SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report: September 14, 1998 Commission File No. 1-
7361
(Date of earliest event reported)
AMERICAN FINANCIAL CORPORATION
Incorporated under the laws of Ohio IRS Employer
Identification No. 31-0624874
One East Fourth Street
Cincinnati, Ohio 45202
Phone: (513) 579-2121
Former name or former address, if changed since last report -
not applicable.
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AMERICAN FINANCIAL CORPORATION
FORM 8-K
Item 5. Other Events.
Please see the News Release of American Financial
Group, Inc., parent company of American Financial Corporation,
attached hereto as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Not Applicable
(b) Not Applicable
(c) Exhibit (99) - Additional Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
AMERICAN FINANCIAL CORPORATION
September 21, 1998 By: James C. Kennedy
---------------------------
James C. Kennedy
Deputy General Counsel
& Secretary
<PAGE> Exhibit 99
[AMERICAN FINANCIAL GROUP, INC. NEW RELEASE]
American Financial Group Agrees To Sell Its
Commercial Lines Division To Ohio Casualty Group
Cincinnati, Ohio - September 15, 1998 - American Financial
Group, Inc. (NYSE: AFG) announced today that its insurance
subsidiary, Great American Insurance Company, has reached a
definitive agreement to sell substantially all of its Commercial
Lines Division to Ohio Casualty Insurance Company, an insurance
subsidiary of Ohio Casualty Corporation (NASDAQ: OCAS). Under
the agreement, Great American will transfer certain commercial
lines insurance liabilities and related assets to Ohio Casualty
in exchange for $300 million in cash, plus warrants to purchase 3
million shares of Ohio Casualty common stock. Furthermore, this
transaction will enable Great American to redirect $225 million
of statutory capital and surplus, formerly dedicated to these
commercial lines operations, for other corporate purposes. AFG
will also have the opportunity to receive up to an additional $40
million based upon the retention and growth of the insurance
business being acquired by Ohio Casualty. AFG's net gain on this
transaction is expected to be in excess of $1.50 per share.
As part of the transaction, Ohio Casualty will assume
responsibility for the personnel of Great American's Commercial
Lines Division as well as the relationships with the agencies
that produced the commercial lines book of business. Great
American will continue to provide specialty and personal lines
products through its existing agency force. In addition, the
companies have agreed to a marketing agreement under which AFG
will provide specialty and nonstandard auto products through Ohio
Casualty's agency force. AFG will provide investment management
services for a portion of Ohio Casualty's portfolio. Great
American's commercial lines insurance is written primarily in 26
states with the largest states, in terms of direct written
premiums, being New York, New Jersey, North Carolina, Maryland
and Connecticut. The commercial lines being sold generated net
written premiums of approximately $330 million in 1997.
This combination will provide unique opportunities for the
commercial lines people of Great American and Ohio Casualty as
part of a larger organization. Tom Hayes, President of Great
American's Commercial Lines Division, will become Executive Vice
President and Chief Operating Officer of Ohio Casualty.
AFG Co-President, Carl H. Lindner, III stated, "We are pleased
with Ohio Casualty's decision to acquire Great American's
Commercial Lines Division. This transaction provides the
opportunity for both of our companies to more effectively pursue
our own strategic objectives. We are looking forward to having
a strategic alliance with Ohio Casualty through our new marketing
arrangements, investment management services agreement and the
opportunity to have an equity position in the company".
Mr. Lindner also stated, "AFG will continue to focus on growth
opportunities in its specialty lines and private passenger
automobile businesses. We have a meaningful market position in
each of our remaining business lines which provide an opportunity
for continuing growth and enhanced
<PAGE>
profitability. The proceeds of this sale will provide AFG with
increased financial flexibility to make strategic insurance
investments while maintaining a conservative capital structure".
Completion of the transaction, which is expected to occur in
the fourth quarter of 1998, is subject to certain conditions and
applicable regulatory approvals.
Under the agreement with Ohio Casualty, AFG will retain
liabilities for certain asbestos and environmental exposures
("A&E") relating to claims under policies written prior to the
mid-1980's. AFG's insurance subsidiaries are in the process of
reviewing their A&E reserves and expect this review to be
completed before the end of this year. While its A&E reserves at
June 30, 1998 were about $350 million, approximately 10 times the
preceding three years' average claim payments, AFG expects that
the review could indicate estimated ultimate aggregate losses as
much as two-thirds greater than that amount. Any additional A&E
reserves estimated to be required will be recorded as a special
charge upon completion of the review.
In addition to its property and casualty insurance businesses,
American Financial Group is engaged in the sale of tax-deferred
annuities and certain life and health insurance products.
This press release contains certain statements that may be
deemed to be "forward- looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements in this press
release not dealing with historical results are forward-looking
and are based on estimates, assumptions and projections. Actual
results could differ materially from those expected by AFG
depending on certain factors including but not limited to adverse
loss development in AFG's operations relating to known and
unknown events, increased price competition and other changes in
market conditions that could affect AFG's insurance operations.
