040)
                                             --------     ----------        ----------     ----------

NET EARNINGS (LOSS)                          $ 24,140    ($   51,880)       $   86,660    ($   32,320)
                                             ========     ==========        ==========     ==========
</TABLE>

                                                             3
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                 AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                             (Dollars in Thousands)
<TABLE>
                                                    Common Stock               Unrealized
                                       Preferred     and Capital    Retained      Gain on
                                           Stock         Surplus    Earnings   Securities             Total
                                       ---------    ------------    --------   ----------        ----------
<S>                                    <C>            <C>         <C>          <C>             <C>

BALANCE AT JANUARY 1, 2002               $72,154        $993,750    $255,127     $156,900        $1,477,931

Net earnings                                -               -         86,660         -               86,660
Change in unrealized                        -               -           -         156,700           156,700
                                                                                                 ----------
  Comprehensive income                                                                              243,360

Capital contribution from parent                           4,600                                      4,600
Dividends on Preferred Stock                -               -         (2,886)        -               (2,886)
Other                                       -                256        -            -                  256
                                         -------        --------    --------     --------        ----------

BALANCE AT SEPTEMBER 30, 2002            $72,154        $998,606    $338,901     $313,600        $1,723,261
                                         =======        ========    ========     ========        ==========





BALANCE AT JANUARY 1, 2001               $72,154        $984,413    $258,349     $139,200        $1,454,116

Net loss                                    -               -        (32,320)        -              (32,320)
Change in unrealized                        -               -           -         114,600           114,600
                                                                                                 ----------
  Comprehensive income                                                                               82,280

Capital contribution from parent                           9,200                                      9,200
Dividends on Preferred Stock                -               -         (2,886)        -               (2,886)
Other                                       -             (1,326)       -            -               (1,326)
                                         -------        --------    --------     --------        ----------

BALANCE AT SEPTEMBER 30, 2001            $72,154        $992,287    $223,143     $253,800        $1,541,384
                                         =======        ========    ========     ========        ==========
</TABLE>












                                        4
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                 AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In Thousands)
<TABLE>
                                                               Nine months ended
                                                                  September 30,
                                                           --------------------------
                                                                 2002            2001
                                                                 ----            ----
<S>                                                      <C>            <C>

OPERATING ACTIVITIES:
  Net earnings (loss)                                      $   86,660     ($   32,320)
  Adjustments:
    Cumulative effect of accounting change                       -             10,040
    Equity in net losses of investees                           7,833          12,042
    Depreciation and amortization                             150,492         111,343
    Annuity benefits                                          215,226         213,996
    Realized losses on investing activities                    91,315           1,106
    Deferred annuity and life policy acquisition costs       (121,160)       (111,377)
    Increase in reinsurance and other receivables            (513,806)       (383,034)
    Increase in other assets                                  (75,286)        (32,298)
    Increase in insurance claims and reserves                 561,134         589,761
    Increase in payable to reinsurers                         168,987         120,443
    Increase in other liabilities                              92,924          58,820
    Increase in minority interest                              12,210           9,788
    Other, net                                                 (2,342)          4,398
                                                           ----------      ----------
                                                              674,187         572,708
                                                           ----------      ----------
INVESTING ACTIVITIES:
  Purchases of and additional investments in:
    Fixed maturity investments                             (3,718,410)     (1,609,151)
    Equity securities                                          (9,217)         (5,556)
    Subsidiary                                                (48,500)           -
    Real estate, property and equipment                       (37,870)        (43,660)
  Maturities and redemptions of fixed maturity
    investments                                             1,256,037         579,916
  Sales of:
    Fixed maturity investments                              2,057,781         666,593
    Equity securities                                          20,144          11,978
    Subsidiaries                                                 -             40,395
    Real estate, property and equipment                        12,731          46,683
  Cash and short-term investments of acquired
    (former) subsidiaries, net                                  4,392        (134,237)
  Decrease (increase) in other investments                     13,435          (4,711)
                                                           ----------      ----------
                                                             (449,477)       (451,750)
                                                           ----------      ----------
<PAGE>
FINANCING ACTIVITIES:
  Fixed annuity receipts                                      599,174         454,189
  Annuity surrenders, benefits and withdrawals               (410,561)       (482,997)
  Net transfers from variable annuity assets                   12,318           3,252
  Additional long-term borrowings                              79,000         185,668
  Reductions of long-term debt                               (145,655)       (102,067)
  Borrowings from AFG                                          10,800          14,077
  Payments to AFG                                             (48,000)        (77,500)
  Capital contribution                                          7,000          14,000
  Repurchase of trust preferred securities                       -            (75,000)
  Cash dividends paid                                          (2,886)         (2,886)
                                                           ----------      ----------
                                                              101,190         (69,264)
                                                           ----------      ----------

NET INCREASE IN CASH AND SHORT-TERM INVESTMENTS               325,900          51,694

Cash and short-term investments at beginning
  of period                                                   543,644         437,263
                                                           ----------      ----------

Cash and short-term investments at end of period           $  869,544      $  488,957
                                                           ==========      ==========
</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 a period based on estimated future principal
      payments and adjusted to reflect actual payments.

      Gains or losses on securities are determined on the specific
      identification basis. When a decline in the value of a specific investment
      is considered to be other than temporary, a provision for impairment is
      charged to earnings and the cost basis of that investment is reduced.

      Emerging Issues Task Force Issue No. 99-20 established a new standard for
      recognizing interest income and impairment on certain asset-backed
      investments. Interest income on these investments is recorded at a yield
      based on projected cash flows. The yield is adjusted prospectively to
      reflect actual cash flows and changes in projected amounts. Impairment
      losses on these investments must be recognized when (i) the fair value of
      the security is less than its cost basis and (ii) there has been an
      adverse change in the expected cash flows. The new standard became
      effective on April 1, 2001. Impairment losses on initial application of
      this rule were recognized as the cumulative effect of an accounting
      change. Subsequent impairments are recognized as a component of net
      realized gains and losses.
<PAGE>
      GOODWILL Goodwill represents the excess of cost of subsidiaries over AFC's
      equity in their underlying net assets. Through December 31, 2001, goodwill
      was being amortized over periods of 20 to 40 years. Effective January 1,
      2002, AFC implemented Statement of Financial Accounting Standards ("SFAS")
      No. 142, under which goodwill is no longer amortized but is subject to an
      impairment test at least annually. As required under SFAS No. 142, AFC
      will complete the transitional test for goodwill impairment (as of January
      1, 2002) by the end of 2002. Any resulting write-down will be reported by
      restating first quarter 2002 results for the cumulative effect of a change
      in accounting principle.

