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Registration Statement No. 333-81903
Filed pursuant to Rule 424(b)(3)
PROSPECTUS
$500,000,000
AMERICAN FINANCIAL GROUP, INC.
Debt Securities and Common Stock
and
AMERICAN FINANCIAL CAPITAL TRUST II
Preferred Securities
Fully and unconditionally guaranteed, as described in this prospectus, by
American Financial Group, Inc.
We will provide the specific terms of these securities in supplements to
this prospectus. You should read carefully this prospectus and any supplement
before you invest.
This Prospectus may not be used to consummate sales of securities unless
accompanied by a prospectus supplement.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is July 15, 1999.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement filed with the
Securities and Exchange Commission utilizing a shelf registration process. Under
this shelf process, American Financial Group, Inc. and American Financial
Capital Trust II may sell the securities described in this prospectus in one or
more offerings up to a total dollar amount of $500,000,000. This prospectus
provides you with a general description of the securities which may be offered.
Each time securities are offered for sale, a prospectus supplement will be
provided that contains specific information about the terms of that offering.
The prospectus supplement may also add, update or change information contained
in this prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described below under the
following heading.
WHERE YOU CAN FIND MORE INFORMATION
American Financial Group files annual, quarterly and special reports, proxy
statement and other information with the SEC. These filings are available to the
public over the Internet at the SEC's web site at http://www.sec.gov. You may
also read and copy any document American Financial Group files at the SEC's
public reference rooms in Washington, D.C., New York City and Chicago. Please
call the SEC at 1-800-732-0330 for further information on the public reference
rooms. American Financial Group's common stock, previously issued debt
securities and the securities of a related trust are also listed on the New York
Stock Exchange, and you may inspect any document at its offices located at 20
Broad Street, New York, NY 10005.
The SEC allows American Financial Group to "incorporate by reference" the
information it files with the SEC. This means that American Financial Group can
disclose important information to you by referring you to documents American
Financial Group files with the SEC. The information incorporated by reference is
an important part of this prospectus. Information that American Financial Group
files later with the SEC will automatically update and supersede information
which American Financial Group has previously incorporated by reference until
American Financial Group sells all of the securities described in this
prospectus. The following documents of American Financial Group are incorporated
by reference in this prospectus:
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FILING DATE
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<S> <C>
Annual Report on Form 10-K Year Ended December 31, 1998
Quarterly Report on Form 10-Q Quarter Ended March 31, 1999
Report on Form 8-K April 13, 1999
</TABLE>
All documents filed by American Financial Group under Section 13(a), 13(e),
14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus will be deemed incorporated by reference into this prospectus and to
be a part of this prospectus from the date of filing of the documents.
No separate financial statements of the Trust have been included and none
are incorporated by reference in this prospectus. American Financial Group does
not believe that financial statements of the Trust would be useful since the
Trust will not have any independent function other than to issue securities
representing undivided interests in its assets and investing the proceeds in
American Financial Group debt securities. In addition, all obligations of the
Trust are fully and unconditionally guaranteed by American Financial Group.
We will provide you with a copy of any of these documents we are
incorporating by reference at no cost, by writing or telephoning us at the
following address or telephone number:
James C. Kennedy
Vice President, Deputy General Counsel and Secretary
American Financial Group, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
(513) 579-2538
You should rely only on the information incorporated by reference or
provided in this prospectus. No one else is authorized to provide you with any
other information or any different information. Neither
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American Financial Group nor the Trust is making an offer of its securities in
any state where an offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of those documents.
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AMERICAN FINANCIAL GROUP, INC.
American Financial Group, Inc. is engaged primarily in private passenger
automobile and specialty property and casualty insurance businesses and in the
sale of tax-deferred annuities and certain life and supplemental health
insurance products. At March 31, 1999, AFG had total assets of $15.7 billion and
shareholders' equity of $1.6 billion.
AFG's property and casualty operation originated in the 1800's and is one
of the 25 largest property and casualty groups in the United States based on
statutory net premiums written. We have achieved outstanding results that
consistently outperform insurance industry averages by focusing on highly
specialized niche products and markets, supplemented with personal automobile
products.
Our annuity, life and health operations are headed by American Annuity
Group, Inc., an 83%-owned subsidiary with over $7 billion in assets. AAG
specializes in the sale of retirement products, including traditional fixed,
equity-indexed and variable annuities. In 1998, AAG's retirement annuity
premiums were in excess of $500 million; its life and health premiums exceeded
$100 million.
The address of our principal executive offices is One East Fourth Street,
Cincinnati, Ohio, 45202, and our telephone number is (513) 579-2121. All
references to "we," "us," "the Company," "AFG" or "American Financial Group" in
this prospectus mean, unless the context otherwise indicates, American Financial
Group, Inc. and its consolidated subsidiaries.
THE TRUST
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) a declaration of trust executed by the Company, as sponsor, and the
trustees (described below) for the Trust and (ii) the filing of a certificate of
trust with the Delaware Secretary of State. The Trust's declaration will be
amended and restated as of the date the securities of the Trust are initially
issued. The amended declaration will be qualified as an indenture under the
Trust Indenture Act of 1939.
The Trust exists solely for the purposes of:
- issuing preferred securities and common securities representing undivided
beneficial interests in the assets of that Trust;
- investing the proceeds of those securities issuances in junior
subordinated debt securities of the Company; and
- engaging only in other incidental activities.
The rights of the holders of the trust securities, including economic
rights, rights to information and voting rights, are set forth in the amended
declaration of the Trust, the Delaware Business Trust Act and the Trust
Indenture Act.
The Company will own, directly or indirectly, all of the common securities
of the Trust, which will have an aggregate liquidation amount equal to 3% of the
total capital of the Trust. The common securities will generally rank equally in
right of payment with the preferred securities, and payments on both will be
made pro rata. However, upon an event of default under the Trust's amended
declaration, the rights of the holders of the common securities to payment of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the preferred securities. The
Company will pay all fees and expenses related to the Trust and the offering of
trust securities.
The Company, as holder of all of the common securities, will be entitled to
appoint, remove or replace any of, or increase or reduce the number of, the
trustees of the Trust. The business and affairs of the Trust will be conducted
by such trustees, and the duties and obligations of the trustees will be
governed by the amended declaration of the Trust.
