Edgar Filing: AMERICAN FINANCIAL GROUP INC

DEF 14A

SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12

AMERICAN FINANCIAL GROUP, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

Title of each class of securities to which transaction applies:

Aggregate number of securities to which transaction applies:

Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined)

Proposed maximum aggregate value of transaction:

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identity the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:

AMERICAN FINANCIAL GROUP, INC.
[LOGO]

One East Fourth Street
Cincinnati, Ohio 45202

----------------------------------------

Notice of Annual Meeting of Shareholders
and Proxy Statement

----------------------------------------

To be Held on June 17, 2002

Dear Shareholder:

We invite you to attend our Annual Meeting of Shareholders on Monday,
June 17, 2002, in Cincinnati, Ohio. At the meeting, you will hear a report on
our operations and have an opportunity to meet your Company's directors and
executives.

This booklet includes the formal notice of the meeting and the proxy
statement. The proxy statement tells you more about the agenda and procedures
for the meeting. It also describes how your Board of Directors operates and
provides information about the director candidates.

All shareholders are important to us. We want your shares to be
represented at the meeting and urge you either to use our telephone voting
system or promptly to complete, sign, date and return your proxy form.

Sincerely,

/s/Carl H. Lindner
--------------------------------
Carl H. Lindner
Chairman of the Board and
Chief Executive Officer

Cincinnati, Ohio
April 30, 2002

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF AMERICAN FINANCIAL GROUP, INC.
--------------------------------------------------------------------------------

Date: Monday, June 17, 2002

Time: 10:30 a.m. Eastern Daylight Savings Time

Place: The Town Hall
14th Floor -- 580 Building
580 Walnut Street
Cincinnati, Ohio

Purpose: o Elect Directors
o Conduct other business if properly raised

Record Date: April 23, 2002 - Shareholders listed in the records of the
Company or its agents on that date are entitled to receive
notice of and to vote at the meeting.

Mailing Date: The approximate mailing date of this proxy statement and
accompanying proxy form is April 30, 2002.

Your vote is important. Whether or not you attend the meeting, you may vote your
shares (a) using the toll-free telephone voting system described on page 1
below, or (b) by mailing a signed proxy form, which is the bottom portion of the
enclosed perforated form. If you do attend the meeting, you may either vote by
proxy or revoke your proxy and vote in person. You may also revoke your proxy at
any time before the vote is taken at the meeting by written revocation, using
the telephone voting system or by submitting a later-dated proxy form.

- i -

Table Of Contents
-----------------

Page
----

GENERAL INFORMATION................................ 1

ELECTION OF DIRECTORS.............................. 2

PRINCIPAL SHAREHOLDERS............................. 4

MANAGEMENT......................................... 5

COMPENSATION....................................... 7

COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS.. 13

INDEPENDENT AUDITORS............................... 14

NOMINATIONS AND SHAREHOLDER PROPOSALS.............. 15

REQUESTS FOR FORM 10-K............................. 15

- ii -

GENERAL INFORMATION

Record Date; Shares Outstanding

As of April 23, 2002, the record date for determining shareholders
entitled to notice of and to vote at the meeting, the Company had 67,298,386
shares of common stock deemed outstanding and eligible to vote. This number does
not include 20,029,294 shares held by subsidiaries of AFG. Under Ohio law,
shares held by subsidiaries are not entitled to vote and are therefore not
considered to be outstanding for purposes of the meeting. Each share of
outstanding common stock is entitled to one vote on each matter to be presented
at the meeting. Abstentions (including instructions to withhold authority to
vote for one or more nominees) and broker non-votes are counted for purposes of
determining a quorum but will not be cast with respect to any item voted on at
the meeting. As a result, abstentions and broker non-votes will have no effect
on the outcome of any matter voted on at the meeting.

Cumulative Voting

Shareholders have cumulative voting rights in the election of directors
and one vote per share on all other matters. Cumulative voting allows a
shareholder to multiply the number of shares owned on the record date by the
number of directors to be elected and to cast the total for one nominee or
distribute the votes among the nominees as the shareholder desires. Nominees who
receive the greatest number of votes will be elected. In order to invoke
cumulative voting, notice of cumulative voting must be given in writing to the
Secretary of the Company not less than 48 hours before the time fixed for the
holding of the meeting.

Proxies and Voting Procedures

Registered shareholders may vote by using a toll-free telephone number,
by completing a proxy form and mailing it to the proxy tabulator, or by
attending the meeting and voting in person. The telephone voting facilities will
open on May 1, 2002, and close at 9:00 a.m. Eastern Daylight Savings Time on the
meeting date. The telephone voting facilities are open Monday through Friday
from 8:00 a.m. until 10:30 p.m. and on Saturdays from 8:00 a.m. until 4:30 p.m.
Eastern Daylight Savings Time. The telephone voting procedures are designed to
authenticate shareholders by use of a proxy control number and personal
identification number ("PIN") to allow shareholders to confirm that their
instructions have been properly recorded.

Shareholders whose shares are held in the name of a broker, bank or
other nominee should refer to the proxy card or the information forwarded by
such broker, bank or other nominee to see what voting options are available.

To vote by telephone, shareholders should call 1-877-298-0570,
toll-free, using any touch-tone telephone and have their proxy form at hand.
Shareholders will be asked to enter the proxy control number and PIN, then
follow simple recorded instructions. To vote by mail, shareholders should
complete and sign the bottom portion of the proxy form and return only that
portion to the proxy tabulator.

