SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549


                             FORM 10-Q


      Quarterly Report Pursuant to Section 13 or 15(d) of the
                  Securities Exchange Act of 1934


For the Quarterly Period Ended                    Commission File
June 30, 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 August 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 17
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                              PART I
                       FINANCIAL INFORMATION

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

                                                         June 30,  December 31,
                                                            1997          1996
           Assets
Cash and short-term investments                      $   360,603   $   404,831
Investments:
  Bonds and redeemable preferred stocks:
    Held to maturity - at amortized cost
      (market - $3,345,200 and $3,528,100)             3,320,594     3,491,126
    Available for sale - at market
      (amortized cost - $6,769,104 and $6,362,597)     6,894,904     6,494,597
  Other stocks - principally at market
    (cost - $150,120 and $142,364)                       424,420       327,664
  Investment in investee corporations                    234,162       199,651
  Loans receivable                                       541,472       568,055
  Real estate and other investments                      211,922       205,021
     Total investments                                11,627,474    11,286,114

Recoverables from reinsurers and prepaid
  reinsurance premiums                                   951,470       942,450
Agents' balances and premiums receivable                 676,671       609,403
Deferred acquisition costs                               475,797       452,041
Other receivables                                        245,662       272,766
Deferred tax asset                                        81,303       137,284
Assets held in separate accounts                         262,453       247,579
Prepaid expenses, deferred charges and other assets      394,603       368,114
Cost in excess of net assets acquired                    272,176       278,581

                                                     $15,348,212   $14,999,163
<PAGE>
       Liabilities and Capital
Unpaid losses and loss adjustment expenses           $ 4,086,040   $ 4,123,701
Unearned premiums                                      1,336,805     1,247,806
Annuity benefits accumulated                           5,469,541     5,365,612
Life, accident and health reserves                       589,526       575,380
Payable to American Financial Group, Inc.                351,771       422,015
Other long-term debt:
  Holding companies                                      337,459       339,504
  Subsidiaries                                           132,607       178,415
Liabilities related to separate accounts                 262,453       247,579
Accounts payable, accrued expenses and other
  liabilities                                            860,319       915,398
     Total liabilities                                13,426,521    13,415,410

Minority interest                                        476,419       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                                        927,939       919,746
  Retained earnings                                      112,248         1,364
  Net unrealized gain on marketable securities,
    net of deferred income taxes                         232,700       183,400
      Total shareholders' equity                       1,445,272     1,276,895 

                                                     $15,348,212   $14,999,163
                                  2
<PAGE>                 
                 AMERICAN FINANCIAL CORPORATION 10-Q

           AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF EARNINGS
                            (In Thousands)
<TABLE>
<CAPTION>      
                                             Three months ended        Six months ended
                                                   June 30,                 June 30,
                                               1997        1996         1997        1996
<S>                                     <C>         <C>          <C>         <C>
Income:
  Property and casualty insurance
    premiums                             $  698,381  $  730,419   $1,362,143  $1,443,808
  Life, accident and health premiums         27,331      31,261       52,696      55,514
  Investment income                         214,583     212,097      427,335     414,557
  Realized gains on sales of
    securities                                4,198       2,725        6,011      21,443
  Equity in net earnings of investee
    corporations                             17,228      17,344       32,008      25,866
  Gains on sales of subsidiaries               -          2,946          731      36,837
  Other income                               25,823      36,004       52,247      64,935
                                            987,544   1,032,796    1,933,171   2,062,960

Costs and Expenses:
  Property and casualty insurance:
    Losses and loss adjustment expenses     495,187     530,183      964,511   1,039,340
    Commissions and other underwriting
      expenses                              193,304     208,340      377,605     409,019
  Annuity benefits                           70,607      68,790      139,437     136,805
  Life, accident and health benefits         25,825      26,877       49,988      48,470
  Interest charges on borrowed money         22,515      24,086       46,126      48,348
  Other operating and general expenses       86,609      92,841      163,796     179,719
                                            894,047     951,117    1,741,463   1,861,701

