SECURITIES AND EXCHANGE COMMISSION
                       Washington, D. C.  20549


                              FORM 10-Q


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


For the Quarterly Period Ended                      Commission File
September 30, 1996                                  No. 1-7361



                    AMERICAN FINANCIAL CORPORATION


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


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





Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days.  Yes   X    No




As of November 1, 1996, 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
                            (In Thousands)

                                           September 30,  December 31,
                                                   1996          1995
        Assets
Cash and short-term investments             $   297,818   $   331,825
Investments:
 Bonds and redeemable preferred stocks:
   Held to maturity - at amortized cost
     (market - $3,258,200 and $3,386,000)     3,256,622     3,257,204
   Available for sale - at market
     (amortized cost - $4,773,787 and 
     $4,211,883)                              4,799,687     4,412,483
 Other stocks - principally at market
   (cost - $151,390 and $133,665)               308,590       248,665
 Investment in investees                        772,032       833,886
 Loans receivable                               577,765       591,105
 Real estate and other investments              197,641       198,120
     Total investments                        9,912,337     9,541,463

Recoverables from reinsurers and prepaid
  reinsurance premiums                          966,760       984,500
Agents' balances and premiums receivable        369,422       376,330
Deferred acquisition costs                      364,472       330,353
Other receivables                               196,376       202,099
Assets held in separate accounts                243,339       238,524
Prepaid expenses, deferred charges and 
  other assets                                  206,998       224,858
Cost in excess of net assets acquired           176,377       183,639

                                            $12,733,899   $12,413,591
<PAGE>

      Liabilities and Shareholders' Equity
Unpaid losses and loss adjustment expenses  $ 3,139,783   $ 2,965,700
Unearned premiums                               894,207       920,641
Annuity benefits accumulated                  5,279,208     5,051,959
Life, accident and health reserves              561,150       538,274
Payable to American Premier Underwriters        725,411       639,455
Other long-term debt:
 Direct obligations of AFC Parent Company       173,566       311,202
 Obligations of AFC subsidiaries:
   American Annuity Group                       159,456       167,734
   Other subsidiaries                            55,411        56,705
Liabilities related to separate accounts        243,339       238,524
Accounts payable, accrued expenses and 
  other liabilities                             597,361       675,052
Minority interest                               147,423       148,338
     Total liabilities                       11,976,315    11,713,584

Shareholders' Equity:
  Preferred Stock (liquidation 
    value - $278,719)                           168,484       168,484
  Common Stock without par value                  9,625         9,625
  Retained earnings                             464,875       335,798
  Net unrealized gain on marketable 
    securities, net of deferred 
    income taxes                                114,600       186,100
     Total shareholders' equity                 757,584       700,007


                                            $12,733,899   $12,413,591
                                  2
<PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q

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

<TABLE>
<CAPTION>
                                              Three months ended      Nine months ended
                                                 September 30,          September 30,
                                                 1996      1995        1996        1995
<S>                                          <C>       <C>       <C>         <C>
Income:
  Property and casualty insurance premiums   $398,093  $381,850  $1,164,405  $1,107,141
  Life, accident and health premiums           24,809       403      80,323       1,598
  Investment income                           175,424   160,034     517,410     472,322
  Realized gains on sales of securities         2,547    17,787      16,786      22,219
  Equity in net earnings of investees           8,929     1,422      50,692      43,998
  Gains (losses) on sales of investee
    corporations                              169,376        95     169,376        (347)
  Other income                                 33,702    27,067      96,811      77,169
                                              812,880   588,658   2,095,803   1,724,100

Costs and Expenses:
  Property and casualty insurance:
    Losses and loss adjustment expenses       394,854   262,256     921,929     775,550
    Commissions and other underwriting
      expenses                                117,593   114,590     365,049     359,085
  Annuity benefits                             69,514    65,631     206,319     194,152
  Life, accident and health benefits           21,742       230      70,212       1,310
  Interest charges on borrowed money           32,190    36,928     102,437     103,037
  Other operating and general expenses         80,221    60,978     228,164     176,919
                                              716,114   540,613   1,894,110   1,610,053

Earnings before income taxes and
  extraordinary items                          96,766    48,045     201,693     114,047
Provision for income taxes                     11,710    12,275      35,358      31,149

