<PAGE>
As filed with the Securities and Exchange Commission on October 16, 1995
Registration No.
----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
______________
AMERICAN FINANCIAL CORPORATION
(Exact name of Registrant as specified on its charter)
Ohio 31-0624874
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification
Number)
One East Fourth Street
Cincinnati, Ohio 45202
(513) 579-2121
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
______________
JAMES C. KENNEDY, ESQ.
Deputy General Counsel and Secretary
American Financial Corporation
One East Fourth Street
Cincinnati, Ohio 45202
(513) 579-2538
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
__________________
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
___________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 of the Securities
Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box.
X
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Proposed Maxi-
Proposed Maximum mum Aggregate
Title of Securities to Amount to be Offering Price Offering Price Amount of
be Registered Registered Per Unit (1) (1) Registration Fee
---------------------- ------------- ---------------- ---------------- ----------------
9-3/4% Debentures due
April 20, 2004 $50,000,000 100.1875% $50,093,750 $17,274
(1) In accordance with Rule 457(c) under the Securities Act of 1933, the proposed maximum offering price
has been computed based on the average of the high and low prices of the 9-3/4% Debentures due April 20,
2004 reported on October 10, 1995 on the Pacific Stock Exchange. Such value is used solely for the
purpose of calculating the registration fee.
</TABLE>
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
------------------------------------------------------------------------
<PAGE>
Subject to Completion, dated October 13, 1995
PROSPECTUS
$50,000,000
AMERICAN FINANCIAL CORPORATION
9-3/4% Debentures Due April 20, 2004
This Prospectus relates to 9-3/4% Debentures due April 20, 2004
(the "Debentures") of American Financial Corporation ("AFC" or the
"Company"). The Debentures are unsecured obligations of the Company,
pay interest on April 20 and October 20 of each year, and may be
redeemed at the option of AFC, in whole or in part, at prices declining
each April 20 from 104.75% of principal amount in 1999 to 100% in 2002
and thereafter. The Debentures have no mandatory annual sinking fund
requirements prior to maturity. See "Description of Debentures."
Under an Indenture between AFC and Star Bank, National Association,
as Trustee, up to $750 million principal amount of Debentures are
authorized to be issued. Of the $50 million principal amount of
Debentures which are the subject of this Offering, $37.5 million
principal amount was issued in private transactions in September and
October 1995 to certain funds and other accounts managed or advised by
Fidelity Management and Research Company ("Fidelity") and $12.5 million
principal amount was issued to certain funds associated with Allstate
Insurance Company and Allstate Life Insurance Company (collectively,
"Allstate") which funds are managed or advised by Crescent Capital
Corporation ("Crescent") (the actual Fidelity and Allstate funds and
accounts holding the Debentures are referred to herein as the "Selling
Debentureholders"). Approximately $203.8 million principal amount of
Debentures were issued in 1994 in an exchange offer for other AFC
debentures then outstanding, and $50 million principal amount of
Debentures were issued to several funds managed by Fidelity in a private
placement in May 1995. Additional Debentures may be issued in future
exchange offers, private placements or in other transactions. As of
October 12, 1995, approximately $303.8 million principal amount of the
Debentures were outstanding.
The Debentures are listed on the Pacific and Cincinnati Stock
Exchanges and also trade in the over-the-counter market. See "Price
Range of Debentures."
The Debentures to which this Prospectus relates may be offered to
the public from time to time by the Selling Debentureholders. See "The
Selling Debentureholders."
<PAGE>
The Company will receive none of the proceeds from the sale of the
Debentures by the Selling Debentureholders but will pay all of the
expenses of registration of the Debentures. The Debentures offered
hereby may be sold from time to time directly by the Selling
Debentureholders or through brokerage firms that may be deemed to be
underwriters, dealers or agents. See "Plan of Distribution." If
required, a Prospectus Supplement will be delivered setting forth the
aggregate principal amount of Debentures being offered hereby, the
identity of Selling Debentureholders and the terms of the offering,
including the names of any brokerage firms that may be deemed to be
underwriters, dealers or agents; any discounts, commissions and other
items constituting compensation from Selling Debentureholders and any
discounts, concessions or commissions allowed or paid to dealers; any
indemnification by the Company of Selling Debentureholders or any
underwriter, dealer or agent against certain liabilities, including
liabilities under the Securities Act of 1933 (the "Securities Act"); and
the resulting net proceeds to Selling Debentureholders.
See "Investment Considerations" beginning on page 5 for a
discussion of certain factors that should be considered in connection
with an investment in the Securities offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is October ___, 1995.
-7-
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files periodic reports and other information with the
Securities and Exchange Commission (the "Commission"). The Company has
filed a Registration Statement on Form S-3 (the "Registration
Statement") with the Commission under the Securities Act with respect to
the Offering. This Prospectus does not contain all the information,
exhibits and undertakings contained in the Registration Statement, to
which reference is hereby made. Statements contained in this Prospectus
as to the terms of any contract or other document are not necessarily
complete with respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement. Reference is made to
the exhibits for a more complete description of the matter involved.
Such reports, proxy and information statements, the Registration
Statement and other information filed with the Commission by AFC may be
inspected at and obtained from the Commission at its public reference
facilities at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at Suite 1400, 500 West Madison
Avenue, Chicago, Illinois, and at 7 World Trade Center, 13th Floor, New
York, New York. Copies of such material can also be obtained, at
prescribed rates, by mail from the Public Reference Section of the
Commission at its Washington, D.C. address set forth above. The
Debentures are traded on the Pacific and Cincinnati Stock Exchanges.
Reports can be inspected at the Records Department offices of the
Pacific Stock Exchange at 115 Samsone St., 9th Floor, San Francisco,
California, and at the offices of the Cincinnati Stock Exchange at 400
S. LaSalle Street, Chicago, Illinois.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-7361)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, as
amended (the "Annual Report");
2. The Company's Current Reports on Form 8-K dated April 7,
1995 and August 23, 1995; and
3. The Company's Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 1995
and June 30, 1995 (the "Quarterly Reports").