Earnings before income taxes and
  extraordinary items                        93,497      81,679      191,708     201,259
Provision for income taxes                   32,783      23,217       69,004      64,168

Earnings before extraordinary items          60,714      58,462      122,704     137,091

Extraordinary items - loss on prepayment
  of debt                                       (23)     (9,964)         (78)    (17,358)

Net Earnings                             $   60,691  $   48,498   $  122,626  $  119,733
</TABLE>
                                    3
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

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

                                                         Six months ended
                                                              June  30,
                                                          1997          1996
Operating Activities:
  Net earnings                                      $  122,626    $  119,733
  Adjustments:
   Extraordinary items                                      78        17,358
   Depreciation and amortization                        36,057        33,653
   Annuity benefits                                    139,437       136,805
   Equity in net earnings of investee corporations     (32,008)      (25,866)
   Changes in reserves on assets                           506        11,755
   Realized gains on investing activities               (6,742)      (54,991)
   Increase in reinsurance and other receivables       (77,692)     (143,063)
   Decrease (increase) in other assets                 (18,136)       39,767
   Increase in insurance claims and
      reserves                                          65,484        78,590
   Decrease in other liabilities                      (122,376)      (78,243)
   Increase in minority interest                        15,761        16,422
   Dividends from investees                              2,400         2,400
   Other, net                                           (3,889)       (3,194)
                                                       121,506       151,126
Investing Activities:
  Purchases of and additional investments in:
    Fixed maturity investments                      (1,205,788)   (1,161,142)
    Equity securities                                  (16,555)      (13,997)
    Investees and subsidiaries                          (4,900)         -
    Real estate, property and equipment                (22,872)      (16,012)
  Maturities and redemptions of fixed maturity
    investments                                        360,774       313,216
  Sales of:
    Fixed maturity investments                         698,990       490,604
    Equity securities                                    9,552        26,940
    Investees and subsidiaries                           2,500        64,856
    Real estate, property and equipment                  1,914         2,995
  Cash and short-term investments of former                          
    subsidiaries                                           (70)       (4,589)
  Increase in other investments                         (2,233)       (6,418)
                                                      (178,688)     (303,547)
<PAGE>
Financing Activities:
  Annuity receipts                                     259,708       280,579
  Annuity payments                                    (288,531)     (241,706)
  Additional long-term borrowings                        7,053       197,561
  Reductions of long-term debt                         (54,820)     (372,036)
  Borrowings from AFG                                   44,100       106,972
  Payments to AFG                                     (101,500)      (37,000)
  Capital contribution                                   9,333         9,333
  Issuances of trust preferred securities              149,353          -
  Cash dividends paid                                  (11,742)      (12,561)
                                                        12,954       (68,858)

Net Decrease in Cash and Short-term Investments        (44,228)     (221,279)

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

Cash and short-term investments at end of period    $  360,603    $  226,922
                
                                  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:
                                                   June 30,   December 31,
                                                      1997    1996   1995
    American Annuity Group, Inc. ("AAG")               81%     81%    81%
    American Financial Enterprises, Inc. ("AFEI")      82%     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 Corporations  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 in excess of 20% 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 the interests of noncontrolling shareholders in AFC
   subsidiaries including preferred securities issued by trust
   subsidiaries of AAG and 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.

                                           Six months ended June 30,
      Revenues                                   1997          1996
      Property and casualty insurance:
       Premiums earned:
         Nonstandard automobile            $  592,761    $  609,198
         Specialty lines                      482,711       476,109
         Commercial and personal lines        286,647       358,076
         Other lines                               24           425
                                            1,362,143     1,443,808
       Investment and other income            216,274       232,971
                                            1,578,417     1,676,779
      Annuities and life (*)                  302,426       290,339
      Other                                    20,320        69,976
                                            1,901,163     2,037,094
      Equity in net earnings of investee
        corporations                           32,008        25,866

                                           $1,933,171    $2,062,960

      (*) Represents primarily investment income.