Earnings before extraordinary items            85,056    35,770     166,335      82,898

Extraordinary items - loss on prepayment
  of debt                                      (7,756)     -        (24,505)     (3,048)

Net Earnings                                 $ 77,300  $ 35,770  $  141,830  $   79,850
</TABLE>

                                   3
<PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q

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

                                                        Nine months ended
                                                           September 30,
                                                          1996         1995
Operating Activities:
  Net earnings                                      $  141,830   $   79,850
  Adjustments:
    Extraordinary items                                 24,505        3,048
    Depreciation and amortization                       38,815       23,362
    Annuity benefits                                   206,319      194,152
    Equity in net earnings of investees                (50,692)     (43,998)
    Changes in reserves on assets                        7,714        2,932
    Realized gains on investing activities            (186,768)     (22,921)
    Decrease (increase) in reinsurance and 
      other receivables                                 45,728      (41,283)
    Increase in other assets                           (30,686)     (80,826)
    Increase in insurance claims and reserves          170,525      116,692
    Decrease in other liabilities                      (69,396)     (18,625)
    Increase in minority interest                       18,685       16,961
    Dividends from investees                            17,114       17,124
    Other, net                                             236       (4,765)
                                                       333,929      241,703
Investing Activities:
  Purchases of and additional investments in:
    Fixed maturity investments                      (1,315,341)  (1,352,959)
    Equity securities                                   (9,117)      (3,749)
    Investees and subsidiaries                          (2,236)     (13,327)
    Real estate, property and equipment                (19,854)     (23,600)
  Maturities and redemptions of fixed maturity 
    investments                                        369,880      193,451
  Sales of:
    Fixed maturity investments                         422,011      672,221
    Equity securities                                   31,666       15,258
    Investee and subsidiaries                          221,792       43,697
    Real estate, property and equipment                  4,068        5,040
  Increase in other investments                         (8,741)     (11,030)
                                                      (305,872)    (474,998)
<PAGE>
Financing Activities:
  Annuity receipts                                     410,203      338,353
  Annuity payments                                    (372,005)    (302,486)
  Additional long-term borrowings                      204,275      145,128
  Reductions of long-term debt                        (369,220)    (494,753)
  Borrowings from American Premier                     238,600      639,000
  Repayments of borrowings from American Premier      (161,164)     (80,000)
  Repurchases of preferred stock                          -            (147)
  Exercise of stock options                               -           8,721
  Cash dividends paid                                  (12,753)     (12,890)
                                                       (62,064)     240,926

Net Increase (Decrease) in Cash and 
  Short-term Investments                               (34,007)       7,631

Cash and short-term investments at beginning 
  of period                                            331,825      171,335

Cash and short-term investments at end of period    $  297,818   $  178,966

                                    4
<PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A. Mergers  On April 3, 1995, American Financial Corporation ("AFC")
   merged with a subsidiary of American Financial Group, Inc. ("AFG"),
   a new company formed to own 100% of the common stock of both AFC
   and American Premier Underwriters, Inc. ("American Premier").  In
   the transaction, Carl H. Lindner and members of his family, who
   owned 100% of the Common Stock of AFC, exchanged their AFC Common
   Stock for approximately 55% of AFG voting common stock.  Former
   shareholders of American Premier, including AFC and its
   subsidiaries, received shares of AFG stock on a one-for-one basis.

   AFC continues to be a separate SEC reporting company with publicly
   traded debentures and preferred stock.  Holders of AFC Series F and
   G Preferred Stock were granted voting rights equal to approximately
   21% of the total voting power of AFC shareholders immediately prior
   to the Mergers.

B. Accounting Policies

   Basis of Presentation  The accompanying consolidated financial
   statements for AFC and subsidiaries are unaudited; however,
   management believes that all adjustments (consisting only of normal
   recurring accruals unless otherwise disclosed herein) necessary for
   fair presentation have been made.  The results of operations for
   interim periods are not necessarily indicative of results to be
   expected for the year.  The financial statements have been prepared
   in accordance with the instructions to Form 10-Q and therefore do
   not include all information and footnotes necessary to be in
   conformity with generally accepted accounting principles.