                                        6
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


      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 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 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. Payable to reinsurers
      includes ceded premiums retained by AFC's insurance subsidiaries under
      contracts to fund ceded losses as they become due. AFC's insurance
      subsidiaries also assume reinsurance from other companies. Income on
      reinsurance assumed is recognized based on reports received from ceding
      companies.

             DEFERRED ACQUISITION COSTS ("DPAC") Policy acquisition costs
      (principally commissions, premium taxes and other marketing and
      underwriting expenses) related to the production of new business are
      deferred. 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.

      DPAC related to annuities and universal life insurance products is
      deferred to the extent deemed recoverable and amortized, with interest, in
      relation to the present value of expected gross profits on the policies.
      To the extent that realized gains and losses result in adjustments to the
      amortization of DPAC related to annuities, such adjustments are reflected
      as components of realized gains. DPAC related to annuities is also
      adjusted, net of tax, for the change in amortization that would have been
      recorded if the unrealized gains (losses) from securities had actually
      been realized. This adjustment is included in unrealized gains (losses) on
      marketable securities.

      DPAC related to traditional life and health insurance is amortized over
      the expected premium paying period of the related policies, in proportion
      to the ratio of annual premium revenues to total anticipated premium
      revenues.
<PAGE>
             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 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. Establishing reserves for asbestos and
      environmental claims involves considerably more judgment than other types
      of claims due to, among other things, inconsistent court decisions, an
      increase in bankruptcy filings as a result of asbestos-related
      liabilities, novel theories of coverage, and judicial interpretations that
      often expand theories of recovery and broaden the scope of coverage.

      Loss reserve liabilities are subject to the impact of changes in claim
      amounts and frequency and other factors. Changes in estimates of the
      liabilities for losses and loss adjustment expenses are reflected in the
      Statement of Operations in the period in which determined. In spite of the
      variability inherent in such

                                        7
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


      estimates, management believes that the liabilities for unpaid losses and
      loss adjustment expenses are adequate.

             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 the original
      projections of investment yields, 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"), an
      83%-owned subsidiary, earns a fee. Investment funds are selected and may
      be changed only by the policyholder, who retains all investment risk.
      Accordingly, GAFRI's liability for these accounts equals the value of the
      account assets.

             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. Estimates are accrued during the
      period in which premiums are 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.
<PAGE>
      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) American Financial Group, Inc.'s ("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


                                        8
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


      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 AFG's Retirement and Savings Plan. The
      Company makes all contributions to the retirement fund and matches a
      portion of employee contributions to the savings fund. Employees have been
      permitted to direct the investment of their contributions to independently
      managed investment funds, while Company contributions have been invested
      primarily in securities of AFG and affiliates. Employees are being
      afforded the flexibility to direct the investment of a portion of their
      vested retirement fund account balances (increasing from 12.5% in July
      2002 to 100% in April 2004) from securities of AFG and its affiliates to
      independently managed investment funds. As of September 30, 2002, the Plan
      owned 12% of AFG's outstanding common stock. Company contributions 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 employees earn such
      benefits.

      DERIVATIVES Derivatives included in AFC's Balance Sheet consist primarily
      of investments in common stock warrants (included in other stocks), the
      equity-based component of certain annuity products (included in annuity
      benefits accumulated) and call options (included in other investments)
      used to mitigate the risk embedded in the equity-indexed annuity products.
      Changes in the fair value of derivatives are included in current earnings.

      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.    ACQUISITIONS AND SALES OF SUBSIDIARIES

      NEW JERSEY PRIVATE PASSENGER AUTOMOBILE INSURANCE BUSINESS In September
      2002, an AFC subsidiary entered into an agreement under which Palisades
      Safety and Insurance Association and Palisades Insurance Company will
      assume the subsidiary's obligations to renew its private passenger
      automobile insurance business written in New Jersey. AFC recognized a
      $10.8 million pretax loss on the transaction. As of September 9, 2002, AFC
      no longer accepts any new private passenger automobile insurance in that
      state.

      MANHATTAN NATIONAL LIFE INSURANCE On June 28, 2002, GAFRI acquired
      Manhattan National Life Insurance Company ("MNL") from Conseco, Inc. for
      $48.5 million in cash. At June 30, 2002, MNL had approximately $290
      million of assets and statutory capital and surplus of $27.5 million.

      SEVEN HILLS INSURANCE COMPANY In July 2001, AFC sold Seven Hills Insurance
      Company for $18.4 million, realizing a pretax gain of $7.1 million. As a
      part of the sale, AFC assumed all liability for Seven Hills' business
      prior to the date of the sale.

      JAPANESE DIVISION In December 2000, AFC agreed to sell its Japanese
      property and casualty division to Mitsui Marine & Fire Insurance Company
      of America for $22 million in cash and recorded an estimated $10.7 million
      pretax loss. Upon completion of the sale in March 2001, AFC realized an
      additional pretax loss of $1.6 million and deferred a gain of
      approximately $21 million on ceded insurance; the deferred gain is being
      recognized over the estimated settlement period (weighted average of 4
      years) of the ceded claims.























                                       10
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


C.    SEGMENTS OF OPERATIONS AFC's property and casualty group is engaged
      primarily in specialty and private passenger automobile insurance
      businesses. 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, fidelity and surety
      bonds, collateral protection, and umbrella and excess coverages. The
      Personal group writes nonstandard and preferred/standard private passenger
      auto and other personal insurance coverage. AFC's annuity, life and health
      business markets primarily retirement products as well as life and
      supplemental health insurance.
<PAGE>
      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,
                                               -----------------------      -------------------------
                                                   2002           2001            2002           2001
                                                   ----           ----            ----           ----
<S>                                           <C>         <C>             <C>            <C>
        REVENUES (a)
        Property and casualty insurance:
          Premiums earned:
            Specialty                          $403,738     $  390,254      $1,130,439     $1,062,749
            Personal                            201,290        273,905         697,110        924,166
            Other lines                             (16)           222             306          1,752
                                               --------     ----------      ----------     ----------
                                                605,012        664,381       1,827,855      1,988,667
          Investment and other income            99,196        117,233         275,133        331,008
                                               --------     ----------      ----------     ----------
                                                704,208        781,614       2,102,988      2,319,675
        Annuities, life and health (b)          225,787        228,044         650,829        647,636
        Other                                     5,449          6,778          27,318         17,581
                                               --------     ----------      ----------     ----------
                                               $935,444     $1,016,436      $2,781,135     $2,984,892
                                               ========     ==========      ==========     ==========

