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, 1998                                No. 1-7361



                  AMERICAN FINANCIAL CORPORATION




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


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







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


   As of November 1, 1998, there were 10,593,000 shares of the
Registrant's Common Stock outstanding, all of which were owned
indirectly by American Financial Group, Inc.





                           Page 1 of 21
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                              PART I
                       FINANCIAL INFORMATION

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

                                                  September 30,  December 31,
                                                          1998          1997
Assets:
Cash and short-term investments                    $   405,831   $   231,227
Investments:
  Fixed maturities:
    Held to maturity - at amortized cost
      (market - $2,911,400 and $3,417,900)           2,764,137     3,326,996
    Available for sale - at market
      (amortized cost - $7,462,670 and $7,225,736)   7,897,070     7,532,836
  Other stocks - principally at market
    (cost - $196,868 and $153,322)                     393,468       446,222
  Investment in investee corporation                   232,933       200,714
  Policy loans                                         221,208       240,955
  Real estate and other investments                    268,657       280,235
     Total investments                              11,777,473    12,027,958

Recoverables from reinsurers and prepaid
  reinsurance premiums                               1,161,686       998,743
Agents' balances and premiums receivable               754,855       691,005
Deferred acquisition costs                             500,052       521,898
Other receivables                                      262,182       261,454
Assets held in separate accounts                        84,890       300,491
Prepaid expenses, deferred charges and other assets    359,600       405,798
Cost in excess of net assets acquired                  283,422       299,408

                                                   $15,589,991   $15,737,982
<PAGE>
Liabilities and Capital:
Unpaid losses and loss adjustment expenses         $ 4,528,175   $ 4,225,336
Unearned premiums                                    1,294,259     1,328,910
Annuity benefits accumulated                         5,424,690     5,528,111
Life, accident and health reserves                     339,558       709,899
Payable to American Financial Group, Inc.              292,000       352,766
Other long-term debt:
  Holding companies                                    332,589       286,661
  Subsidiaries                                         207,306       194,084
Liabilities related to separate accounts                84,890       300,491
Accounts payable, accrued expenses and other
  liabilities                                          980,005       908,622
     Total liabilities                              13,483,472    13,834,880

Minority interest                                      527,801       509,619

Shareholders' Equity:
  Preferred Stock
    - $72,154 liquidation value                         72,154        72,154
  Common Stock, no par value
    - 20,000,000 shares authorized
    - 10,593,000 shares outstanding                      9,625         9,625
  Capital surplus                                      948,740       936,154
  Retained earnings                                    194,699        34,350
  Net unrealized gain on marketable securities,
    net of deferred income taxes                       353,500       341,200
     Total shareholders' equity                      1,578,718     1,393,483

                                                   $15,589,991   $15,737,982
                                2
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
          AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF EARNINGS
               (In Thousands, Except Per Share Data)


<TABLE>
<CAPTION>
                                                 Three months ended          Nine months ended
                                                    September 30,              September 30,
                                                  1998         1997          1998         1997
<S>                                        <C>          <C>           <C>          <C>    
Income:
  Property and casualty insurance
    premiums                                $  696,537   $  739,858    $2,080,003   $2,102,001
  Life, accident and health premiums            50,434       32,149       145,710       84,845
  Investment income                            223,322      218,626       672,760      645,961
  Equity in net earnings (loss) of
    investee                                    (5,518)     (13,914)       26,396       18,094
  Realized gains on sales of:
    Securities                                  14,302       29,682        28,890       35,693
    Investee and subsidiaries                   11,090         -           20,510          731
    Other investments                             -            -            6,843         -
  Other income                                  42,262       28,335       106,112       80,582
                                             1,032,429    1,034,736     3,087,224    2,967,907

Costs and Expenses:
  Property and casualty insurance:
    Losses and loss adjustment expenses        513,537      545,915     1,577,440    1,510,426
    Commissions and other underwriting
      expenses                                 201,777      208,975       586,409      586,580
  Annuity benefits                              64,514       72,868       204,735      212,305
  Life, accident and health benefits            40,547       28,250       115,208       78,238
  Interest charges on borrowed money            19,005       21,167        54,059       67,293
  Minority interest expense                     15,048       10,530        38,135       30,887
  Other operating and general expenses          88,823       89,775       248,655      233,214
                                               943,251      977,480     2,824,641    2,718,943

Earnings before income taxes and
  extraordinary items                           89,178       57,256       262,583      248,964
Provision for income taxes                      31,185       22,339        98,594       91,343

Earnings before extraordinary items             57,993       34,917       163,989      157,621

Extraordinary items - loss on prepayment
  of debt                                          (33)      (6,908)         (754)      (6,986)

Net Earnings                                $   57,960   $   28,009    $  163,235   $  150,635
</TABLE>
                                     3
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
          AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
     CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                      (Dollars in Thousands)
                                 
                                 
                                 
<TABLE>
<CAPTION>
                                Common Stock                           Unrealized
                                   Preferred  and Capital   Retained     Gain on  Comprehensive
                                       Stock      Surplus   Earnings  Securities         Income
<S>                                 <C>         <C>        <C>         <C>            <C>
Balance at January 1, 1998           $72,154     $936,154   $ 34,350    $341,200
                                                                                   
 Net earnings                           -            -       163,235        -          $163,235
 Dividends on Preferred Stock           -            -        (2,886)       -              -
 Capital contribution from parent       -          12,530       -           -              -
 Change in unrealized                   -            -          -         12,300         12,300
 Other                                  -              56       -           -              -