   Certain reclassifications have been made to prior years to conform
   to the current year's presentation.  All significant intercompany
   balances and transactions have been eliminated.  All acquisitions
   have been treated as purchases.  The results of operations of
   companies since their formation or acquisition are included in the
   consolidated financial statements.

   The preparation of the financial statements requires management to
   make estimates and assumptions that affect the amounts reported in
   the financial statements and accompanying notes.  Changes in
   circumstances could cause actual results to differ materially from
   those estimates.

<PAGE>
   AFC's ownership of subsidiaries and significant affiliates with
   publicly traded shares was as follows:
                                                  September 30,  December 31,
                                                          1996   1995   1994 
     American Annuity Group, Inc. ("AAG")                   81%    80%    80%
     American Financial Enterprises, Inc. ("AFEI")          83%    83%    83%
     American Financial Group, Inc.                         23%    24%     -
     American Premier Underwriters, Inc.                    (a)    (a)    42%
     Chiquita Brands International, Inc.                    37%    38%    46%
     Citicasters Inc.                                       (b)    38%    37%

     (a) Exchanged for shares of AFG in April 1995.
     (b) Sold in September 1996.

   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

                               5
  <PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


   certain limited circumstances, such as significant issuer credit
   deterioration or if required by insurance or other regulators, may
   a company change its intent to hold a certain security to maturity
   without calling into question its intent to hold other debt
   securities to maturity in the future.

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

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

   Investment in Investees  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 businesses 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.

                                 6
<PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


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

   Annuity Benefits Accumulated  Annuity receipts and benefit payments
   are generally 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
   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; depositors can elect to purchase
   an annuity from AAG with funds in their account.

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

                                 7
<PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


   Benefit Plans  AFC provides retirement benefits through
   contributory and noncontributory defined contribution plans.
   Contributions to benefit plans are charged against earnings in the
   year for which they are declared.  AFC's Employee Stock Ownership
   Retirement Plan ("ESORP") is a noncontributory, qualified plan
   which invests in securities of AFG and affiliates for the benefit
   of their 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.

   Debt Discount  Debt discount and expenses are being amortized over
   the lives of respective borrowings, generally on the interest
   method.

   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.
<PAGE>
C. Segments of Operations  AFC operates its property and casualty
   insurance business in two major segments: specialty lines and
   commercial and personal lines.  AFC's annuity business sells tax-
   deferred annuities principally to employees of primary and
   secondary educational institutions and hospitals.  These insurance
   businesses operate throughout the United States.  AFC also owns
   significant portions of the voting equity securities of certain
   companies (investee corporations - see Note D).  The following
   table (in thousands) shows AFC's revenues by significant business
   segment.  Intersegment transactions are not significant.

                                           Nine months ended September 30,
      Revenues                                      1996        1995
        Property and casualty insurance:
          Premiums earned:
            Specialty lines                   $  644,835  $  585,019
            Commercial and personal lines        519,112     520,984
            Other lines                              458       1,138
                                               1,164,405   1,107,141
          Investment and other income            305,683     231,272
                                               1,470,088   1,338,413
        Annuities and life (*)                   437,763     310,128
        Other                                    137,260      31,561
                                               2,045,111   1,680,102

        Equity in net earnings of investees       50,692      43,998

                                              $2,095,803  $1,724,100

        (*) Represents primarily investment income.

                                  8
<PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


D. Investment in Investees  The companies in the following table are
   subject to the rules and regulations of the SEC.  The market value
   of the investments was approximately $842 million and $1.0 billion
   at September 30, 1996 and December 31, 1995, respectively.
   AFC's investment (and common stock ownership percentage) in these
   investees was as follows (dollars in thousands):

                              September 30, 1996  December 31, 1995
      American Financial Group     $574,262 (23%)     $568,781 (24%)
      Chiquita                      197,770 (37%)      191,026 (38%)
      Citicasters                     (*)               74,079 (38%)
                                   $772,032           $833,886

      (*) Sold in September 1996.

   In addition to owning the common stock of AFC, American Financial
   Group owns all of the common stock of American Premier, a specialty
   property and casualty insurance company.  Chiquita is a leading
   international marketer, producer and distributor of bananas and
   other quality fresh and processed food products.  Citicasters owns
   and operates radio and television stations in major markets
   throughout the country.

