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
March 31, 1997                                      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 May 1, 1997, there were 45,000,000 shares of the
Registrant's Common Stock outstanding, all of which were owned by
American Financial Group, Inc.









                           Page 1 of 16
<PAGE>                
                AMERICAN FINANCIAL CORPORATION 10-Q
                              PART I
                       FINANCIAL INFORMATION

          AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEET
                      (Dollars In Thousands)

                                                        March 31,  December 31,
                                                            1997          1996
           Assets
Cash and short-term investments                      $   404,801   $   404,831
Investments:
  Bonds and redeemable preferred stocks:
    Held to maturity - at amortized cost
      (market - $3,412,300 and $3,528,100)             3,439,287     3,491,126
    Available for sale - at market
      (amortized cost - $6,681,142 and $6,362,597)     6,674,942     6,494,597
  Other stocks - principally at market
    (cost - $144,270 and $142,364)                       340,670       327,664
  Investment in investee corporation                     213,234       199,651
  Loans receivable                                       540,087       568,055
  Real estate and other investments                      207,335       205,021
     Total investments                                11,415,555    11,286,114

Recoverables from reinsurers and prepaid
  reinsurance premiums                                   932,704       942,450
Agents' balances and premiums receivable                 638,718       609,403
Deferred acquisition costs                               468,143       452,041
Other receivables                                        256,228       272,766
Deferred tax asset                                       154,429       137,284
Assets held in separate accounts                         253,544       247,579
Prepaid expenses, deferred charges and other assets      373,953       368,114
Cost in excess of net assets acquired                    274,971       278,581

                                                     $15,173,046   $14,999,163
<PAGE>
       Liabilities and Capital
Unpaid losses and loss adjustment expenses           $ 4,028,032   $ 4,123,701
Unearned premiums                                      1,311,851     1,247,806
Annuity benefits accumulated                           5,423,164     5,365,612
Life, accident and health reserves                       581,431       575,380
Payable to American Financial Group, Inc.                452,401       422,015
Other long-term debt:                                      
  Holding Companies                                      338,214       339,504
  Subsidiaries                                           184,848       178,415
Liabilities related to separate accounts                 253,544       247,579
Accounts payable, accrued expenses and other            
  liabilities                                            946,038       915,398
     Total liabilities                                13,519,523    13,415,410

Minority interest                                        378,151       306,858

Shareholders' Equity:                                  
  Preferred Stock (liquidation value $258,638)           162,760       162,760
  Common Stock without par value                           9,625         9,625
  Capital Surplus                                        923,519       919,746
  Retained earnings                                       62,268         1,364
  Net unrealized gain on marketable securities,            
    net of deferred income taxes                         117,200       183,400
     Total shareholders' equity                        1,275,372     1,276,895

                                                     $15,173,046   $14,999,163
  
                                  2
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
          AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF EARNINGS
                          (In Thousands)

            
                                                           Three months ended
                                                                March 31,
                                                            1997         1996
Income:
  Property and casualty insurance premiums              $663,762   $  713,389
  Life, accident and health premiums                      25,365       24,253
  Investment income                                      212,752      202,460
  Realized gains on sales of securities                    1,813       18,718
  Equity in net earnings of investee corporations         14,780        8,522
  Gains on sales of subsidiaries                             731       33,891
  Other income                                            26,424       28,931
                                                         945,627    1,030,164

Costs and Expenses:
  Property and casualty insurance:
    Losses and loss adjustment expenses                  469,324      509,157
    Commissions and other underwriting expenses          184,301      200,679
  Annuity benefits                                        68,830       68,015
  Life, accident and health benefits                      24,163       21,593
  Interest charges on borrowed money                      23,611       24,262
  Other operating and general expenses                    77,187       86,995
                                                         847,416      910,701

Earnings before income taxes and extraordinary items      98,211      119,463
Provision for income taxes                                36,221       40,951