Balance at September 30, 1998        $72,154     $948,740   $194,699    $353,500       $175,535





Balance at January 1, 1997          $162,760     $929,371   $  1,364    $183,400 
 Net earnings                           -            -       150,635        -          $150,635
 Dividends on Preferred Stock           -            -       (12,773)       -              -
 Capital contribution from parent       -          12,530       -           -              -
 Change in unrealized                   -            -          -        128,200        128,200
 Other                                  -            (384)      -           -              -
                                       
Balance at September 30, 1997       $162,760     $941,517   $139,226    $311,600       $278,835
</TABLE>
                                4
<PAGE> 
               AMERICAN FINANCIAL CORPORATION 10-Q

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

                                                         Nine months ended
                                                          September 30,
                                                         1998         1997
Operating Activities:
  Net earnings                                     $  163,235   $  150,635
  Adjustments:
   Extraordinary items                                    754        6,986
   Depreciation and amortization                       71,589       51,173
   Annuity benefits                                   204,735      212,144
   Equity in net earnings of investee                 (26,396)     (18,094)
   Changes in reserves on assets                          761         (102)
   Realized gains on investing activities             (80,357)     (36,102)
   Increase in reinsurance and other receivables     (229,730)    (216,226)
   Decrease (increase) in other assets               (125,352)      66,962
   Increase in insurance claims and reserves          293,264      188,305
   Increase (decrease) in other liabilities           111,765     (104,382)
   Increase in minority interest                       14,743       24,944
   Dividends from investee                              3,600        3,600
   Other, net                                         (12,783)     (19,044)
                                                      389,828      310,799
Investing Activities:
  Purchases of and additional investments in:
   Fixed maturity investments                      (1,682,077)  (1,816,550)
   Equity securities                                  (54,971)     (22,783)
   Subsidiaries                                       (30,325)      (4,900)
   Real estate, property and equipment                (49,425)     (35,396)
  Maturities and redemptions of fixed maturity     
    investments                                     1,017,004      535,178
  Sales of:
   Fixed maturity investments                         544,722      935,942
   Equity securities                                   19,119       85,677
   Subsidiaries                                       164,589        2,500
   Real estate, property and equipment                 48,634        2,792
  Cash and short-term investments of acquired
   (former) subsidiaries                              (19,646)         (70)
  Increase in other investments                        (9,363)      (4,448)
                                                      (51,739)    (322,058)
<PAGE>
Financing Activities:
  Fixed annuity receipts                              358,659      369,731
  Annuity surrenders, benefits and withdrawals       (538,912)    (439,818)
  Additional long-term borrowings                     217,537       63,090
  Reductions of long-term debt                       (159,383)    (110,494)
  Borrowings from AFG                                    -          44,100
  Payments to AFG                                     (52,500)    (118,500)
  Capital contribution                                 14,000       14,000
  Issuances of trust preferred securities                -         149,353
  Cash dividends paid                                  (2,886)     (12,773)
                                                     (163,485)     (41,311)

Net Increase (Decrease) in Cash and 
  Short-term Investments                              174,604      (52,570)

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

Cash and short-term investments at end of period   $  405,831   $  352,261
                                
                                5
<PAGE> 
             AMERICAN FINANCIAL CORPORATION, INC. 10-Q

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A. Accounting Policies

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

   Certain reclassifications have been made to prior years to
   conform to the current year's presentation.  All significant
   intercompany balances and transactions have been eliminated.
   All acquisitions have been treated as purchases.  The results
   of operations of companies since their formation or acquisition
   are included in the consolidated financial statements.
   
   The preparation of the financial statements requires management
   to make estimates and assumptions that affect the amounts
   reported in the financial statements and accompanying notes.
   Changes in circumstances could cause actual results to differ
   materially from those estimates.
   
   AFC's Common Stock is owned by AFC Holding Company, a wholly-
   owned subsidiary of American Financial Group, Inc. ("AFG").
   AFC's ownership of subsidiaries and significant affiliates was
   as follows:
   
                                                   September 30,  December 31,
                                                           1998    1997  1996
      American Annuity Group, Inc. ("AAG")                   82%     81%   81%
      American Financial Enterprises, Inc. ("AFEI")(*)       80%     80%   83%
      American Premier Underwriters, Inc.(*)                 81%     81%   81%
      Chiquita Brands International, Inc.                    37%     39%   43%
   
      (*) AFG owned the remaining 20% of AFEI and 19% of American Premier at
          September 30, 1998 and December 31, 1997.
<PAGE>
   Investments  Debt securities are classified as "held to
   maturity" and reported at amortized cost if AFC has the
   positive intent and ability to hold them to maturity.  Debt and
   equity securities are classified as "available for sale" and
   reported at fair value with unrealized gains and losses
   reported as a separate component of shareholders' equity if the
   securities are not classified as held to maturity or bought and
   held principally for selling in the near term.  Only in certain
   limited circumstances, such as significant issuer credit
   deterioration or if required by insurance or other regulators,
   may a company change its intent to hold a certain security to
   maturity without calling into question its intent to hold other
   debt securities to maturity in the future.
   
   Short-term investments are carried at cost; loans receivable
   are carried primarily at the aggregate unpaid balance.
   Premiums and discounts on mortgage-backed securities are
   amortized over 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.
                                6
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


   Investment in Investee Corporation  Investments in securities
   of 20%- to 50%-owned companies are generally carried at cost,
   adjusted for AFC's proportionate share of their undistributed
   earnings or losses.
   