   In September 1996, AFC sold its investment in Citicasters to Jacor
   Communications for approximately $220 million in cash plus warrants
   to purchase Jacor common stock.  AFC realized a pretax gain of
   approximately $169 million, before minority interest of
   $6.5 million, on the sale.

   Summarized financial information for AFC's investees follows (in
   millions):
                                              Nine months          Six months
                                                    ended               ended
      American Financial Group         September 30, 1996  September 30, 1995
      Revenues                                     $3,227              $2,009
      Earnings before Extraordinary Items             261                  84
      Extraordinary Items - Gain (Loss)                             
        on Debt Prepayments                           (26)                  3
      Net Earnings                                    235                  87

                                              Nine months ended September 30,
      Chiquita                                       1996                1995
      Net Sales                                    $1,880              $1,971
      Operating Income                                149                 172
      Income from Continuing Operations                60                  57
      Discontinued Operations                        -                      4
      Extraordinary Item - Loss on
        Debt Prepayments                              (23)                 (5)
      Net Income                                       37                  56
                                    9
  <PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


E. Payable to American Premier Underwriters  At September 30, 1996,
   AFC (parent) had borrowed $675 million under its revolving credit
   agreement with American Premier. Accrued interest of $19.8 million
   at that date was paid in October 1996.

   Included in the payable to American Premier at September 30, 1996,
   is an aggregate of $30.6 million representing borrowings of an AFC
   subsidiary under a revolving credit facility with American Premier.

F. Other Long-Term Debt  During the first nine months of 1996, AFC
   (parent) repurchased $137.4 million of its debentures for $147.0 million.  
   AAG repurchased $78.0 million of its Notes for $84.2 million.

   At September 30, 1996, sinking fund and other scheduled principal
   payments on debt for the balance of 1996 and the subsequent five
   years were as follows (in thousands):

                      Parent
                     Company         Other           Total
         1996        $  -          $   309         $   309
         1997          5,604        16,250          21,854
         1998           -            1,944           1,944
         1999           -           76,736          76,736
         2000           -            7,163           7,163
         2001           -           42,321          42,321

   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.

G. Preferred Stock  Under provisions of both the Nonvoting
   (21.1 million shares authorized) and Voting (17.0 million shares
   authorized, 14.1 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.
   Outstanding shares of AFC voting preferred stock consisted of the
   following (see Note L - "Subsequent Events"):

             Series F, $1 par value - authorized 15,000,000
       shares; annual dividends per share $1.80; nonredeemable
       after 1996; 13,744,754 shares (stated value -
       $167.9 million) outstanding at September 30, 1996 and
       December 31, 1995.

             Series G, $1 par value - authorized 2,000,000 shares;
       annual dividends per share $1.05; may be retired at AFC's
       option at $10.50 per share; 364,158 shares (stated value -
       $600,000) outstanding at September 30, 1996 and
       December 31, 1995.
<PAGE>
H. Common Stock  Since the Mergers, AFG has owned all outstanding
   shares of AFC's Common Stock.
                                  10
<PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


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

                                                Nine months ended
                                                   September 30,
                                                  1996       1995
       AFC (parent)                           ($ 9,605)   ($1,713)
       AAG                                      (7,159)        30
       Other subsidiary                             57       -
       Chiquita (investee)                      (7,798)    (1,365)

                                              ($24,505)   ($3,048)

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
       1996                           Maturity     For Sale        Total
       Purchases                      $156,834   $1,158,507   $1,315,341
       Maturities and redemptions      173,562      196,318      369,880
       Sales                             9,310      412,701      422,011

       1995
       Purchases                      $424,915     $928,044   $1,352,959
       Maturities and redemptions      118,469       74,982      193,451
       Sales                             9,040      663,181      672,221

   Securities classified as "held to maturity" having an amortized cost of
   $9.5 million and $9.0 million were sold in 1996 and 1995, respectively, 
   due to significant deterioration in the issuers' creditworthiness.

K. Pending Legal Proceedings  Counsel has advised AFC that there is
   little likelihood of any substantial liability being incurred from
   any litigation pending against AFC and subsidiaries.