        OPERATING PROFIT (LOSS)
        Property and casualty insurance:
          Underwriting:
            Specialty                          $  4,706    ($   32,119)     $   17,377    ($   38,958)
            Personal                             (2,223)       (21,104)        (10,116)       (84,681)
            Other lines (c)                          56        (98,365)        (20,784)      (104,166)
                                               --------     ----------      ----------     ----------
                                                  2,539       (151,588)        (13,523)      (227,805)
          Investment and other income            45,259         73,115         141,433        217,464
                                               --------     ----------      ----------     ----------
                                                 47,798        (78,473)        127,910        (10,341)
        Annuities, life and health                7,387         36,959          40,476         84,417
        Other (d)                                (6,388)       (16,568)        (32,215)       (66,505)
                                               --------     ----------      ----------     ----------
                                               $ 48,797    ($   58,082)     $  136,171     $    7,571
                                               ========     ==========      ==========     ==========
</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)  Represents development of lines in "run-off"; AFC has ceased
             underwriting new business in these operations.
        (d)  Includes holding company expenses.






                                       11
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

D.    GOODWILL  Effective January 1, 2002, goodwill is no longer amortized but
      is subject to annual impairment testing under a two step process.  Under
      the first step, an entity's net assets are broken down into reporting
      units and compared to their fair value.  If the carrying amount of a
      reporting unit exceeds its fair value, the second step of the goodwill
      impairment test is performed to measure the amount of impairment loss,
      if any.  AFC has completed the first step of its transitional impairment
      test and has identified potential impairment of goodwill in its annuities
      and life insurance segment and the personal lines segment of its property
      and casualty insurance business. The second step of the impairment test,
      that will measure the amount of impairment loss, will be completed by the
      end of the year with any resulting impairment charge reported by
      restating first quarter 2002 results for the cumulative effect of a
      change in accounting principle.  Management believes that while an
      impairment charge may be as much as 15% of the carrying value of goodwill
      at September 30, 2002, it may be as little as half of that amount.

      If the goodwill amortization of $3.5 million in the third quarter and
      $10.4 million in the first nine months of 2001 had not been expensed, net
      losses for the periods would have been $48.4 million and $22.0 million,
      respectively.

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,
                                                                    2002             2001
                                                            ------------      -----------
<S>                                                           <C>               <C>
           HOLDING COMPANIES:
             AFC notes payable under bank line                  $140,000         $203,000
             APU 10-7/8% Subordinated Notes due May 2011          11,512           11,557
             Other                                                10,631           13,695
                                                                --------         --------

                                                                $162,143         $228,252
                                                                ========         ========
           SUBSIDIARIES:
             GAFRI 6-7/8% Senior Notes due June 2008            $100,000         $100,000
             GAFRI notes payable under bank line                 121,100          121,100
             Notes payable secured by real estate                 35,779           36,253
             Other                                                13,844           13,399
                                                                --------         --------

                                                                $270,723         $270,752
                                                                ========         ========
</TABLE>
<PAGE>
      At September 30, 2002, scheduled principal payments on debt for the
      balance of 2002 and the subsequent five years were as follows (in
      millions):

                        Holding
                      Companies     Subsidiaries           Total
                      ---------     ------------          ------
           2002          $147.6           $  1.4          $149.0
           2003             -                2.1             2.1
           2004             -              123.3           123.3
           2005             -               11.3            11.3
           2006             -               19.6            19.6
           2007              .1               .2              .3

      AFC and GAFRI each have an unsecured credit agreement with a group of
      banks under which they can borrow up to $300 million and $155 million,
      respectively. Borrowings bear interest at floating rates based on prime or
      Eurodollar rates. Loans mature in December 2002 under the AFC credit
      agreement and in December


                                       12
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

      2004 under the GAFRI credit agreement.  AFC's management expects to
      complete a replacement bank agreement by the end of November.

G.    MINORITY INTEREST  Minority interest in AFC's balance sheet is comprised
      of the following (in thousands):
<TABLE>
<CAPTION>
                                                           September 30,     December 31,
                                                                   2002             2001
                                                           ------------      -----------
<S>                                                          <C>             <C>

           Interest of AFG (parent) and noncontrolling
             shareholders in subsidiaries' common stock        $352,134         $317,824
           Preferred securities issued by
             subsidiary trusts                                  142,913          142,913
                                                               --------         --------
                                                               $495,047         $460,737
                                                               ========         ========
</TABLE>
      PREFERRED SECURITIES Wholly-owned subsidiary trusts of GAFRI have issued
      preferred securities and, in turn, purchased a like amount of 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 trusts' obligations.

      The preferred securities consisted of the following (in thousands):
<TABLE>
<CAPTION>
      Date of                                      September 30,   December 31,  Optional
      Issuance         Issue (Maturity Date)               2002           2001   Redemption Dates
      -------------    ------------------------    ------------    -----------   --------------------
<S>                  <C>                             <C>            <C>        <C>
      November 1996    GAFRI 9-1/4% TOPrS (2026)        $72,913        $72,913   Currently redeemable
      March 1997       GAFRI 8-7/8% Pfd   (2027)         70,000         70,000   On or after 3/1/2007
</TABLE>

      MINORITY INTEREST EXPENSE Minority interest expense is comprised of (in
      thousands):

                                                          Nine months ended
                                                            September 30,
                                                         -------------------
                                                            2002        2001
         Interest of AFG (parent) and noncontrolling        ----        ----
           shareholders in earnings of subsidiaries      $14,934     $10,122
         Effect of basis difference in realized gains
           (losses) of subsidiaries                       (2,517)       -
         Accrued distributions by subsidiaries
           on trust issued securities, net of tax          6,318       8,969
                                                         -------     -------
                                                         $18,735     $19,091
                                                         =======     =======
<PAGE>
H.    SHAREHOLDERS' EQUITY  At September 30, 2002, and December 31, 2001,
      American Financial Group 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, 2002, and December 31, 2001, 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)
           outstanding at September 30, 2002, and December 31, 2001.