At least two of the trustees of the Trust will be persons who are employees
or officers of, or otherwise affiliated with, the Company. These persons are
sometimes referred to herein as "regular" trustees. One
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trustee of the Trust will be a financial institution which will be unaffiliated
with the Company and which will act as property trustee and as indenture trustee
for purposes of the Trust Indenture Act pursuant to the terms of the amended
declaration and as may be further described in a prospectus supplement. The
property trustee will hold title to the junior subordinated debt securities for
the benefit of the holders of the trust securities. In addition, unless the
property trustee maintains a principal place of business in the State of
Delaware and otherwise meets the requirements of applicable laws, one trustee of
the Trust will be a legal entity having a principal place of business in, or an
individual resident of, the State of Delaware.
Unless otherwise indicated in a prospectus supplement, The Bank of New York
will be the property trustee and The Bank of New York (Delaware) will be the
Delaware trustee. The address of the principal corporate trust office of The
Bank of New York is 101 Barclay Street, 21st Floor, New York, New York, 10286
and for The Bank of New York (Delaware) is White Clay Center, Route 273, Newark,
Delaware, 19711. The principal place of business of the Trust will be c/o
American Financial Group, Inc., One East Fourth Street, Cincinnati, Ohio, 45202,
telephone number (513) 579-2121.
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USE OF PROCEEDS
Unless otherwise indicated in an accompanying prospectus supplement, the
net proceeds received by AFG from the sale of any securities offered hereby are
expected to be used for general corporate purposes, which may include investment
in insurance businesses and the repayment of outstanding debt of AFG and its
subsidiaries. Until the net proceeds are used for these purposes, AFG may
deposit them in interest-bearing accounts or invest them in short-term
marketable securities. The specific allocations, if any, of the proceeds of any
of the securities will be described in the prospectus supplement. The proceeds
from any sale of preferred securities by the Trust will be invested in debt
securities of AFG.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
AFG and its subsidiaries. Fixed charges are computed on a "total enterprise"
basis. For purposes of calculating the ratios, "earnings" have been computed by
adding to pretax earnings the fixed charges and the minority interest in
earnings of subsidiaries having fixed charges and deducting (adding) the
undistributed equity in earnings (losses) of investees. Fixed charges include
interest (excluding interest on annuity benefits), amortization of debt
premium/discount and expense, preferred dividend and distribution requirements
of subsidiaries and a portion of rental expense deemed to be representative of
the interest factor. The ratio for years 1995 and 1994 do not give pro forma
effect to the April 1995 merger transactions through which AFG was created.
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THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
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1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges....... 3.88 4.87 3.22 3.98 4.22 2.60 1.69
</TABLE>
DESCRIPTION OF THE SECURITIES WE MAY OFFER
GENERAL
The Company may issue, in one or more offerings, any combination of senior
or subordinated debt securities and common stock. The Trust may issue in one or
more offerings, trust preferred securities that will be unconditionally
guaranteed by the Company.
This prospectus contains a summary of the general terms of the various
securities that the Company or the Trust may offer. The prospectus supplement
relating to any particular securities offered will describe the specific terms
of the securities, which may be in addition to or different from the general
terms summarized in this prospectus. The summary in this prospectus and in any
prospectus supplement does not describe every aspect of the securities and is
subject to and qualified in its entirety by reference to all applicable
provisions of the documents relating to the securities offered. These documents
are or will be filed as exhibits to or incorporated by reference in the
registration statement.
In addition, the prospectus supplement will set forth the terms of the
offering, the initial public offering price and net proceeds to the Company.
Where applicable, the prospectus supplement will also describe any material
United States federal income tax considerations relating to the securities
offered and indicate whether the securities offered are or will be listed on any
securities exchange.
BOOK-ENTRY SYSTEM
The Company or the Trust may issue securities in the form of one or more
fully registered global securities. These will be deposited with, or on behalf
of, the Depository Trust Company ("DTC") and registered in the name of its
nominee. Except as described below, the global securities may be transferred, in
whole and not in part, only to DTC or to another nominee of DTC.
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DTC has advised the Company that it is:
- A limited-purpose trust company organized under the laws of the state of
New York;
- A member of the Federal Reserve System;
- A "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- A "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934.
DTC was created to hold securities for institutions that have accounts with
DTC ("Participants") and to facilitate the clearance and settlement of
securities transactions among its Participants through electronic book-entry
changes in Participants' accounts. Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own DTC. Access to
DTC's book-entry system is also available to others that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly. DTC administers its book-entry system in accordance with its rules
and bylaws and legal requirements.
Upon issuance of a global security representing offered securities, DTC
will credit (on its book-entry registration and transfer system) the principal
amount to Participants' accounts. Ownership of beneficial interests in the
global security will be limited to Participants or to persons that hold
interests through Participants. Ownership of interests in the global security
will be shown on, and the transfer of those ownership interests will be effected
only through, records maintained by DTC (with respect to Participants'
interests) and the Participants (with respect to the owners of beneficial
interests in the global security). The laws of some jurisdictions may require
that certain purchasers of securities take physical delivery of those securities
in definitive form. These limits and laws may impair the ability to transfer
beneficial interests in a global security.
So long as DTC (or its nominee), is the registered holder and owner of a
global security, DTC (or its nominee) will be considered, for all purposes under
the applicable indenture, the sole owner and holder of the related offered
securities. Except as described below, owners of beneficial interests in a
global security will not:
- be entitled to have the offered securities registered in their names; or
- receive or be entitled to receive physical delivery of certificated
offered securities in definitive form.
Each person owning a beneficial interest in a global security must rely on
DTC's procedures (and, if that person holds through a Participant, on the
Participant's procedures) to exercise any rights of a holder of offered
securities under the global security or any applicable indenture, or otherwise.
The indentures provide that DTC may grant proxies and otherwise authorize
Participants to take any action which it (as the holder of a global security) is
entitled to take under the indentures or the global security. We understand that
under existing industry practice, if the Company or the Trust requests any
action of holders or an owner of a beneficial interest in a global security
desires to take any action that DTC (as the holder of the global security) is
entitled to take, DTC would authorize the Participants to take that action and
the Participants would authorize their beneficial owners to take the action or
would otherwise act upon the instructions of their beneficial owners.
