AMERICAN FINANCIAL CORPORATION
                              
                              
                              
                      ANNUAL BONUS PLAN
                              
                              
                              
                 Adopted on January 17, 1996
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               AMERICAN FINANCIAL CORPORATION
                              
                      ANNUAL BONUS PLAN



1.   PURPOSE

     The purpose of the Annual Bonus Plan (the "Plan") is to
further the profitability of American Financial Corporation,
its  subsidiaries  and  affiliates (the  "Company")  to  the
benefit  of  the  shareholders of the Company  by  providing
incentive to the Plan participants.

2.   ADMINISTRATION

     Except as otherwise expressly provided herein, the Plan
shall  be  administered by the Compensation Committee  or  a
successor committee or subcommittee (the "Committee") of the
Board  of  Directors of the Company (the  "Board")  composed
solely  of  two  or  more  "outside  directors"  as  defined
pursuant to Section 162(m) of the Internal Revenue Code.  No
member  of  the  Committee while serving as  such  shall  be
eligible  to be granted a bonus under the Plan.  Subject  to
the provisions of the Plan (and to the approval of the Board
where  specified  in  the Plan), the  Committee  shall  have
exclusive  power  to  determine  the  conditions  (including
performance  requirements)  to  which  the  payment  of  the
bonuses may be subject and to certify that performance goals
are  attained.  Subject to the provisions of the  Plan,  the
Committee shall have the authority to interpret the Plan and
establish, adopt or revise such rules and regulations and to
make  all determinations relating to the Plan as it may deem
necessary  or advisable for the administration of the  Plan.
The  Committee's interpretation of the Plan and all  of  its
actions  and  decisions with respect to the  Plan  shall  be
final, binding and conclusive on all parties.

3.   PLAN TERM AND BONUS YEARS

     The term of the Plan is one year, commencing January 1,
1996,  which term shall be renewed from year to year  unless
and  until  the  Plan shall be terminated  or  suspended  as
provided in Section 9.  As used in the Plan the term  "Bonus
Year" shall mean a calendar year.

4.   PARTICIPATION

      Subject to the approval of the Committee and the Board
of Directors (based on the recommendation of the Committee),
management  of the Company shall suggest those  persons  who
are   deemed  to  be  key  employees  of  the  Company   for
participation in the Plan (the "Participants").
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5.   ESTABLISHMENT   OF   INDIVIDUAL   BONUS   TARGETS   AND
     PERFORMANCE CRITERIA

      The  Committee  shall establish the individual  target
amount of bonus (the "Bonus Target") that may be awarded  to
each  Participant  and recommend that the Board  adopt  such
action.   In  no  event  shall  the  establishment  of   any
Participant's Bonus Target give a Participant any  right  to
be  paid  all or any part of such amount unless and until  a
bonus is actually awarded pursuant to Section 6.

      The Committee shall establish the performance criteria
(the   "Performance  Criteria")  that  will  apply  to   the
determination  of each Participant's bonus  for  that  Bonus
Year  and  recommend that the Board adopt such action.   The
individuals,  their  Bonus Targets and Performance  Criteria
set forth on Schedules I and II have been recommended by the
Committee and approved by the Board.

6.   DETERMINATION OF BONUSES AND TIME OF PAYMENT

      As  soon  as  practicable after the end of  1996,  the
Committee  shall   certify whether or  not  the  performance
criteria  of  each Participant has been attained  and  shall
recommend  to the Board, and the Board shall determine,  the
amount  of  the  bonus,  if  any,  to  be  awarded  to  each
Participant  for 1996 according to the terms of  this  Plan.
Such  bonus determinations shall be based on achievement  of
the Performance Criteria for 1996.

      Once the bonus is so determined for a Participant,  it
shall  be  paid seventy-five percent in cash and twenty-five
percent in Company Common Stock to the Participant (less any
applicable  withholding and employment  taxes)  as  soon  as
practicable.   The number of shares of Company Common  Stock
to  be  issued  to  a  Participant shall  be  determined  by
dividing  twenty-five percent of the bonus  payable  (before
applicable taxes and deductions) by the average of  the  per
share  Fair  Market Value of the Common Stock for  the  last
twenty trading days of 1996; the resulting number shall then
be rounded to the nearest hundred.

      "Fair Market Value" means the last sale price reported
on  any stock exchange or over-the-counter trading system on
which  Company Common Stock is trading on the  last  trading
day prior to a specified date or, if no last sales price  is
reported,  the average of the closing bid and  asked  prices
for a share of Common Stock on a specified date.

                             -2-
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If  no  sale has been made on any date, then prices  on  the
last  preceding day on which any such sale shall  have  been
made  be used in determining Fair Market Value under  either
method prescribed in the previous sentence.