                                       13
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


      The change in unrealized gain 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>
                      2002
     --------------------------------------
     Unrealized holding gains on securities
       arising during the period                       $183.7    ($62.5)    ($13.9)      $107.3
     Realized losses included in net income              88.4     (30.8)      (8.2)        49.4
                                                       ------     -----      -----       ------
     Change in unrealized gain on
       marketable securities, net                      $272.1    ($93.3)    ($22.1)      $156.7
                                                       ======     =====      =====       ======

                      2001
     ---------------------------------------
     Unrealized holding gains on securities
       arising during the period                       $158.5    ($54.9)    ($18.3)      $ 85.3
     Adoption of EITF 99-20                              16.9      (6.0)      (0.9)        10.0
     Realized losses included in net income
       and unrealized gains of subsidiary sold           33.1     (11.6)      (2.2)        19.3
                                                       ------     -----      -----       ------
     Change in unrealized gain on
       marketable securities, net                      $208.5    ($72.5)    ($21.4)      $114.6
                                                       ======     =====      =====       ======
</TABLE>
I.    EQUITY IN LOSSES OF INVESTEES 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.

      During the fourth quarter of 2000, AFC sold the equity interests to a
      group of employees for nominal cash consideration plus warrants to
      repurchase a significant ownership interest. Due to the absence of
      significant financial investment by the buyers relative to the amount of
      loans ($61.5 million at December 31, 2000) owed to AFC subsidiaries, the
      sale was not recognized as a divestiture for accounting purposes. Assets
      of the businesses transferred ($53.5 million at September 30, 2002 and
      $57.1 million at December 31, 2001) are included in other assets;
      liabilities of the businesses transferred ($9.9 million at September 30,
      2002 and $11.8 million at December 31, 2001, after consolidation and
      elimination of loans from AFC subsidiaries) are included in other
      liabilities. Investee losses in the Statement of Operations represents
      AFC's equity in the losses of these two companies. One of the businesses
      is involved in litigation impacting its operations; see "Investee
      Corporations" in Management's Discussion and Analysis.
<PAGE>
J.    COMMITMENTS AND CONTINGENCIES There have been no significant changes to
      the matters discussed and referred to in AFC's Quarterly Report on Form
      10-Q for June 30, 2002 and in Note M "Commitments and Contingencies" of
      AFC's Annual Report on Form 10-K for 2001.

K.    SUBSEQUENT EVENT  In October 2002, AFC's newly-formed subsidiary,
      Infinity Property and Casualty Corporation ("Infinity"), filed a
      registration statement with the Securities and Exchange Commission with
      respect to an initial public offering of its common stock.  All of the
      offered shares would be sold by AFC which will own approximately 30% of
      Infinity after the offering.  Prior to the offering, AFC will transfer to
      Infinity the following subsidiaries involved primarily in the issuance of
      nonstandard auto policies: Atlanta Casualty Company, Infinity Insurance
      Company, Leader Insurance Company and Windsor Insurance Company.  In
      addition, Great American Insurance Company, an AFC subsidiary, will
      transfer to Infinity its personal insurance business written through
      independent agents.  The businesses being transferred generated
      aggregate net written premiums of approximately $550 million and
      $710 million for the nine months ended September 30, 2002 and 2001,
      respectively, and


                                       14
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


       $900 million for the year ended December 31, 2001. AFC expects to realize
       a gain on the sale, depending on the pricing of the shares being offered.
       The proceeds will be used primarily to reduce outstanding bank debt and
       to provide additional capital to AFC's remaining subsidiaries.
















































                                       15
<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 1999, AFC initiated an enterprise-wide project to study
      its information technology ("IT") resources, needs and opportunities. The
      initiative, involving improvements in physical infrastructure and business
      support systems, entails extensive effort and costs over a period of
      several years. While the costs precede the expected savings, management
      believes the benefits will exceed the costs incurred, all of which have
      been and will be funded through available working capital.

      INDEPENDENT RATINGS In October 2002, the independent ratings of AFC's
      property and casualty subsidiaries were affirmed (at A) by Standard &
      Poor's and (at A+) by Fitch. The ratings of AFC's life and annuity
      subsidiaries were affirmed (at A+) by Fitch, but downgraded (from A to A-)
      by Standard & Poor's. Management of AFC's subsidiaries which market
      annuity products believes that a rating in the "A" category by at least
      one rating agency is necessary to successfully compete in certain annuity
      markets. Management intends to maintain the capital of its significant
      subsidiaries at levels currently indicated by the rating agencies as
      appropriate for their current ratings.

      FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of
      1995 provides a safe harbor for forward-looking statements. Some of the
      forward-looking statements can be identified by the use of forward-looking
      words such as "believes", "could", "expects", "may", "will", "should",
      "seeks", "intends", "plans", "estimates", "anticipates" or the negative
      version of those words or other comparable terminology. Examples of such
      forward-looking statements include statements relating to: expectations
      concerning market and other conditions and their effect on future
      premiums, revenues, earnings and investment activities; recoverability of
      asset values; expected losses and the adequacy of reserves for asbestos,
      environmental pollution and mass tort claims; rate increases, improved
      loss experience and expected expense savings resulting from recent
      initiatives.
<PAGE>
      Actual results could differ materially from those contained in or implied
      by such forward-looking statements for a variety of factors including:

        o    changes in economic conditions, including interest rates,
             performance of securities markets, and the availability of
             capital; o regulatory actions;
        o    changes in legal environment;
        o    tax law changes;
        o    levels of natural catastrophes, terrorist events, incidents of
             war and other major losses;
        o    the ultimate amount of liabilities associated with certain
             asbestos and environmental-related claims;

                                       16
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


        o    adequacy of insurance reserves;
        o    availability of reinsurance and ability of reinsurers to pay
             their obligations;
        o    trends in mortality and morbidity;
        o    competitive pressures, including the ability to obtain rate
             increases; and
        o    changes in debt and claims paying ratings.

      The forward-looking statements herein are made only as of the date of this
      report. AFC assumes no obligation to publicly 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 9% at September 30,
      2002, and 13% at December 31, 2001. Including amounts due AFG, the ratio
      was 22% at September 30, 2002, and 28% at December 31, 2001.

      SOURCES OF FUNDS Management believes the parent holding companies have
      sufficient resources to meet their liquidity requirements, primarily
      through funds generated by their subsidiaries' operations. If funds
      provided by subsidiaries through dividends and tax payments are
      insufficient to meet fixed charges in any period, the holding companies
      would be required to generate cash through borrowings, sales of securities
      or other assets, or similar transactions.