The Company or the Trust will make payments with respect to securities
represented by a global security to DTC. We expect that DTC, upon receipt of any
payments, will immediately credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests. We also expect
that payments by Participants to owners of beneficial interests in a global
security held through them will be governed by standing instructions and
customary practices (as is the case with securities held for customers' accounts
in "street name") and will be the responsibility of the Participants. None of
the Company, the Trust or any trustee will have any responsibility or liability
for:
- any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in a global security for any securities;
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- maintaining, supervising, or reviewing any records relating to any
beneficial ownership interests;
- any other aspect of the relationship between DTC and its Participants; or
- the relationship between the Participants and the owners of beneficial
interests in a global security.
Unless and until they are exchanged in whole or in part for certificated
securities in definitive form, the global securities may not be transferred
except as a whole by DTC to its nominee or by its nominee to DTC or another
nominee.
The securities of any series represented by a global security may be
exchanged for certificated securities in definitive form if:
- DTC notifies us that it is unwilling or unable to continue as depositary
for the global security or if at any time it ceases to be a clearing
agency registered under the Securities Exchange Act of 1934;
- the Company decides at any time not to have the securities of that series
represented by a global security and so notifies DTC; or
- in the case of debt securities, an event of default has occurred and is
continuing with respect to the debt securities.
If there is such an exchange, we will issue certificated securities in
authorized denominations and registered in such names as DTC directs. Subject to
the foregoing, the global securities are not exchangeable, except for a global
security(ies) of the same aggregate denomination to be registered in DTC's or
its nominee's name.
DESCRIPTION OF DEBT SECURITIES
GENERAL
As required by Federal law for all bonds and notes of companies that are
publicly offered, the debt securities are governed by documents called
"indentures." The indenture is a contract between American Financial Group and
the trustee named in the applicable prospectus supplement, which acts as trustee
for the debt securities. There may be more than one trustee under each indenture
for different series of debt securities. The trustee has two main roles. First,
the trustee can enforce your rights against us if we default. There are some
limitations on the extent to which the trustee acts on your behalf, described
later on page 10 under "Remedies If An Event of Default Occurs." Second, the
trustee may perform administrative duties for us, such as sending you interest
payments, transferring your debt securities to a new buyer if you sell, and
sending you notices. We anticipate that we will perform these duties with
respect to the debt securities.
The debt securities will be unsecured general obligations of the Company
and may include:
- senior debt securities, to be issued under the senior indenture;
- subordinated debt securities, to be issued under the subordinated
indenture; and
- junior subordinated debt securities, to be issued under the junior
subordinated indenture.
If issued, the junior subordinated debt securities will be purchased by the
Trust using proceeds from issuances of trust preferred securities. When we refer
to the indenture we mean the senior indenture, the subordinated indenture and
the junior subordinated indenture collectively, unless we indicate otherwise.
When we refer to the trustee we mean the senior trustee, the subordinated
trustee and the junior subordinated trustee collectively, unless we indicate
otherwise.
This section summarizes the general terms of the debt securities we may
offer. The prospectus supplement relating to any particular debt securities
offered will indicate whether the debt securities are senior debt securities,
subordinated debt securities or junior subordinated debt securities and will
describe the specific terms of the debt securities, which may be in addition to
or different from the general terms summarized in this section. The summary in
this section and in any prospectus supplement does not describe
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every aspect of the senior, subordinated or junior subordinated indenture or the
debt securities, and is subject to and qualified in its entirety by reference to
all the provisions of the applicable indenture and the debt securities. The
forms of the senior indenture, subordinated indenture and junior subordinated
indenture and the forms of the debt securities are or will be filed as exhibits
to or incorporated by reference in the registration statement. See "Where You
Can Find More Information" on page 2 for information on how to obtain a copy.
The prospectus supplement relating to any debt securities will describe the
following specific financial, legal and other terms particular to such debt
securities:
- the title of the debt securities;
- any limit on the aggregate principal amount of the debt securities;
- the date or dates on which the debt securities will mature;
- the annual rate or rates (which may be fixed or variable) at which the
debt securities will bear interest, if any, and the date or dates from
which the interest will accrue;
- the dates on which interest on the debt securities will be payable and
the regular record dates for those interest payment dates;
- any mandatory or optional sinking funds or analogous provisions or
provisions for redemption at the holder's option;
- the date, if any, after which and the price or prices at which the debt
securities may, in accordance with any option or mandatory redemption
provisions, be redeemed and the other detailed terms and provisions of
any such optional or mandatory redemption provision;
- if other than denominations of $1,000 and any integral multiple thereof,
the denomination in which the debt securities will be issuable;
- if other than the principal amount thereof, the portion of the principal
amount of the debt securities which will be payable upon the declaration
of acceleration of the maturity of those debt securities;
- any index or formula used to determine the amount of payment of principal
of, premium, if any, and interest on the debt securities;
- whether any debt securities will be issued in the form of a global
security, the wording of any legal legend to be placed on any global
security in addition to or instead of a legend describing the
restrictions on exchanges and transfers listed under "Global Securities"
on page 7 and, if different from those described in that subsection, any
circumstances under which a global security may be exchanged for debt
securities registered in the names of persons other than the depositary
for the global security or its nominee;
- whether the debt securities are senior, subordinated or junior
subordinated debt securities;
- the subordination provisions applicable to the subordinated debt
securities or junior subordinated debt securities; and
- any other material terms of the debt securities.
Those terms may vary from the terms described here. Thus, this summary also
is subject to and qualified by reference to the description of the particular
terms of your debt securities to be described in the prospectus supplement. The
prospectus supplement relating to your debt securities will be attached to the
front of this prospectus.
The indenture and its associated documents contain the full legal text of
the matters described in this section. The indenture and the debt securities are
governed by New York law.
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EVENTS OF DEFAULT
General. You will have special rights if an "event of default" occurs and
is not cured, as described later in this subsection. Under the indentures, the
term "event of default" means any of the following:
- We do not pay the principal or any premium on a debt security on its due
date;
- We do not pay interest on a debt security, in the case of senior debt
securities or subordinated debt securities, within 30 days of its due
date and, in the case of junior subordinated debt securities, within 60
days after its due date;
- We remain in breach of any restrictive covenant described in the
indenture for 60 days after we receive a notice stating we are in breach.