Earnings before extraordinary items                       61,990       78,512

Extraordinary items - loss on prepayment of debt             (55)      (7,277)

Net Earnings                                            $ 61,935   $   71,235

                                 3
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

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

                                                         Three months ended
                                                               March 31,
                                                          1997          1996
Operating Activities:
  Net earnings                                        $ 61,935      $ 71,235
  Adjustments:
   Extraordinary items                                      55         7,277
   Depreciation and amortization                        17,979        15,414
   Annuity benefits                                     68,830        68,015
   Equity in net earnings of investee corporations     (14,780)       (8,522)
   Changes in reserves on assets                           418         3,752
   Realized gains on investing activities               (2,544)      (51,582)
   Decrease (increase) in reinsurance and
     other receivables                                 (24,175)       15,500
   Increase in other assets                            (49,036)      (50,392)
   Decrease in insurance claims and reserves           (25,573)      (82,242)
   Increase (decrease) in other liabilities            (26,180)       32,431
   Increase in minority interest                         6,293         6,788
   Dividends from investees                              1,200         1,200
   Other, net                                             (830)       (2,622)
                                                        13,592        26,252
Investing Activities:
  Purchases of and additional investments in:
    Fixed maturity investments                        (616,655)     (726,148)
    Equity securities                                   (9,408)       (8,573)
    Real estate, property and equipment                 (8,762)       (7,898)
  Maturities and redemptions of fixed maturity
    investments                                        155,184       167,358
  Sales of:
    Fixed maturity investments                         332,008       242,365
    Equity securities                                    7,943        20,845
    Investees and subsidiaries                           2,500        59,585
    Real estate, property and equipment                    396         1,206
  Cash and short-term investments of former
    subsidiaries                                           (70)       (4,589)
  Increase in other investments                         (1,119)         (390)
                                                      (137,983)     (256,239)
<PAGE>
Financing Activities:
  Annuity receipts                                     133,402       137,241
  Annuity payments                                    (134,699)     (113,852)
  Additional long-term borrowings                        7,053       111,200
  Reductions of long-term debt                          (1,718)     (197,918)
  Borrowings from AFG                                   42,000       103,800
  Payments to AFG                                         -          (15,000)
  Capital contribution                                   4,667         4,667
  Issuance of trust preferred securities                74,687          -
  Cash dividends paid                                   (1,031)         (191)
                                                       124,361        29,947

Net Decrease in Cash and Short-term Investments            (30)     (200,040)

Cash and short-term investments at beginning
  of period                                            404,831       448,201

Cassh and short-term investments at end of period     $404,801      $248,161
              
                                  4
<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.
   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.

   At the close of business on December 31, 1996, American
   Financial Group ("AFG") contributed to AFC 81% of the common
   stock of American Premier.  Since AFC and American Premier are
   under the common control of AFG, the acquisition of American
   Premier has been recorded by AFC at AFG's historical cost in a
   manner similar to a pooling of interests.  Accordingly, the
   historical consolidated financial statements of AFC for periods
   subsequent to April 3, 1995 (date of common control) have been
   restated to include the accounts of American Premier.

   AFC's ownership of subsidiaries and significant affiliates with
   publicly traded common shares was as follows:
                                                  March 31,   December 31,
                                                      1997    1996   1995
     American Annuity Group, Inc. ("AAG")               81%     81%    81%
     American Financial Enterprises, Inc. ("AFEI")      83%     83%    83%
     American Premier Underwriters, Inc.                81%     81%     -
     Chiquita Brands International, Inc.                43%     43%    44%
     Citicasters Inc.                                   (a)     (a)    38%

     (a) Sold in September 1996.
<PAGE>
   Investments  Debt securities are classified as "held to
   maturity" and reported at amortized cost if AFC has the positive
   intent and ability to hold them to maturity.  Debt and equity
   securities are classified as "available for sale" and reported
   at fair value with unrealized gains and losses reported as a
   separate component of shareholders' equity if the securities are
   not classified as held to maturity or bought and held
   principally for selling in the near term.  Only in certain
   limited circumstances, such as significant issuer credit
   deterioration or if required by insurance or other regulators,
   may a company change its intent to hold a certain security to
   maturity without calling into question its intent to hold other
   debt securities to maturity in the future.
                                  5
<PAGE>   
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


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

   Short-term investments are carried at cost; loans receivable are
   stated primarily at the aggregate unpaid balance.

