AFG Completes Merger With Subsidiary

Cincinnati-based insurer American Financial Group, Inc. has completed its merger with its subsidiary, American Financial Corporation. The merger significantly increases AFG shareholders’ equity and simplifies the structure of the company and its subsidiaries.

Holders of over 75 percent of AFC’s shares of Series J Preferred Stock, voting at a special meeting of AFC shareholders, voted to approve the merger. As a result, AFC and its immediate parent company, AFC Holding Company, merged with and into AFG. AFC’s Series J Preferred shareholders are now entitled to receive $26 per share in common stock of AFG, along with a cash payment of 10.5 cents per share representing accrued dividends on the Series J Preferred from Nov. 1 to Nov. 20, 2003. Cash will also be paid in lieu of fractional shares of AFG common stock. The exchange rate is 1.1434 shares of AFG common stock for each share of AFC Series J Preferred.

Letter of transmittal forms are being sent to all record holders of Series J preferred stock today. Shareholders are asked to complete and return the forms to the company along with the certificate representing their shares.

In the merger, approximately $72 million of AFC preferred stock was converted into approximately 3.3 million shares of AFG common stock. As previously reported, the conversion of AFC preferred stock to AFG common equity and the elimination of deferred tax liabilities associated with AFC’s holding of AFG stock, will result in a 12 to 15 percent increase in AFG shareholders’ equity.