In the case of senior debt securities or subordinated debt securities,
the notice must be sent by either the trustee or direct holders of at
least 25% of the principal amount of outstanding debt securities of the
affected series, and in the case of the junior subordinated debt
securities, the notice must be sent by the trustee;
- We fail to pay an amount of debt (other than the debt securities)
totaling more than $10,000,000 ($15,000,000 in the case of junior
subordinated debt securities), our obligation to repay is accelerated by
our lenders, and this payment obligation remains accelerated for 60 days
after we receive notice of default as described in the previous
paragraph; or
- We become subject to judgments, orders or decrees requiring payments of
more than $10,000,000 ($15,000,000 in the case of junior subordinated
debt securities) and 60 days have passed during which a stay of
enforcement has not been in effect after we receive notes as described
two paragraphs above.
Remedies if an Event of Default Occurs. If an event of default has occurred
and has not been cured, the trustee or the direct holders of 25% in principal
amount of the outstanding debt securities of the affected series may declare the
entire principal amount of all the debt securities of that series to be due and
immediately payable. This is called a "declaration of acceleration of maturity."
Except in cases of default, where a trustee has some special duties, a
trustee is not required to take any action under the indenture at the request of
any direct holders unless the direct holders offer the trustee reasonable
protection from expenses and liability (called an "indemnity"). If reasonable
indemnity is provided, the direct holders of a majority in principal amount of
the outstanding debt securities of the relevant series may direct the time,
method and place of conducting any lawsuit or other formal legal action seeking
any remedy available to the trustee. These majority direct holders may also
direct the trustee in performing any other action under the indenture.
In general, before you bypass the trustee and bring your own lawsuit or
other formal legal action or take other steps to enforce your rights or protect
your interests relating to the debt securities, the following must occur:
- You must give the trustee written notice that an event of default has
occurred and remains uncured;
- The direct holders of 25% in principal amount of all outstanding debt
securities of the relevant series must make a written request that the
trustee take action because of the default, and must offer reasonable
indemnity to the trustee against the cost and other liabilities of taking
that action;
- The trustee must have not taken action for 60 days after receipt of the
above notice and offer of indemnity; and
- The trustee must not have received from direct holders of a majority in
principal amount of the outstanding debt securities of that series a
direction inconsistent with the written notice during the 60 day period
after receipt of the above notice.
However, you are entitled at any time to bring a lawsuit for the payment of
money due on your debt security on or after its due date.
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MODIFICATION
There are three types of changes we can make to the indentures and the debt
securities.
Changes Requiring Your Approval. First, there are changes that cannot be
made to your debt securities without your specific approval. Following is a list
of those types of changes:
- change the payment due date of the principal or interest on a debt
security;
- reduce any amounts due on a debt security;
- reduce the amount of principal payable upon acceleration of the maturity
of a debt security following a default;
- change the place of payment on a debt security;
- impair your right to sue for payment;
- reduce the percentage of direct holders of debt securities whose consent
is needed to modify or amend the indenture;
- reduce the percentage of direct holders of debt securities whose consent
is needed to waive compliance with certain provisions of the indenture or
to waive certain defaults; and
- modify any other aspect of the provisions dealing with modification and
waiver of the indenture.
Changes Requiring a Majority Vote. The second type of change to the
indentures and the debt securities is the kind that requires a vote in favor by
direct holders of debt securities owning a majority of the principal amount of
the particular series affected. The same majority vote would be required for us
to obtain a waiver of a past default. However, we cannot obtain a waiver of a
payment default or any other aspect of the indenture or the debt securities
listed in the first category described previously under "Changes Requiring Your
Approval" unless we obtain your individual consent to the waiver.
Changes Not Requiring Approval. The third type of change does not require
any vote by direct holders of debt securities. This type is limited to
clarifications and certain other changes that would not adversely affect holders
of the debt securities.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We are generally permitted to consolidate or merge with another entity. We
are also permitted to sell or lease substantially all of our assets to another
company, or to buy or lease substantially all of the assets of another entity.
However, unless AFG survives the consolidation or merger, we may not take any of
these actions unless the following conditions (among others) are met:
- Where we merge out of existence or sell or lease substantially all our
assets, the other entity must be a corporation, partnership or trust
organized under the laws of a State or the District of Columbia or under
federal law, and it must agree to be legally responsible for the debt
securities.
- The merger, sale of assets or other transaction must not cause a default
on the debt securities, and we must not already be in default (unless the
merger or other transaction would cure the default). For purposes of this
no-default test, a default would include an event of default.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt securities will be issuable in definitive, registered form. Debt
securities are also issuable in temporary or permanent global form. See
"Description of the Securities We May Offer -- Book-Entry System" on page 6.
You may have your debt securities broken into more debt securities of
smaller denominations or combined into fewer debt securities of larger
denominations, as long as the total principal amount is not changed. This is
called an "exchange."
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You may exchange or transfer debt securities at the office of the trustee.
The trustee acts as our agent for registering debt securities in the names of
holders and transferring debt securities. We may appoint another entity or
perform this role ourselves. The entity performing the role of maintaining the
list of registered direct holders is called the "security registrar." It will
also perform transfers. You will not be required to pay a service charge to
transfer or exchange debt securities, but you may be required to pay for any tax
or other governmental charge associated with the exchange or transfer. The
transfer or exchange will only be made if the security registrar is satisfied
with your proof of ownership.
If the debt securities are redeemable and we redeem less than all of the
debt securities of a particular series, we may block the transfer or exchange of
those debt securities during the period beginning 15 days before the day we mail
the notice of redemption and ending on the day of that mailing, in order to
freeze the list of holders to prepare the mailing. We may also refuse to
register transfers or exchanges of debt securities selected for redemption,
except that we will continue to permit transfers and exchanges of the unredeemed
portion of any debt security being partially redeemed.
