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, 1997                                  No. 1-8013



                 AMERICAN FINANCIAL ENTERPRISES, INC.


Incorporated under                                  IRS Employer I.D.
the Laws of Connecticut                             No. 31-0996797


           One East Fourth Street, Cincinnati, Ohio  45202
                            (513) 579-2172





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, 1997, there were 13,617,521 shares of the
Registrant's Common Stock outstanding.


    

    
                             Page 1 of 9
<PAGE>
              AMERICAN FINANCIAL ENTERPRISES, INC. 10-Q
                                PART I
                        FINANCIAL INFORMATION

                 AMERICAN FINANCIAL ENTERPRISES, INC.
                            BALANCE SHEET
                        (Dollars in Thousands)


                                                   September 30,  December 31,
                                                           1997          1996
            Assets

Cash and short-term investments                        $ 75,479      $ 59,939
Investment in affiliates:
  American Financial Group, Inc.                        442,926       397,421
  American Annuity Group, Inc.                           53,704        43,237
Other equities - at market (cost - $4,855 and $7,368)     7,355         5,168
Other assets                                                202           499

                                                       $579,666      $506,264


    Liabilities and Shareholders' Equity

Accounts payable, accrued expenses and
  other liabilities                                    $  3,509      $  1,230
Payable to American Financial Corporation               103,277        80,935
                                                        106,786        82,165

Shareholders' Equity:
  Preferred Stock, none issued                             -             -
  Common Stock, $1 par value
    - 20,000,000 shares authorized
    - 13,617,521 and 13,291,117 shares outstanding       13,618        13,291   
  Capital surplus                                       120,963       114,106
  Retained earnings                                     284,246       278,802
  Net unrealized gain on marketable                     
    securities, net of deferred income taxes             54,053        17,900
      Total Shareholders' Equity                        472,880       424,099

                                                       $579,666      $506,264

                                  2

<PAGE>
             AMERICAN FINANCIAL ENTERPRISES, INC. 10-Q

                AMERICAN FINANCIAL ENTERPRISES, INC.
                       STATEMENT OF EARNINGS
               (In Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                                             Three months ended     Nine months ended
                                                September 30,          September 30,
                                               1997        1996        1997       1996
<S>                                         <C>        <C>         <C>        <C>
Income:
  Equity in net earnings of affiliates:
    American Financial Group, Inc.           $ -        $ 9,840     $  -       $24,390  
    American Annuity Group, Inc.              1,596       1,678       5,019      4,696
    Citicasters Inc.                           -           -           -           490
  Realized gains on sales of securities       1,093        -          1,093       -
  Gains on sales of affiliate                  -         57,648        -        57,648
  Dividend and interest income                3,513         137      10,157        190
                                              6,202      69,303      16,269     87,414

Costs and Expenses:
  Interest charges on borrowed money           -            277        -           907
  Administrative and general expenses         1,690         578       3,204      1,366
                                              1,690         855       3,204      2,273

Earnings before federal income taxes and
  extraordinary items                         4,512      68,448      13,065     85,141
Provision for federal income taxes              969      23,348       2,743     27,972

Earnings before extraordinary items           3,543      45,100      10,322     57,169

Extraordinary items - share of affiliates'
  losses on prepayment of debt, net of                                        
  tax benefit                                   (99)       (762)        (99)    (2,461)

Net Earnings                                 $3,444     $44,338     $10,223    $54,708


Average number of Common Shares              13,609      13,291      13,419     13,291

Earnings (loss) per Common Share:
  Before extraordinary items                  $ .26       $3.39        $.77      $4.30
  Extraordinary items                          (.01)       (.05)       (.01)      (.18)
  Net earnings                                $ .25       $3.34        $.76      $4.12

Cash dividends per Common Share                $.10        $.10        $.30       $.30
</TABLE>

                                  3
<PAGE>
              AMERICAN FINANCIAL ENTERPRISES, INC. 10-Q

                 AMERICAN FINANCIAL ENTERPRISES, INC.
                       STATEMENT OF CASH FLOWS
                            (In Thousands)


                                                         Nine months ended
                                                           September 30,
                                                           1997      1996
Operating Activities:
  Net earnings                                          $10,223   $54,708
  Adjustments:
    Extraordinary items - share of affiliates'
      losses on prepayment of debt                           99     2,461
    Equity in net earnings of affiliates                 (5,019)  (29,576)
    Realized gains on sale of securities                 (1,093)     -
    Gains on sales of affiliate                            -      (57,648)
    Cash dividends from equity method affiliates           -        7,465
    Increase in payable to affiliates                     2,743    27,961
    Other, net                                            2,576       281
                                                          9,529     5,652