-2-
<PAGE>
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of this Offering shall be deemed to be incorporated by reference in this
Prospectus and to be a part of this Prospectus from the date of filing
thereof. Any statement contained in a document incorporated by
reference herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. These documents are available
upon request without charge from the Company at the address and phone
number set forth below.
The Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, upon the written or verbal request
of any such person, a copy of any or all of the documents which have
been incorporated herein by reference, other than exhibits to such
documents (unless such exhibits are specifically incorporated by
reference into such documents). Requests for such documents should be
directed to American Financial Corporation, One East Fourth Street,
Cincinnati, Ohio 45202, Attention: Treasurer, Telephone (513) 579-
2494.
-3-
<PAGE>
SUMMARY INFORMATION
This summary is qualified by the more detailed information and
financial statements appearing elsewhere, or incorporated by reference,
in this Prospectus.
The Company
American Financial Corporation ("AFC") is a holding company
operating through wholly-owned and majority-owned subsidiaries and other
companies in which it holds significant minority ownership interests.
These companies operate in a variety of financial businesses, including
property and casualty insurance, annuities, and portfolio investing. In
nonfinancial areas, these companies have substantial operations in the
food products industry and radio and television broadcasting. AFC was
incorporated as an Ohio corporation in 1955. Its address is One East
Fourth Street, Cincinnati, Ohio 45202 and its phone number is (513)
579-2121.
American Financial Group, Inc. (formerly American Premier Group,
Inc.) owns 100% of the outstanding common stock of AFC, which amounts to
79% of the voting power of the corporation after taking into account
outstanding voting preferred stock of AFC. American Financial Group is
a holding company formed to own both AFC and American Premier
Underwriters, Inc. ("APU"). On April 3, 1995, AFC and APU each merged
with newly-formed subsidiaries of American Financial Group (the
"Mergers"). In the Mergers, Carl H. Lindner and members of his family
who owned 100% of the common stock of AFC exchanged their AFC common
stock for approximately 55% of American Financial Group voting common
stock. Former shareholders of APU received the other 45% of the voting
common stock of American Financial Group. AFC and its subsidiaries own
approximately 18.7 million shares of American Financial Group common
stock which, as long as AFC is owned by American Financial Group,
generally will not be eligible to vote.
The Offering
Issue
$50,000,000 principal amount of 9-3/4% Debentures due April 20,
2004
Interest Payment Dates
April 20 and October 20
-4-
<PAGE>
Optional Redemption
The Debentures may be redeemed at the option of the Company, in
whole or in part, at prices declining each April 20 from 104.75% of
principal amount in 1999 to 100% in 2002 and thereafter.
Use of Proceeds
The Company will not receive any proceeds from the sale of
Debentures offered hereby by the Selling Debentureholders.
Listing
The Debentures are listed on the Pacific and Cincinnati Stock
Exchanges and trade on the Pacific Stock Exchange under the symbol
"AFIZ.P".
-5-
<PAGE>
Summary Historical Financial Information
The following table sets forth certain data (dollars in millions)
and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in
the Annual Report and the Quarterly Reports. Results for interim
periods are not necessarily indicative of results to be expected for the
year.
<TABLE>
<CAPTION>
Six Months
Ended June 30, Years Ended December 31,
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Operations Statement Data (1):
Total Revenues . . . . . . . . . . . $1,134 $1,032 $2,103 $ 2,721 $ 3,929 $ 5,219 $ 7,761
Earnings (Loss) From Continuing
Operations Before Income Taxes . . 66 67 44 262 (145) 119 49
Earnings (Loss) From:
Continuing Operations . . . . . . 47 50 19 225 (162) 56 (9)
Discontinued Operations . . . . . -- -- -- -- -- 16 3
Extraordinary Items . . . . . . . . (3) (16) (17) (5) -- -- 28
Cumulative Effect of Accounting -- -- -- -- 85 -- --
Change . . . . . . . . . . . . . . . .
Net Earnings (Loss) . . . . . . . . . . 44 34 2 220 (77) 72 22
Ratio of Earnings to Fixed Charges (2) 1.58 2.00 1.69 2.62 2.15 1.54 1.12
Ratio of Earnings to Fixed Charges
and Preferred Dividends (2) . . . 1.34 1.66 1.40 2.26 1.94 1.42 1.06
Balance Sheet Data (1):
Total Assets . . . . . . . . . . . . $11,230 $10,182 $10,550 $10,077 $12,389 $12,057 $11,500
Long-term Debt:
Parent Company . . . . . . . . . . 355 493 490 572 557 559 558
Payable to APU . . . . . . . . . . 526 -- -- -- -- -- --
Subsidiaries . . . . . . . . . . . 432 587 617 482 1,452 1,549 2,432
Capital Subject to Mandatory Redemption 3 35 3 49 28 82 77
. . . . . . . . . . . . . . . . . . . .
Other Capital . . . . . . . . . . . . 526 455 396 537 280 262 256
---------------------
(1) Due to decreases in ownership percentages in 1993, 1992 and 1991, AFC ceased accounting for certain
companies as subsidiaries and began accounting for them as investees. AFC had accounted for American
Premier as a subsidiary from 1992 through the first quarter of 1993 due to AFC's ownership exceeding
50%. As a result of these changes, income statement and balance sheet components are not comparable.
See Note B of Notes to Financial Statements and "Management's Discussion and Analysis - Results of
Operations" in AFC's 1994 Form 10-K incorporated herein by reference.
-6-
<PAGE>
(2) Fixed charges are computed on a "total enterprise" basis. For purposes of calculating the ratios,
"earnings" have been computed by adding to pretax earnings (excluding discontinued operations) 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 policyholders' funds), amortization of debt discount and
expense, preferred dividend requirements of subsidiaries and a portion of rental expense deemed to be
representative of the interest factor.