      AFC has a revolving credit agreement with several banks under which it can
      borrow up to $300 million until December 31, 2002. At September 30, 2002,
      $140 million of the credit line had been used. On November 13, 2002, AFC
      borrowed an additional $55 million on the credit line. These funds were
      used to provide additional capital to AFC's insurance subsidiaries.
      Management expects to complete a replacement bank agreement by the end of
      November. The new agreement will run for three years and be similar in
      size and terms to the old agreement. The interest rate on borrowings will
      be about 1% higher than under the old line.

      INVESTMENTS  AFC's investment portfolio at September 30, 2002, contained
      $11.8 billion in "Fixed maturities" and $278.4 million in "Other stocks",
      all carried at market value with unrealized gains and losses reported as a
      separate component of shareholders' equity on an after-tax basis. At
      September 30, 2002, AFC had pretax net unrealized gains of $462.8 million
      on fixed maturities and $106.1 million on other stocks.

      Approximately 94% of the fixed maturities held by AFC at September 30,
      2002, were rated "investment grade" (credit rating of AAA to BBB) by
      nationally recognized rating agencies. Investment grade securities
      generally bear lower yields and lower degrees of risk than those that are
      unrated and noninvestment grade. Management believes that a high quality
      investment portfolio is more likely to generate a stable and predictable
      investment return.
<PAGE>
      Individual portfolio securities are sold creating gains or losses as
      market opportunities exist. Since all of these securities are carried at
      market value in the balance sheet, there is virtually no effect on
      liquidity or financial condition upon the sale and ultimate realization of
      unrealized gains and losses.








                                       17
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


      Summarized information for the unrealized gains and losses recorded in
      AFC's balance sheet at September 30, 2002, is shown in the following table
      (dollars in millions). Approximately $329 million of "Fixed maturities"
      and $30 million of "Other stocks" had no unrealized gains or losses at
      September 30, 2002.

                                                        Securities  Securities
                                                          with         With
                                                       Unrealized   Unrealized
                                                          Gains       Losses
                                                       ----------   ----------
        Fixed Maturities
        ----------------
          Market value of securities                      $10,162       $1,287
          Amortized cost of securities                    $ 9,525       $1,461
          Gross unrealized gain or loss                   $   637       $  174
          Market value as % of amortized cost                 107%          88%
          Number of security positions                      1,719          374
          Number individually exceeding
            $2 million gain or loss                            37           26
          Concentration of gains or losses by
            type or industry (exceeding 5% of
            unrealized):
              Mortgage-backed securities                  $ 175.9       $  8.4
              U.S. government and government agencies        58.7           .9
              Banks                                          53.7           -
              State and municipal                            46.0          3.8
              Electric services                              34.2         12.9
              Asset-backed securities                        19.9          9.6
              Telephone communications                        6.4         10.0
              Air transportation                              6.0         54.5
              Cable television                                2.3          9.2
          Percentage rated investment grade                    98%          68%

        Other Stocks
        ------------
          Market value of securities                      $   226       $   22
          Cost of securities                              $   108       $   34
          Gross unrealized gain or loss                   $   118       $   12
          Market value as % of cost                           209%          65%
          Number individually exceeding
            $2 million gain or loss                             3            1

      AFC's investment in equity securities of Provident Financial Group, a
      Cincinnati-based commercial banking and financial services company,
      represents $110 million of the $118 million in unrealized gains on other
      stocks at September 30, 2002.
<PAGE>
      The table below sets forth the scheduled maturities of fixed maturity
      securities at September 30, 2002, based on their market values.

                                                  Securities    Securities
                                                     with          With
                                                  Unrealized    Unrealized
           Maturity                                  Gains        Losses
           --------                               ----------    ----------
             One year or less                          6%            3%
             After one year through five years        16            30
             After five years through ten years       27            38
             After ten years                          14            15
                                                     ---           ---
                                                      63            86
             Mortgage-backed securities               37            14
                                                     ---           ---
                                                     100%          100%
                                                     ===           ===
                                       18
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


      AFC realized aggregate losses of $9.2 million during the third quarter of
      2002 on $59.6 million in sales of fixed maturity securities (12 issues; 11
      issuers) that had unrealized losses at June 30, 2002. Market values of
      five of the issues increased an aggregate of $804,000 from June 30 to date
      of sale. Two of the securities were AAA-rated interest-only
      mortgage-backed securities ("IOs") that decreased in value by $3.8 million
      from June 30 to the date of sale due to the decline in market interest
      rates. Market values of the remaining five securities decreased an
      aggregate of $1.4 million from June 30 to the sale date. Four of the
      twelve issues had unrealized losses greater than $500,000 at June 30.
      Actual losses on sale of these four securities were $131,000 less than the
      unrealized loss at June 30. Although AFC had the ability to continue
      holding these investments, its intent to hold them changed due primarily
      to deterioration in the issuer's credit, decisions to lessen exposure to a
      particular credit or industry, or to modify asset allocation within the
      portfolio.

      The table below (dollars in millions) summarizes the length of time
      securities have been in an unrealized gain or loss position at September
      30, 2002.
<TABLE>
<CAPTION>
                                                                                  Market
                                                      Aggregate     Aggregate   Value as
                                                         Market    Unrealized  % of Cost
                                                          Value   Gain (Loss)      Basis
                                                      ---------   -----------  ---------
<S>                                                   <C>             <C>        <C>

     FIXED MATURITIES
     ----------------------------------------------
     SECURITIES WITH UNREALIZED GAINS:
       Exceeding $500,000 at 9/30/02 and for:
         Less than one year (380 issues)                $ 4,679          $359      108.3%
         More than one year (74 issues)                     912           105      113.0
       Less than $500,000 at 9/30/02 (1,265 issues)       4,571           173      103.9
                                                        -------          ----
                                                        $10,162          $637      106.7
                                                        =======          ====