Solicitation of proxies through the mail, in person and otherwise, is
being made by management at the direction of AFG's Board of Directors, without
additional compensation. AFG will pay all costs of soliciting proxies. In
addition, AFG will request brokers and other custodians, nominees and
fiduciaries to forward proxy soliciting material to the beneficial owners of
shares held of record by such persons, and AFG will reimburse them for their
expenses.

The execution of a proxy or vote by phone does not affect the right to
vote in person at the meeting, and a proxy or vote by phone may be revoked by
the person giving it prior to the exercise of the powers conferred by it. A
shareholder may revoke a prior vote by writing to the Secretary of AFG at the
Company's principal offices or by properly executing and delivering a proxy
bearing a later date (or recording a later telephone vote). In addition, persons
attending the meeting in person may withdraw their proxies.

- 1 -

If a choice is specified on a properly executed proxy form, the shares
will be voted accordingly. If a proxy form is signed without a preference
indicated, those shares will be voted "FOR" the election of the eight nominees
proposed by the Board of Directors. The authority solicited by this Proxy
Statement includes discretionary authority to cumulate votes in the election of
directors. If any other matters properly come before the meeting or any
adjournment thereof, each properly executed proxy form will be voted in the
discretion of the proxies named therein.

Adjournment and Other Matters

Approval of a motion for adjournment or other matters brought before
the meeting requires the affirmative vote of a majority of the shares voting at
the meeting. Management knows of no other matters to be presented at the meeting
other than those stated in this document.

ELECTION OF DIRECTORS

The Board of Directors oversees the management of the Company on your
behalf. The Board reviews AFG's long-term strategic plans and exercises direct
decision-making authority in key areas such as choosing the Chief Executive
Officer, setting the scope of his authority to manage the Company's business day
to day, and evaluating management's performance. The Board met 4 times last
year.

The Board of Directors has nominated eight individuals to hold office
until the next annual meeting of Shareholders and until their successors are
elected and qualified. If any of the nominees should become unable to serve as a
director, the proxies will be voted for any substitute nominee designated by the
Board of Directors but, in any event, no proxy may be voted for more than eight
nominees. The eight nominees who receive the greatest number of votes will be
elected.

The nominees for election to the Board of Directors are:

Carl H. Lindner
Age 82
Director since 1959

(Chairman of the Executive Committee) Mr. Lindner is the Chairman of the Board
and Chief Executive Officer of the Company and American Financial
Corporation ("AFC"), a diversified financial services subsidiary of the
Company. He is Chairman of the Board of Directors of Great American
Financial Resources, Inc., an 83%-owned subsidiary of AFC that markets
tax-deferred annuities principally to employees of educational institutions
and offers life and health insurance products, and a director of Chiquita
Brands International, Inc., a worldwide marketer and producer of bananas
and other food products. Mr. Lindner is the father of Carl H. Lindner III,
S. Craig Lindner and Keith E. Lindner.

Keith E. Lindner
Age 42
Director since 1981

(Member of the Executive Committee) For more than five years, Mr. Lindner has
served as Co-President and a director of the Company. From March 1997 until
March 2002, Mr. Lindner was Vice Chairman of the Board of Directors of
Chiquita. For more than five years prior to that time, Mr. Lindner had been
President and Chief Operating Officer and a director of Chiquita. Mr.
Lindner is also a director of AFC.

Carl H. Lindner III
Age 48
Director since 1980

(Member of the Executive Committee) For more than five years, Mr. Lindner has
served as Co-President and a director of the Company. For over ten years,
Mr. Lindner has been principally responsible for the Company's property and
casualty insurance operations. Mr. Lindner is also a director of AFC.

S. Craig Lindner
Age 47
Director since 1979

(Member of the Executive Committee) For more than five years, Mr. Lindner has
served as Co-President and a director of the Company. He is also President
and a director of Great American Financial Resources, Inc. Mr. Lindner is
also President of American Money Management Corporation, a subsidiary that
provides investment services for the Company and its affiliated companies.
Mr. Lindner is also a director of AFC.

- 2 -

Theodore H. Emmerich
Age 75
Director since 1988

(Chairman of the Audit Committee; Member of the Compensation Committee) Prior to
his retirement in 1986, Mr. Emmerich was managing partner of the Cincinnati
office of the independent accounting firm of Ernst & Whinney. He is also a
director of AFC and Summit Mutual Funds, Inc.

James E. Evans
Age 56
Director since 1985

For more than five years, Mr. Evans has served as Senior Vice President and
General Counsel of the Company and AFC. Mr. Evans is also a director of
AFC.

William R. Martin
Age 73
Director since 1994

(Chairman of the Compensation Committee; Member of the Audit Committee) During
the past five years, Mr. Martin has been Chairman of the Board of MB
Computing, Inc., a computer software and services company. Mr. Martin is
also a director of Great American Financial Resources and AFC.

William W. Verity
Age 43
Director Nominee

Mr. Verity has been President of Veritas Asset Management, LLC, an investment
management company, since January 1, 2002, and prior thereto, he was a
partner of Pathway Guidance L.L.C., an executive consulting firm, since
October 2000. For more than five years previously, Mr. Verity was Chairman
and Chief Executive Officer of ENCOR Holdings, Inc., a developer and
manufacturer of plastic molded components. From 1994 until March 2002, he
was an independent director of Chiquita.