</TABLE>
-7-
<PAGE>
INVESTMENT CONSIDERATIONS
Prospective investors in the Debentures should consider carefully
all of the information set forth in this Prospectus including the
information in the documents incorporated by reference and, in
particular, should evaluate the specific factors set forth below for
risks involved with an investment in the Debentures.
Holding Company Structure, Dividend Restrictions
AFC is a holding company with almost all of its operations being
conducted by its subsidiaries. AFC has continuing expenditures for
administrative expenses and corporate services and, most importantly,
for the payment of principal and interest on borrowings and for
dividends on AFC preferred stock. AFC relies on dividends and tax
payments from its subsidiaries, borrowings from affiliates as well as
dividends from companies in which it has a significant investment for
funds to meet its obligations.
As of June 30, 1995, AFC had approximately $355 million of non-
subordinated indebtedness outstanding at the parent holding company
level. It had preferred stock outstanding at the same date which
required annual dividend payments of approximately $25 million. Great
American Holding Corporation ("GAHC"), a wholly-owned subsidiary of AFC,
had $199 million, and other AFC subsidiaries had an additional $232
million of indebtedness outstanding at June 30, 1995. AFC has
significant assets at the parent company level but they are not
sufficient to enable it to meet its ongoing needs for cash without the
receipt of dividends and tax payments from its subsidiaries. Following
completion of the Mergers, an AFC subsidiary repaid $187 million of
borrowings under its multi-bank revolving credit facility. Also, AFC
redeemed all $133 million principal amount of its 12% Debentures due
1999 at par and all $52 million principal amount of its 12-1/4%
Debentures due 2003 at 102.5% of par on May 3, 1995. The funds utilized
for these repayments were borrowed from APU under a subordinated credit
agreement under which AFC can borrow up to $675 million. At June 30,
1995, AFC had borrowed approximately $526 million under this
subordinated credit agreement.
Since June 30, 1995, GAHC has retired $50 million principal amount
of floating rate notes and called for redemption on October 16, 1995,
$150 million principal amount of 11% notes. The funds utilized for
these repayments include (i) approximately $65 million in cash AFG
received upon the sale of approximately 2.3 million shares of AFG common
stock to an employee stock ownership plan and to persons exercising AFG
employee stock options, (ii) the proceeds of the sale of 9-3/4%
Debentures due April 20, 2004 in several private placements and (iii)
borrowings under GAHC's existing line of credit.
-8-
<PAGE>
Generally over 90% of the dividends AFC has received from
subsidiaries have come from its principal insurance subsidiary, Great
American Insurance Company ("GAI"), which is domiciled in Ohio.
Payments of dividends by GAI and AFC's other insurance subsidiaries are
subject to various laws and regulations which limit the amount of
dividends that can be paid without prior approval. During 1993, the
State of Ohio revised its dividend law for Ohio-domiciled insurers.
Under the new law, the maximum amount of dividends which may be paid
without either prior approval or expiration of a 30-day waiting period
without disapproval is the greater of statutory net income or 10% of
policyholders' surplus as of the preceding December 31, but only to the
extent of earned surplus as of the preceding December 31. Without such
approval, the maximum amount of dividends payable in 1995 from GAI based
on its 1994 policyholders surplus is approximately $95 million. The
maximum dividend permitted by law is not indicative of an insurer's
actual ability to pay dividends, which may be further constrained by
business and regulatory considerations, such as the impact of dividends
on surplus, which could affect an insurer's ratings, competitive
position, the amount of premiums that can be written, and the ability to
pay future dividends. Furthermore, the Ohio Insurance Department has
broad discretion to limit the payment of dividends by insurance
companies domiciled in Ohio.
Cyclicality of the Insurance Industry, Impact of Catastrophes
AFC's insurance subsidiaries operate in a highly competitive
industry that is affected by many factors which can cause significant
fluctuations in the results of operations. AFC's insurance operations
have been subject to operating cycles and losses from catastrophes. The
property and casualty insurance industry has historically been subject
to pricing cycles characterized by periods of intense competition and
lower premium rates (a "downcycle") followed by periods of reduced
competition, reduced underwriting capacity and higher premium rates (an
"upcycle"). The property and casualty insurance industry is currently
in an extended downcycle, which has lasted approximately eight years.
The underwriting results for AFC's property and casualty operations have
been adversely affected by this downcycle, particularly reflected in
soft pricing in certain standard commercial lines of business. AFC
believes that specialty lines of business will be less affected by
supply/pricing pressures during downcycles than other lines of property
and casualty insurance. Consequently, AFC believes that its emphasis
towards specialty lines programs, larger accounts and loss sensitive and
retrospectively rated policies will enhance its ability to achieve
improved operating results during both upcycles and downcycles.
-9-
<PAGE>
As with other property and casualty insurers, AFC's operating
results can be adversely affected by unpredictable catastrophe losses.
AFC's insurance subsidiaries generally seek to reduce their exposure to
such events through individual risk selection and the purchase of
reinsurance. Major catastrophes in recent years included hail storms in
Texas in the second quarter of 1995, the Northridge earthquake in
Southern California and the winter storms in the South and Northeast in
1994; winter storms and flooding in the Midwest in 1993; Hurricanes
Andrew and Iniki, Chicago flooding and Los Angeles civil disorder in
1992; and the Oakland fires in 1991. Total net losses to AFC's
insurance operations from catastrophes were $31.6 million in the first
six months of 1995; $51 million in 1994; $26 million in 1993; $42 millon
in 1992; $22 million in 1991; and $13 million in 1990.
Ratings
A.M. Best Company, Inc. ("Best"), publisher of Best's Insurance
Reports, Property-Casualty, has given GAI its rating of "A" (Excellent).
Although some of the large insurance companies against whom GAI competes
have a higher rating, AFC believes that the current rating is adequate
to enable GAI to compete successfully. A downgrade in the Best rating
below "A" (Excellent) could adversely affect the competitive position of
GAI. Best's ratings are not designed for the protection of investors
and do not constitute recommendations to buy, sell or hold any security.