C. Investment in Investee Corporations  Investment in investee
   corporations reflects primarily AFC's 43% ownership (24 million
   shares; carrying value of $229.3 million at June 30, 1997) of 
   Chiquita common stock. The market value of AFC's investment in 
   Chiquita was $330 million and $306 million at June 30, 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):

                                           Six months ended June 30,
                                                 1997          1996
     Net Sales                                 $1,278        $1,339
     Operating Income                             139           133
     Income before Extraordinary Item              84            67
     Extraordinary Loss from Debt Refinancings    -              (5)
     Net Income                                    84            62
<PAGE>
D. Payable to American Financial Group, Inc.  At June 30, 1997,
   AFC had outstanding borrowings under a note with AFG (bearing
   interest at 11-5/8%) of $213 million, plus accrued interest of
   $6.2 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
   June 30, 1997, American Premier had outstanding borrowings
   under the credit agreement of $130.1 million, plus accrued
   interest of $2.4 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):
                                                        June 30,  December 31,
                                                           1997          1996
     Holding Companies:
       9-3/4% AFC Debentures due April 2004            $163,725      $164,368
       9-3/4% APU Subordinated Notes due August 1999     92,811        93,604
       10-5/8% APU Subordinated Notes due April 2000     54,012        54,595
       10-7/8% APU Subordinated Notes due May 2011       18,367        18,496
       Other                                              8,544         8,441
                                                       $337,459      $339,504

     Subsidiaries:
       AAG notes payable to banks due September 1999   $   -         $ 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                                             67,682        68,790
                                                       $132,607      $178,415

   AAG has called for redemption on August 15, 1997, all of its
   outstanding 9-1/2% Senior Notes at a price of $1,040.71 per $1,000
   principal amount.  AFC expects to record a third quarter pretax
   loss of $2.1 million, net of minority interest, on the
   redemption.
   
   At June 30, 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         $ 5,698       $ 1,313      $ 7,011
      1998            -            2,841        2,841
      1999          91,243         2,433       93,676
      2000          51,744         8,747       60,491
      2001            -           42,298(*)    42,298
      2002            -            1,458        1,458

      (*) Includes the AAG 9-1/2% Notes being redeemed in
          August 1997.

   Debentures purchased in excess of scheduled payments may be
   applied to satisfy any sinking fund requirement.  The scheduled
   principal payments shown above assume that debentures
   previously purchased are applied to the earliest scheduled
   retirements.
<PAGE>
F. Minority Interest  Included in minority interest are the
   preferred securities issued by trust subsidiaries of AAG.

   In November 1996, a wholly-owned subsidiary trust of AAG issued
   three million units of 9-1/4% trust originated preferred
   securities ("TOPrS") for $75 million in cash.  The Trust then
   purchased $75 million of newly issued AAG 9-1/4% Subordinated
   Debentures due 2026, which, along with related interest and
   principal payments received, are the only assets of the Trust.
   The TOPrS are mandatorily redeemable upon maturity or
   redemption of the Subordinated Debentures.  The Subordinated
   Debentures are redeemable by AAG on or after November 7, 2001.
   AAG effectively provides an unconditional guarantee of the
   Trust's obligations under the TOPrS.
      
                                  10
<PAGE>                
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


   Through private transactions completed in March and May 1997,
   wholly-owned subsidiary trusts of AAG issued $75 million of 8-
   7/8% preferred securities and $75 million of 7-1/4% Remarketed
   Par Securities ("ROPES"), respectively, and used the proceeds
   to purchase the related debentures of their parent due in 2027
   and 2041.  Both of these issues are structured similarly to the
   TOPrS issued in November 1996.

G. 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 L - "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 June 30,
      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 June 30, 1997 and
      December 31, 1996.