PAYMENT AND PAYING AGENTS
We will pay interest to you if you are a direct holder listed in the
trustee's records at the close of business on a particular day in advance of
each due date for interest, even if you no longer own the debt security on the
interest due date. That particular day, usually about two weeks in advance of
the interest due date, is called the "regular record date" and will be stated in
the prospectus supplement. Holders buying and selling debt securities must work
out between them how to compensate for the fact that we will pay all the
interest for an interest period to the one who is the registered holder on the
regular record date. The most common manner is to adjust the sales price of the
debt securities to prorate interest fairly between buyer and seller. This
prorated interest amount is called "accrued interest."
In the past, AFG has chosen to pay interest by mailing checks. AFG may also
choose to pay interest, principal and any other money due on the debt securities
at the corporate trust office of the trustee. You must make arrangements to have
your payments picked up at or wired from the trust office.
We may also arrange for additional payment offices, and may cancel or
change these offices, including our use of the trustee's corporate trust office.
These offices are called "paying agents." We may also choose to act as our own
paying agent. We must notify you of changes in the paying agents for any
particular series of debt securities.
NOTICES
Notices to holders of debt securities will be given by mail to the
addresses of such holders as they appear in the security register.
PROVISIONS APPLICABLE TO JUNIOR SUBORDINATED DEBT SECURITIES
Events of Default. In addition to the events described above under
"Description of Debt Securities -- Events of Default" applicable to all debt
securities, the voluntary or involuntary dissolution, winding up or termination
of the Trust that owns the series of junior subordinated debt securities will
constitute an event of default for any series of junior subordinated debt
securities issued pursuant to the junior subordinated indenture, except in
connection with:
- the distribution of such junior subordinated debt securities to holders
of trust securities of the Trust;
- the redemption of all of the trust securities of the Trust; and
- mergers, consolidations or similar events permitted by the amended
declaration of the Trust.
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The holders of at least a majority in aggregate liquidation amount of the
trust preferred securities of the Trust may waive any default or event of
default with respect to such series and its consequences, except defaults or
events of default that:
- are not waivable under the junior subordinated indenture (such as
defaults regarding payment of principal, premium, if any, or interest);
or
- require the consent or vote of greater than a majority in principal
amount of the holders of junior subordinated debt securities to be waived
under the junior subordinated indenture, in which case the event of
default may only be waived by the holders of the same "super-majority" in
liquidation amount of the trust preferred securities.
Any such waiver shall cure such default or event of default. If, under the
amended declaration of the Trust, an event of default has occurred and is
attributable to the failure of the Company to pay principal, premium, if any, or
interest on, such junior subordinated debt securities, then each holder of the
trust preferred securities of the Trust may sue the Company or seek other
remedies, to force payment to such holder of the principal of, premium, if any,
or interest on, such junior subordinated debt securities having a principal
amount equal to the aggregate liquidation amount of the trust preferred
securities held by such holder.
Modification of Junior Subordinated Indenture. Under the junior
subordinated indenture, the Company and the indenture trustee may change certain
rights of holders of a series of junior subordinated debt securities with the
written consent of the holders of a majority in principal amount of the series
of junior subordinated debt securities that are affected. Any such change will
be subject to the limitations described above under "Modification" on page 12
applicable to the other debt securities. If the property trustee of the Trust,
as a holder of junior subordinated debt securities, is required to consent to
any amendment, modification or termination of the junior subordinated indenture,
the property trustee will request directions from the holders of the trust
securities of the Trust.
Subordination of Junior Subordinated Debt Securities. The junior
subordinated debt securities will be unsecured and will be subordinate and
junior in priority of payment to certain of the Company's other indebtedness to
the extent described in a prospectus supplement. The junior subordinated
indenture will not limit the amount of junior subordinated debt securities which
the Company may issue, nor does it limit the Company from issuing any other
secured or unsecured debt.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
GENERAL
The amended declaration of the Trust will authorize the trustees to issue,
on behalf of the Trust, one series of trust preferred securities. The Trust will
use the proceeds from the sale of the trust preferred securities to purchase a
series of junior subordinated debt securities issued by the Company. The
property trustee will hold these junior subordinated debt securities in trust
for the benefit of the holders of such trust preferred securities.
This section summarizes the general terms of the preferred securities that
the Trust may offer. The prospectus supplement relating to any particular
preferred securities offered by the Trust will describe the specific terms of
the preferred securities, which may be in addition to or different from the
general terms summarized in this section. The summary in this section and in any
prospectus supplement does not describe every aspect of the trust preferred
securities offered and is subject to and qualified in its entirety by reference
to all the provisions of the amended declaration and the trust preferred
securities. The forms of the amended declarations and the trust preferred
securities are or will be filed as exhibits to or incorporated by reference in
the registration statement.
The Company will guarantee the payments of distributions and payments on
redemption or liquidation with respect to the trust preferred securities, but
only to the extent the Trust has funds available to make
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those payments and has not made the payments. The trust preferred securities
guarantee by the Company is described in more detail below under "Description of
the Trust Preferred Securities Guarantee."
The assets of the Trust available for distribution to the holders of its
trust preferred securities will be limited to payments from the Company under
the series of junior subordinated debt securities held by the Trust. If the
Company fails to make a payment on the junior subordinated debt securities, the
Trust will not have sufficient funds to make related payments, including
distributions, on its trust preferred securities.
The trust preferred securities guarantee, when taken together with the
Company's obligations under the series of junior subordinated debt securities,
the junior subordinated indenture and the amended declaration of the Trust, will
provide a full and unconditional guarantee of amounts due on the trust preferred
securities issued by the Trust.