AFC's Investment Portfolio
Approximately 95% of the bonds and redeemable preferred stocks held
by AFC were rated "investment grade" (credit rating of AAA to BBB-) at
June 30, 1995 and December 31, 1994, compared to less than 60% at the
end of 1988. Investment grade securities generally bear lower yields
and lower degrees of risk than those that are unrated or non-investment
grade.
At June 30, 1995, AFC held mortgage-backed securities, consisting
primarily of collateralized mortgage obligations ("CMOs"), with a market
value of $1.8 billion. At that date, interest only (I/Os), principal
only (P/Os) and other "high risk" CMOs represented approximately seven-
tenths of one percent of AFC's total mortgage-backed securities. AFC
invests primarily in CMOs which are structured to minimize prepayment
risk. In addition, the majority of CMOs held by AFC were purchased at a
discount to par value. AFC believes that the structure and discounted
nature of the CMOs will minimize the effect of prepayments on earnings
over the anticipated life of the CMO portfolio. Substantially all of
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<PAGE>
AFC's CMOs are rated "AAA" by Standard & Poor's Corporation and are
collateralized primarily by GNMA, FNMA or FHLMC single-family
residential pass-through certificates. The market in which these
securities trade is highly liquid. Aside from interest rate risk, AFC
does not believe a material risk (relative to earnings and liquidity) is
inherent in holding such investments.
AFC has generally followed a practice of concentrating its equity
investments in a relatively limited number of issues rather than
maintaining relatively limited positions in a larger number of issues.
This practice permits concentration of attention on a limited number of
companies in relatively few industries, principally insurance,
utilities, financial services, food products, energy and communications.
Some of the investments, because of their size, may not be as readily
marketable as the typical small investment position. Alternatively, a
large equity position may be attractive to persons seeking to control or
influence the policies of a company and AFC's concentration in a
relatively small number of companies and industries may permit it to
identify investments with above average potential to increase in value.
Because of its significant ownership percentage of the voting stock of
several companies, AFC utilizes the equity method of accounting in
certain companies. This method results in AFC including in its results
its proportionate share of the investees' earnings and losses. At June
30, 1995, AFC utilized the equity method of accounting with respect to
its investments of $548 million in AFG; $216 million in Chiquita Brands
International, Inc. ("Chiquita"); and $72 million in Citicasters Inc.
("Citicasters").
Adequacy of Loss Reserves
The insurance subsidiaries of AFC establish reserves to cover their
estimated liability for losses and loss adjustment expense with respect
to both reported and unreported claims as of the end of each accounting
period. By their nature, such reserves do not represent an exact
calculation of liabilities. Rather, except for reserves related to
environmental and asbestos type claims, such reserves are estimates
involving projections at a given time of management's expectations as to
the ultimate settlement and administration of claims. These
expectations are, in turn, based on facts and circumstances known at the
time, predictions of future events, estimates of future trends in the
severity and frequency of claims and judicial theories of liability as
well as inflation.
In recent years, AFC's insurance subsidiaries have increased their
premium writings in specialty commercial lines of business. Estimation
of loss reserves for many specialty commercial lines of business is more
difficult than for certain standard commercial lines because claims may
-11-
<PAGE>
not become apparent for a number of years (such period of time being
referred to as the "tail"), and a relatively higher proportion of
ultimate losses is considered incurred but not reported. As a result,
variations in loss development are more likely in these lines of
business.
AFC regularly reviews its reserving techniques and reserve
positions and believes that adequate provision has been made for loss
reserves. Nevertheless, there can be no assurance that currently
established reserves will prove adequate in light of subsequent actual
experience. Future earnings could be adversely impacted should future
loss development require increases in reserves previously established
for prior periods.
AFC's insurance subsidiaries face liabilities for asbestos and
environmental ("A&E") claims. A&E claims arise out of general liability
and commercial multi-peril policies issued by GAI prior to the early
1980's when providing coverage for A&E exposures was not specifically
contemplated by GAI's policies.
The insurance industry typically includes only claims relating to
polluted waste sites and asbestos in defining environmental exposures.
GAI extends its definition of A&E claims to include claims relating to
breast implants, repetitive stress on keyboards, DES (a drug used in
pregnancies years ago alleged to cause cancer and birth defects), and
other latent injuries.
Establishing reserves for A&E claims is subject to uncertainties
that are greater than those presented by other types of claims. Factors
contributing to those uncertainties include a lack of historical data,
long reporting delays, uncertainty as to the number and identity of
insureds with potential exposure, unresolved legal issues regarding
policy coverage, and the extent and times of any such contractual
liability. Courts have reached different and sometimes inconsistent
conclusions as to when the loss occurred and what policies provide
coverage, what claims are covered, whether there is an insured
obligation to defend, how policy limits are determined and other policy
provisions. Management believes these issues are not likely to be
resolved in the near future.
Based on known facts and current law, management believes that its
reserves for A&E claims are adequate.
-12-
<PAGE>
THE SELLING DEBENTUREHOLDERS
Each Selling Debentureholder associated with Fidelity Management &
Research Company, a Massachusetts corporation ("Fidelity"), is a
portfolio of an investment company registered under Section 8 of the
Investment Company Act of 1940, as amended. Fidelity is an investment
adviser registered under Section 203 of the Investment Advisers Act of
1940 and provides investment advisory services to two of the Selling
Debentureholders (Fidelity Puritan Trust: Fidelity Puritan Fund and
Variable Insurance Products Fund: High Income Portfolio), to certain
other registered investment companies and to certain other funds that
are generally offered to limited groups of investors. Fidelity is a
wholly-owned subsidiary of FMR Corp., a Massachusetts corporation.
Each selling Debentureholder associated with Allstate Insurance
Company or Allstate Life Insurance Company is a portfolio of an
insurance company. Allstate Life Insurance Company is a stock life
insurance company incorporated under the insurance laws of Illinois and
and is a wholly-owned subsidiary of Allstate Insurance Company, a stock
property-liability insurance company incorporated under the insurance
laws of Illinois.