   Cost in Excess of Net Assets Acquired  The excess of cost of
   subsidiaries and investees over AFC's equity in the underlying
   net assets ("goodwill") is being amortized over 40 years.
   
   Insurance  As discussed under "Reinsurance" below, unpaid
   losses and loss adjustment expenses and unearned premiums have
   not been reduced for reinsurance recoverable.
   
     Reinsurance  In the normal course of business, AFC's
   insurance subsidiaries cede reinsurance to other companies to
   diversify risk and limit maximum loss arising from large
   claims.  To the extent that any reinsuring companies are unable
   to meet obligations under the agreements covering reinsurance
   ceded, AFC's insurance subsidiaries would remain liable.
   Amounts recoverable from reinsurers are estimated in a manner
   consistent with the claim liability associated with the
   reinsurance policies.  AFC's insurance subsidiaries report as
   assets (a) the estimated reinsurance recoverable on unpaid
   losses, including an estimate for losses incurred but not
   reported, and (b) amounts paid to reinsurers applicable to the
   unexpired terms of policies in force.  AFC's insurance
   subsidiaries also assume reinsurance from other companies.
   Income on reinsurance assumed is recognized based on reports
   received from ceding reinsurers.
   
     Deferred Acquisition Costs  Policy acquisition costs
   (principally commissions, premium taxes and other underwriting
   expenses) related to the production of new business are
   deferred ("DPAC").  For the property and casualty companies,
   the deferral of acquisition costs is limited based upon their
   recoverability without any consideration for anticipated
   investment income.  DPAC is charged against income ratably over
   the terms of the related policies.  For the annuity companies,
   DPAC is amortized, with interest, in relation to the present
   value of expected gross profits on the policies.
<PAGE>   
     Unpaid Losses and Loss Adjustment Expenses  The net
   liabilities stated for unpaid claims and for expenses of
   investigation and adjustment of unpaid claims are based upon
   (a) the accumulation of case estimates for losses reported
   prior to the close of the accounting period on 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 recorded as increases or decreases in "annuity
   benefits accumulated" rather than as revenue and expense.
   Increases in this liability for interest credited are charged
   to expense and decreases for surrender charges are credited to
   other income.
   
     Life, Accident and Health Reserves  Liabilities for future
   policy benefits under traditional life, accident and health
   policies are computed using a net level premium method.
   Computations are based on anticipated
                               7
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


   investment yield, 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
   Separate account assets and related liabilities represent
   variable annuity deposits and, in 1997, include deposits
   maintained by several banks under a previously offered tax-
   deferred annuity program which was sold as part of the Funeral
   Services division (see Note B).
   
     Premium Recognition  Property and casualty premiums are
   earned over the terms of the policies on a pro rata basis.
   Unearned premiums represent that portion of premiums written
   which is applicable to the unexpired terms of policies in
   force.  On reinsurance assumed from other insurance companies
   or written through various underwriting organizations, unearned
   premiums are based on reports received from such companies and
   organizations.  For traditional life, accident and health
   products, premiums are recognized as revenue when legally
   collectible from policyholders.  For interest-sensitive life
   and universal life products, premiums are recorded in a
   policyholder account which is reflected as a liability.
   Revenue is recognized as amounts are assessed against the
   policyholder account for mortality coverage and contract
   expenses.
   
     Policyholder Dividends  Dividends payable to policyholders
   are included in "Accounts payable, accrued expenses and other
   liabilities" and represent estimates of amounts payable on
   participating policies which share in favorable underwriting
   results.  The estimate is accrued during the period in which
   the related premium is earned.  Changes in estimates are
   included in income in the period determined.  Policyholder
   dividends do not become legal liabilities unless and until
   declared by the boards of directors of the insurance companies.
   
   Minority Interest  For balance sheet purposes, minority
   interest represents the interests of noncontrolling
   shareholders in AFC subsidiaries, including preferred
   securities issued by trust subsidiaries of AAG, and the AFG
   direct ownership interest in American Premier Underwriters,
   Inc. ("American Premier" or "APU") and AFEI.  For income
   statement purposes, minority interest expense represents those
   shareholders' interest in the earnings of AFC subsidiaries as
   well as accrued distributions on the trust preferred
   securities.
   
   Issuances of Stock by Subsidiaries and Investees  Changes in
   AFC's equity in a subsidiary or an investee caused by issuances
   of the subsidiary's or investee's stock are accounted for as
   gains or losses where such issuance is not part of a broader
   reorganization.
<PAGE>   
   Income Taxes  AFC and American Premier have each filed
   consolidated federal income tax returns which include all 80%-
   owned U.S. subsidiaries, except for certain life insurance
   subsidiaries and their subsidiaries.  At the close of business
   on December 31, 1996, AFG contributed 81% of the common stock
   of American Premier to AFC.  Accordingly, AFC and American
   Premier filed a consolidated return for 1997.
   
   Deferred income taxes are calculated using the liability
   method.  Under this method, deferred income tax assets and
   liabilities are determined based on differences between
   financial reporting and tax bases and are measured using
   enacted tax rates.  Deferred tax assets are recognized if it is
   more likely than not that a benefit will be realized.
                               8
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


   Benefit Plans  AFC provides retirement benefits to qualified
   employees of participating companies through contributory and
   noncontributory defined contribution plans contained in AFC's
   Retirement and Savings Plan.  Under the retirement portion of
   the plan, company contributions (approximately 6% of covered
   compensation in 1997) are invested primarily in securities of
   AFG and affiliates.  Under the savings portion of the plan, AFC
   matches a specific portion of employee contributions.
   Contributions to benefit plans are charged against earnings in
   the year for which they are declared.
   
