AMERICAN FINANCIAL GROUP, INC.
                  DIRECTORS' COMPENSATION PLAN

                         P R E A M B L E

      The purpose of the Directors' Compensation Plan ("Plan") of
American  Financial  Group,  Inc. (the  "Company")  is  to  align
further  the  interests  of the Company's non-employee  directors
with the interests of shareholders by providing that a minimum of
50%  of  such  directors' annual retainers are paid  through  the
issuance of shares of the Company's Common Stock, $1.00 par value
("Common Stock").

      Directors who are not employees of the Company or a Company
subsidiary  are  paid an annual retainer ("Board  Retainer"),  an
additional annual Board Committee retainer ("Committee Retainer")
and  an  attendance  fee  for  each Board  or  Committee  meeting
attended ("Meeting Fees"), in amounts which shall be set  by  the
Board of Directors.  The initial amounts established by the Board
of  Directors  for  the retainers and fees is set  forth  on  the
attached  Schedule 1.  These amounts may be changed by the  Board
of Directors from time to time without shareholder approval.

1.   PAYMENT OF COMPENSATION TO NON-EMPLOYEE DIRECTORS.

      The Board Retainer and Committee Retainer shall be paid  by
the  Company  quarterly,  in  arrears,  as  soon  as  practicable
following  the  end  of  each calendar  quarter.   The  quarterly
portion  of  the  Board  Retainer  and  Committee  Retainer   (if
applicable)  shall  be  paid 50% in cash  and  50%,  or  in  such
proportion as an eligible director may elect pursuant to  Section
3 below, in the form of shares of the Company's Common Stock.

      The  number of shares of Common Stock to be issued to  each
non-employee  director pursuant to this Plan shall be  determined
by  dividing the amount of the retainers payable in Common  Stock
by  the  average of the per share Fair Market Value of the Common
Stock  (as  defined in Section 3 below) for the ten trading  days
ending  on  the last business day of each calendar  quarter;  the
resulting number shall then be rounded up to the nearest share.

      The  Meeting Fees accrued during each calendar quarter,  if
any,  shall be paid by the Company at the end of such quarter  in
cash,  together with the cash portion of the applicable quarterly
retainers.


<PAGE>

2.   ELECTION  BY NON-EMPLOYEE DIRECTORS TO RECEIVE CASH  PORTION
     OF THEIR COMPENSATION IN ADDITIONAL COMPANY COMMON STOCK.

      Each  non-employee director may elect to receive all  or  a
portion  (in  20%  increments) of the quarterly cash  portion  of
their  applicable retainers for service on the Board of Directors
in  shares  of Common Stock.  Such election shall be  irrevocable
for each quarter and shall be made at least six months in advance
of the date the non-employee director is to receive the quarterly
payment.

3.   FAIR MARKET VALUE OF COMPANY COMMON STOCK.

      The "Fair Market Value" of a share of Common Stock shall be
the  mean between the high and low prices of the shares  on  such
date  on  the  New  York Stock Exchange Composite  Tape  (or  the
principal  market  in which the Common Stock is  traded,  if  the
shares  are not listed on that Exchange on such date) or, if  the
shares  were  not traded on such date, then the mean between  the
high  and low prices of the shares on the next preceding  trading
day during which the shares were traded.

4.    RESTRICTIVE  LEGEND; HOLDING PERIOD FOR  SHARES  OF  COMMON
STOCK.

      In  order to comply with certain provisions of the  Federal
securities laws, including Section 16(b) of the Securities 
Exchange Act of 1934, all certificates representing shares of 
Common Stock issued pursuant to the Plan shall bear the following
restrictive   legend  which  will  prevent  the  recipient   from
disposing  of  such  shares  for six  months  from  the  date  of
issuance:

     THE   SHARES  OF  COMMON  STOCK  REPRESENTED  BY   THIS
     CERTIFICATE  MAY  NOT  BE OFFERED,  SOLD,  TRANSFERRED,
     PLEDGED,  HYPOTHECATED OR OTHERWISE ASSIGNED UNTIL  THE
     EXPIRATION  OF  THE SIX MONTH PERIOD BEGINNING  ON  THE
     DATE  OF ORIGINAL ISSUANCE BY AMERICAN FINANCIAL GROUP,
     INC.  (THE "COMPANY") AS PROVIDED BY SECTION 4  OF  THE
     COMPANY'S DIRECTORS' COMPENSATION PLAN EFFECTIVE AS  OF
     ,  1996,  A  COMPLETE AND CORRECT COPY OF THE  FORM  OF
     WHICH  WILL  BE FURNISHED BY THE COMPANY TO THE  HOLDER
     HEREOF UPON REQUEST.