All of the nominees other than William W. Verity were elected directors
at the last annual meeting of shareholders of the Company held on May 24, 2001.
Mr. Verity has been nominated to take the board seat and Compensation and Audit
Committee memberships of Mr. Thomas M. Hunt, who is not standing for reelection
at the meeting. See "Management" and "Compensation" below for information
concerning the background, securities holdings, remuneration and other matters
relating to the nominees.

In March 2002, Chiquita completed a comprehensive financial
restructuring that included a prepackaged plan of reorganization filed in
November of the prior year under Chapter 11 of the Bankruptcy Code. Carl H.
Lindner and Keith E. Lindner were executive officers of Chiquita at the time of
the bankruptcy filing.

The Board of Directors recommends that shareholders vote FOR the
election of these eight nominees as directors.

- 3 -

PRINCIPAL SHAREHOLDERS

The following shareholders are the only persons known by the Company to
own beneficially 5% or more of its outstanding common stock as of March 31,
2002:

--------------------------------------------------------------------------------------------------------------------
Amount and Nature of Beneficial Ownership
---------------------------------------------------------
Name and Address Obtainable
Of Common Stock upon Exercise of
Beneficial Owner Held (a) Options (b) Total Percent of Class
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
Carl H. Lindner
One East Fourth Street 9,754,275 (d) - 9,754,275 14.5%
Cincinnati, Ohio 45202
--------------------------------------------------------------------------------------------------------------------
Carl H. Lindner III
One East Fourth Street 5,619,645 (e) 536,272 6,155,917 9.1%(c)
Cincinnati, Ohio 45202
--------------------------------------------------------------------------------------------------------------------
S. Craig Lindner
One East Fourth Street 5,619,645 (f) 536,272 6,155,917 9.1%(c)
Cincinnati, Ohio 45202
--------------------------------------------------------------------------------------------------------------------
Keith E. Lindner
250 East Fifth Street 5,619,645 (g) 536,272 6,155,917 9.1%(c)
Cincinnati, Ohio 45202
--------------------------------------------------------------------------------------------------------------------
The American Financial
Group, Inc. Retirement 8,280,077 - 8,280,077 12.3%
and Savings Plan (h)
One East Fourth Street
Cincinnati, Ohio 45202
--------------------------------------------------------------------------------------------------------------------

(a) Unless otherwise noted, the holder has sole voting and dispositive
power with respect to the shares listed.

(b) Represents shares of common stock that may be acquired within 60 days
of March 31, 2002 through the exercise of options granted under the
Company's Stock Option Plan. The Lindner family members listed above
hold options (both vested and unvested) to purchase the following
numbers of shares of common stock:

Carl H. Lindner.................... 0
Keith E. Lindner................... 696,272
Carl H. Lindner III................ 696,272
S. Craig Lindner................... 696,272

(c) The percentages of outstanding shares of common stock beneficially
owned (within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934) by Carl H. Lindner III, S. Craig Lindner and Keith E.
Lindner are 8.1%, 7.9% and 11.2%, respectively, after attributing the
shares held in various trusts for the benefit of the minor children of
S. Craig Lindner and Carl H. Lindner III (for which Keith E. Lindner
acts as trustee with voting and dispositive power) to Keith E.
Lindner.

(d) Includes 1,544,402 shares held by his spouse and 252,378 shares held in
a charitable foundation over which Mr. Lindner has sole voting and
dispositive power but no pecuniary interest. Excludes 1,951,123 shares
held in a trust for the benefit of his family for which a third party
acts as trustee with voting and dispositive power.

(e) Includes 19,826 shares held by his spouse individually or in a trust
over which she has voting and dispositive power, 1,000,000 shares held
by a limited liability company over which shares he holds dispositive
but not voting power, and 661,864 shares which are held in various
trusts for the benefit of his minor children for which Keith E. Lindner
acts as trustee with voting and dispositive power.

(f) Includes 64,027 shares held by his spouse as custodian for their minor
children or in a trust over which she has voting and dispositive power,
12,027 shares held by a dependent child, 1,000,000 shares held by a
limited liability company over which shares he holds dispositive but
not voting power, and 776,910 shares which are held in various trusts
for the benefit of his minor children for which Keith E. Lindner acts
as trustee with voting and dispositive power.

- 4 -

(g) Includes 341 shares held in a trust over which his spouse shares voting
and dispositive power with an individual not affiliated with the
Company, 2,226 shares held in a trust over which he shares voting and
dispositive power with an individual not affiliated with the Company,
and 1,500,000 shares held by a limited liability company over which
shares he holds dispositive but not voting power, but excludes
1,438,774 shares (described in footnotes (e) and (f) above) which are
held in various trusts for the benefit of the minor children of his
brothers, Carl H. Lindner III and S. Craig Lindner, over which Keith E.
Lindner has sole voting and dispositive power but no pecuniary
interest.

(h) The members of the Administrative Plan Committee of the American
Financial Group, Inc. Retirement and Savings Plan (the "RASP"), Sandra
W. Heimann and Thomas E. Mischell, direct the voting of the securities
held by the RASP. Both of the members of such Committee are executives
of the Company.