Investing Activities:
  Sales of equity securities                              3,606      -
  Sale of affiliate                                        -       75,599
                                                          3,606    75,599

Financing Activities:
  Repayments of borrowings from affiliates                 -      (19,667)
  Exercise of stock options                               6,432      -
  Cash dividends paid                                    (4,027)   (3,987)
                                                          2,405   (23,654)

Net Increase in Cash and Short-term Investments          15,540    57,597

Cash and short-term investments at beginning of period   59,939       506

Cash and short-term investments at end of period        $75,479   $58,103

                                  4
<PAGE>
             AMERICAN FINANCIAL ENTERPRISES, INC. 10-Q

                   NOTES TO FINANCIAL STATEMENTS


A. Basis of Presentation  The accompanying financial statements for
   American Financial Enterprises, Inc. ("AFEI") are unaudited, but
   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.

   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.

   At September 30, 1997, American Financial Group, Inc. ("AFG")
   owned 10,986,429 shares (81%) of AFEI's outstanding Common Stock.

   In July 1997, AFEI entered into an agreement with AFG under which
   all shares of AFEI Common Stock not owned by AFG would be
   exchanged on a one-for-one basis for AFG common stock or $37.00
   per AFEI share in cash and AFEI would become wholly-owned.  The
   transaction is structured to be tax-free to AFEI shareholders who
   receive only new stock and is subject to the approval by holders
   of two-thirds of AFEI's shares other than AFG or AFG's officers,
   directors or associates.  The shareholders' meeting to approve
   this transaction is scheduled for December 2, 1997.

   Income Taxes  AFEI files consolidated federal income tax returns
   with American Financial Corporation ("AFC"), all of whose common
   stock is owned by AFG.  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.  Current and deferred tax assets and liabilities are
   aggregated with other amounts receivable from or payable to AFC.

   Earnings Per Share  Earnings per share are calculated on the basis
   of the weighted average number of shares of common stock outstanding
   during the period and the dilutive effect, if material, of assumed
   conversion of common stock options.
 
   New accounting standards issued in 1997 revise current rules for
   computing and presenting earnings per share beginning with financial
   statements issued for periods ending after December 15, 1997.  The
   new rules require the presentation of basic and diluted earnings per
   share for entities with potentially dilutive securities.
   Implementation of these new rules will not materially affect AFEI's
   reported earnings per share amounts.
<PAGE>
   Statement of Cash Flows  For cash flow purposes, "investing
   activities" are defined as acquiring and disposing of debt or
   equity instruments.  "Financing activities" include obtaining
   resources from owners and providing them with a return on their
   investments, borrowing money and repaying amounts borrowed.  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.

                                 5
<PAGE>
             AMERICAN FINANCIAL ENTERPRISES, INC. 10-Q

             NOTES TO FINANCIAL STATEMENTS - CONTINUED


B. Investment in Affiliates  In light of the proposed transaction
   discussed in Note A, AFEI suspended accounting for its investment
   in AFG under the equity method beginning in January 1997.  As a
   result, AFEI carries its investment in AFG at market value and
   recognizes only the dividends received as income from AFG.

   AFEI's and AFC's combined ownership of the common stock of
   American Annuity Group, Inc. exceeds 20%.  Accordingly, this
   investment is treated as an affiliate under the equity method of
   accounting.  Since AFEI's basis in certain assets and liabilities
   of affiliates differs from amounts reported by these companies,
   adjustments are made to their reported earnings in calculating
   AFEI's share of affiliate earnings.  Included in AFEI's balance
   sheet is its portion of affiliates' unrealized gains and losses on
   marketable securities.

   Investment in American Financial Group  AFEI owned 10.0 million
   shares (13%) of AFG common stock at September 30, 1997.  Since
   AFEI and AFC are AFG subsidiaries, AFG does not report shares
   owned by them as outstanding for financial reporting purposes.
   AFEI (and AFC) receive dividends paid on AFG common stock;
   however, their shares generally will not be eligible to be voted
   as long as AFEI (and AFC) are owned by AFG.  The market value of
   AFEI's investment in AFG was $443 million and $376 million at
   September 30, 1997 and December 31, 1996, respectively.  The book
   value (cost plus equity in net earnings through December 31, 1996)
   of AFEI's investment in AFG was $374 million at September 30,
   1997.  AFG's subsidiaries operate primarily in specialty and multi-
   line property and casualty insurance and the sale of tax-deferred
   annuities.