7.   TERMINATION OF EMPLOYMENT

      If  a Participant's employment with the Company  or  a
subsidiary, as the case may be, is terminated for any reason
other  than discharge for cause, he may be entitled to  such
bonus, if any, as the Committee, in its sole discretion, may
determine.

      In  the  event of a Participant's discharge for  cause
from  the employ of the Company or a Subsidiary, as the case
may  be,  he  shall not be entitled to any amount  of  bonus
unless  the  Committee,  in its sole discretion,  determines
otherwise.

8.   MISCELLANEOUS

            A.    Government  and  Other  Regulations.   The
     obligation  of the Company to make payment  of  bonuses
     shall  be  subject to all applicable  laws,  rules  and
     regulations  and  to  such  approvals  by  governmental
     agencies as may be required.

            B.     Tax  Withholding.   The  Company   or   a
     Subsidiary,  as appropriate, shall have  the  right  to
     deduct from all bonuses paid in cash any federal, state
     or  local  taxes  required by law to be  withheld  with
     respect to such cash payments.

           C.   Claim to Bonuses and Employment Rights.  The
     designation of persons to participate in the Plan shall
     be wholly at the discretion of the Board.  Neither this
     Plan  nor any action taken hereunder shall be construed
     as  giving any Participant any right to be retained  in
     the employ of the Company or a Subsidiary.

           D.    Beneficiaries.  Any bonuses  awarded  under
     this  Plan  to a Participant who dies prior to  payment
     shall  be  paid  to the beneficiary designated  by  the
     Participant  on a form filed with the Company.   If  no
     such  beneficiary has been designated or  survives  the
     Participant, payment shall be made to the Participant's
     legal representative.  A beneficiary designation may be
     changed  or  revoked  by  a  Participant  at  any  time
     provided  the  change or revocation is filed  with  the
     Company.

           E.    Nontransferability.  A person's rights  and
     interests  under the Plan may not be assigned,  pledged
     or  transferred except, in the event of a Participant's
     death, to his designated beneficiary as provided in the
     Plan or, in the absence of such designation, by will or
     the laws of descent and distribution.


                             -3-
                              
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          F.   Indemnification.  Each person who is or shall
     have  been  a member of the Committee or of  the  Board
     shall  be indemnified and held harmless by the  Company
     (to   the   extent   permitted  by  the   Articles   of
     Incorporation  and Code of Regulations of  the  Company
     and  applicable law) against and from any  loss,  cost,
     liability  or  expense  that may  be  imposed  upon  or
     reasonably  incurred  by  him  in  connection  with  or
     resulting from any claim, action, suit or proceeding to
     which  he  may  be  a  party or in which  they  may  be
     involved  by reason of any action taken or  failure  to
     act  under  the Plan and against and from any  and  all
     amounts  paid  by him in settlement thereof,  with  the
     Company's approval, or paid by him, in satisfaction  of
     judgment in any such action, suit or proceeding against
     him.  He shall give the Company an opportunity, at  its
     own  expense, to handle and defend the same  before  he
     undertakes  to handle and defend it on his own  behalf.
     The  foregoing right of indemnification  shall  not  be
     exclusive  of  any  other rights of indemnification  to
     which  such person may be entitled under the  Company's
     Articles of Incorporation or Code of Regulations, as  a
     matter  of  law or otherwise or of any power  that  the
     Company may have to indemnify him or hold him harmless.

           G.    Reliance  on Reports.  Each member  of  the
     Committee and each member of the Board shall  be  fully
     justified in relying or acting in good faith  upon  any
     report   made  by  the  independent  certified   public
     accountants  of  the Company or of its Subsidiaries  or
     upon any other information furnished in connection with
     the  Plan by any officer or director of the Company  or
     any  of its Subsidiaries.  In no event shall any person
     who is or shall have been a member of the Committee  or
     of  the  Board be liable for any determination made  or
     other  action taken or any omission to act in  reliance
     upon  any such report or information or for any  action
     taken,  including  the furnishing  of  information,  or
     failure to act, if in good faith.

           H.   Expenses.  The expenses of administering the
     Plan shall be borne by the Company and its Subsidiaries
     in  such  proportions as shall be agreed upon  by  them
     from time to time.

          I.   Pronouns.  Masculine pronouns and other words
     of masculine gender shall refer to both men and women.

          J.   Titles and Headings.  The titles and headings
     of  the  sections  in the Plan are for  convenience  of
     reference  only,  and,  in the event  of  any  conflict
     between any such title or heading and the text  of  the
     Plan, such text shall control.

                             -4-

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9.   AMENDMENT AND TERMINATION

      The  Board  may at any time terminate the  Plan.   The
Board  may  at  any  time, or from time to  time,  amend  or
suspend and, if suspended, reinstate the Plan in whole or in
part.    Notwithstanding  the  foregoing,  the  Plan   shall
continue  in  effect to the extent necessary to  settle  all
matters relating to the payment of bonuses awarded prior  to
any such termination or suspension.