Carl H. Lindner, S. Craig Lindner, Carl H. Lindner III, Keith E.
Lindner and trusts for their benefit (collectively, the "Lindner Family") were
the beneficial owners of approximately 43.8% of the Company's common stock at
March 31, 2002. The Lindner Family may be deemed to be controlling persons of
the Company.

MANAGEMENT

The directors, nominees and executive officers of the Company are:

Director or
Executive
Age(1) Position Since
-------------------------------------------------------------------------------
Carl H. Lindner 82 Chairman of the Board and Chief
Executive Officer 1959
S. Craig Lindner 47 Co-President and a Director 1979
Keith E. Lindner 42 Co-President and a Director 1981
Carl H. Lindner III 48 Co-President and a Director 1980
Theodore H. Emmerich 75 Director 1988
James E. Evans 56 Senior Vice President and General
Counsel and a Director 1976
Thomas M. Hunt (2) 78 Director 1982
William R. Martin 72 Director 1994
William W. Verity 43 Nominee ----
Keith A. Jensen 51 Senior Vice President 1999
Thomas E. Mischell 54 Senior Vice President - Taxes 1985
Fred J. Runk 59 Senior Vice President and Treasurer 1978
-------------------------
(1) As of March 31, 2002.
(2) Mr. Hunt has informed the Company that he will not stand for reelection at
the meeting. He is currently a member of the Compensation and Audit
Committees. During the past five years, Mr. Hunt has been Chairman of the
Board of Hunt Petroleum Corporation, an oil and gas production company. He
is also a director of AFC.

Keith A. Jensen was named a Senior Vice President of the Company in
February 1999. He served as a Senior Vice President of Great American Financial
Resources from February 1997 until he was named Executive Vice President of that
company in May 1999.

Thomas E. Mischell has served as Senior Vice President - Taxes of the
Company for over five years.

Fred J. Runk has served as Senior Vice President and Treasurer of the
Company for more than five years.

- 5 -

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires AFG's executive officers,
directors and persons who own more than ten percent of AFG's common stock to
file reports of ownership with the Securities and Exchange Commission and to
furnish AFG with copies of these reports. The Company believes that all filing
requirements were met during 2001.

Securities Ownership

The following table sets forth information, as of March 31, 2002,
concerning the beneficial ownership of equity securities of the Company and its
subsidiaries by each director, nominee for director, the executive officers
named in the Summary Compensation Table (see "Compensation" below) and by all of
these individuals as a group. Such information is based on data furnished by the
persons named. Except as set forth in the following table, no director or
executive officer beneficially owned 1% or more of any class of equity security
of the Company or any of its subsidiaries outstanding at March 31, 2002. Unless
otherwise indicated, the persons named have sole voting and dispositive power
over the shares reported.

Amount and Nature of Beneficial Ownership (a)
-------------------------------------------------
Shares of Common Stock
Name of Shares of Common Obtainable on Exercise
Beneficial Owner Stock Held of Options (b)
------------------------- ---------------- ---------------------------

Carl H. Lindner (c) 9,754,275 (d) 0
Carl H. Lindner III (c) 5,619,645 (e) 536,272
S. Craig Lindner (c) 5,619,645 (f) 536,272
Keith E. Lindner (c) 5,619,645 (g) 536,272
Theodore H. Emmerich 15,310 11,591
James E. Evans 119,050 266,000
Thomas M. Hunt 16,969 11,591
William R. Martin 39,371 13,500
William W. Verity -0- -0-

All directors, nominees and
executive officers as a
group (12 persons)(c) 27,142,370 2,308,498

a) Does not include the following ownership interests in subsidiaries of
the Company: Messrs. Emmerich, Evans, Hunt, S.C. Lindner and Martin,
and all directors and executive officers as a group beneficially own
1,561; 11,138; 382; 115,873; 11,271 and 273,226 shares, respectively,
of the common stock of Great American Financial Resources. Mr. Martin
and all directors and executive officers as a group beneficially own
40,126 (1.4%) and 61,870 shares (2.1%), respectively, of the preferred
stock of AFC.

(b) Consists of shares of common stock purchasable within 60 days of March
31, 2002 through the exercise of market options and the vested portion
of stock options granted under the Company's Stock Option Plan.

(c) The shares set forth for Carl H. Lindner, Carl H. Lindner III, S.C.
Lindner and Keith E. Lindner and all directors and officers as a group
constituted 14.5%, 9.1%, 9.1%, 9.1% and 42.3%, respectively, of the
common stock outstanding at March 31, 2002. For information as to the
percentage of outstanding shares beneficially owned (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934) by such
Lindner Family members, see "Principal Shareholders."

- 6 -

COMPENSATION

The following table summarizes the aggregate cash compensation for
2001, 2000 and 1999 of the Company's Chairman of the Board and Chief Executive
Officer and its four other most highly compensated executive officers during
2001 (the "Named Executive Officers"). Such compensation includes amounts paid
by AFG and its subsidiaries and certain affiliates during the years indicated.

SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation
------------------------------------ ---------------------
Name Other Annual Securities Underlying All Other
And Compensation Options Granted Compensation
Principal Position Year Salary (a) Bonus (b) (c) (# of Shares) (d) (e)
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
Carl H. Lindner 2001 $950,000 $415,600 $47,000 --- $48,000
Chairman of the Board and 2000 950,500 0 54,000 --- 44,000
Chief Executive Officer 1999 968,000 600,000 65,000 --- 68,000
-------------------------------------------------------------------------------------------------------------------
Keith E. Lindner 2001 950,000 415,600 26,000 --- 29,400
Co-President 2000 950,500 0 35,000 110,000 34,000
1999 968,000 600,000 56,000 50,000 44,000
-------------------------------------------------------------------------------------------------------------------
Carl H. Lindner III 2001 950,000 415,600 74,000 --- 30,400
Co-President 2000 950,500 0 79,000 110,000 29,000
1999 968,000 600,000 106,000 50,000 34,000
-------------------------------------------------------------------------------------------------------------------
S. Craig Lindner 2001 950,000 415,600 106,000 --- 30,400
Co-President 2000 950,500 0 98,000 110,000 28,000
1999 968,000 600,000 75,000 50,000 33,000
-------------------------------------------------------------------------------------------------------------------
James E. Evans 2001 950,000 400,000 4,000 --- 33,400
Senior Vice President and 2000 950,500 290,000 500 100,000 30,000
General Counsel 1999 968,000 580,000 2,000 45,000 36,000

-------------------------------------------------------------------------------------------------------------------

(a) This column includes salaries paid by Chiquita to Keith E. Lindner of
$55,000 in 2001, $47,500 in 2000, and $50,000 in 1999, and to Carl H.
Lindner of $70,000 in 2001, $62,500 in 2000 and $50,000 in 1999.

(b) Bonuses are for the year shown, regardless of when paid. Approximately
one-fourth of the bonuses for each individual was paid in shares of
AFG common stock.

- 7 -

(c) This column includes amounts for personal homeowners and automobile
insurance coverage, and the use of corporate aircraft and automobile
service as follows.
Aircraft &
Name Year Insurance Automobile
-------------------------------------------------------------------

Carl H. Lindner 2001 $24,000 $23,000
2000 25,000 29,000
1999 21,000 44,000

Keith E. Lindner 2001 21,000 5,000
2000 21,000 14,000
1999 42,000 14,000

Carl H. Lindner III 2001 37,000 47,000
2000 32,000 47,000
1999 29,000 77,000

S. Craig Lindner 2001 43,000 63,000
2000 44,000 54,000
1999 32,000 43,000

James E. Evans 2001 -- 4,000
2000 -- 500
1999 -- 2,000

(d) The number of options shown as granted during 2000 includes the 2001
grant, which was made in late December 2000.

(e) Includes Company or subsidiary contributions or allocations under the
(i) defined contribution retirement plans and (ii) employee savings
plan in which the following Named Executive Officers participate (and
related accruals for their benefit under the Company's benefit
equalization plan which generally makes up certain reductions caused by
Internal Revenue Code limitations in the Company's contributions to
certain of the Company's retirement plans) and Company paid group life
insurance as set forth below.

AFG Auxiliary Retirement Directors'
Name Year RASP Plan Savings Plan Fees Term Life
------------------- --------- ------------- ------------ ------------- ------------- -----------

Carl H. Lindner 2001 $16,500 $8,500 -- -- $23,000
2000 16,500 8,500 -- -- 19,000
1999 20,400 9,600 -- $15,000 23,000

Keith E. Lindner 2001 16,500 8,500 $3,400 -- 1,000
2000 16,500 8,500 8,000 -- 1,000
1999 20,400 9,600 12,000 -- 2,000

Carl H. Lindner III 2001 16,500 8,500 3,400 -- 2,000
2000 16,500 8,500 2,000 -- 2,000
1999 20,400 9,600 2,000 -- 2,000

S. Craig Lindner 2001 16,500 8,500 3,400 -- 2,000
2000 16,500 8,500 2,000 -- 1,000
1999 20,400 9,600 2,000 -- 1,000

James E. Evans 2001 16,500 8,500 3,400 -- 5,000
2000 16,500 8,500 2,000 -- 3,000
1999 20,400 9,600 2,000 -- 4,000

- 8 -

Stock Options

The table below shows stock options exercised by the Named Executive
Officers during 2001, and the number and value of unexercised options held by
them at December 31, 2001. While no options were granted to such persons in
2001, the expiration dates of certain of the options held by two of the
Company's Co-Presidents were extended to April 2005. No options were granted to
the CEO in 2000 or 2001.

AGGREGATED OPTION EXERCISES IN 2001 AND 2001 YEAR-END OPTION VALUES
--------------------------------------------------------------------------------------------------------------------

Number of Securities
Shares Underlying Value of Unexercised
Acquired on Unexercised Options In-the-Money Options
Exercise at Year End at Year End (a)
(# of Value ------------------------------------------------------------
Name Company Shares) Realized Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------------------------------------------------------

Carl H. Lindner AFG - - - - - -

Carl H. Lindner III AFG 1,091 $5,047 497,272 144,000 $329,281 $418,440

S. Craig Lindner AFG 1,091 $6,118 497,272 144,000 $336,287 $418,440

Keith E. Lindner AFG 1,091 $4,779 497,272 144,000 $331,548 $418,440

James E. Evans AFG - - 234,000 127,000 $95,100 $380,400

(a) The value of unexercised in-the-money options is calculated based on
the New York Stock Exchange closing market price of the Company's
common stock at year-end 2001. This price was $24.55 per share.