      When  the legend requirement imposed by this Section  shall
terminate,  the holder of shares of Common Stock for  which  such
legend  requirement has terminated may request that  the  Company
(at   its  expense)  promptly  issue  a  replacement  certificate
representing such shares without such legend.



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<PAGE>
5.   NO RIGHT TO CONTINUANCE AS A DIRECTOR.

      Neither the action of the Company in establishing the  Plan
nor  the  issuance of Common Stock hereunder shall be  deemed  to
create  any  obligation on the part of the Board of Directors  to
nominate  any  non-employee  director  for  reelection   by   the
Company's  shareholders or to be evidence  of  any  agreement  or
understanding, express or implied, that the non-employee director
has  a right to continue as a director for any period of time  or
at any particular rate of compensation.

6.   SHARES SUBJECT TO THE PLAN.

      One  hundred thousand shares of Common Stock are authorized
for  issuance  under the Plan in accordance with  the  provisions
hereof.   The Company shall at all times during the term  of  the
Plan retain as authorized and unissued Common Stock at least  the
number  of shares from time to time required under the provisions
of the Plan, or otherwise assure itself of its ability to perform
its obligations hereunder.

7.   EFFECTIVE DATE AND EXPIRATION OF PLAN.

      The  Plan is subject to approval by a majority of the votes
cast at the next Annual Meeting of Shareholders of the Company by
the  holders of shares of Common Stock entitled to vote  thereon,
and,  if  so approved, shall be effective beginning on the  first
day of the calendar quarter immediately following  such vote (the
"Effective  Date").  Unless earlier terminated by  the  Board  of
Directors pursuant to Section 10, the Plan shall terminate on the
tenth  anniversary of the Effective Date.  No  shares  of  Common
Stock  shall be issued pursuant to the Plan after its termination
date.

8.   ELECTION TO DEFER DIRECTOR COMPENSATION.

     a.    Any  non-employee director may, by  delivering  a
     written election to the Secretary of the Company on  or
     before December 31 of any calendar year, elect to defer
     receipt   of  all  or  a  specified  portion  (in   20%
     increments)  of  his cash or Common Stock  compensation
     during  the  calendar year following such election  and
     succeeding calendar years.

     b.     Any  person  who  shall  become  a  non-employee
     director  during any calendar year, and who was  not  a
     non-employee  director  on the preceding  December  31,
     may, before his term begins, elect to defer receipt  of
     all  or a specified portion (in 20% increments) of  his
     cash  compensation during the balance of such  calendar
     year and for succeeding calendar years.


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<PAGE>

     c.     A  non-employee  director's  election  to  defer
     receipt  of compensation shall continue until the  date
     on  which  such non-employee director ceases  to  be  a
     director  of  the  Company or until he terminates  such
     election  by written notice delivered to the  Secretary
     of the Company.

9.   PAYMENT IN EVENT OF DEATH.

     If a non-employee director dies (before or after his ceasing
to  be  a  Company  director), any portion  of  his  compensation
pursuant to the Plan (whether or not deferred) then unpaid  shall
be  paid  to the beneficiaries of the director named in the  most
recent  beneficiary designation filed with the Secretary  of  the
Company.  In the absence of such a designation, such compensation
shall  be  paid  to,  or as directed by, the director's  personal
representative,  in one or more installments as the  non-employee
director may have elected in writing.

10.  AMENDMENT, SUSPENSION AND TERMINATION OF PLAN.

      The  amount,  pricing  and timing of Company  Common  Stock
issuances  pursuant to the Plan shall not be  amended  more  than
once every six months, other than to comport with changes in  the
Internal   Revenue  Code  of  1986,  as  amended,  the   Employee
Retirement Income Security Act of 1974, as amended, or the  rules
thereunder.

      The Board of Directors may suspend or terminate the Plan or
any portion of it at any time, and may amend it, subject only  to
the  preceding paragraph, from time to time in such  respects  as
the  Board  may deem advisable in order that any awards hereunder
shall conform to any change in applicable laws or regulations  or
in  any  other  respect the Board may deem  to  be  in  the  best
interests  of  the  Company;  provided,  however,  that  no  such
amendment shall, without the further approval of the shareholders
of  the  Company by the affirmative vote of shareholders entitled
to  cast  at  least  a  majority of the  total  number  of  votes
represented at a meeting of shareholders of the Company, increase
the  number  of shares of Common Stock which may be issued  under
the  Plan,  materially modify the requirements as to  eligibility
for participating in the Plan, or extend the termination date  of
the Plan.


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                           SCHEDULE 1
                                
             
             
             
             
             
             Annual Board Retainer                   $40,000
             
             Annual   Board  Committee  Retainer     $12,000
             
             Attendance Fee per Meeting              $ 1,000
             
             
             
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