AFG and Subs Affirmed

January 26, 2004

Fitch Ratings affirmed the “BBB+” long-term issuer ratings of American Financial Group Inc. (AFG) and its subsidiaries American Premier Underwriters Inc. and Great American Financial Resources Inc. (GAFR). The affirmation affects $815 million worth of specific debt issuance by the companies. Additionally, Fitch Ratings affirmed the insurer financial strength ratings of AFG’s property/casualty subsidiaries and life insurance subsidiaries at “A+.” Fitch also affirmed GAFR’s trust originated preferred securities at “BBB.” The rating outlook for all ratings is stable.

AFG is a public holding company with subsidiaries engaged primarily in the sale of property/casualty insurance, life insurance and annuities. The company had total assets of $19.9 billion and total shareholders equity of $1.8 billion, as of Sept. 30, 2003.

During 2003, AFG successfully sold its personal lines property/casualty business in two separate public offerings to focus on its specialty commercial lines business. The life operations occupy a good niche in the qualified annuity market, which is typified by profitable and persistent business. The organization remains challenged to reduce financial leverage and improve expense efficiency.

AFG’s specialty lines operations have historically generated favorable underwriting results. The specialty business lines are diverse and consist of more than 20 different independently managed business units that can be grouped into the following nine categories: California workers’ compensation, inland and ocean marine, agricultural, surety and credit, collateral protection, umbrella and excess liability, commercial automobile, excess and surplus, and executive and professional liability. Overall, operating performance at AFG continues to show improvement, returning to profitability in 2002 and 2003. However, AFG’s results in 2003 include only a portion of the property/casualty personal lines operations, now a part of Infinity Property Casualty Corporation, through the equity accounting method.

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Insurance Journal West January 26, 2004
January 26, 2004
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