   Investment in Investee Corporation  Investments in securities of
   20%- to 50%-owned companies are carried at cost, adjusted for
   AFC's proportionate share of their undistributed earnings or
   losses.  Investments in less than 20%-owned companies are
   accounted for by the equity method when, in the opinion of
   management, AFC can exercise significant influence over
   operating and financial policies of the investee.

   Cost in Excess of Net Assets Acquired  The excess of cost of
   subsidiaries and investees over AFC's equity in the underlying
   net assets ("goodwill") is being amortized over 40 years.  The
   excess of AFC's equity in the net assets of other subsidiaries
   and investees over its cost of acquiring these companies
   ("negative goodwill") is allocated to AFC's basis in these
   companies' fixed assets, goodwill and other long-term assets and
   is amortized on a 10- to 40-year basis.

   Insurance  As discussed under "Reinsurance" below, unpaid losses
   and loss adjustment expenses and unearned premiums have not been
   reduced for reinsurance recoverable.
   
   Reinsurance  In the normal course of business, AFC's insurance
   subsidiaries cede reinsurance to other companies to diversify
   risk and limit maximum loss arising from large claims.  To the
   extent that any reinsuring companies are unable to meet
   obligations under the agreements covering reinsurance ceded,
   AFC's insurance subsidiaries would remain liable.  Amounts
   recoverable from reinsurers are estimated in a manner consistent
   with the claim liability associated with the reinsurance
   policies.  AFC's insurance subsidiaries report as assets (a) the
   estimated reinsurance recoverable on unpaid losses, including an
   estimate for losses incurred but not reported, and (b) amounts
   paid to reinsurers applicable to the unexpired terms of policies
   in force.  AFC's insurance subsidiaries also assume reinsurance
   from other companies.  Income on reinsurance assumed is
   recognized based on reports received from ceding reinsurers.
 <PAGE>
   Deferred Acquisition Costs  Policy acquisition costs
   (principally commissions, premium taxes and other underwriting
   expenses) related to the production of new business are deferred
   ("DPAC").  For the property and casualty companies, the deferral
   of acquisition costs is limited based upon their recoverability
   without any consideration for anticipated investment income.
   DPAC is charged against income ratably over the terms of the
   related policies.  For the annuity companies, DPAC is amortized,
   with interest, in relation to the present value of expected
   gross profits on the policies.

   Unpaid Losses and Loss Adjustment Expenses  The net liabilities
   stated for unpaid claims and for expenses of investigation and
   adjustment of unpaid claims are based upon (a) the accumulation
   of case estimates for losses reported prior to the close of the
   accounting period on the direct business written; (b) estimates
   received from ceding reinsurers and insurance pools
   and associations; (c) estimates of unreported losses based on
   past
                                  6
<PAGE>                              
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


   experience; (d) estimates based on experience of expenses for
   investigating and adjusting claims and (e) the current state of
   the law and coverage litigation.  These liabilities are subject
   to the impact of changes in claim amounts and frequency and
   other factors.  In spite of the variability inherent in such
   estimates, management believes that the liabilities for unpaid
   losses and loss adjustment expenses are adequate.  Changes in
   estimates of the liabilities for losses and loss adjustment
   expenses are reflected in the Statement of Earnings in the
   period in which determined.
   