   AFC and many of its subsidiaries provide health care and life
   insurance benefits to eligible retirees.  AFC also provides
   postemployment benefits to former or inactive employees
   (primarily those on disability) who were not deemed retired
   under other company plans.  The projected future cost of
   providing these benefits is expensed over the period the
   employees earn such benefits.
   
   Start-up Costs  Certain costs associated with introducing new
   products and distribution channels are deferred by AAG and are
   amortized on a straight-line basis over 5 years.  See
   Management's Discussion and Analysis - "New Accounting
   Standards to be Implemented."
   
   Comprehensive Income  Effective January 1, 1998, AFC
   implemented Statement of Financial Accounting Standards
   ("SFAS") No. 130, "Reporting Comprehensive Income."  SFAS No.
   130 uses the term "comprehensive income" to describe the total
   of net earnings plus other comprehensive income.  For AFC,
   other comprehensive income represents the change in net
   unrealized gain on marketable securities net of deferred taxes
   and a reclassification adjustment for gains and losses included
   in net earnings.  Implementation of this statement had no
   impact on net earnings or shareholders' equity.  Prior periods
   have been restated to conform to the current presentation.
   
   Statement of Cash Flows  For cash flow purposes, "investing
   activities" are defined as making and collecting loans and
   acquiring and disposing of debt or equity instruments and
   property and equipment.  "Financing activities" include
   obtaining resources from owners and providing them with a
   return on their investments, borrowing money and repaying
   amounts borrowed.  Annuity receipts, benefits and withdrawals
   are also reflected as financing activities.  All other
   activities are considered "operating".  Short-term investments
   having original maturities of three months or less when
   purchased are considered to be cash equivalents for purposes of
   the financial statements.
                               9
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


B. Sale of Subsidiaries  On September 30, 1998, AAG sold its
   Funeral Services division for approximately $165 million in
   cash.  AFC realized a pretax gain of $21.6 million, before
   $2.7 million of minority interest, on this sale.

   In September 1998, AFC reached a definitive agreement to sell
   the majority of its Commercial lines division to Ohio Casualty
   Company for $300 million in cash plus warrants to purchase
   3 million shares of Ohio Casualty common stock.  The commercial
   lines being sold generated net written premiums of
   approximately $215 million and $235 million for the nine months
   ended September 30, 1998 and 1997, respectively, and
   $330 million for the year ended December 31, 1997.  AFC expects
   to record a pretax gain in excess of $140 million on this
   transaction.  Completion of the sale, which is expected to
   occur in the fourth quarter of 1998, is subject to certain
   conditions, including receipt of regulatory approval.

C. Segments of Operations  Following the sale of its Commercial
   lines division, AFC's property and casualty group will be
   engaged primarily in private passenger automobile and specialty
   insurance businesses. AFC's annuity and life business primarily
   sells tax-deferred annuities to employees of primary and
   secondary educational institutions and hospitals.  In addition,
   AFC has owned significant portions of the voting equity
   securities of certain companies (investee corporation - see
   Note D).
   
   The Financial Accounting Standards Board issued SFAS No. 131,
   "Disclosures about Segments of an Enterprise and Related
   Information" which is required to be implemented by the end of
   1998.  The implementation of SFAS No. 131 will have no effect
   on AFC's earnings or its financial position.
<PAGE>
   The following table (in thousands) shows AFC's revenues by
   significant business segment. The Personal group consists of
   the nonstandard auto group along with the preferred/standard
   private passenger auto and other personal insurance business,
   formerly included in the Commercial and Personal lines.  The
   Specialty group now includes a highly diversified group of
   specialty business units (formerly, Specialty lines) plus the
   commercial business previously included in the Commercial and
   Personal lines.

                                           Nine months ended September 30,
                                                      1998           1997
       Property and casualty insurance:
         Premiums earned:
          Personal                              $  980,288     $1,017,976
          Specialty                              1,068,854      1,056,531
          Other (a)                                 30,861         27,494
                                                 2,080,003      2,102,001
       Investment and other income                 376,684        340,608
                                                 2,456,687      2,442,609
       Annuities and life (b)                      584,834        466,046
         Other                                      19,307         41,158
                                                 3,060,828      2,949,813
       Equity in net earnings of investee           26,396         18,094
   
                                                $3,087,224     $2,967,907

       (a) Includes nonstandard auto group operations in the United Kingdom.
       (b) Represents primarily investment income.
   
                               10
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


D. Investment in Investee Corporation  Investment in investee
   corporation reflects AFC's ownership of 24 million shares of
   Chiquita common stock.  The market value of this investment was
   $253 million and $391 million at September 30, 1998 and
   December 31, 1997, respectively.  Chiquita is a leading
   international marketer, producer and distributor of bananas and
   other quality fresh and processed food products.

   Summarized financial information for Chiquita follows (in
   millions):
 
                                  Nine months ended September 30,
                                           1998             1997
      Net Sales                          $2,095           $1,834
      Operating Income                      157              134
      Net Income                             83               56

   In November 1998, Chiquita reported that it had incurred significant   
   damage to its operations in Honduras as a result of widespread
   flooding caused by Hurricane Mitch.  Chiquita estimated that its
   asset write-offs and charges relating to Honduras for its fourth 
   quarter will be in the $50 million range.