     SECURITIES WITH UNREALIZED LOSSES:
       Exceeding $500,000 at 9/30/02 and for:
         Less than one year (71 issues)                 $   474         ($108)      81.4%
         More than one year (15 issues)                      99           (35)      73.8
       Less than $500,000 at 9/30/02 (288 issues)           714           (31)      96.1
                                                        -------          ----
                                                        $ 1,287         ($174)      88.1
                                                        =======          ====
<PAGE>
     OTHER STOCKS
     ----------------------------------------------
     SECURITIES WITH UNREALIZED GAINS:
       Exceeding $500,000 at 9/30/02 and for:
         Less than one year (1 issue)                   $     6          $  1      120.0%
         More than one year (4 issues)                      201           115      233.7
       Less than $500,000 at 9/30/02 (56 issues)             19             2      111.8
                                                        -------          ----
                                                        $   226          $118      209.3
                                                        =======          ====

     SECURITIES WITH UNREALIZED LOSSES:
       Exceeding $500,000 at 9/30/02 and for:
         Less than one year (3 issues)                  $     4          $ (7)      36.4%
         More than one year (0 issues)                      -              -          -
       Less than $500,000 at 9/30/02 (78 issues)             18            (5)      78.3
                                                        -------          ----
                                                        $    22         ($ 12)      64.7
                                                        =======          ====
</TABLE>
      When a decline in the value of a specific investment is considered to be
      "other than temporary," a provision for impairment is charged to earnings
      (accounted for as a realized loss) and the cost basis of that investment
      is reduced. The determination of whether unrealized losses are "other than
      temporary" requires judgment based on subjective as well as objective
      factors. A listing of factors considered and resources used is contained
      in the discussion of "Investments" under Management's Discussion and
      Analysis in AFC's 2001 Form 10-K.

                                       19
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


      Based on its analysis, management believes (i) AFC will recover its cost
      basis in the securities with unrealized losses and (ii) that AFC has the
      ability and intent to hold the securities until they mature or recover in
      value. Should either of these beliefs change with regard to a particular
      security, a charge for impairment would likely be required. While it is
      not possible to accurately predict if or when a specific security will
      become impaired, charges for other than temporary impairment could be
      material to results of operations in a future period. Management believes
      it is not likely that future impairment charges will have a significant
      effect on AFC's liquidity.

      UNCERTAINTIES As more fully explained in the following paragraphs,
      management believes that the areas posing the greatest risk of material
      loss are the adequacy of its insurance reserves and American Premier's
      contingencies arising out of its former operations.

               PROPERTY AND CASUALTY INSURANCE RESERVES Future costs of claims
      are projected based on historical trends adjusted for changes in
      underwriting standards, policy provisions, product mix and other factors.
      Estimating the liability for unpaid losses and LAE is inherently
      judgmental and is influenced by factors which are subject to significant
      variation. Through the use of analytical reserve development techniques,
      management monitors items such as the effect of inflation on medical,
      hospitalization, material, repair and replacement costs, general economic
      trends and the legal environment.

               ASBESTOS AND ENVIRONMENTAL-RELATED ("A&E") RESERVES Establishing
      reserves for A&E claims is subject to uncertainties that are significantly
      greater than those presented by other types of claims. Estimating ultimate
      liability for asbestos claims presents unique and difficult challenges to
      the insurance industry due to, among other things, inconsistent court
      decisions, an increase in bankruptcy filings as a result of
      asbestos-related liabilities, novel theories of coverage, and judicial
      interpretations that often expand theories of recovery and broaden the
      scope of coverage. The casualty insurance industry is engaged, as is AFC,
      in extensive litigation over these coverage and liability issues as the
      volume and severity of claims against asbestos defendants continue to
      increase.

      While management believes that AFC's reserves for A&E claims are a
      reasonable estimate of ultimate liability for such claims, actual results
      may vary materially from the amount currently recorded due to outstanding
      issues and uncertainties such as whether coverage exists, whether claims
      are to be allocated among triggered policies and implicated years, whether
      claimants who exhibit no signs of illness will be successful in pursuing
      their claims, predicting the number of future claims, and the impact of
      recent bankruptcy filings.
<PAGE>
      Further, certain policyholders assert that each bodily injury claim should
      be treated as a separate occurrence under the policy, and that their
      claims are not subject to aggregate limits on coverage because either
      their policies did not contain aggregate limits with respect to products
      liability coverage or, faced with exhaustion of products coverage limits,
      their asbestos claims fall within non-products liability coverage which is
      not subject to any aggregate limit. These claims are now being contested
      in insurance coverage litigation in various jurisdictions. In rejecting
      the claims that are the basis of this litigation, AFC believes its
      coverage defenses are substantial and intends to continue to vigorously
      defend its position. Nonetheless, the outcome of disputes related to
      asbestos and environmental matters, whether through litigation or
      negotiation, may result in liabilities exceeding current related reserves
      by amounts that

                                       20
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


      could have a material adverse effect upon AFC's results of operations and
      financial condition.

      For further discussion of uncertainties and litigation involving AFC, see
      "Legal Proceedings" in AFC's Annual Report on Form 10-K for 2001 and
      Quarterly Report on Form 10-Q for June 30, 2002.

      RESULTS OF OPERATIONS

      GENERAL Pretax operating earnings for the third quarter and nine months of
      2002 were $48.8 million and $136.2 million compared to a pretax loss of
      $58.1 million and pretax earnings of $7.6 million for the comparable 2001
      periods. Results for the third quarter of 2001 include a $100 million
      special asbestos and environmental charge and losses of $25 million from
      the World Trade Center terrorist attack. Excluding these items, the
      improvement in the comparable third quarter and nine months was due
      primarily to significantly improved property and casualty underwriting
      results.

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

      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, fidelity and surety bonds, collateral protection,
      and umbrella and excess coverages.

      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 an applicant's driving record,
      type of vehicle, age or other criteria.

      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.