   Annuity Benefits Accumulated  Annuity receipts and benefit
   payments are recorded as increases or decreases in "annuity
   benefits accumulated" rather than as revenue and expense.
   Increases in this liability for interest credited are charged to
   expense and decreases for surrender charges are credited to
   other income.

   Life, Accident and Health Reserves  Liabilities for future
   policy benefits under traditional ordinary life, accident and
   health policies are computed using a net level premium method.
   Computations are based on anticipated investment yields,
   mortality, morbidity and surrenders and include provisions for
   unfavorable deviations.  Reserves are modified as necessary to
   reflect actual experience and developing trends.
   
   Assets Held In and Liabilities Related to Separate Accounts
   Investment annuity deposits and related liabilities represent
   primarily deposits maintained by several banks under a
   previously offered tax-deferred annuity program.  AAG receives
   an annual fee from each bank for sponsoring the program; if
   depositors elect to purchase an annuity from AAG, funds are
   transferred to AAG.
   
   Premium Recognition  Property and casualty premiums are earned
   over the terms of the policies on a pro rata basis.  Unearned
   premiums represent that portion of premiums written which is
   applicable to the unexpired terms of policies in force.  On
   reinsurance assumed from other insurance companies or written
   through various underwriting organizations, unearned premiums
   are based on reports received from such companies and
   organizations.  For traditional life, accident and health
   products, premiums are recognized as revenue when legally
   collectible from policyholders.  For interest-sensitive life and
   universal life products, premiums are recorded in a policyholder
   account which is reflected as a liability.  Revenue is
   recognized as amounts are assessed against the policyholder
   account for mortality coverage and contract expenses.
<PAGE>
   Policyholder Dividends  Dividends payable to policyholders are
   included in "Accounts payable, accrued expenses and other
   liabilities" and represent estimates of amounts payable on
   participating policies which share in favorable underwriting
   results.  The estimate is accrued during the period
   in which the related premium is earned.  Changes in estimates
   are included in income in the period determined.  Policyholder
   dividends do not become legal liabilities unless and until
   declared by the boards of directors of the insurance companies.
   
   Income Taxes  AFC and American Premier have each filed
   consolidated federal income tax returns which include all 80%-
   owned U.S. subsidiaries, except for certain life insurance
   subsidiaries and their subsidiaries.  Because holders of AFC
   Series F and G Preferred Stock hold 21% of AFC's voting rights,
   the companies file separate consolidated returns.  At the close
   of business on December 31, 1996, AFG contributed 81% of the common 
   stock of American Premier to AFC.  Accordingly, AFC and American 
   Premier will file a single consolidated return for 1997.
      
                                  7
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


   Deferred income taxes are calculated using the liability method.
   Under this method, deferred income tax assets and liabilities
   are determined based on differences between financial reporting
   and tax bases and are measured using enacted tax rates.
   Deferred tax assets are recognized if it is more likely than not
   that a benefit will be realized.

   Benefit Plans  AFC provides retirement benefits to qualified
   employees of participating companies through contributory and
   noncontributory defined contribution plans.  Contributions to
   benefit plans are charged against earnings in the year for which
   they are declared.  Both AFC and American Premier had Employee
   Stock Ownership Retirement Plans ("ESORP").  In 1997, these
   ESORP plans were combined into a new plan.  Like the ESORP plan,
   the new plan is a noncontributory, qualified plan invested in
   securities of AFG and affiliates for the benefit of employees.

   AFC and many of its subsidiaries provide health care and life
   insurance benefits to eligible retirees.  AFC also provides
   postemployment benefits to former or inactive employees
   (primarily those on disability) who were not deemed retired
   under other company plans.  The projected future cost of
   providing these benefits is expensed over the period the
   employees qualify for such benefits.
   