E. Payable to American Financial Group  In December 1997, AFC and
   APU entered into a ten-year reciprocal Master Credit Agreement
   with AFG and AFC's direct parent, AFC Holding Company, under
   which funds are made available to each other at one percent
   over LIBOR.  At September 30, 1998 and December 31, 1997, AFC
   and APU had outstanding net borrowings due AFG and AFC Holding
   under the Master Credit Agreement of $292.0 million and
   $352.8 million (including accrued interest payable),
   respectively.
   
F. Other Long-Term Debt  The carrying value of long-term debt
   consisted of the following (in thousands):
     
                                                   September 30, December 31,
                                                           1998         1997
      Holding Companies:
       AFC notes payable to banks due December 2002    $ 95,000      $45,000
       AFC 9-3/4% Debentures due April 2004              78,797       79,792
       APU 9-3/4% Subordinated Notes due August 1999     89,738       92,127
       APU 10-5/8% Subordinated Notes due April 2000     43,108       43,889
       APU 10-7/8% Subordinated Notes due May 2011       17,544       17,586
       Other                                              8,402        8,267
   
                                                       $332,589     $286,661
      Subsidiaries:
       AAG 6-7/8% Senior Notes due June 2008           $100,000     $   -
       AAG notes payable to banks due
         in installments to December 2003                57,000      107,000
       AAG 11-1/8% Senior Subordinated Notes               -          24,080
       Notes payable secured by real estate              37,744       49,525
       Other                                             12,562       13,479
   
                                                       $207,306     $194,084
                               11
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
   
   At September 30, 1998, sinking fund and other scheduled
   principal payments on debt for the balance of 1998 and the
   subsequent five years were as follows (in thousands):
   
                    Holding
                  Companies    Subsidiaries      Total
      1998          $  -            $   472   $    472
      1999           89,030           1,962     90,992
      2000           42,042           8,666     50,708
      2001             -              1,381      1,381
      2002          100,502           1,266    101,768
      2003             -             58,294     58,294
   
   Debentures purchased in excess of scheduled payments may be
   applied to satisfy any sinking fund requirement.  The scheduled
   principal payments shown above assume that debentures
   previously purchased are applied to the earliest scheduled
   retirements.
   
   In February 1998, AFC entered into a new unsecured credit
   agreement with a group of banks under which AFC can borrow up
   to $300 million through December 2002.  Borrowings bear
   interest at floating rates based on prime or Eurodollar rates.
   
   In January 1998, AAG replaced its existing bank lines with a
   new $200 million unsecured credit agreement.  Loans under the
   credit agreement mature from 2000 to 2003 and bear interest at
   floating rates based on prime or Eurodollar rates.  In February
   1998, AAG borrowed $50 million under the line and retired its
   11-1/8% Notes (including $24.3 million principal amount held by
   AAG and its subsidiaries).  In June 1998, AAG sold $100 million
   principal amount of 6-7/8% Senior Notes due 2008 to the public
   and used the net proceeds to reduce outstanding indebtedness
   under the credit agreement.
   
G. Minority Interest  Minority interest in AFC's balance sheet
   is comprised of the following (in thousands):
   
                                     September 30,  December 31,
                                             1998          1997
     Interest of AFG (parent) and of
       noncontrolling shareholders
       in subsidiaries' common stock     $302,801      $284,619
     Preferred securities issued by                    
       subsidiary trusts                  225,000       225,000
   
                                         $527,801      $509,619
<PAGE>   
   Trust Issued Preferred Securities  Wholly-owned subsidiary
   trusts of AAG have issued $225 million of preferred securities
   and, in turn, purchased $225 million of newly authorized AAG
   subordinated debt issues which provide interest and principal
   payments to fund the respective trusts' obligations.  The
   preferred securities are mandatorily redeemable upon maturity
   or redemption of the subordinated debt.
   
   The preferred securities are summarized as follows:
   
       Date of                                            Optional
       Issuance     Issuance (Maturity Date)     Amount   Redemption Dates
   
       November 1996   9-1/4% TOPrS (2026)  $75,000,000   On or after 11/7/2001
       March 1997      8-7/8% Pfd   (2027)   75,000,000   On or after 3/1/2007
       May 1997        7-1/4% ROPES (2041)   75,000,000   Prior to 9/28/2000 
                                                            and after 9/28/2001
   
   AAG effectively provides unconditional guarantees of its trusts' obligations.

                                 12
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

   Minority Interest Expense  Minority interest expense is comprised
   of (in thousands):
   
                                                Nine months ended
                                                   September 30,
                                                1998        1997
      Interest of AFG (parent) and
       noncontrolling shareholders in
       earnings of subsidiaries              $23,861     $20,417
      Accrued distributions on trust issued
       preferred securities                   14,274      10,470
   
                                             $38,135     $30,887
  
H. Preferred Stock  Under provisions of both the Nonvoting
   (4.0 million shares authorized) and Voting (4.0 million shares
   authorized) Cumulative Preferred Stock, the Board of Directors
   may divide the authorized stock into series and set specific
   terms and conditions of each series.  AFC's Preferred Stock
   consisted of the following:
   
       Series J, no par value; $25.00 liquidating value per share;
       annual dividends per share $2.00; redeemable at $25.75 per
       share beginning December 2005 declining to $25.00 at
       December 2007; 2,886,161 shares (stated value $72.2 million)
       outstanding at September 30, 1998 and December 31, 1997.
   
