AMERICAN FINANCIAL CORPORATION
                                
                                
                                
                        ANNUAL BONUS PLAN
                                
                                
                                
                   Adopted on January 17, 1996
<PAGE>                                
                 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, and 
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").


<PAGE>

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.  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.




                               -2-
<PAGE>

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-
<PAGE>
          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-
<PAGE>
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.


                               -5-