   Minority Interest  For balance sheet purposes, minority interest
   represents (i) the interests of noncontrolling shareholders in
   AFC subsidiaries including $150 million of preferred securities
   issued by trust subsidiaries of AAG and (ii) AFG's direct
   ownership interest in American Premier.  For income statement
   purposes, minority interest expense (included in "Other
   operating and general expenses") represents those shareholders'
   interest in the earnings of AFC subsidiaries as well as accrued
   distributions on the trust preferred securities.
   
   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.

                                 8
<PAGE>                
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


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

                                           Three months ended March 31,
      Revenues                                     1997           1996
      Property and casualty insurance:
       Premiums earned:
         Nonstandard automobile                $288,659     $  304,392
         Specialty lines                        232,590        229,292
         Commercial and personal lines          142,485        179,547
         Other lines                                 28            158
                                                663,762        713,389
       Investment and other income              110,150        121,364
                                                773,912        834,753
      Annuities and life (*)                    148,706        139,414
      Other                                       8,229         47,475
                                                930,847      1,021,642
      Equity in net earnings of investee
        corporations                             14,780          8,522

                                               $945,627     $1,030,164

      (*) Represents primarily investment income.

C. Investment in Investee Corporation  AFC owned 24 million shares
   (43%) of Chiquita common stock at March 31, 1997 and December
   31, 1996.  The market value of AFC's investment in Chiquita was
   $372 million and $306 million at March 31, 1997 and December
   31, 1996, respectively.  Chiquita is a leading international
   marketer, producer and distributor of bananas and other quality
   fresh and processed food products.
   
   Summarized financial information for Chiquita follows (in
   millions):

                                           Three months ended March 31,
                                                   1997           1996
     Net Sales                                     $631           $625
     Operating Income                                71             58
     Net Income                                      43             24
<PAGE>
D. Payable to American Financial Group, Inc.  At March 31, 1997,
   AFC had outstanding borrowings under a note with AFG (bearing
   interest at 11-5/8%) of $225 million, plus accrued interest of
   $6.4 million.  American Premier has a credit agreement with AFG
   under which American Premier and AFG may make loans of up to
   $250 million available to each other.  The balance outstanding
   under the credit line bears interest at a variable rate of one
   percent over LIBOR and is payable on December 31, 2010.  At
   March 31, 1997, American Premier had outstanding borrowings
   under the credit agreement of $217.5 million, plus accrued
   interest of $3.5 million.

                                  9
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


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

                                                       March 31,  December 31,
                                                            1997         1996
     Holding Companies:
       9-3/4% AFC Debentures due April 2004             $163,968     $164,368
       9-3/4% APU Subordinated Notes due August 1999      93,101       93,604
       10-5/8% APU Subordinated Notes due April 2000      54,193       54,595
       10-7/8% APU Subordinated Notes due May 2011        18,381       18,496
       Other                                               8,571        8,441
                                                        $338,214     $339,504

     Subsidiaries:
       AAG notes payable to banks due September 1999    $ 51,700     $ 44,700
       9-1/2% AAG Senior Notes due August 2001            40,845       40,845
       11-1/8% AAG Senior Subordinated Notes
         due February 2003                                24,080       24,080
       Other                                              68,223       68,790
                                                        $184,848     $178,415

   At March 31, 1997, sinking fund and other scheduled principal
   payments on debt for the balance of 1997 and the subsequent
   five years were as follows (in thousands):
   
                   Holding
                 Companies   Subsidiaries        Total
      1997         $ 5,735        $ 1,933     $  7,668
      1998            -             2,846        2,846
      1999          91,361         54,137      145,498
      2000          51,744          8,752       60,496
      2001            -            42,304       42,304
      2002            -             1,411        1,411

   Debentures purchased in excess of scheduled payments may be
   applied to satisfy any sinking fund requirement.  The scheduled
   principal payments shown above assume that debentures purchased
   are applied to the earliest scheduled retirements.
<PAGE>
F. Preferred Stock  Under provisions of both the Nonvoting
   (21.1 million shares authorized) and Voting (17.0 million
   shares authorized, 13.9 million shares outstanding) Cumulative
   Preferred Stock, the Board of Directors may divide the
   authorized stock into series and set specific terms and
   conditions of each series.  The outstanding shares of preferred
   stock consisted of the following (see Note K - "Subsequent
   Event"):

      Series F,  $1 par value; $20.00 liquidating value per share;
      annual dividends per share $1.80; nonredeemable; 11,900,725
      shares (stated value $145.4 million) outstanding at
      March 31, 1997 and December 31, 1996.