L. Subsequent Events  In October 1996, AFC announced it will redeem
   1.6 million shares of its Series F preferred stock at $20 per share
   in December 1996.  In November 1996, an AAG trust subsidiary issued
   $75 million of 9-1/4% Trust Originated Preferred Securities for
   cash.

                                  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 expenditures for administrative
expenses and corporate services and, most importantly, for the payment
of principal and interest on borrowings and dividends on AFC Preferred
Stock.  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 ratio of debt to total capital at the holding company
level (excluding amounts due to affiliates) was .19 at September 30,
1996 compared to .31 at December 31, 1995.  Including the notes payable
to American Premier, the ratio changes to .54 at September 30, 1996
compared to .57 at December 31, 1995.  AFC's ratio of earnings to fixed
charges on a total enterprise basis was 2.58 for the first nine months
of 1996 compared to 2.23 for the entire year of 1995; ratios of
earnings to fixed charges and preferred dividends were 2.19 and 1.90
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, AFC would be required to generate cash through borrowings,
sales of securities or other assets, or similar transactions.

In recent months, three nationally recognized rating agencies issued or
upgraded their ratings on AFC and AAG senior public debentures, all of
which are now rated investment grade.  AAG's subordinated debentures
are rated investment grade by two of the agencies.  Generally, the
upgrades reflect the expectation that AFC's consolidated debt to total
capital will remain conservative and that coverage ratios will benefit
from higher subsidiary earnings and a lower level of fixed charges.

Bank credit lines at several subsidiary holding companies provide ample
liquidity which 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 $415 million is available under
these bank facilities, $89 million of which was borrowed at
September 30, 1996.
<PAGE>
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 carry
borrowings of up to $200 million of bank debt in the normal course in
order to retire public or privately held fixed rate debt over the next
year or two.

In April 1995, AFC entered into a subordinated credit agreement with
American Premier under which it can borrow up to $675 million.  The
credit line bears interest at 11-5/8% and converts to a four-year term 
loan in March 2005 with scheduled principal payments to begin in 
April 2005.  At September 30, 1996, AFC had borrowed $675 million under 
the agreement which it used for debt retirements, capital contributions 
to subsidiaries and other corporate purposes.

                                 12
<PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q

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


In addition, two AFC subsidiaries have separate revolving credit
agreements with American Premier allowing for maximum aggregate
borrowings of $170 million.  Borrowings under these credit lines bear
interest at rates approximating prime or LIBOR.  At September 30, 1996,
approximately $30 million was borrowed under these lines.

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 September 30, 1996.
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 these companies and the industries in which they operate.

RESULTS OF OPERATIONS

General  Pretax earnings for the three months ended September 30, 1996
were $97 million, an increase of $49 million over the comparable 1995
period.  Pretax earnings for the 1996 quarter include (i) a $169
million gain on the sale of AFC's investment in Citicasters, (ii) a
charge of $87 million resulting from a decision to strengthen insurance
reserves relating to asbestos and other environmental matters ("A&E")
and (iii) losses of approximately $30 million related to damage from
Hurricane Fran.

Pretax earnings were $202 million in the first nine months of 1996, an
increase of $88 million over the comparable 1995 period.  The gain on
the sale of Citicasters and an increase in investment income were
partially offset by the charge for A&E reserves and losses from
Hurricane Fran.

Property and Casualty Insurance  Great American (GAI and its property
and casualty insurance subsidiaries) manages and operates its property
and casualty business as two major sectors.  The specialty lines is a
diversified group that offers a wide variety of specialty insurance
products.  Some of the more significant lines are executive liability,
inland and ocean marine, U.S.-based operations of Japanese companies,
agricultural-related coverages, excess and surplus lines, nonstandard
auto 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
the 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 Great American's property
and casualty insurance subsidiaries were as follows (dollars in
millions):

                                      Three months ended    Nine months ended
                                         September 30,         September 30,
                                            1996    1995       1996      1995
  Net Written Premiums (GAAP)
    Specialty Operations                  $245.1  $228.6   $  671.6  $  630.3
    Commercial and Personal Operations     160.7   186.8      488.9     525.5
    Other lines                               -       .1         .3        .8
                                          $405.8  $415.5   $1,160.8  $1,156.6