I. Unrealized Gain on Marketable Securities  The change in net
   unrealized gain on marketable securities for the nine months
   ended September 30 included the following (in millions):
   <TABLE>
   <CAPTION>                                   
                                                                   Minority
                                                 Pretax    Taxes   Interest      Net
  <S>                                            <C>      <C>       <C>       <C>
                    1998
   Unrealized holding gains (losses) on
     securities arising during the period         $67.2   ($22.0)     ($8.1)   $37.1
   Less reclassification adjustment for
     realized gains included in net income  
     and unrealized gains of subsidiaries sold    (45.1)    15.8        4.5    (24.8)
   Change in net unrealized gain on
     marketable securities                        $22.1   ($ 6.2)     ($3.6)   $12.3
   
   
                    1997
   Unrealized holding gains (losses) on
     securities arising during the period        $254.0   ($89.0)    ($15.6)  $149.4
   Less reclassification adjustment for
     realized gains included in net income        (36.1)    12.6        2.3    (21.2)
   Change in net unrealized gain on
     marketable securities                       $217.9   ($76.4)    ($13.3)  $128.2
</TABLE>
<PAGE>  
J. 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):
   
                                     Nine months ended
                                        September 30,
                                      1998        1997
      Holding Companies:
        AFC (parent)               ($   51)    ($5,357)
        APU (parent)                   (54)       (379)
      Subsidiaries:
        AAG                           (649)     (1,250)
   
                                   ($  754)    ($6,986)
   
                                     13
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


K. Cash Flows - Fixed Maturity Investments  "Investing activities"
   related to fixed maturity investments in AFC's Statement of
   Cash Flows consisted of the following (in thousands):
   
                                   Held to    Available
                                  Maturity     For Sale       Total
      1998
      Purchases                        826    1,681,251   1,682,077
      Maturities and redemptions   478,711      538,293   1,017,004
      Sales                         37,903(*)   506,819     544,722
   
   
      1997
      Purchases                   $  3,759   $1,812,791  $1,816,550
      Maturities and redemptions   268,432      266,746     535,178
      Sales                           -         935,942     935,942
   
      (*) Sold (at a gain of $.7 million) due to significant
          deterioration in the issuers' creditworthiness.
   
L. Commitments and Contingencies  Other than as disclosed in
   "Legal Proceedings" in Part II of AFC's June 30, 1998 Form 10-
   Q, there have been no significant changes to the matters
   discussed and referred to in Note O "Commitments and
   Contingencies" in AFC's Annual Report on Form 10-K for 1997.
   
                               14
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q

                              ITEM 2

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


GENERAL

AFC and American Premier are organized as holding companies with
almost all of their operations being conducted by subsidiaries.
These parent corporations, however, have continuing cash needs for
administrative expenses, the payment of principal and interest on
borrowings and shareholder dividends.  Therefore, certain analyses
are best done on a parent only basis while others are best done on
a total enterprise basis.  In addition, since most of its
businesses are financial in nature, AFC does not prepare its
consolidated financial statements using a current-noncurrent
format.  Consequently, certain traditional ratios and financial
analysis tests are not meaningful.

Year 2000 Status  AFC's Year 2000 Project is a corporate-wide
program designed to ensure that its computer systems will function
properly in the year 2000.  The Project also encompasses
communicating with agents, vendors, financial institutions and
others with which the companies conduct business to determine their
Year 2000 readiness and resulting effects on AFC.  AFC's Year 2000
Project is being coordinated by its Year 2000 Project Office which
monitors the work being performed by the various business units and
reports monthly to the Audit Committee of the Board of Directors
and more frequently to senior management.

To address the Year 2000 problem, AFC's operations have been
divided into separate systems groups.  At September 30, 1998,
these groups were in the process of either (i) modifying their
software programs or (ii) replacing programs with new software
that is Year 2000 compliant.  Nearly three-fourths of the groups
are "on target" to meet AFC's goal of having program
modifications and new software installations substantially
completed by the end of 1998, with testing continuing in and
through 1999.  About one-fourth of the groups are being "closely
watched" because there is some risk that critical dates in the
project schedule may be missed with a potential for some
disruption of normal business operations.  One group is
considered "critical" at this time since it has significantly
missed internal project deadlines.  This project has recently been 
reorganized and staffing levels have been increased.  The project 
is being closely monitored and will be reviewed to determine if it 
can be upgraded to the "closely watched" category during the fourth 
quarter of 1998.
<PAGE>
Contingency plans have been developed for certain systems deemed
most critical to operations.  These plans provide a documented
order of actions necessary to keep the business functions operating
for these systems.  Such plans typically include procedures and
workflow processes for developing contingent databases.
Contingency planning for other systems deemed critical to
operations and reasonably likely not to be modified on schedule
will begin in the fourth quarter of 1998 and be completed by mid-
1999.

Many of the systems being replaced were planned replacements which
were merely accelerated due to the Year 2000 problem.  In addition,
a significant portion of AFC's Year 2000 Project is being completed
using internal staff.  Therefore, cost estimates for the Year 2000
Project do not entirely represent incremental costs.

From inception in the early 1990s through September 30, 1998, AFC
has incurred approximately $32 million in Year 2000 costs,
including capitalized costs of $7 million for new systems.  During
the first nine months of 1998, $17 million in Year 2000 costs have
been expensed.  AFC estimates that it will incur an additional
$30 million of such costs in completing the Project.

