AMERICAN FINANCIAL GROUP, INC.



                   1997 ANNUAL BONUS PLAN



                  Adopted on March 11, 1997

               AMERICAN FINANCIAL GROUP, INC.

                      ANNUAL BONUS PLAN




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1.   PURPOSE

     The purpose of the Annual Bonus Plan (the "Plan") is to
further the profitability of American Financial Group, Inc.
(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,
1997, 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 1997, 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 1997 according to the terms of this Plan.
Such bonus determinations shall be based on achievement of
the Performance Criteria for 1997.

     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 1997; 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.  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.
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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.
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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.
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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.