The prospectus supplement relating to any particular preferred securities
offered by the Trust will describe the specific terms of the preferred
securities, which may be in addition to or different from the general terms
summarized in this section. In particular, the prospectus supplement will
describe:
- the name of such trust preferred securities;
- the designation of the trust preferred securities;
- the dollar amount and number of trust preferred securities issued;
- the annual distribution rate(s) or method of determining such rate(s),
the payment date(s) and the record dates used to determine the holders
who are to receive distributions;
- the date(s) or the method to determine the date(s) from which
distributions shall be cumulative;
- the optional redemption provisions, if any, including the prices, time
periods and other terms and conditions for which such trust preferred
securities shall be purchased or redeemed, in whole or in part;
- the optional right of the Trust to defer quarterly distributions on the
preferred securities;
- the terms and conditions, if any, upon which the applicable series of
junior subordinated debt securities and the related trust preferred
securities guarantee may be distributed to holders of the trust preferred
securities upon liquidation, dissolution, termination or winding up of
the Trust;
- any voting rights of the trust preferred securities other than those
described in this section;
- any securities exchange on which the trust preferred securities will be
listed;
- whether the trust preferred securities are to be issued in book-entry
form and represented by one or more global certificates, and if so, the
depositary for the global certificates and the specific terms of the
depositary arrangements;
- any other relevant rights, preferences, privileges, limitations or
restrictions of such trust preferred securities; and
- any applicable United States Federal income tax considerations.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The amended declaration of the Trust will state that the Trust shall be
dissolved:
- on the expiration of the term of the Trust;
- upon the bankruptcy, dissolution or liquidation of the Company;
- upon a change in law requiring the Trust to register as an investment
company under the Investment Company Act of 1940;
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- unless the Company takes certain actions, upon a change in the law
resulting in the Trust being subject to United States Federal income tax
on income received from the junior subordinated debt securities held by
the Trust, the interest payable by the Company on the junior subordinated
debt securities not being deductible for United State Federal income tax
purposes, or the Trust being subject to more than a de minimus amount of
other taxes;
- upon the redemption, conversion or exchange of all of the trust
securities of the Trust;
- upon the repayment of all of the junior subordinated debt securities held
by the Trust or at such time as no such junior subordinated debt
securities are outstanding;
- upon entry of a court order for the dissolution of the Trust; or
- upon the election of the Company to terminate the Trust and distribute
the related junior subordinated debt securities directly to the holders
of the trust securities.
In the event of a dissolution, after the Trust pays all amounts owed to
creditors, the holders of the trust securities will be entitled to receive:
- cash equal to the aggregate liquidation amount of each trust security
specified in an accompanying prospectus supplement, plus accumulated and
unpaid distributions to the date of payment; or
- junior subordinated debt securities in an aggregate principal amount
equal to the aggregate liquidation amount of the trust securities.
If the Trust cannot pay the full amount due on its trust securities because
insufficient assets are available for payment, then the amounts payable by the
Trust on its trust securities shall be paid pro rata. However, if an event of
default under the related indenture has occurred, the total amounts due on the
trust preferred securities will be paid before any distribution on the trust
common securities.
EVENTS OF DEFAULT
An event of default under the junior subordinated indenture relating to a
series of junior subordinated debt securities is an event of default under the
amended declaration of the Trust. We have described these events of default
under the sections entitled "Description of Debt Securities -- Provisions
Applicable to All Debt Securities -- Events of Default" on page 10 and
" -- Provisions Applicable to Junior Subordinated Debt Securities Events of
Default" on page 12.
The Company and the regular trustees of the Trust must file annually with
the property trustee for the Trust a certificate stating whether or not they are
in compliance with all the applicable conditions and covenants under the related
amended declaration.
Upon the occurrence of an event of default, the property trustee of the
Trust, as the sole holder of the junior subordinated debt securities held by the
Trust, will have the right under the junior subordinated indenture to declare
the principal of, premium, if any, and interest on such junior subordinated debt
securities to be immediately due and payable.
If a property trustee fails to enforce its rights under the amended
declaration or the junior subordinated indenture then, to the fullest extent
permitted by law, and subject to the terms of the amended declaration and the
junior subordinated indenture, any holder of trust preferred securities may sue
the Company, or seek other remedies, to enforce the property trustee's rights
under the amended declaration or the junior subordinated indenture without first
instituting a legal proceeding against such property trustee or any other
person.
If the Company fails to pay principal, premium, if any, or interest on a
series of junior subordinated debt securities when payable, then a holder of
such trust preferred securities may directly sue the Company or seek other
remedies, to collect its pro rata share of payments owned.
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REMOVAL AND REPLACEMENT OF TRUSTEES
Only the holders of trust common securities may remove or replace the
trustees of the Trust. The resignation or removal of any trustee and the
appointment of a successor trustee will be effective only on the acceptance of
appointment by the successor trustee in accordance with the provisions of the
amended declaration for the Trust.
MERGERS, CONSOLIDATIONS, CONVERSIONS OR AMALGAMATIONS OF THE TRUST
The Trust may not consolidate, amalgamate, merge with or into, or be
converted into or replaced by or convey, transfer or lease their properties and
assets substantially as an entirety to any other corporation or other body,
except as described below. The Trust may, with the consent of a majority of its
regular trustees and without the consent of the holders of its trust securities
or the other trustees, engage in any of the merger events referred to above
under the conditions set forth in the declaration and described in a prospectus
supplement.
In addition, unless all of the holders of the trust preferred securities
and trust common securities approve otherwise, the Trust may not consent to or
engage in a merger event if that event would cause the Trust or the successor
entity to be classified other than as a grantor trust for United States federal
income tax purposes.
INFORMATION CONCERNING DUTIES OF THE PROPERTY TRUSTEE
For matters relating to compliance with the Trust Indenture Act, the
property trustee of the Trust will have all of the duties and responsibilities
of an indenture trustee under the Trust Indenture Act. The property trustee,
other than during the occurrence and continuance of an event of default under
the Trust, undertakes to perform only such duties as are specifically set forth
in the amended declaration and, upon an event of default, must use the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the property
trustee is under no obligation to exercise any of the powers given it by the
applicable amended declaration at the request of any holder of trust preferred
securities unless it is offered reasonable security or indemnity against the
costs, expenses and liabilities that it might incur. However, the holders of the
trust preferred securities will not be required to offer such an indemnity where
the holders, by exercising their voting rights, direct the property trustee to
take any action following an event of default.
MISCELLANEOUS
The regular trustees of the Trust are authorized and directed to conduct
the affairs of the Trust and to operate the Trust in such a way that:
- it will not be deemed to be an "investment company" required to be
registered under the Investment Company Act;
- it will be classified as a grantor trust for United States federal income
tax purposes; and
- the junior subordinated debt securities held by it will be treated as
indebtedness of the Company for United States federal income tax
purposes.
The Company and the regular trustees of the Trust are authorized to take
any action (so long as it is consistent with applicable law or the certificate
of trust or amended declaration) that the Company and the regular trustees of
the Trust determine to be necessary or desirable for such purposes.