                                15
<PAGE>
               AMERICAN FINANCIAL CORPORATION 10-Q
                                 
               Management's Discussion and Analysis
   of Financial Condition and Results of Operations - Continued


Projected Year 2000 costs and completion dates are based on
management's best estimates.  However, there can be no assurance
that these estimates will be achieved.  Should software
modifications and new software installations not be completed on a
timely basis, the resulting disruptions could have a material
adverse affect on operations.

AFC's operations could also be affected by the inability of third
parties such as agents and vendors to become Year 2000 compliant.
In addition, AFC's property and casualty insurance subsidiaries are
reviewing the potential impact of the Year 2000 issue on insureds
as part of their underwriting process.  They are also reviewing
policy forms, issuing clarifying endorsements where appropriate and
examining coverage issues for Year 2000 exposures.  While it is
possible that Year 2000 claims may emerge in future periods, it is
not possible to estimate any such amounts.

A&E Reserves  Under the agreement to sell a majority of its
Commercial lines division, AFC will retain liabilities for certain
asbestos and environmental exposures ("A&E") relating to claims
under policies written prior to the mid-1980's.  AFC's insurance
subsidiaries are in the process of reviewing their A&E reserves and
expect this review to be completed before the end of this year.
While its A&E reserves at September 30, 1998, were about
$350 million, approximately 10 times the preceding three years'
average claim payments, AFC expects that the review could indicate
estimated ultimate aggregate losses as much as two-thirds greater
than that amount.  Any additional A&E reserves estimated to be
required will be recorded as a special charge upon completion of
the review.

Forward-Looking Statements  The Private Securities Litigation
Reform Act of 1995 encourages corporations to provide investors
with information about the company's anticipated performance and
provides protection from liability if future results are not the
same as management's expectations.  This document contains certain
forward-looking statements that are based on assumptions which
management believes are reasonable, but by their nature, inherently
uncertain.  Future results could differ materially from those
projected.  Factors that could cause such differences include, but
are not limited to: changes in economic conditions, regulatory
actions, level of catastrophe losses, the Year 2000 issue and
competitive pressures.  AFC undertakes no obligation to update any
forward-looking statements.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

Ratios  AFC's debt to total capital ratio (at the parent holding
company level and excluding amounts due AFG) was approximately  17%
at September 30, 1998 and December 31, 1997.  Including amounts due
AFG, the ratio was 28% at September 30, 1998 and 31% at
December 31, 1997.

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

                                      Nine months      Year Ended
                               Ended September 30,    December 31,
                                             1998            1997
  Earnings to fixed charges                  4.43            4.20
  Earnings to fixed charges plus
    preferred dividends                      4.06            3.52

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


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

AFC participates in a reciprocal Master Credit Agreement among the
various AFG holding companies under which funds are made available
to each other for general corporate purposes.  Amounts due AFG
under the Master Credit Agreement were $292 million at September 30, 
1998 and $345 million at December 31, 1997.

A new five-year, $300 million bank credit line was established by
AFC in February 1998, replacing two subsidiary holding company
lines.  The new credit line provides ample liquidity and can be
used to obtain funds for operating subsidiaries or, if necessary,
for the parent companies.  At September 30, 1998, there was
$95 million borrowed under the credit line.

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 reduction of debt
at the holding companies from historical levels (and the related 
decrease in ongoing cash needs for interest and principal payments), 
(iii) AFC's ability to obtain financing in capital markets, as well 
as (iv) the sales of non-core investments.

Investments  Approximately 91% of fixed maturities held by AFC were
rated "investment grade" (credit rating of AAA to BBB) by
nationally recognized rating agencies at September 30, 1998.
Investment grade securities generally bear lower yields and lower
degrees of risk than those that are unrated and non-investment
grade.  Management believes that the high quality investment
portfolio should generate a stable and predictable investment
return.

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

General  Pretax earnings before extraordinary items for the three
months ended September 30, 1998 were $89.2 million compared to
$57.3 million for the third quarter of 1997.  The earnings
improvement for the 1998 quarter reflects an increase in investment
income and income from the sale of lease residuals and real estate
properties, a decrease in investee losses and the absence of
certain costs and expenses included in the 1997 period.

Pretax earnings before extraordinary items for the nine months
ended September 30, 1998 were $262.6 million compared to $249.0
million for the first nine months of 1997.  The earnings reflect
higher realized gains in addition to those items mentioned above
related to the third quarter, partially offset by a deterioration
in underwriting results in the property and casualty operations due
primarily to severe storms in the midwestern part of the country
during the 1998 second quarter and a continuation of the adverse
claims environment in the California workers' compensation
business.

                                17
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
               Management's Discussion and Analysis
   of Financial Condition and Results of Operations - Continued


Property and Casualty Insurance - Underwriting  Following the sale
of its Commercial lines division as described in Note B, which is
expected to be completed in the fourth quarter of 1998, AFC's
property and casualty group will be engaged primarily in private
passenger automobile and specialty insurance businesses.
Accordingly, AFC has realigned its property and casualty group into
two major business groups: Personal and Specialty.

The Personal group consists of the nonstandard auto group along
with the preferred/standard private passenger auto and other
personal insurance business, formerly included in the Commercial
and Personal lines.  The nonstandard automobile insurance companies 
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 group includes a highly diversified group of business
lines (formerly, Specialty lines) plus the commercial business
previously included in the Commercial and Personal lines.  Some of
the more significant areas are executive liability, inland and
ocean marine, U.S.-based operations of Japanese companies,
agricultural-related coverages, California workers' compensation,
non-profit liability, general aviation coverages, fidelity and
surety bonds, and umbrella and excess coverages.  Commercial lines
businesses to be sold include certain coverages in workers'
compensation, commercial multi-peril, umbrella, and commercial
automobile.