-13-
<PAGE>
The Selling Debentureholders acquired the $50 million principal
amount of Debentures offered hereby from the Company in private
transactions in September and October 1995.
<TABLE>
<CAPTION>
Principal Beneficial
Beneficial Amount Ownership of Debentures
Ownership of Debentures of After Offering
Before Offering Debentures --------------------------------
------------------------ Offered
Percentage of Hereby Percentage
Principal Outstanding Principal of
Selling Amount Debentures (a) Amount (b) Outstanding
Debentureholder Debentures(a)
--------------------------- ----------- -------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Fidelity Puritan Trust: $19,500,000 6.4% $19,500,000 -0- --
Fidelity Puritan Fund
Variable Insurance Products Fund: $14,570,000 4.8% $10,000,000 $4,570,000 1.5%
High Income Portfolio
Fidelity Fixed Income Trust: $24,830,000 8.2% $4,000,000 $20,830,000 6.9%
Spartan High Income Fund
Fidelity Charles Street Trust: $9,000,000 3.0% $4,000,000 $5,000,000 1.6%
Fidelity Asset Manager
Allstate Insurance Company - $5,000,000 1.6% $5,000,000 -0- --
AICG
Allstate Life Insurance $3,000,000 1.0% $3,000,000 -0- --
Company - ALISLBL
Allstate Life Insurance $2,500,000 .8% $2,500,000 -0- --
Company - ALG
Allstate Life Insurance $2,000,000 .7% $2,000,000 -0- --
Company - ALSPDA
(a) Based on the aggregate principal amount of Debentures outstanding at October 12, 1995.
(b) These Debentures were purchased from AFC in private placements in May 1995. A registration statement
was declared effective with respect to the sale of these Debentures in June 1995.
</TABLE>
In connection with this offering, AFC has agreed to indemnify the
Selling Debentureholders against certain liabilities under the
Securities Act of 1933, or to contribute to payments that the Selling
Debentureholders may be required to make in respect thereof.
-14-
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of
any of the Debentures by the Selling Debentureholders.
PLAN OF DISTRIBUTION
The sale or distribution of the Debentures may be effected directly
to purchasers by the Selling Debentureholders as principals or through
one or more underwriters, brokers, dealers or agents from time to time
(i) in one or more transactions on any exchange or in the over-the-
counter market, or (ii) in transactions otherwise than in such markets.
Any of such transactions may be effected at market prices prevailing at
the time of sale, at prices related to such prevailing market prices, at
varying prices determined at the time of sale or at negotiated or fixed
prices, in each case as determined by the Selling Debentureholder or by
agreement between the Selling Debentureholder and underwriters, brokers,
dealers or agents, or purchasers. If the Selling Debentureholders
effect such transactions by selling Debentures to or through
underwriters, brokers, dealers or agents, such underwriters, brokers,
dealers or agents may receive compensation in the form of discounts,
concessions or commissions from the Selling Debentureholders or
commissions from purchasers of Debentures for whom they may act as agent
(which discounts, concessions or commissions as to particular
underwriters, brokers, dealers or agents may be in excess of those
customary in the types of transactions involved). The Selling
Debentureholders and any brokers, dealers or agents that participate in
the distribution of the Debentures may be deemed to be underwriters, and
any profit on the sale of Debentures by them and any discounts,
concessions or commissions received by any such underwriters, brokers,
dealers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act.
Under the securities laws of certain states, the Debentures may be
sold in such states only through registered or licensed brokers or
dealers. In addition, in certain states the Debentures may not be sold
unless the Debentures have been registered or qualified for sale in such
state or an exemption from registration or qualification is available
and is complied with.
The Company will pay all of the expenses incident to the
registration, offering and sale of the Debentures to the public
hereunder other than commissions, fees and discounts of underwriters,
brokers, dealers and agents. The Company has agreed to indemnify the
Selling Debentureholders and any underwriters against certain
liabilities, including liabilities under the Securities Act.
-15-
<PAGE>
PRICE RANGE OF DEBENTURES
As of October 12, 1995, approximately $303.8 million principal
amount of the Debentures were outstanding. The Debentures are listed on
the Pacific Stock Exchange ("PSE") and the Cincinnati Stock Exchange.
The following table shows for the periods indicated high and low closing
prices per $1,000 principal amount of the Debentures on the PSE. The
prices shown do not necessarily represent actual transactions.
High Low
1994 ------- -------
------
Second Quarter (a) $ 990 $ 930
Third Quarter 969 920
Fourth Quarter 950 875
1995
------
First Quarter 956 913
Second Quarter 1,004 963
Third Quarter 1,015 990
Fourth Quarter (Through October 10) 1,005 999
(a) The Debentures were first issued in
April 1994.
-16-
<PAGE>
DESCRIPTION OF DEBENTURES
General
The Debentures are unsecured obligations of AFC and were issued
under an Indenture between AFC and Star Bank, National Association as
Trustee. The following statements are brief summaries of certain
provisions of the Indenture and do not purport to be complete. The
Indenture is on file with the Commission and references to the Indenture
are qualified in their entirety by express reference to the Indenture.
The Indenture provides for the issuance of up to $750 million
principal amount of debentures of which $50 million principal amount are
being offered hereby. Approximately $203.8 million principal amount of
Debentures was issued in 1994 in an exchange offer for other debt
securities of AFC then outstanding, $50 million principal amount was
issued to certain funds affiliated with Fidelity in May 1995, a total of
$37.5 million principal amount was issued to certain funds affiliated
with Fidelity in September and October 1995 and $12.5 million principal
amount was issued to certain funds affiliated with Allstate in October
1995. Additional Debentures may be issued in future exchange offers,
private placements or other transactions. The Debentures are issuable
as registered debentures without coupons in denominations of $1,000 and
any multiple thereof. The Debentures are exchangeable and transferable
at the office of the transfer agent which the Company has designated as
Securities Transfer Company, One East Fourth Street, Cincinnati, Ohio
45202. No service charge will be made for the transfer or exchange of
Debentures, but AFC may require payment of sums sufficient to cover any
tax or other governmental charge. (Sections 2.03 and 2.06 of the
Indenture; further references to Sections are references to the
Indenture.)