   Summarized financial information for AFG (for the period it was
   accounted for under the equity method) follows (in millions):
                                            
                                                Nine months ended
                                               September 30, 1996
     Revenues                                            $3,227.2
     Earnings Before Extraordinary Items                    261.1
     Extraordinary Items - Loss
       on Debt Prepayments                                  (25.9)
     Net Earnings                                           235.2

   Investment in American Annuity Group  AFEI owned 4.2 million
   shares (10%) of American Annuity common stock at September 30,
   1997.  The market value of AFEI's investment in American Annuity
   was $91 million and $60 million at September 30, 1997 and
   December 31, 1996, respectively.  American Annuity is engaged in
   the sale of tax-deferred annuities and certain life and health
   insurance.
<PAGE>
   Summarized financial information for American Annuity follows (in
   millions):

                                                Nine months ended
                                                  September 30,
                                                  1997       1996
       Revenues                                 $465.9     $435.8
       Income Before Extraordinary Item           52.1       48.1
       Extraordinary Item - Loss on
         Debt Prepayments                         (1.5)      (6.0)
       Net Income                                 50.6       42.1

   Investment in Citicasters  In September 1996, AFEI sold its
   investment in Citicasters to Jacor Communications for
   approximately $76 million in cash plus warrants to purchase Jacor
   common stock.  AFEI realized a pretax gain of approximately
   $57 million on the sale.
                                6
<PAGE>
             AMERICAN FINANCIAL ENTERPRISES, INC. 10-Q

             NOTES TO FINANCIAL STATEMENTS - CONTINUED


C. Payable to American Financial Corporation AFEI's payable to AFC at
   September 30, 1997 and December 31, 1996 represents primarily tax
   payments due under AFEI's tax agreement and deferred taxes on
   AFEI's net unrealized gain on marketable securities.

   AFEI has a $20 million credit agreement with an AFC subsidiary
   which expires in December 1997.  Borrowings bear interest at rates
   1/8th of 1% below AFEI's bank line rates.  All other terms are
   similar to those in the bank line agreement.  Maximum aggregate
   borrowings under the two lines may not exceed $25 million at any
   one time.  AFEI had no borrowings under this agreement at
   September 30, 1997 or December 31, 1996.

D. Bank Line Agreement  AFEI has a revolving credit agreement under
   which it may borrow a maximum of $20 million through December
   1997.  Loans under the line of credit bear interest at rates
   approximating prime and are collateralized by a pledge of AFG
   common stock having a market value of two times the amount
   borrowed under the line.  The lender charges an annual fee of 1/4%
   of the unused portion of the line of credit.  There was no
   outstanding balance under the bank line at September 30, 1997 or
   December 31, 1996.

E. Shareholders' Equity  During the second and third quarters of
   1997, options for 352,000 shares of AFEI Common Stock were
   exercised for aggregate proceeds of $7.4 million (including 26,096
   AFEI Common Shares received in lieu of cash).

   At September 30, 1997, there were 110,000 shares of AFEI Common
   Stock reserved for issuance upon exercise of stock options.

   The components of AFEI's net unrealized gain on marketable
   securities were as follows (in millions):

                                              September 30,  December 31,
                                                      1997          1996

     American Financial Group common stock           $69.0         $  -
     Other equities                                    2.5          (2.2)
     Equity in affiliates' net unrealized gains:
       American Annuity Group                         11.7           6.1
       American Financial Group                         -           23.5
                                                      83.2          27.4
     Deferred taxes                                   29.1           9.5

     Net unrealized gain                             $54.1         $17.9

                                7
<PAGE>
              AMERICAN FINANCIAL ENTERPRISES, INC. 10-Q

                                ITEM 2

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


GENERAL  AFEI's assets consist primarily of investments in the common
stock of American Financial Group and American Annuity.

LIQUIDITY AND CAPITAL RESOURCES  At the current indicated rate,
$10 million in annual dividends from AFG is expected to be more than
sufficient to cover AFEI's fixed charges and other operating expenses.
If, in the future, affiliate dividends are insufficient to meet its
fixed charges, AFEI would be required to meet them through bank
borrowings, sales of investments, borrowings from affiliates, or
similar transactions.