Compensation Committee Report

The Compensation Committee of the Board of Directors consists of three
directors, none of whom is an employee of the Company or any of its
subsidiaries. The Committee's functions include reviewing and making
recommendations to the Board of Directors with respect to the compensation of
the Company's senior executive officers, as defined from time to time by the
Board. The term "senior executive officers" currently includes the Chairman of
the Board and Chief Executive Officer (the "CEO") and the Co-Presidents. The
Compensation Committee has the exclusive authority to grant stock options under
the Company's Stock Option Plan to employees of the Company and its
subsidiaries, including senior executive officers.

Compensation of Executive Officers. The Company's compensation policy
for all executive officers of the Company has three principal components: annual
base salary, annual incentive bonuses and stock option grants. Before decisions
were made regarding 2001 compensation for senior executives, the Committee had
discussions with Company executives to solicit their thoughts regarding
compensation. Based in part on such discussions as well as the Committee's
review of the Company's financial results for the preceding year, the Committee
deliberated, formed its recommendations, and presented its determinations
regarding salary and bonus to the full Board for its review and approval. The
compensation decisions discussed in this report conformed with recommendations
made by the Committee, the CEO and the Co-Presidents.

Annual Base Salaries. The Committee approved annual base salaries and
salary increases for senior executive officers that were appropriate, in the
Committee's subjective judgment, for their respective positions and levels of
responsibilities. The Committee approved the 2001 salaries of the CEO and the
Co-Presidents, noting that such salaries would be the same rates in 2001 as in
2000, 1999, 1998 and the latter part of 1997.

Annual Bonuses. As was the case for the past five years, the Committee
developed an annual bonus plan for 2001 for the CEO and the Co-Presidents that
would make a substantial portion of their total compensation dependent on the
Company's performance, including achievement of pre-established earnings per
share targets. Other executive officers of the Company were included in the
annual bonus plan for 2001 by action of the Executive Committee.

- 9 -

The annual bonus plan for 2001 made 50% of each participant's annual
bonus dependent on the Company attaining certain earnings per share targets. The
other 50% is based on the Company's overall performance, as subjectively
determined by the Committee. The 2001 annual bonus plan (as in prior years)
provided that 25% of any bonuses be paid in common stock.

Under the 2001 annual bonus plan, the bonus target amount for the CEO
and each of the Co-Presidents was $950,000 with 0% to 175% of $475,000 (50% of
$950,000) to be paid depending on the Company achieving certain 2001 earnings
per share allocable to insurance operations (the "EPS Component") and 0% to 175%
of $475,000 to be paid based on the Company's overall performance, as
subjectively determined by the Committee (the "Company Performance Component").
The earnings per share target which would result in the payment of 100% of the
EPS Component bonus was set by the Committee at $1.60. In recommending the 2001
annual bonus plan to the Board for adoption, the Committee noted that no bonus
should be paid under the plan if 2001 earnings per share from insurance
operations are less than $1.20 (75% of the 2001 EPS target). Not including the
effects from the attack on the World Trade Center and an increase in reserves
for asbestos related claims, the Company reported earnings per share from
insurance operations of $1.55. The Committee noted that the annual bonus plan
provides that unusual or non-recurring items are not be included in determining
earnings allocable to insurance operations. This results in a payment to the CEO
and each of the Co-Presidents of approximately $416,000 under the EPS Component.

The Committee then evaluated the Company's performance during 2001. The
Committee considered a number of factors in discussions of such performance with
senior executives, including the Company's current status of credit ratings,
operating ratios, which were viewed positively, and net earnings and stock price
from the end of 2000 to the end of 2001 which were viewed negatively. The
Committee noted the improvement in stock price from the beginning of 2000 to the
time of its meeting to consider the 2001 annual bonus plan held in March. The
Committee agreed with management's recommendation that while a bonus under the
Company Performance Component could be justified, no bonus attributable to that
component would be paid.

The annual base salary and bonus target amounts of the CEO and the
Co-Presidents are virtually identical because the Committee reviews them as
working as a management team whose skills and areas of expertise complement each
other.

Stock Option Grants. Stock options represent an important part of the
Company's performance-based compensation system. The Committee believes that
Company shareholders' interests are well served by aligning the Company's senior
executives' interests with those of its shareholders through the grant of stock
options in addition to paying a portion of any annual bonus in common stock.
Options under the Company's Stock Option Plan are granted at exercise prices
equal to the fair market value of common stock on the date of grant and vest at
the rate of 20% per year. The Committee believes that these features provide an
optionee with substantial incentive to maximize the Company's long-term success.
Options for 55,000 shares were granted to each of the Co-Presidents and
additional options were granted to the other senior executives of the Company in
December 2000, so that the exercise price of such options would be near the
public offering of Common Stock which was completed in December 2000. While no
options were granted to such persons in 2001, the Committee determined to extend
the expiration dates of certain of the options held by two of the Company's
Co-Presidents to April 2005 to align the expiration dates of the options held by
each Co-President. No options were granted to the CEO in 2000 or 2001.

- 10 -

Members of the Compensation Committee: William R. Martin, Chairman
Theodore H. Emmerich
Thomas M. Hunt

Performance Graph

The following graph compares the cumulative total shareholder return on
the Company's common stock with the cumulative total return of the Standard &
Poor's ("S&P") 400 Midcap Index and the S&P Property-Casualty Insurance Index.
(Assumes $100 invested on December 31, 1996 in the Company's common stock and
the two indexes, including reinvestment of dividends.)