  Combined Ratios (GAAP)
    Specialty Operations                    75.7%   96.6%      88.4%    100.2%
    Commercial and Personal Operations     126.7    99.6      111.2     100.5
    Aggregate (including A&E and
      other lines)                         128.7    98.8      110.5     102.4


   Operating results for the third quarter and first nine months of
1996 were adversely impacted by two unusual items: (i) approximately
$30 million in losses due to Hurricane Fran and (ii) the strengthening
of A&E reserves (exposures for which AFC has been held liable under
general liability policies written years ago).  AFC increased A&E
reserves of its discontinued insurances lines by $120 million by
recording a third quarter, non-cash, pretax charge of $87  million and
reallocating $33 million in reserves from its Specialty Operations.
A&E reserves at September 30, 1996 were approximately $340 million, an
amount expected to be approximately 11 times the preceding three years'
average claim payments.

   Specialty Operations  Net written premiums for the specialty
operations increased 7% during the third quarter and first nine months 
of 1996 from the comparable 1995 periods.  Excluding the impact of 
withdrawal from an unprofitable voluntary pool, the increase is 13% for 
the quarter and 15% for the first nine months.  The increases are due in 
part to increases in specialized coverages for U.S.-based operations of
Japanese companies, agricultural-related businesses, nonstandard
automobile, animal mortality and collateral protection exposures.  The
improvement in the combined ratio for the third quarter and first nine
months of 1996 is due primarily to (i) improved results in certain
niche businesses, (ii) the reallocation of $33 million in reserves to
A&E reserves (a combined ratio impact of 13.9 points and 5.1 points for
the third quarter and first nine months of 1996), and (iii) losses in
1995 from participation in the voluntary pool.
<PAGE>
   Commercial and Personal Operations  The 7% decrease in net written
premiums for the nine months of 1996 is due primarily to significant
decreases in personal lines business.  The 14% decrease in net written
premiums for the third quarter is due to price competition in the
commercial casualty lines and reduced writings of homeowners' insurance
in certain states.  Increases in the combined ratio reflect the impact
of losses due to Hurricane Fran as well as other weather-related
losses.

Life, Accident and Health Premiums and Benefits  The increase in life,
accident and health premiums and benefits reflects AAG's acquisition of
Laurentian Capital Corporation in November 1995.

Investment Income  Investment income increased $15.4 million (10%) in
the third quarter and $45.1 million (10%) in the first nine months of
1996 compared to 1995 due to AAG's acquisition of Laurentian and an
increase in the average amount of investments held.

                                 14
<PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q

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


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

Investee Corporations  Equity in net earnings of investees (companies
in which AFC owns a significant portion of the voting stock) represents
AFC's proportionate share of the investees' earnings and losses.

Gains (Losses) on Sales of Investee Corporations  The gain on sale of
investee for the third quarter and first nine months of 1996 represents
a pretax gain, before minority interest, on the sale of Citicasters
common stock.

Annuity Benefits  Annuity benefits expense increased 6% in the first
nine months of 1996 due primarily 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.

Interest on Borrowed Money  Interest on borrowed money decreased
$4.7 million (13%) in the third quarter compared to 1995 due primarily
to retirements of debt.

Other Operating and General Expenses  Operating and general expenses
for the third quarter and first nine months of 1996 include
$8.9 million and $26.2 million, respectively, attributable to the
operations of Laurentian.  Also included in the first nine months of
1996 and 1995 are charges of $19.3 million and $10.8 million,
respectively, for minority interest.


                                   

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


                                ITEM 6

                   Exhibits and Reports on Form 8-K


(a)  Exhibit:
                          
      Number                Description

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

(b)  Report on Form 8-K:    None

                                  16
<PAGE>
                 AMERICAN FINANCIAL CORPORATION 10-Q
                                PART II
                     OTHER INFORMATION - CONTINUED


                              Signature

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


                                 American Financial Corporation



November 11, 1996                 BY: FRED J. RUNK
                                      Fred J. Runk
                                      Senior Vice President and Treasurer

                                  17
<PAGE>