H. Common Stock  At June 30, 1997, American Financial Group owned
   all of the outstanding shares of AFC's Common Stock.

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

                                 Six months ended
                                      June 30,
                                 1997        1996    
        AFC (parent)             ($36)   ($ 9,499)
        Subsidiaries:
         APU (parent)             (42)       (456)
         AAG                       -       (5,605)
         Other                     -          110
       Investee:
         Chiquita                  -       (1,908)
                                 ($78)   ($17,358)
<PAGE>
J. Cash Flows - Fixed Maturity Investments  "Investing activities"
   related to fixed maturity investments in AFC's Statement of Cash Flows 
   consisted of the following (in thousands):
                                 
                                     Held to    Available
     1997                           Maturity     For Sale        Total
     Purchases                      $  1,675   $1,204,113   $1,205,788
     Maturities and redemptions      197,546      163,228      360,774
     Sales                              -         698,990      698,990

     1996
     Purchases                      $149,250   $1,011,892   $1,161,142
     Maturities and redemptions      134,936      178,280      313,216
     Sales                              -         490,604      490,604

K. 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.
                                 11
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


L. Subsequent Event  In July 1997, AFG announced that it has
   entered into agreements with two of its subsidiaries, AFC and
   AFEI, pursuant to previously announced plans to reduce its
   corporate expenses and improve its corporate capital structure.

   AFG has proposed a merger transaction whereby holders of AFC's
   Series F Preferred would receive consideration of $22.35 per
   share and holders of AFC's Series G Preferred would receive
   consideration of $10.50 per share plus accrued dividends.
   Consideration would be payable, at the holder's election, in
   shares of a new issue of AFC Preferred Stock, in cash, or a
   combination of the two.  It is a condition to the merger that
   there be approximately 3.1 million shares of a new Preferred
   Stock issued, representing at least 20% of AFC's total voting
   power.  The new preferred would be redeemable at AFC's option
   after the eighth anniversary of its issuance, have a liquidation
   value of $22.35 per share and an annual dividend of $1.90 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 2.7 million shares of AFEI common stock
   outstanding (including yet-unexercised stock options) which are
   not beneficially owned by AFG.

   These transactions are subject to the receipt of all required
   shareholder, stock exchange listing and regulatory approvals.
                                 12
<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 approximately 20% at June 30, 1997 and December
31, 1996.  AFC's ratio of earnings to fixed charges on a total
enterprise basis was 4.09 for the first six months of 1997 compared
to 4.99 for the entire year of 1996; ratios of earnings to fixed
charges and preferred dividends were 3.10 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
June 30, 1997, $213 million is outstanding under the note and
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 $130.1 million and $175.5 million at
June 30, 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.
At June 30, 1997, there were no outstanding borrowings under
these credit lines.

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 L are completed is expected to come from internally generated
funds and existing credit lines.
      
                                     13
<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
June 30, 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 for the three
months ended June 30, 1997 were $93.5 million, an increase of
$11.8 million over the comparable 1996 period.  The increase is
attributable to improved underwriting profit in the property and
casualty operations.

Pretax earnings before extraordinary items were $191.7 million for
the first six months of 1997 compared to $201.3 million for the
first six months of 1996.  Excluding realized gains, pretax
earnings before extraordinary items were $185 million and
$143 million for the first six months of 1997 and 1996,
respectively.  The improvement in 1997 was due primarily to (i) an
increase of $24.6 million in underwriting profit in the property
and casualty operations, (ii) an increase of $12.8 million in
investment income primarily in the annuity, life and health
operations and (iii) an increase of $6.1 million in investee
earnings.
<PAGE>
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.