      Series G,  $1 par value; annual dividends per share $1.05;
      redeemable at $10.50 per share; 1,964,158 shares (stated
      value $17.4 million) outstanding at March 31, 1997 and
      December 31, 1996.

G. Common Stock  At March 31, 1997, American Financial Group owned all
   of the outstanding shares of AFC's Common Stock.

                                10
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

                                Three months ended
                                    March 31,
                                  1997      1996

       AFC (parent)               ($17)  ($4,198)
       APU (parent)                (38)     (901)
       AAG                           -    (2,178)
                                  ($55)  ($7,277)

I. Cash Flows - Fixed Maturity Investments  "Investing activities"
   related to fixed maturity investments in AFC's Statement of Cash Flows 
   consisted of the following (in thousands):
                                     Held to  Available
     1997                           Maturity   For Sale       Total
     Purchases                       $   987   $615,668    $616,655
     Maturities and redemptions       81,185     73,999     155,184
     Sales                              -       332,008     332,008

     1996
     Purchases                       $86,697   $639,451    $726,148
     Maturities and redemptions       72,669     94,689     167,358
     Sales                              -       242,365     242,365

J. Commitments and Contingencies  There have been no significant
   changes to the matters discussed and referred to in Note N
   "Commitments and Contingencies" in AFC's Annual Report on Form
   10-K for 1996.

K. Subsequent Event  In April 1997, AFG announced two transactions
   intended to reduce its corporate expenses and simplify the
   public company structure of certain subsidiaries.

   AFG has proposed a merger transaction in which AFC's Series F
   and Series G preferred stock would be retired for $21.50 and
   $10.50 per share in cash, respectively.  Under the proposal,
   holders of Series F and G preferred stock will have as an option
   the right to receive shares of a new issue of AFC preferred
   stock.  The new preferred will be redeemable at AFC's option
   after the eighth anniversary of its issuance, have a liquidation
   value of $21.50 per share and an annual dividend of $1.8275 per
   share, paid semi-annually.

   AFG has also proposed that AFEI engage in a merger transaction
   whereby all publicly held shares of AFEI would be exchanged, at
   the option of AFEI shareholders, for shares of AFG common stock
   on a one-for-one basis, or $37.00 per share in cash.  There are
   approximately 2.3 million shares of AFEI common stock
   outstanding which are not beneficially owned by AFG.
<PAGE>
   The transactions would be subject to the negotiation of final
   documentation, the approval of the Board of Directors of each of
   AFG, AFC, and AFEI, and the receipt of all required shareholder,
   stock exchange listing and regulatory approvals.
                                 11
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

                              ITEM 2

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

GENERAL

AFC is organized as a holding company with almost all of its
operations being conducted by subsidiaries and affiliates.  The
parent corporation, however, has continuing cash needs for
administrative expenses, the payment of principal and interest on
borrowings, dividends on AFC Preferred Stock, 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.

LIQUIDITY AND CAPITAL RESOURCES

Ratios  AFC's debt to total capital ratio at the parent holding
company level was just over 20% at March 31, 1997 and December 31,
1996.  AFC's ratio of earnings to fixed charges on a total
enterprise basis was 4.27 for the first three months of 1997
compared to 4.99 for the entire year of 1996; ratios of earnings to
fixed charges and preferred dividends were 3.21 and 3.96 for the
same periods.