Principal, Maturity and Interest
The Debentures bear interest at the rate of 9-3/4% per annum
payable semi-annually on April 20 and October 20 each year to holders of
record on the April 1 and October 1 next preceding the interest payment
date. Interest on the Debentures will accrue from the most recent date
upon which interest was paid. They will mature on April 20, 2004.
Payments of principal and premium, if any, and interest payable on
redemption (other than interest payable on April 20 and October 20) will
be made at the office of the Paying Agent in Cincinnati, Ohio, upon
surrender of the Debentures. (Section 3.01)
-17-
<PAGE>
Optional Redemption
The Debentures will be redeemable after April 20, 1999 at the
option of AFC, as a whole or in part, on not less than 30 nor more than
60 days' written notice, at the following prices, expressed in
percentage of the principal amount, together with interest accrued to
the date fixed for redemption. If redeemed on or after April 20 of:
Redemption Redemption
Year Price Year Price
---- ----------- ----- ----------
1999 104.75% 2001 101.75%
2000 103.25% 2002 and thereafter 100.00%
Redemptions will be made in $1,000 denominations with the
Trustee determining the particular debentures to be redeemed by lot at
its discretion. (Sections 4.01, 4.02 and 4.03)
No Sinking Fund
The Indenture contains no sinking fund provisions.
No Financial Covenants
The Indenture contains no provisions which restrict the
issuance of additional securities, the incurring of additional debt, the
declaration of dividends or the retirement of equity securities. The
Indenture does not require the maintenance of any particular ratios or
the creation or maintenance of reserves, nor does it contain any other
financial covenants.
The provisions of the Indenture would not necessarily afford
holders of the Debentures protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar
transaction which involves the Company and which event may adversely
affect the holders.
Modification and Satisfaction of Indentures
The Indenture may be amended or supplemented by AFC and the
Trustee with the consent of the holders of not less than a majority in
principal amount of the debentures then outstanding; but no modification
of the terms of payment of principal or interest on the Debentures and
no modification impairing or reducing the percentage required for
modification will be effective against any holder without his consent.
(Section 9.02)
-18-
<PAGE>
The Indenture may be satisfied and discharged upon cancellation
of all the Debentures or, under certain conditions, upon deposit with
the Trustee of funds or securities sufficient therefor. (Section 8.01)
Limitations on Claims in Bankruptcy or on Acceleration Upon an Event of
Default
Under the Indenture, the Trustee or the holders of 25% of the
debentures may declare an acceleration if an Event of Default occurs and
is continuing, even if the bankruptcy of AFC does not result in or was
not the cause of the Event of Default. Under the terms of the
Indenture, should an acceleration be declared as a result of the
occurrence and continuation of an Event of Default absent bankruptcy,
the claim of a holder of Debentures is for the full principal amount of
the holder's debentures. (Section 6.02)
The amount that a holder would be able to recover from AFC,
under a bankruptcy or an event of default, may, however, be limited by
applicable law to the issue price (the market value at the time of
issuance) of the Debentures plus the portion of any original issue
discount which has been amortized.
Events of Default
The following events are defined in the Indenture as "Events of
Default": failure to pay principal or premium when due for 20 days;
failure to pay interest when due for 30 days; failure to perform any
other covenants in the Indenture for 90 days after notice; certain
events of bankruptcy, insolvency or reorganization of AFC; the
occurrence of an event of default in any other instrument under which
AFC has or may issue debt which has not been cured within 30 days after
notice of such default; or failure to pay any funded debt in excess of
$10,000,000 now existing or existing after the date of the Indenture
within 20 days after stated maturity. Upon the happening and during
the continuance of any Event of Default, the Trustee or the holders of
at least 25% in principal amount of the outstanding Debentures may
declare the principal and accrued interest of all debentures due and
payable. The Indenture provides that such declaration and its
consequences may, in certain events, be annulled by the holders of a
majority in principal amount of the outstanding debentures. (Article 6)
The Indenture provides that if a default occurs and is
continuing and is actually known to the Trustee, the Trustee shall,
within 90 days thereafter, give to the holders notice of all uncured
defaults known to it (the term default to include the events specified
above without grace periods); provided that, except in the case of
default in payment of principal of or interest in respect of the
debentures, the Trustee shall be protected in withholding such notice if
it in good faith determines that the withholding of such notice is in
the interest of the holders. (Section 7.05)
-19-
<PAGE>
AFC must furnish to the Trustee within 120 days after the end
of each fiscal year, a certificate of certain officers of AFC as to
whether such persons have knowledge of any default under the Indenture.
(Section 3.04)
The holders of a majority in aggregate principal amount of
outstanding Debentures will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee,
except that the Trustee shall not be so required to act unless
reasonable indemnity shall be offered against the costs, expenses and
liabilities of such act, or except as otherwise provided in the
Indenture. (Sections 6.05 and 7.01)
Trustee
The Trustee serves as trustee under indentures relating to
other debt of AFC and certain of its subsidiaries and affiliates and has
loans outstanding to certain subsidiaries and affiliates of AFC. The
Trustee has no other material relationship with AFC.
Authenticating Agent, Paying Agent, Registrar
Securities Transfer Company, an Ohio limited partnership,
Cincinnati, Ohio, has been designated by AFC as the Authenticating
Agent, Paying Agent, and Registrar for the debentures. AFC may change
the Authenticating Agent, Paying Agent and Registrar without prior
notice. AFC is the general partner of Securities Transfer Company and
subsidiaries and affiliates of AFC are limited partners. AFC or any of
its subsidiaries or affiliates may act in such capacities.
LEGAL MATTERS
Certain legal matters, including the validity of the Debentures
offered hereby, will be passed upon for the Company by Keating, Muething
& Klekamp.