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.

For certain lines of business and products where the credibility of
the range of loss projections is less certain (primarily the
various specialty lines listed above), management believes that it
is prudent and appropriate to use conservative assumptions until
such time as the data, experience and projections have more
credibility, as evidenced by data volume, consistency and maturity
of the data.  While this practice mitigates the risk of adverse
development on this business, it does not eliminate it.
<PAGE>
Net written premiums and combined ratios for AFC's property and
casualty insurance subsidiaries were as follows (dollars in
millions):

                                Three months ended      Nine months ended
                                   September 30,          September 30,
                                     1998     1997         1998      1997
  Net Written Premiums (GAAP)
    Personal                       $314.3   $329.0     $  998.0  $1,030.6
    Specialty                       357.9    397.7      1,039.6   1,090.8
    Other                             2.1     13.6         17.7      29.4
                                   $674.3   $740.3     $2,055.3  $2,150.8

  Combined Ratios (GAAP)
    Personal                         97.3%    98.5%        96.9%     99.1%
    Specialty                       106.0    103.9        107.5      96.5
    Aggregate (including other)     102.8    102.0        104.1      99.8

 Personal  The Personal group's net written premiums decreased 4%
in the third quarter and 3% in the first nine months of the year
compared to the same 1997 periods.  The decline is due primarily to
stronger price competition in the personal automobile market.
                                18
<PAGE>
                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
               Management's Discussion and Analysis
   of Financial Condition and Results of Operations - Continued


 Specialty  The Specialty group's net written premiums decreased
$39.8 million (10%) during the third quarter from the comparable
1997 period due primarily to the initial impact of a reinsurance
agreement whereby approximately 30% of AFC's California workers'
compensation premiums are being ceded.  Also, the Specialty group's
writings continue to be affected by intense price competition in
the commercial casualty markets.  Underwriting results for the third
quarter of 1998 continue to be affected by the adverse claims
environment in the California workers' compensation business and
weak results in the general aviation business.

Net written premiums for the first nine months of 1998 decreased
$51.2 million (5%) from 1997 due to the workers' compensation
reinsurance agreement mentioned above and a decline in commercial
multi-peril due to price competition.  Underwriting results for the
first nine months of 1998 worsened from the comparable periods in
1997 due to (i) losses from the midwestern storms in the second
quarter of 1998, (ii) the continuation of the adverse claims
environment in the California workers' compensation business, (iii)
weak results in the general aviation business and (iv) unusually
good results in 1997 in certain other lines.

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

Investment Income  Investment income increased $4.7 million (2%)
for the third quarter of 1998 and $26.8 million (4%) for the first
nine months of 1998 compared to 1997 due primarily to an increase
in the average amount of investments held partially offset by
decreasing market interest rates.

Investee Corporations  Equity in net earnings of investee
corporations represents AFC's proportionate share of Chiquita's
earnings.  Chiquita reported net income (losses) for the third
quarter and first nine months of 1998 of ($11 million) and
$83 million, respectively, compared to ($28 million) and
$56 million for the same periods in 1997.

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

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

   Subsidiaries  In the third quarter of 1998, AFC recorded a
pretax gain of $21.6 million on AAG's sale of its Funeral Services
Division and a charge of $10.5 million relating to operations
expected to be sold or otherwise disposed of.

Other Income  Other income increased $13.9 million (49%) during the
third quarter and $25.5 million (32%) in the first nine months of
1998 due primarily to income from the sale of operating real estate
assets and lease residuals.
                                19
<PAGE>

                AMERICAN FINANCIAL CORPORATION 10-Q
                                 
               Management's Discussion and Analysis
   of Financial Condition and Results of Operations - Continued


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.  While management believes the recent
interest rate environment has contributed to an increase in
annuitizations and surrenders, AAG's persistency rate remains over
87%.  A continuation of the current interest rate environment could
adversely affect this rate.

Interest on Borrowed Money  Interest expense decreased $2.2 million
(10%) during the third quarter and $13.2 million (20%) during the
first nine months of 1998.  The decrease reflects a decrease in
average amounts borrowed and a decrease in average rates.

Minority Interest Expense  Minority interest expense increased
$4.5 million (43%) during the third quarter and $7.2 million (23%)
during the first nine months of 1998.  Dividends paid by
subsidiaries on their trust issued preferred securities have varied
as the securities were issued over the past few years.

New Accounting Standard to be Implemented  Statement of Position 98-
5, "Reporting on the Costs of Start-Up Activities," was issued
during the second quarter of 1998.  The SOP is effective for fiscal
years beginning after December 15, 1998, and requires that costs of
start-up activities be expensed as incurred.  The SOP requires that
unamortized balances of previously deferred costs be expensed no
later than the first quarter of 1999 and reported as the cumulative
effect of a change in accounting principle.  AAG had approximately
$8 million in capitalized start-up costs at September 30, 1998.

In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which is required to be implemented for fiscal years
beginning after June 15, 1999.  Management does not anticipate that
implementation of the new statement will have a significant effect
on AFC's earnings or its financial position.
        
                                20
<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 as of September 30, 1998.  For
                 submission in electronic filing only.

(b) Reports on Form 8-K:

      Date of Report       Item Reported

      September 21, 1998   Agreement to sell Commercial Lines Division

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

                                21