credibility, as evidenced by data volume, consistency and maturity of the data. While this practice mitigates the risk of adverse development on this business, it does not eliminate it.
debt and lower average subsidiary indebtedness more than offset higher average borrowings under the AFC bank line. Interest expense increased in 2000 due to higher average indebtedness.
Consolidated Statement of Cash Flows: Years ended December 31, 2001, 2000 and 1999
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Financial Corporation and subsidiaries at December 31, 2001 and 2000, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
COMMERCIAL LINES DIVISION In 1998, AFC sold its Commercial lines division to Ohio Casualty Corporation for $300 million cash plus warrants to purchase shares of Ohio Casualty common stock. AFC received an additional $25 million (included in gains on sales of subsidiaries) in August 2000 under a provision in the sale agreement related to the retention and growth of the insurance businesses sold.
Summarized financial information for Chiquita at December 31, is shown below (in millions). 2000 1999 ---- ----
2001 2000 ---- ---- HOLDING COMPANIES: AFC notes payable under bank line $203,000 $178,000 American Premier Underwriters, Inc. ("APU") 10-7/8% Subordinated Notes due May 2011, including premium of $836 and $890 (imputed rate - 9.6%) 11,557 11,611 Other 13,695 14,727 -------- -------- $228,252 $204,338 ======== ======== SUBSIDIARIES: GAFRI 6-7/8% Senior Notes due June 2008 $100,000 $100,000 GAFRI notes payable under bank line 121,100 48,500 Notes payable secured by real estate 36,253 31,201 Other 13,399 15,386 -------- -------- $270,752 $195,087 ======== ========
2001 2000 ---- ---- Interest of AFG (parent) and noncontrolling shareholders in subsidiaries' common stock $317,824 $291,792 Preferred securities issued by subsidiary trusts 142,913 217,913 -------- --------
BENEFIT PLANS AFC expensed approximately $19 million in 2001, $22 million in 2000 and $13 million in 1999 for its retirement and employee savings plans.
TRANSACTIONS WITH AFFILIATES AFC purchased a $3.7 million minority interest in a residential homebuilding company from an unrelated party in 1995. At that same time, a brother of AFC's chairman purchased a minority interest in the company for $825,000. In 2000, that brother and another brother of AFC's chairman acquired the remaining shares from the third parties. GAFRI has extended a line of credit to this company under which the homebuilder may borrow up to $8 million at 13%. At December 31, 2001 and 2000, $6.4 million and $8 million, respectively, was due under the credit line.
s/CARL H. LINDNER III Director March 27, 2002 - ----------------------- Carl H. Lindner III