Sources of Funds    Management believes AFC has sufficient
resources to meet its liquidity requirements through operations in
the short-term and long-term future.  If funds generated from
operations, including dividends from subsidiaries, are insufficient
to meet fixed charges in any period, these companies would be
required to generate cash through borrowings, sales of securities
or other assets, or similar transactions.

In December 1996, American Premier paid a dividend to AFG in the
form of a $675 million note receivable from AFC plus $18.7 million
of related accrued interest.  AFG then contributed $450 million of
the note (without accrued interest) to the capital of AFC.  At
March 31, 1997, the remaining $225 million is included in payable
to AFG on AFC's balance sheet.

American Premier has a credit agreement with AFG under which
American Premier and AFG will make loans of up to $250 million
available to each other.  Principal amounts payable to AFG under
the credit agreement totaled $217.5 million and $175.5 million at
March 31, 1997 and December 31, 1996, respectively.
<PAGE>
Bank credit lines at several subsidiary holding companies provide
ample liquidity and can be used to obtain funds for the operating
subsidiaries or, if necessary, for the parent company.
Agreements with the banks generally run for three to seven years
and are renewed before maturity.  While it is highly unlikely
that all such amounts would ever be borrowed at one time, a
maximum of $510 million is available under these bank facilities,
$52 million of which was borrowed at March 31, 1997.

In the past, funds have been borrowed under certain of these bank
facilities and used for working capital, capital infusions into
subsidiaries, and to retire other issues of short-term or high-rate
debt.  Also, AFC believes it may be prudent and advisable to borrow
up to $200 million of bank debt in the normal course in order to
retire public or privately held fixed rate obligations over the
next year or two.

The cash to be utilized if the proposed transactions discussed in
Note K are completed is expected to come from internally generated
funds and existing credit lines.
        
                                 12
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

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


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

Investments  Approximately 93% of the bonds and redeemable
preferred stocks held by AFC were rated "investment grade" (credit
rating of AAA to BBB) by nationally recognized rating agencies at
March 31, 1997.  Investment grade securities generally bear lower
yields and lower degrees of risk than those that are unrated and
non-investment grade.  Management believes that the high quality
investment portfolio should generate a stable and predictable
investment return.

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

RESULTS OF OPERATIONS

General  Pretax earnings before extraordinary items were
$98.2 million for the first quarter of 1997 and $119.5 million for
the first quarter of 1996.  While results included (i) an increase
of $6.6 million in underwriting profit in the property and casualty
operations, (ii) an increase of $10.3 million in investment income
primarily in the annuity, life and health operations and (iii) an
increase of $6.3 million in investee earnings, these improvements
were more than offset by reductions of $50.1 million in realized
gains.

Property and Casualty Insurance - Underwriting  AFC manages and
operates its property and casualty business as three major sectors.
The nonstandard automobile insurance companies (the "NSA Group")
insure risks not typically accepted for standard automobile
coverage because of the applicant's driving record, type of
vehicle, age or other criteria.  The specialty lines are a
diversified group of over twenty-five business lines that offer a
wide variety of specialty insurance products.  Some of the more
significant areas are California workers' compensation, executive
liability, inland and ocean marine, U.S.-based operations of
Japanese companies, agricultural-related coverages, excess and
surplus lines, aviation coverages and fidelity and surety bonds.
The commercial and personal lines provide coverages in commercial
multi-peril, workers' compensation, umbrella and commercial
automobile, standard private passenger automobile and homeowners
insurance.
<PAGE>
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.
                                 13 
<PAGE>               
               AMERICAN FINANCIAL CORPORATION 10-Q

               Management's Discussion and Analysis
   of Financial Condition and Results of Operations - Continued
                                 
                                 
Net written premiums and combined ratios for AFC's property and
casualty insurance subsidiaries were as follows (dollars in
millions):