EXPERTS
The consolidated financial statements of AFC appearing in AFC's
Annual Report (Form 10-K) for the year ended December 31, 1994, have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by
reference. Such report is based in part on the reports of Deloitte &
Touche LLP, independent auditors relating to the consolidated financial
statements of American Premier Underwriters, Inc. and of Deloitte &
Touche, independent auditors, relating to the consolidated financial
statements of General Cable Corporation. The financial statements
referred to above are included in reliance upon such reports given upon
the authority of such firms as experts in accounting and auditing.
-20-
<PAGE>
No person has been authorized to give any information or to
make any representations not contained in this Prospectus
and, if given or made, such information or representation
must not be relied upon as having been authorized by the
Company or the Selling Debentureholders. This Prospectus
does not constitute an offer to sell or a solicitation of
any offer to buy any of the securities offered hereby in
any jurisdiction to any person to whom it is unlawful to
make such offer in such jurisdiction. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that the infor-
mation herein is correct as of any time subsequent to the
date hereof or that there has been no change in the affairs
of the Company since such date.
TABLE OF CONTENTS
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . 2
SUMMARY INFORMATION . . . . . . . . . . . . . . . . . . 4
INVESTMENT CONSIDERATIONS . . . . . . . . . . . . . . . 8
THE SELLING DEBENTUREHOLDERS . . . . . . . . . . . . . 13
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . 15
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . 15
PRICE RANGE OF DEBENTURES . . . . . . . . . . . . . . . 16
DESCRIPTION OF DEBENTURES . . . . . . . . . . . . . . . 17
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . 20
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . 20
-21-
<PAGE>
AMERICAN
FINANCIAL
CORPORATION
$50,000,000
9-3/4% Debentures
due April 20, 2004
PROSPECTUS
October , 1995
-22-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with the
offering described in this Registration Statement:
Securities and Exchange Commission registration fee* . . . . $17,274
Accountants' fees and expenses . . . . . . . . . . . . . . . . 5,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . 7,000
Blue Sky expenses . . . . . . . . . . . . . . . . . . . . . . . 5,000
Miscellaneous expenses . . . . . . . . . . . . . . . . . 3,226
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $37,500
________________
*Actual; other expenses are estimated
Item 15. Indemnification of Directors and Officers.
Ohio Revised Code, Section 1701.13(E), allows indemnification by the
Registrant to any person made or threatened to be made a party to any
proceedings, other than a proceeding by or in the right of the
Registrant, by reason of the fact that he is or was a director, officer,
employee or agent of the Registrant, against expenses, including
judgment and fines, if he acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the Registrant
and, with respect to criminal actions, in which he had no reasonable
cause to believe that his conduct was unlawful. Similar provisions
apply to actions brought by or in the right of the Registrant, except
that no indemnification shall be made in such cases when the person
shall have been adjudged to be liable for negligence or misconduct to
the Registrant unless deemed otherwise by the court. Indemnifications
are to be made by a majority vote of a quorum of disinterested directors
or the written opinion of independent counsel or by the shareholders or
by the court. The Registrant's Code of Regulations extends such
indemnification.
Item 16. Exhibits and Financial Statement Schedules.
Exhibit Description of Document
Number
-------- ----------------------------------------------------------
2 Agreement and Plan of Acquisition and Reorganization
dated December 9, 1994, as amended, as incorporated by
reference to Amendment No. 1 to a Registration Statement
on Form S-4 filed by American Premier Group, Inc. on
January 20, 1995, Registration No. 33-56813.
<PAGE>
4 Form of Indenture dated as of March 25, 1994, between
the Company and Star Bank, N.A., as Trustee relating to
the 9-3/4% Debentures due April 20, 2004, as
incorporated by reference to Amendment No. 1 to a Form
T-3 filed by the Company on March 10, 1994, File No. 22-
22177.
5 Opinion of Keating, Muething & Klekamp.
12.1 Computation of ratio of earnings to fixed charges for
the six months ended June 30, 1995 and 1994.
12.2 Computation of ratio of earnings to fixed charges for
1994, 1993, 1992, 1991 and 1990 is incorporated by
reference to AFC's 1994 Form 10-K.
23.1 Consents of Independent Auditors.
23.2 Consent of Keating, Muething & Klekamp (Contained on
Exhibit 5).
24 Power of Attorney (contained on the signature page).
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective amendment to this
Registration Statement to include any material information
with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-
effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
II - 2
<PAGE>
(b) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person
of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) That, for purposes of determining any liability
under the Securities Act, each filing of the Registrant's Annual Report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II - 3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the
Company certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Cincinnati, State
of Ohio, as of the 13th day of October, 1995.
AMERICAN FINANCIAL CORPORATION
By: Carl H. Lindner
---------------------------------------
Carl H. Lindner
Chairman of the Board
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person below whose
signature is preceded by an (*) hereby constitutes and appoints Fred J.
Runk and James C. Kennedy, or either of them, his true and lawful
attorney and agent, to do any and all acts and instruments for him and
in his name in the capacity indicated below, which said attorneys and
agents, or either of them, may deem necessary or advisable to enable
American Financial Corporation to comply with the Securities Act of
1933, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement,
including specifically, but without limitation, power and authority to
sign amendments (including post effective amendments).
Signature Capacity Date
* Carl H. Lindner Director October 13, 1995
----------------------------
Carl H. Lindner
* Carl H. Lindner III Director October 13, 1995
----------------------------
Carl H. Lindner III
* S. Craig Lindner Director October 13, 1995
----------------------------
S. Craig Lindner
II - 4
<PAGE>
* Keith E. Lindner Director October 13, 1995
----------------------------
Keith E. Lindner
* James E. Evans Director October 13, 1995
----------------------------
James E. Evans
Fred J. Runk Vice President October 13, 1995
----------------------------- and Treasurer
Fred J. Runk (Principal Accounting
and Financial Officer)
II - 5
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Document
2* Agreement and Plan of Acquisition and
Reorganization dated December 9, 1994, as
amended, as incorporated by reference to
Amendment No. 1 to a Registration Statement
on Form S-4 filed by American Premier
Group, Inc. on January 20, 1995,
Registration No. 33-56813.
