S&P’s Reacts to American Financial Group’s Plan to Offer IPO

October 14, 2002

Standard & Poor’s issued a comment on American Financial Group Inc. (AFG) (BBB/Neg/–) following the announcement of its intention to perform an initial public offering (IPO) of its personal lines agency operations through a newly formed subsidiary, Infinity Property and Casualty Corp. (Infinity).

As part of this transaction, AFG will transfer the ownership of several subsidiaries to Infinity before the IPO, including personal lines writers Atlanta Casualty Co., Infinity Insurance Co., Leader Insurance Co., and Windsor Insurance Co.

AFG is expected to maintain a 30 percent ownership in Infinity once it becomes a public company. S&P’s is currently in discussions with management and is evaluating the effect of the IPO on the ratings on American Financial Group and its subsidiaries.

Among issues to be considered are the effects on AFG in terms of financial leverage, capital adequacy, prospective earnings,
and business position. Similarly, S&P’s will evaluate the ratings effect on the AFG subsidiaries that will be transferred to Infinity.

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