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.
                                 14
<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      Six months ended
                                          June 30,              June 30,
                                         1997     1996        1997      1996
  Net Written Premiums (GAAP)
    NSA Group                          $328.2   $296.1    $  657.9  $  591.6
    Specialty Operations                257.6    267.4       522.0     485.1
    Commercial and Personal Operations  135.8    162.9       230.6     328.2
    Other lines                           -         .2         -          .3
                                       $721.6   $726.6    $1,410.5  $1,405.2

  Combined Ratios (GAAP)
    NSA Group                            97.1%   100.8%       97.2%    101.4%
    Specialty Operations                 88.0     97.4        90.3      93.9
    Commercial and Personal Operations  102.7    104.7       102.9     104.2
    Aggregate (including other lines)    98.6    101.2        98.5     100.4

NSA Group  The NSA Group's 11% increase in net written premiums in
the second quarter and first half of 1997 is 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 decreased 4% during the second quarter from the
comparable 1996 period due primarily to reductions in executive
liability and agricultural-related coverages.  Underwriting results
for the second quarter of 1997 reflect improved results in certain
specialty niche operations.  Net written premiums increased 8%
during the first six months of 1997 due primarily to the impact of
$30 million of premiums assumed on general aviation policies under
a reinsurance agreement with American Eagle Insurance Company in
the first quarter of 1997 and the return of premiums related to the
withdrawal from a voluntary pool in 1996.

Commercial and Personal Operations  Net written premiums for the
commercial and personal operations decreased 17% during the second
quarter and 30% during the first six months from the comparable
1996 periods due primarily to a reinsurance agreement, effective
January 1, 1997, under which 80% of all AFC'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 9% and 11%, respectively.
Underwriting results for 1997 improved due in part to the impact in
1996 of weather-related losses.
<PAGE>
Investment Income  Investment income increased $12.8 million (3%)
for the first six months 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 net income of $84.4 million
for the first six months of 1997 and $61.8 million for the
comparable 1996 period.  Chiquita's results for 1996 include
$12 million of charges for damages resulting from industry-wide
flooding in Costa Rica.
      
                                15
<PAGE>                
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
               Management's Discussion and Analysis
   of Financial Condition and Results of Operations - Continued
                                 
                                 
Included in earnings from investees in 1996 were earnings of
$1.5 million attributable to AFC's investment in Citicasters which
was sold in September 1996.

Gains on Sales of Subsidiaries  The gain on sale of subsidiaries in
1997 represents a pretax gain on the sale of a travel agency.  The
gains on sales of subsidiaries in 1996 include a pretax gain of
$33.9 million on the sale of Buckeye Management Company and the
settlement of litigation related to a subsidiary sold in 1993.

Other Income  Other income decreased $10.2 million (28%) during the
second quarter and $12.7 million (20%) during the first six months
of 1997 due primarily to the sale of a subsidiary in the first
quarter of 1997.

Annuity Benefits  Annuity benefits reflect interest credited to
annuity policyholders' funds accumulated.  The majority of AAG's
fixed rate annuity products permit AAG to change the crediting rate
at any time (subject to minimum interest rate guarantees of 3% or
4% per annum).  As a result, management has been able to react to
changes in market interest rates and maintain a desired interest
rate spread without a substantial effect on persistency.  Annuity
benefits increased 3% in the second quarter and 2% in the first six
months of 1997 due primarily to an increase in average annuity
benefits accumulated.

Other Operating and General Expenses  The decrease in other
operating and general expenses is due primarily to the sale of a
subsidiary in 1997.  Included in other operating and general
expenses are charges for minority interest of $10.9 million for the
second quarter and $20.4 million for the first six months of 1997
compared to $9.4 million and $20.7 million for the same periods in
1996.

NEW TAX LEGISLATION  

New federal tax legislation was signed into law in August 1997.  
Management believes the legislation will not have a material 
effect on AFC's financial condition or results of operations.

  ____________________________________________________________


                                16
<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:

       Date of Report    Item Reported
       July 14, 1997     Proposal to exchange Preferred Stock for
                         cash or new Preferred Stock.


  ____________________________________________________________


                             Signature



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


                                American Financial Corporation



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




                                17
<PAGE>