4* Form of Indenture dated as of March 25,
1994, between American Financial
Corporation and Star Bank, N.A., as Trustee
relating to the 9-3/4% Debentures due April
20, 2004, as incorporated by reference to
Amendment No. 1 to a Form T-3 filed by the
Company on March 10, 1994, File No. 22-
22177.
5 Opinion of Keating, Muething & Klekamp.
12.1 Computation of ratio of earnings to fixed
charges for the six months ended June 30,
1995 and 1994.
12.2* Computation of ratio of earnings to fixed
charges for 1994, 1993, 1992, 1991 and 1990
is incorporated by reference to AFC's 1994
Form 10-K.
23.1 Consents of Independent Auditors.
23.2 Consent of Keating, Muething & Klekamp
(Contained on Exhibit 5).
24 Power of Attorney (contained on the
signature page).
*Incorporated by reference as indicated.
II - 6
<PAGE>
EXHIBIT 5
Keating, Muething & Klekamp
One East Fourth Street
Cincinnati, Ohio 45202
October 16, 1995
American Financial Corporation
One East Fourth Street
Cincinnati, Ohio 45202
Ladies and Gentlemen:
We have acted as your counsel in connection with the
preparation of a Registration Statement on Form S-3 filed by the Company
with the Securities and Exchange Commission on October 16, 1995. The
Registration Statement relates to the offering of $50,000,000 aggregate
principal amount of the Company's 9-3/4% Debentures due April 20, 2004
(the "Debentures") by the holders thereof.
In connection with this opinion, we have examined and are
familiar with originals or copies, certified or otherwise identified to
our satisfaction, of such documents as we have deemed necessary or
appropriate as a basis for the opinion set forth below, including (i)
the Registration Statement (together with the form of preliminary
prospectus forming a part thereof (the "Prospectus")), in the form filed
by the Company with the Commission, (ii) the Indenture dated as of March
24, 1994 between the Company and Star Bank, National Association, as
Trustee (the "Indenture"), (iii) the form of the Debentures issuable
under the Indenture, (iv) the Articles of Incorporation and Code of
Regulations of the Company, each as amended to the date hereof, and (v)
resolutions of the Executive Committee of the Board of Directors of the
Company relating to the filing of the Registration Statement and the
issuance of the Debentures. In our examination, we have assumed the
legal capacity of all natural persons, the genuineness of all
signatures, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the authenticity
of the originals of such latter documents. As to any facts material to
the opinion expressed herein that were not independently established or
verified, we have relied upon oral or written statements and
representations of officers and other representatives of the Company and
others.
Members of our firm are admitted to the bar in the State of
Ohio, and we do not express any opinion as to the laws of any other
jurisdiction other than the laws of the United States of America and the
General Corporation Laws of the State of Ohio.
II - 7
<PAGE>
Based upon and subject to the foregoing, we are of the
opinion that the Debentures constitute valid and binding obligations of
the Company, entitled to the benefits provided in the Indenture and
enforceable against the Company in accordance with their terms, except
to the extent that enforcement thereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
We hereby consent to the reference to our firm under the
heading "Legal Matters" in the Prospectus and the filing of this opinion
as an exhibit to the Registration Statement.
Very truly yours,
KEATING, MUETHING & KLEKAMP
By: Gary P. Kreider
----------------------------------
Gary P. Kreider
II - 8
<PAGE>
EXHIBIT 12.1
<TABLE>
<CAPTION>
AMERICAN FINANCIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND FIXED CHARGES AND PREFERRED DIVIDENDS
(Dollars in Thousands)
Six Months Ended
June 30,
---------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Pre-tax income $62,889 $50,228
Minority interest in subsidiaries having fixed charges 6,366 3,062
Less undistributed equity in (earnings) losses of investees (28,993) 8,489
Fixed charges:
Interest expense 65,934 58,677
Debt discount and expense 549 602
One-third of rentals 2,607 2,347
--------- ---------
EARNINGS $109,352 $123,405
========= =========
Fixed charges:
Interest expense $65,934 $58,677
Debt discount and expense 549 602
One-third of rentals 2,607 2,347
--------- ---------
FIXED CHARGES $69,090 $61,626
========= =========
Fixed charges and preferred dividends:
Fixed charges - per above $69,090 $61,626
Preferred dividends 12,699 12,913
--------- ---------
FIXED CHARGES AND PREFERRED DIVIDENDS $81,789 $74,539
========= =========
Ratio of Earnings to Fixed Charges 1.58 2.00
==== ====
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends 1.34 1.66
==== ====
</TABLE>
II - 9
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of American
Financial Corporation for the registration of $50 million principal
amount of its 9-3/4% Debentures due April 20, 2004 and to the
incorporation by reference therein of our report dated March 28, 1995,
with respect to the consolidated financial statements and schedules of
American Financial Corporation included in its Annual Report (Form 10-K)
for the year ended December 31, 1994, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Cincinnati, Ohio
October 13, 1995
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement on Form S-3 of American Financial Corporation, for the
registration of its 9-3/4% Debentures due April 20, 2004, of (a) the
report of Deloitte & Touche LLP dated February 15, 1995 (March 23, 1995
with respect to the acquisition of American Financial Corporation as
discussed in Note 2 to the financial statements) relating to the
consolidated financial statements of American Premier Underwriters, Inc.
and (b) the report of Deloitte & Touche dated February 18, 1994 relating
to the consolidated financial statements of General Cable Corporation,
both appearing in the American Financial Corporation Annual Report on
Form 10-K for the year ended December 31, 1994, and to the reference to
Deloitte & Touche LLP and Deloitte & Touche under the heading "Experts"
in the Prospectus, which is part of such Registration Statement.
DELOITTE & TOUCHE LLP
Cincinnati, Ohio
October 13, 1995
II - 10