                                       21
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


      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,
                                                  --------------------       ----------------------
                                                      2002        2001            2002         2001
                                                      ----        ----            ----         ----
<S>                                             <C>          <C>            <C>           <C>

         Gross Written Premiums (GAAP)
         -----------------------------
           Specialty                              $  839.5      $653.3        $2,050.8     $1,663.9
           Personal                                  280.7       295.9           956.6        975.8
           Other lines                                -           -                 .3           .2
                                                  --------      ------        --------     --------
                                                  $1,120.2      $949.2        $3,007.7     $2,639.9
                                                  ========      ======        ========     ========

         Net Written Premiums (GAAP)
         ---------------------------
           Specialty                              $  474.2      $417.3        $1,254.7     $1,167.7
           Personal (a)                              150.9       190.6           652.2        813.1
           Other lines                                -           -                 .3         -
                                                  --------      ------        --------     --------
                                                  $  625.1      $607.9        $1,907.2     $1,980.8
                                                  ========      ======        ========     ========

         Combined Ratios (GAAP)
         ----------------------
           Specialty (b)                              98.8%      108.3%           98.4%       103.7%
           Personal                                  101.2       107.7           101.5        109.2
           Aggregate (including
             discontinued lines)(c)                   99.6       122.8           100.8        111.4
</TABLE>

          (a)  Reflects the ceding of $127 million and $298 million in premiums
               in the third quarter and nine months of 2002 compared to
               $98 million and $148 million in the comparable 2001 periods
               under a reinsurance agreement (effective April 1, 2001).
          (b)  Includes 6.5% and 2.3% for the three and nine month periods
               of 2001 relating to the attack on the World Trade Center.
          (c)  Includes an aggregate of 18.8% and 6.2% for the three and nine
               month periods of 2001 relating to the A&E charge and the attack
               on the World Trade Center.
<PAGE>
          SPECIAL A&E CHARGE During the third quarter of 2001, AFC recorded an
      A&E charge of $100 million after experiencing an increase in the number
      and severity of asbestos claims and observing the developments of adverse
      trends in the property and casualty insurance industry concerning asbestos
      losses. This charge, accompanied by a transfer of $36 million from excess
      reserves for other environmental claims, resulted in an increase of $136
      million in asbestos reserves. For a discussion of the uncertainties
      relative to asbestos and environmental claims, see MD&A - "Uncertainties -
      Asbestos and Environmental-related Reserves."

      SPECIALTY The Specialty group's gross written premiums increased 28% for
      the third quarter and 23% for the nine months of 2002 over the comparable
      2001 periods. These increases reflect the impact of rate increases and the
      realization of growth opportunities in certain commercial markets,
      partially offset by the decision to discontinue certain lines of business
      (during 2001) that were not achieving adequate returns. Specialty rate
      increases averaged over 30% during the first nine months of 2002 and are
      expected to be in excess of 30% for the year. Net written premiums
      increased 14% for the third quarter and 7% for the nine months over the
      comparable 2001 periods. Strong growth in gross written premiums was
      offset by increased reinsurance coverage in certain lines.

      Excluding the effect of the attack on the World Trade Center, the
      Specialty group's combined ratio improved 3 points for both the third
      quarter and first nine months of 2002. The improvement reflects strategic
      changes in the mix of specialty businesses and the impact of rate
      increases.

                                       22
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


      PERSONAL The Personal group's gross written premiums for the third quarter
      decreased 5% compared to the third quarter of 2001 due primarily to
      intentional reductions in new business volume in certain markets and
      through the direct channel, partially offset by the effect of continuing
      rate increases. Rate increases implemented in the first nine months of
      2002 were 10% and are expected to be slightly above 10% for the year.
      Effective April 1, 2001, AFC began reinsuring 80% of the automobile
      physical damage business written by three of its insurance subsidiaries.
      In July 2001, the agreement was amended to increase the level of
      reinsurance to 90% and to add an additional insurance subsidiary. In
      September 2002, our use of the existing agreement was expanded to include
      physical damage business written by agents of Great American Insurance
      pool companies. This agreement enables AFC to reallocate some of its
      capital to the more profitable specialty operations. The decline in net
      written premiums for the third quarter and nine months reflects the impact
      of this reinsurance agreement.

      As a result of rate increases implemented over the last year, the Personal
      group's combined ratio improved by 6.5 points for the third quarter and
      7.7 points for the nine months compared to the 2001 periods. Nearly 90% of
      the Personal group's business is written through independent agents.
      Business written through this distribution channel achieved an
      underwriting profit for the fourth consecutive quarter with a combined
      ratio of about 98% for the first nine months of 2002. This business
      comprises the insurance operations to be included in the recently
      announced proposed public offering of Infinity Property and Casualty
      Corporation.

      LIFE, ACCIDENT AND HEALTH PREMIUMS AND BENEFITS Life, accident and health
      premiums increased for the third quarter and first nine months of 2002
      compared to the 2001 periods due primarily to the acquisition of Manhattan
      National Life in June 2002 and growth in GAFRI's existing operations. In
      addition to this growth, life, accident and health benefits for the 2002
      periods reflect the effects of adverse mortality in GAFRI's life insurance
      operations.
<PAGE>
      REAL ESTATE OPERATIONS AFC's subsidiaries are engaged in a variety of real
      estate operations including hotels, apartments, office buildings and
      recreational facilities; they also own several parcels of land. Revenues
      and expenses of these operations, including gains and losses on disposal,
      are included in AFC's Statement of Operations as shown below (in
      millions).

<TABLE>
<CAPTION>
                                                 Three months ended      Nine months ended
                                                    September 30,          September 30,
                                                 ------------------      -----------------
                                                  2002         2001       2002        2001
                                                  ----         ----       ----        ----
<S>                                             <C>         <C>        <C>         <C>

        Other income                             $26.0        $24.3      $70.9       $85.7
        Other operating and general expenses      19.8         17.9       52.0        49.5
        Interest charges on borrowed money          .6           .3        1.9         1.6
        Minority interest expense, net              .5           .5        1.0         3.8
</TABLE>
      Other income includes net pretax gains on the sale of real estate assets
      of $87,000 in the third quarter and $7.7 million in the first nine months
      of 2002 compared to $2.0 million and $26.6 million for the 2001 periods.

      OTHER INCOME Excluding gains on sales of real estate assets (discussed
      above), other income increased $11.6 million (21%) for the third quarter
      and $23.4 million (16%) for the first nine months of 2002 compared to 2001
      due primarily to higher income from real estate operations (including the
      effect of a hotel acquired in May 2002), fees earned by the Specialty
      group's new warranty business and higher fee income in certain other
      specialty insurance operations.

                                       23


<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


      REALIZED GAINS Realized capital gains have been an important part of the
      return on investments. Individual assets are sold creating gains and
      losses as market opportunities exist.

      LOSSES ON SECURITIES Realized losses on securities include provisions for
      other than temporary impairment of securities still held as follows: third
      quarter of 2002 and 2001 - $49.8 million and $22.9 million; nine months of
      2002 and 2001 - $138.2 million and $60.1 million, respectively. Increased
      impairment charges in recent years reflect a rise in corporate defaults in
      the marketplace. The increase in impairment charges in 2002 reflects
      primarily the downturn in the communications and airline industries and
      writedowns of certain asset-backed securities.