Holders of trust preferred securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
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GOVERNING LAW
The amended declaration and the related trust preferred securities will be
governed by and construed in accordance with the laws of the State of Delaware
and the Trust Indenture Act.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEE
GENERAL
The Company will execute a trust preferred securities guarantee, which
benefits the holders of trust preferred securities, at the time that the Trust
issues those trust preferred securities. The trust preferred securities
guarantee will be qualified as an indenture under the Trust Indenture Act and
will be held for the benefit of holders of trust preferred securities by a
guarantee trustee meeting the requirements of the Trust Indenture Act. Unless
otherwise indicated in a prospectus supplement, DTC will be the guarantee
trustee.
GUARANTEE PAYMENT
This section summarizes the general terms of the guarantees that the
Company will provide in respect of the preferred securities that the Trust may
offer. The summary in this section does not describe every aspect of the
guarantee and is subject to and qualified in its entirety by reference to any
description in the related prospectus supplement and to all the provisions of
the guarantee agreements. The form of the guarantee agreement is filed as an
exhibit to the registration statement.
The Company will irrevocably agree, as described in the trust preferred
securities guarantee, to pay in full, to the holders of the trust preferred
securities issued by the Trust, the following trust preferred securities
guarantee payments when due to the extent not paid by the Trust, regardless of
any defense, right of set-off or counterclaim which the Trust may have or
assert:
- any accrued and unpaid distributions required to be paid on the trust
preferred securities, to the extent that the Trust has funds available to
make the payment;
- the redemption price, to the extent that the Trust has funds available to
make the payment; and
- upon a voluntary or involuntary dissolution and liquidation of the Trust
(other than in connection with a distribution of junior subordinated debt
securities to holders of such trust preferred securities or the
redemption of all such trust preferred securities), the lesser of
(1) the aggregate of the liquidation amount specified in the
prospectus supplement for each trust preferred security plus all
accrued and unpaid distributions on the trust preferred securities
to the date of payment, to the extent the Trust has funds
available to make the payment and
(2) the amount of assets of the Trust remaining available for
distribution to holders of its trust preferred securities upon a
dissolution and liquidation of the Trust ("Liquidation Payment").
The Company's obligation to make a trust preferred securities guarantee
payment may be satisfied by directly paying the required amounts to the holders
of the trust preferred securities or by causing the Trust to pay the amounts to
the holders.
The combined operation of the Company's obligations under the junior
subordinated indenture and the trust preferred securities guarantee and amended
declaration has the effect of providing a full, irrevocable and unconditional
guarantee of the Trust's obligations under its trust preferred securities.
STATUS OF THE TRUST PREFERRED SECURITIES GUARANTEE
The trust preferred securities guarantee will constitute an unsecured
obligation of the Company and will rank:
- subordinated and junior in right of payment to all the Company's other
liabilities except those liabilities made equal or subordinate to the
guarantee by their terms; and
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- senior to the following:
(1) all capital stock (other than the most senior preferred shares
issued, from time to time, by the Company, which will rank equally
with the guarantee) issued by the Company; and
(2) any guarantee entered into by the Company relating to its capital
stock (other than the most senior preferred shares issued, from
time to time, by the Company).
The trust preferred securities guarantee will rank equally with obligations
under other guarantee agreements that the Company may enter into from time to
time if both:
- the agreements are in substantially the form of the preferred
securities guarantee and provide for comparable guarantees by the
Company of payment on preferred securities issued by other trusts or
financing vehicles of the Company; and
- the debt relating to those preferred securities are subordinated,
unsecured indebtedness of the Company.
By acceptance of the trust preferred securities, holders accept the
subordination provisions and other terms of the trust preferred securities
guarantee. The trust preferred securities guarantee will constitute a guarantee
of payment and not of collection (in other words, the holder of the guaranteed
security may sue the Company, or seek other remedies, to enforce its rights
under the trust preferred securities guarantee without first suing any other
person or entity). The trust preferred securities guarantee will not be
discharged except by payment of the guarantee payments in full to the extent not
previously paid or upon distribution of the corresponding series of junior
subordinated debt securities to the holders of trust preferred securities
pursuant to the amended declaration.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of trust preferred securities in any material respect (in which case
no consent of such holders will be required), a trust preferred securities
guarantee may only be amended with the prior approval of the holders of a
majority in aggregate liquidation amount of such trust preferred securities. All
guarantees and agreements contained in the trust preferred securities guarantee
will be binding on the Company's successors, assigns, receivers, trustees and
representatives and are for the benefit of the holders of the applicable trust
preferred securities.
TRUST PREFERRED SECURITIES GUARANTEE EVENTS OF DEFAULT
An event of default under the trust preferred securities guarantee occurs
if the Company fails to make any of its required payments or perform its
obligations under the trust preferred securities guarantee.
The holders of at least a majority in aggregate liquidation amount of the
trust preferred securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the guarantee
trustee or to direct the exercise of any trust or power given to the guarantee
trustee under the trust preferred securities guarantee.
INFORMATION CONCERNING DUTIES OF THE TRUST PREFERRED GUARANTEE TRUSTEE
The guarantee trustee under the trust preferred securities guarantee, other
than during the occurrence and continuance of an event of default under the
trust preferred securities guarantee, will only perform the duties that are
specifically described in the trust preferred securities guarantee. After such a
default, the trust preferred guarantee trustee will exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the guarantee trustee is under no
obligation to exercise any of its powers as described in the trust preferred
securities guarantee at the request of any holder of covered trust preferred
securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that it might incur.
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TERMINATION OF THE TRUST PREFERRED SECURITIES GUARANTEE
The trust preferred securities guarantee will terminate once the trust
preferred securities are paid in full or upon distribution of the corresponding
series of junior subordinated debt securities to the holders of the trust
preferred securities. The trust preferred securities guarantee will continue to
be effective or will be reinstated if at any time any holder of trust preferred
securities must restore payment of any sums paid under such trust preferred
securities or such trust preferred securities guarantee.