                                             Three months ended
                                                  March 31, 
                                               1997        1996
  Net Written Premiums (GAAP)
    NSA Group                                $329.7      $295.5
    Specialty Operations                      264.4       217.7
    Commercial and Personal Operations         94.8       165.3
    Other Lines                                  -           .1
                                             $688.9      $678.6

  Combined Ratios (GAAP)
    NSA Group                                  97.1%      101.9%
    Specialty Operations                       92.7        90.0
    Commercial and Personal Operations        102.9       103.7
    Aggregate (including other lines)          98.5        99.6

NSA Group  For the first three months of 1997, net written
premiums of the NSA Group increased 12% from the comparable 1996
period due primarily to volume increases in California resulting
from enactment of legislation which requires drivers to provide
proof of insurance in order to obtain a valid permit.  The
improvement in the combined ratio reflects rate increases in
various states over the last couple of years.

Specialty Operations  Net written premiums for the specialty
operations increased 21% during the first three months of 1997 from
the comparable 1996 period due to the impact of $30 million of
premiums assumed on general aviation policies under a reinsurance
agreement with American Eagle Insurance Company and the return of
premiums related to the withdrawal from a voluntary pool in 1996.
The combined ratio for the first three months of 1997 increased
from the comparable 1996 period due in part to a reduction in
underwriting profit in the California workers' compensation
business.  Underwriting results for the 1996 first quarter included
reserve reductions prompted by fundamental changes in the
California workers' compensation market and actuarial evaluations.
Excluding the effects of such reserve reductions, first quarter
1997 underwriting results improved moderately as compared to 1996.

Commercial and Personal Operations  The 43% decrease in net
written premiums for the commercial and personal operations from
the comparable 1996 period was due primarily to a reinsurance
agreement, effective January 1, 1997, under which 80% of all AFG's
homeowners' business will be reinsured, and reduced writings of
personal automobile coverages in certain states.  Excluding the
impact of the reinsurance agreement, premiums decreased 13%.
<PAGE>
Investment Income  Investment income increased $10.3 million (5%)
for the first quarter of 1997 compared to 1996 due primarily to an
increase in the average amount of investments held.

Realized Gains  Realized capital gains have been an important part
of the return on investments in marketable securities.  Individual
securities are sold creating gains and losses as market
opportunities exist.

Investee Corporations  Equity in net earnings of investee
corporations in 1997 represents AFC's proportionate share of
Chiquita's earnings.  Chiquita reported first quarter net income of
$43.3 million for 1997 and $24.2 million for 1996.  Chiquita's
results for 1996 include $12 million of charges for damages
resulting

                                14
<PAGE>                
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
               Management's Discussion and Analysis
   of Financial Condition and Results of Operations - Continued
                                 
                                 
from industry-wide flooding in Costa Rica.  Included in earnings
from investees in 1996 were losses of $330,000 attributable to
AFC's investment in Citicasters which was sold in September 1996.

Gains on Sales of Subsidiaries  Gains on sales of subsidiaries
represent pretax gains on the sales of a travel agency in 1997 and
Buckeye Management Company in 1996.

Annuity Benefits  Annuity benefits expense increased slightly in
the first three months of 1997 due to an increase in average funds
accumulated.  The rate at which interest is credited on annuity
policyholders' funds is subject to change based on management's
judgment of market conditions.

Other Operating and General Expenses  Included in other operating
and general expenses are charges for minority interest of
$9.5 million for the first quarter of 1997 compared to $11.4
million for the same period in 1996.



  ____________________________________________________________




                                 15
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                              PART II
                         OTHER INFORMATION


                              Item 6
                                 
                 Exhibits and Reports on Form 8-K


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

(b)   Reports on Form 8-K:  None



  ____________________________________________________________



                             Signature



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


                                American Financial Corporation



May 12, 1997                    BY:Fred J. Runk
                                   Fred J. Runk
                                   Senior Vice President and Treasurer


                                16
<PAGE>