[PERFORMANCE GRAPH]
Performance Graph Index

December 31,
-------------------------------------------------
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
AFG Common Stock 100 110 122 76 80 77
S&P 400 Midcap Index 100 132 157 180 211 210
S&P Property-Casualty
Insurance Index 100 142 129 94 149 137

- 11 -

Certain Transactions

From time to time, AFG and its subsidiaries have had transactions with
affiliates. AFG believes that the financial terms of these transactions are
comparable to those that would apply to unrelated parties and are fair to AFG.

Members of the Lindner Family are the principal owners of Provident
Financial Group, Inc. ("Provident"). In 2001, AFG paid Provident $245,000 in
connection with an expense sharing arrangement for a cafeteria operated by
Provident for the employees of both companies. AFG provides security guard and
surveillance services at the main office of Provident for which Provident paid
$100,000 in 2001. Provident leases its main banking and corporate office from
AFG for which Provident paid rent of $3,125,000 in 2001. A subsidiary of
Provident leases equipment to subsidiaries of AFG for which Provident was paid
an aggregate of $805,000 during 2001.

During 2001, AFG paid the Cincinnati Reds $109,000 for tickets to
baseball games. Carl H. Lindner is the Chief Executive Officer of the Reds. In
addition, a subsidiary of AFG, and a company owned by Carl H. Lindner, Carl
H. Lindner III, Keith E. Lindner and S. Craig Lindner, are part owners of
the Reds.

In July 2000, AFG's principal insurance company subsidiary, Great
American Insurance Company, entered into a thirty-year agreement with the Reds,
pursuant to which the Reds' home stadium will be named "Great American Ball
Park" upon its expected completion in time for the 2003 baseball season. Great
American paid the Reds $2 million during 2001, and will pay the Reds
approximately $2.3 million annually over the term of the agreement. For these
payments, Great American will also receive approximately $1.3 million of premium
seating, marketing credits, and related sponsorship rights.

In 2001, an AFG subsidiary purchased a 29% interest in an aircraft for
$1.6 million (fair value as determined by independent third party) from an
entity owned by one of Carl H. Lindner's brothers. The remaining interests in
the aircraft are owned by Carl H. Lindner and his two brothers. Costs of
operating the aircraft are being borne proportionately. During 2001 and prior to
the purchase, AFG and its subsidiaries had chartered the aircraft from the same
entity. The total charges for such aircraft usage were $584,000.

In 1997, Carl H. Lindner and Great American Financial Resources, Inc.
(an 83%-owned subsidiary of AFG) purchased 51% and 49%, respectively, of the
outstanding common stock of a newly incorporated entity formed to acquire the
assets of a company engaged in the production of ethanol. In 2000, the ethanol
company repurchased the 49% interest from GAFRI for amounts which included an
$18.9 million subordinated debenture bearing interest at 12 1/4% with scheduled
repayments through 2005. The balance owed on the subordinated debenture at
year-end 2001 was $12.9 million. Another AFG subsidiary has a working capital
credit facility in place under which the ethanol company may borrow up to $10
million at a rate of prime plus 3%. There were no borrowings outstanding under
this facility in 2001. In 1998, GAFRI made a loan to the ethanol company in the
amount of $4 million, bearing interest at the rate of 14% and maturing in
September 2008.

An AFG subsidiary is the lender under a credit agreement with American
Heritage Holding Corporation, a Florida-based homebuilder which is 49% owned by
AFG and 51% owned by brothers of Carl H. Lindner. The homebuilder may borrow up
to $8 million at 13% per annum, with interest deferred and added to principal.
In January 2001, the maturity date of this loan was extended from March 31, 2001
to March 31, 2003. The highest outstanding balance owed to the AFG subsidiary
during 2001 was $8.0 million and the balance at year-end 2001 was $6.4 million.

- 12 -

Directors' Compensation

Pursuant to the Non-Employee Directors' Compensation Plan (the
"Directors' Plan"), all directors who are not officers or employees of the
Company are paid the following fees: an annual retainer of $40,000; an
additional annual retainer of $12,000 for each Board Committee on which the
non-employee director serves; and an attendance fee of $1,000 for each Board or
Committee meeting attended. Non-employee directors who become directors during
the year receive a pro rata portion of these annual retainers. The retainers and
fees to be paid under the Directors' Plan are reviewed by the Board of Directors
from time to time and are subject to change at its discretion.

In order to align further the interests of the Company's non-employee
directors with the interests of shareholders, the Directors' Plan provides that
a minimum of 50% of such directors' annual retainers are paid through the
issuance of shares of AFG common stock.

The Board of Directors has a program under which a retiring Company
director (other than an officer or employee of the Company or any of its
subsidiaries) will, if the director has met certain eligibility requirements,
receive upon retirement (in a lump sum or, if elected, in deferred payments) an
amount equal to five times the then current annual director's fee. For purposes
of this program, retirement means resignation as a Company director or not being
nominated for reelection by shareholders as a Company director. To be eligible
for the retirement benefit, a person must have served as a Company director for
at least four years while not an officer or employee of the Company or any of
its subsidiaries. In addition, a Company director will not become eligible for
the retirement benefit until reaching age 55. A director who receives a
retirement benefit must provide consulting services to the Company on request
for five years following retirement without further compensation (except
reimbursement for expenses). Under the program, a death benefit equal to the
retirement benefit will be paid (in lieu of any retirement benefit under the
program) to the designated beneficiary or legal representative of any person who
dies while serving as a Company director, whether or not eligible for a
retirement benefit at time of death. This death benefit will not be available to
a director who at any time during the two years immediately preceding death was
an officer or employee of the Company or any of its subsidiaries.