      Warrants to purchase common stock of publicly traded companies are
      generally considered derivatives and marked to market through current
      earnings as realized gains and losses. Realized losses on securities
      include losses of $7.5 million in the third quarter of 2002 and $6.9
      million for the first nine months of 2002 compared to gains of $60,000 and
      $2.4 million in the 2001 periods to adjust the carrying value of AFC's
      investment in warrants to market value ($18.8 million at September 30,
      2002).

      GAINS (LOSSES) ON SUBSIDIARIES In September 2002, AFC recognized a $10.8
      million pretax loss on the disposal of its New Jersey private passenger
      auto business. In 2001, AFC recognized a third quarter pretax gain of $7.1
      million on the sale of Seven Hills Insurance Company and a first quarter
      $1.6 million pretax loss in connection with the sale of the Japanese
      division.

      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).
      Historically, management has been able to react to changes in market
      interest rates and maintain a desired interest rate spread. The recent
      interest rate environment has resulted in spread compression which could
      continue through 2003.

      INTEREST EXPENSE Interest expense for the third quarter and first nine
      months of 2002 decreased compared to 2001 as lower average interest rates
      on AFC's variable rate debt (including AFC's payable to AFG) more than
      offset the effect of higher average indebtedness and a higher average
      payable to reinsurers balances.
<PAGE>
      OTHER OPERATING AND GENERAL EXPENSES Other operating and general expenses
      for the third quarter and first nine months of 2001 include goodwill
      amortization of $3.5 million and $10.4 million, respectively. Under SFAS
      No. 142, which was implemented January 1, 2002, goodwill is no longer
      amortized. Excluding 2001 goodwill amortization, other operating and
      general expenses increased $20.7 million (18%) for the third quarter and
      $40.2 million (12%) for the first nine months compared to 2001. Expenses
      of the Specialty group's new warranty business, higher expenses in real
      estate operations (due primarily to the acquisition of a new hotel in May
      2002), higher expenses related to growth in certain other Specialty
      operations and increased amortization of annuity and life deferred policy
      acquisition costs ("DPAC") were partially offset by lower IT-related
      expenses. The increase in amortization of annuity and life DPAC in the
      third quarter and the first nine months of 2002 compared to the same
      periods in 2001 reflects (i) the accelerated write-off of variable annuity
      DPAC due to the


                                       24
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED


      effect of the decline in the stock market and (ii) higher average DPAC
      balances due to internal growth and acquisitions.

      INCOME TAXES The 2002 provision for income taxes includes a $16 million
      first quarter tax benefit for the reduction of previously accrued amounts
      due to the resolution of certain tax matters.

      INVESTEE CORPORATIONS Equity in losses of investee corporations represents
      losses of two start-up manufacturing businesses (see Note I). In November
      2001, an injunction was issued against one of the companies which would
      prohibit it from using equipment subject to litigation alleging the
      misappropriation of a trade secret and would effectively close the plant.
      The injunction was subsequently modified to permit operations to continue
      and require certain escrow payments. Since the injunction was imposed, the
      investee manufactured and has installed equipment that it believes does
      not misappropriate a trade secret; the equipment subject to the injunction
      was destroyed. As a result, the injunction no longer affects plant
      operations and escrow payments are no longer required. Even so, if the
      investee's operating results fail to improve, a substantial portion of
      AFC's investment ($30.4 million as of September 30, 2002), may be written
      off.

      CUMULATIVE EFFECT OF ACCOUNTING CHANGE The cumulative effect of accounting
      change represents the implementation of a new accounting standard (EITF
      99-20) which resulted in a write down of $16.9 million ($10.0 million
      after tax and minority interest) of the carrying value of certain
      collateralized debt obligations as of April 1, 2001.

      PROPOSED ACCOUNTING STANDARD GAFRI's variable annuity contracts contain a
      guaranteed minimum death benefit ("GMDB") (which may exceed the value of
      the policyholder's account) to be paid if the annuityholder dies before
      the annuity payout period commences.  At September 30, 2002, and
      December 31, 2001, the aggregate GMDB values (assuming every policyholder
      died on those dates) exceeded the market value of the underlying variable
      annuities by $253 million and $136 million, respectively. Industry
      practice varies, but GAFRI does not establish GAAP reserves for this
      mortality risk. If a proposed accounting standard becomes effective,
      GAFRI would be required to record a liability for the present value of
      expected GMDB payments. Initial recognition of a GAAP liability
      (estimated to be between 2% and 4% of the aggregate difference) would be
      accounted for as the cumulative effect of a change in accounting
      principles.

<PAGE>
                      ------------------------------------


                                     ITEM 3

             QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
             ------------------------------------------------------

      As of September 30, 2002, there were no material changes to the
      information provided in AFC's Form 10-K for 2001 under the caption
      "Exposure to Market Risk" in Management's Discussion and Analysis of
      Financial Condition and Results of Operations.



                                       25
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                                     ITEM 4

                             CONTROLS AND PROCEDURES
                             -----------------------

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

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


                                     PART II
                                OTHER INFORMATION

                                     ITEM 6

                        EXHIBITS AND REPORTS ON FORM 8-K
                        --------------------------------

(a) Exhibit 99 - Certification pursuant to 18 U.S.C. section 1350, as adopted
    pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K:  none


























                                       26
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q





                                    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 13, 2002                       BY: Fred J. Runk
                                            -----------------------------------
                                            Fred J. Runk
                                            Senior Vice President and Treasurer



































                                       27
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

                  SARBANES-OXLEY SECTION 302(a) CERTIFICATIONS


I, Carl H. Lindner, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of American Financial
     Corporation;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)  all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
<PAGE>
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



November 13, 2002                           BY: /s/Carl H. Lindner
                                                -------------------------------
                                                Carl H. Lindner
                                                Chairman of the Board and
                                                  Chief Executive Officer
                                                  (principal executive officer)

                                       28
<PAGE>
                       AMERICAN FINANCIAL CORPORATION 10-Q

            SARBANES-OXLEY SECTION 302(a) CERTIFICATIONS - CONTINUED


I, Fred J. Runk, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of American Financial
     Corporation;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)  all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and
<PAGE>
6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



November 13, 2002                       BY: /s/Fred J. Runk
                                            -----------------------------------
                                            Fred J. Runk
                                            Senior Vice President and Treasurer
                                            (principal financial officer)


                                       29