GOVERNING LAW
The trust preferred securities guarantee will be governed by and construed
in accordance with the laws of the State of New York and the Trust Indenture
Act.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES,
THE TRUST PREFERRED SECURITIES GUARANTEE AND THE
JUNIOR SUBORDINATED DEBT SECURITIES HELD BY THE TRUST
Payments of distributions and redemption and liquidation payments due on
the trust preferred securities, to the extent the Trust has funds available for
the payments, will be guaranteed by the Company to the extent described above
under "Description of the Trust Preferred Securities Guarantee." The combined
operation of the Company's obligations under the trust preferred securities
guarantee, amended declaration and the junior subordinated indenture has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under its trust preferred securities.
As long as the Company makes payments of interest and other payments when
due on the junior subordinated debt securities held by the Trust, such payments
will be sufficient to cover the payment of distributions and redemption and
liquidation payments due on the trust preferred securities issued by the Trust
because:
- the aggregate principal amount of the junior subordinated debt securities
will be equal to the sum of the aggregate liquidation amount of the trust
securities;
- the interest rate and interest and other payment dates on the junior
subordinated debt securities will match the distribution rate and
distribution and other payment dates for the trust preferred securities;
- the Company will pay for any and all costs, expenses and liabilities of
the Trust except the Trust's obligations under its trust preferred
securities; and
- the amended declaration provides that the Trust will not engage in any
activity that is not consistent with the limited purposes of the Trust.
If and to the extent that the Company does not make payments on such junior
subordinated debt securities, the Trust will not have funds available to make
payments of distributions or other amounts due on its trust preferred
securities. In those circumstances, you will not be able to rely upon the trust
preferred securities guarantee for payment of these amounts. Instead, you may
directly sue the Company or seek other remedies to collect your pro rata share
of payments owed. If you sue the Company to collect payment, then the Company
will assume your rights as a holder of trust preferred securities under the
amended declaration to the extent the Company makes a payment to you in any such
legal action.
A holder of any trust preferred security may sue the Company, or seek other
remedies, to enforce its rights under the trust preferred securities guarantee
without first suing the guarantee trustee, the Trust or any other person or
entity.
DESCRIPTION OF COMMON STOCK
This section summarizes the general terms of the common stock that we may
offer. The prospectus supplement relating to the common stock offered will set
forth the number of shares offered, the initial
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offering price and recent market prices, dividend information and any other
relevant information. The summary in this section and in the prospectus
supplement does not describe every aspect of the common stock and is subject to
and qualified in its entirety by reference to all the provisions of our Amended
and Restated Articles of Incorporation and Code of Regulations and to the
provisions of the Ohio General Corporation Law.
The total number of authorized shares of AFG common stock is 200,000,000,
without par value. Holders of common stock are entitled to one vote for each
share held of record on all matters submitted to a vote of shareholders. Holders
of common stock have the right to cumulate their votes in the election of
directors but are not entitled to any preemptive rights.
As of June 15, 1999, there were 59,750,920 shares of common stock issued
and outstanding, including 1,366,812 shares held by a subsidiary for
distribution to certain creditors. All shares of common stock have equal rights
to participate in dividends and, in the event of liquidation, assets available
for distribution to shareholders, subject to any preference established with
respect to preferred stock. Shares of common stock carry no conversion
subscription rights, and are not subject to redemption. All outstanding shares
of common stock are, and any shares of common stock issued upon conversion of
any convertible securities will be, fully paid and nonassessable. The Company
may pay dividends on the common stock when, as and if declared by the Board of
Directors. Dividends may be declared in the discretion of the Board of Directors
from funds legally available therefore, subject to restrictions under agreements
related to Company indebtedness.
AFG is authorized to issue 12,500,000 shares of voting preferred stock and
12,500,000 shares of nonvoting preferred stock, each without par value, none of
which is outstanding. AFG's Articles of Incorporation authorize the board of
directors, without further shareholder approval, to designate for any series of
preferred stock not fixed in AFG's Articles of Incorporation the designations,
preferences, conversion rights, and relative, participating, optional and other
special rights, and such qualifications, limitations or restrictions, as they
determine and as are permitted by law.
The affirmative vote of the holders of a majority of the outstanding shares
of common stock is required to amend the Articles of Incorporation and to
approve mergers, reorganizations, share exchanges and similar transactions.
The outstanding shares of common stock are listed on the New York Stock
Exchange and trade under the symbol "AFG." AFG acts as its own transfer agent
and registrar.
PLAN OF DISTRIBUTION
AFG and the Trust may sell the securities (a) through underwriters or
dealers, (b) directly to one or more purchasers, or (c) through agents. The
prospectus supplement will include the names of underwriters, dealers or agents
retained. The prospectus supplement also will include the purchase price of the
securities, AFG's proceeds from the sale, any underwriting discounts or
commissions and other items constituting underwriters' compensation, and any
securities exchanges on which the securities may be listed.
The underwriters will acquire the securities for their own account. They
may resell the securities in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The obligations of the underwriters to purchase the
securities will be subject to certain conditions. The underwriters will be
obligated to purchase all the securities offered if any of the securities are
purchased. Any initial public offering price and any discounts or concessions
allowed or re-allowed or paid to dealers may be changed from time to time.
Underwriters, dealers, and agents that participate in the distribution of
the securities may be underwriters as defined in the Securities Act, and any
discounts or commissions received by them from AFG and any profit on the resale
of the securities by them may be treated as underwriting discounts and
commissions under the Securities Act.
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AFG may have agreements with the underwriters, dealers, and agents to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, AFG or its subsidiaries in the ordinary course of their
business.
LEGAL MATTERS
The validity of the securities offered hereby other than the preferred
securities will be passed upon for the Company and the Trust by Keating,
Muething & Klekamp, P.L.L., Cincinnati, Ohio. Certain United States federal
income taxation matters also will be passed upon for the Company and the Trust
by Akin, Gump, Strauss, Hauer & Feld, L.L.P., Washington, D.C. Attorneys in the
Keating, Muething & Klekamp law firm hold certain securities of the Company and
the Trust. Certain matters of Delaware law relating to the validity of the
preferred securities will be passed upon for the Trust by Morris, Nichols, Arsht
& Tunnell, Wilmington, Delaware.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedules included in our Annual Report on Form 10-K
for the year ended December 31, 1998, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements and schedules are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
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