In September 1996, AFEI sold its investment in Citicasters for
approximately $76 million and repaid the $19.9 million owed under its
credit line with an AFC subsidiary.

Since March 1995, AFEI has paid quarterly dividends of $1.3 million
($.10 per share).  Additionally, AFEI paid a special dividend in
December 1995 of $2.0 million or $.15 per share.

RESULTS OF OPERATIONS

Affiliates  Since AFEI's basis in certain assets and liabilities of
affiliates differs from amounts reported by these companies,
adjustments are made to AFEI's share of affiliate earnings.  The
following table presents the significant amounts used in calculating
AFEI's equity in net earnings of affiliates for the nine months ended
September 30 (in millions):
<TABLE>
<CAPTION>
                                         
                                                     AFG           American Annuity     Citicasters
                                               1997(a)    1996       1997      1996         1996(b)
 <S>                                        <C>         <C>        <C>       <C>           <C>
  Affiliate earnings before
    extraordinary items                      $158.1     $261.1      $52.1     $48.1         $4.7

  AFEI's share of affiliate earnings                    $ 33.9      $ 5.0     $ 4.7         $0.6
  Basis adjustments, including amortization
    of goodwill                                           (9.5)        -         -          (0.1)

  Equity in net earnings of affiliates
    as shown in Statement of Earnings                   $ 24.4      $ 5.0     $ 4.7         $0.5
<FN>
  (a)  In light of the proposed transaction under which AFEI would become
       wholly-owned, AFEI suspended accounting for AFG under the equity  
       method in January 1997. See Note A to the financial statements.
  (b)  AFEI sold its Citicasters shares in September 1996.  For 1996,
       affiliate earnings represent Citicasters' results through June 30.
</FN>
</TABLE>
Dividend and Interest Income  Dividends of $7.5 million received from
AFG during the first nine months of 1997 were included in dividend and
interest income.  Dividends of $7.5 million received from AFG for the
same period of 1996 were recorded as reductions in AFEI's investment
in AFG under the equity method of accounting.
<PAGE>
Gains on Sales of Affiliate  Gains on sales of affiliate in 1996
represent gains on the disposal of Citicasters shares.

Interest Expense  Interest expense for 1996 represents interest on
borrowings under AFEI's credit agreement with an AFC subsidiary which
were repaid in September 1996.

Administrative and General Expenses  Administrative and general expenses
for the third quarter and nine months of 1997 increased due primarily to an
increase in franchise taxes.

Income Taxes  The provision for income taxes reflects the effects of
deductions relating to affiliate dividends.
                                   8
<PAGE>
              AMERICAN FINANCIAL ENTERPRISES, INC. 10-Q
                               PART II
                          OTHER INFORMATION


                               ITEM 1

                          Legal Proceedings

A lawsuit was filed following the April 23, 1997 public announcement
of a proposal whereby AFG would acquire the AFEI Common Stock not
owned by AFG.  See Note A to the Financial Statements.  The lawsuit
named AFG, AFEI and six of AFEI's directors as defendants, alleged
that the price offered in the proposal for AFEI's Common Stock is
inadequate, and seeks to temporarily or permanently enjoin any
transaction, or, alternatively, seeks recision or compensatory
damages.  The class action complaint was filed in Superior Court in
Hartford, Connecticut, as Harry Lewis v. Carl H. Lindner, et al.  The
defendants filed a motion to dismiss based on Connecticut law "prior
demand" requirements and cases and statutes which would hold or
indicate that appraisal is the sole remedy which would be available to
plaintiffs in this instance.  While defendants' motion to dismiss was
pending, Mr. Lewis passed away.  The administrator of his estate has
decided not to proceed with this action either as a plaintiff or as a
class representative.  On September 24, 1997, counsel for plaintiffs
filed a motion for approval of withdrawal of class action.


                                ITEM 6

                   Exhibits and Reports on Form 8-K

(a)  Exhibit 27 - Financial Data Schedule - Included in Report filed
     electronically with the Securities and Exchange Commission.

(b)  Report on Form 8-K:

        Date of Report   Item Reported
        July 14, 1997    Merger Agreement with AFG






                           Signature

Pursuant to the requirements of the Securities Exchange Act of 1934,
American Financial Enterprises, Inc. has duly caused this Report to be
signed on its behalf by the undersigned duly authorized.

                                   American Financial Enterprises, Inc.



November 13, 1997                  BY: FRED J. RUNK
                                       Fred J. Runk
                                       Vice President and Treasurer









                                  9