SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 29, 2000
GREAT AMERICAN FINANCIAL RESOURCES, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-11632 06-1356481
(State of other Jurisdiction (Commission (IRS Employer
Of Incorporation) File Number Identification. No)
250 East Fifth Street
Cincinnati, OH 45202 45202
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (513)333-5300
American Annuity Group, Inc.
(Former Name or Former Address, if Changed Since Last Report)
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5.Other Events.
On June 29, 2000, the Registrant issued a press release with respect to
the preliminary settlement of certain class action litigation and a charge
to be included in the Registrant's second quarter earnings for liabilities
related to various litigation matters. A copy of such release is attached
hereto as Exhibit 7(c)(1).
Item 7.Financial Statements, Pro Forma Financial Information and Exhibits.
(c)(1) Press Release dated June 29, 2000
<PAGE>
EXHIBIT 7(c)(1)
FOR IMMEDIATE RELEASE
For: Great American Financial Resources, Inc. Contact: Mark F. Muething
250 E. Fifth Street Executive Vice President
Cincinnati, OH 45202 513-333-5515
Web Site: http://www.gafri.com
GREAT AMERICAN FINANCIAL RESOURCES REACHES PRELIMINARY AGREEMENT TO SETTLE
CLASS ACTION AND WILL TAKE SPECIAL CHARGE
CINCINNATI, OH, June 29, 2000 Great American Financial Resources, Inc.
(NYSE:GFR) today announced that it has reached a preliminary agreement to
settle a class action lawsuit brought against the Company's subsidiary,
Great American Life Insurance Company. In the action, which was filed in
state court in Cincinnati in February 1999, the plaintiffs alleged on behalf
of a group of current and former GALIC policyholders, that GALIC had not
properly administered the annuitization feature on a group of policies by
not permitting the tax-free transfer of the annuity value of such annuities
to other product providers, without the imposition of a surrender charge,
and had credited interest on policies in a manner not consistent with the
terms of the policies and the marketing materials. The Company has denied
that it failed to abide by any terms of its policies.
In the proposed settlement, GALIC has agreed (i) to create a fund against
which certain former policyowners who were not permitted to annuitize their
policies can submit claims for all or a portion of their surrender charges
and payment of additional interest, (ii) to make a one-time lump-sum credit
of additional interest to existing policyholders holding fixed rate
annuities (with certain minor exceptions) whose policies remain in force one
year after the effective date of the settlement, and (iii) to make a one-
time offer to certain annuity holders to allow the transfer of all or a
portion of their existing two-tier annuity to a single-tier market based
annuity issued by GALIC or another of the Company's subsidiaries (subject to
proration). The Company expects that the total cost of the settlement will
be $22 - $25 million. The settlement is subject to the parties reaching a
definitive agreement and Court approval of the terms of the settlement.
Policyholders will be provided with notice of the proposed settlement within
the next several months.
-more-
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S. Craig Lindner, President and CEO of GAFRI, commented, "Although we
continue to believe that GALIC's actions have consistently been in
accordance with the terms of its policies and applicable law, we recognized
that defending this type of action would require us to devote significant
resources. We are pleased that in this settlement we are able to provide
value to our policyholders through increased credits to their current
annuities and through a conversion program."
The Company's earnings for the second quarter will include a charge of up to
$0.50 per share after tax for liabilities related to various litigation in
which the Company is a defendant, most significant of which is the
settlement of the above mentioned class action. The balance of the charge
is for other litigation matters, including an adverse jury verdict rendered
in a case in Dallas County, Texas which the Company intends to appeal. The
charge represents amounts that the Company has already agreed to pay and
estimates of the ultimate liability in cases not yet finalized.
****
Through its subsidiaries, GAFRI markets traditional fixed, equity-indexed
and variable annuities and a variety of life, supplemental health and long-
term care insurance.
The Private Securities Litigation Reform Act of 1995 encourages corporations
to provide investors with information about the Company's anticipated
performance and provides protection from liability if future results are not
the same as management's expectations. This document contains certain
forward-looking statements that are based on assumptions which management
believes are reasonable but, by their nature, inherently uncertain. Future
results could differ materially from those projected. Factors that could
cause such differences include, but are not limited to: changes in economic
conditions, regulatory actions and competitive pressures. GAFRI undertakes
no obligation to update any forward-looking statements.
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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 hereunto duly authorized.
GREAT AMERICAN FINANCIAL RESOURCES, INC.
Date: June 29, 2000 By: William J. Maney
Executive Vice President
And Chief Financial Officer