In addition to providing for the grant of stock options to key
employees, the Stock Option Plan provides for automatic annual grants of options
to each non-employee director of the Company. During 2001, each non-employee
director was granted an option under the foregoing provisions of the Stock
Option Plan to purchase 2,500 shares at an exercise price of $27.95 per share on
June 1, 2001, the exercise price being the fair market value of the Company's
common stock on the date of grant.

COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

The Company's Board of Directors held four meetings and took action in
writing ten times in 2001. The Board has an Executive Committee, an Audit
Committee and a Compensation Committee, but no Nominating Committee.

Executive Committee: The Executive Committee consists of Carl H.
Lindner (Chairman), Carl H. Lindner III, S. Craig Lindner and Keith E.
Lindner. The Committee's functions include analyzing the future development
of the business affairs and operations of the Company, including further
expansion of businesses in which the Company is engaged and acquisitions and
dispositions of businesses. With certain exceptions, the Executive Committee is
generally authorized to exercise the powers of the Board of Directors between
meetings of the Board of Directors. The Executive Committee consulted among
themselves informally many times throughout the year and took action in writing
on six occasions in 2001.

Compensation Committee: The Compensation Committee met two times and
took action in writing on three occasions in 2001.

Audit Committee. The Audit Committee met eight times in 2001.

- 13 -

Audit Committee Report

The Audit Committee is comprised of three directors, each of whom is
experienced with financial statements and two of whom have past accounting or
related financial management experience. Each of the members of the Audit
Committee is independent as defined by the New York Stock Exchange listing
standards.

The primary function of the Audit Committee is to assist the Board in
fulfilling its oversight responsibilities by reviewing the financial information
which will be provided to shareholders and others, the systems of internal
control which management has established, and the audit process. The members of
the Committee are Theodore H. Emmerich (Chairman), William R. Martin and Thomas
M. Hunt. It is expected that if elected, Mr. Verity will take the seat of Mr.
Hunt on this committee following the meeting.

Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Committee's responsibility is to monitor and oversee these
processes. Additionally, the Audit Committee recommends to the Board an
accounting firm to be engaged as the Company's independent accountants.

The Committee has met and held discussions with management and the
independent accountants. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Committee has reviewed and
discussed the consolidated financial statements with management and the
independent accountants. The Committee discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communications with Audit Committees).

The Company's independent accountants also provided to the Committee
the written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees) and disclosures
required by the Audit Committee Charter, and the Committee discussed with the
independent accountants that firm's independence.

Based on the Committee's discussions with management and the
independent accountants and the Committee's review of the representation of
management and the report of the independent accountants to the Committee, the
Committee recommended that the audited consolidated financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2001 filed with the Securities and Exchange Commission.

Members of the Audit Committee: Theodore H. Emmerich, Chairman
William R. Martin
Thomas M. Hunt

INDEPENDENT AUDITORS

The accounting firm of Ernst & Young LLP served as the Company's
independent auditors for the fiscal year ended December 31, 2001.
Representatives of that firm will attend the meeting and will be given the
opportunity to comment, if they so desire, and to respond to appropriate
questions that may be asked by shareholders. No auditor has yet been selected
for the current year because it is generally the practice of the Company not to
select independent auditors prior to the annual shareholders meeting.

Audit Fees, Financial Information Systems Design and Implementation Fees and All
Other Fees. Ernst and Young's aggregate fees for services related to the audits
of financial statements for the year ended December 31, 2001, and for quarterly
reviews within that period amounted to approximately $1.5 million. While they
were not billed separately, we estimate that fees for statutory audits for
insurance regulatory purposes and similar audit related services amounted to
approximately one-fourth of the aggregate audit fees.

- 14 -

In addition, during 2001 Ernst & Young billed approximately $161,000
for services related to actuarial reviews, approximately $88,000 for tax
services and approximately $209,000 for all other miscellaneous services. There
were no Ernst & Young fees in 2001 for financial information systems design and
implementation. The Audit Committee considered the non-audit services provided
in satisfying itself as to Ernst & Young's independence.

NOMINATIONS AND SHAREHOLDER PROPOSALS

In accordance with the Company's Code of Regulations (the
"Regulations"), the only candidates eligible for election at a meeting of
shareholders are candidates nominated by or at the direction of the Board of
Directors and candidates nominated at the meeting by a shareholder who has
complied with the procedures set forth in the Regulations. Shareholders will be
afforded a reasonable opportunity at the meeting to nominate candidates for the
office of director. However, the Regulations require that a shareholder wishing
to nominate a director candidate must have first given the Secretary of the
Company at least five and not more than thirty days prior written notice setting
forth or accompanied by (1) the name and residence of the shareholder and of
each nominee specified in the notice, (2) a representation that the shareholder
was a holder of record of the Company's voting stock and intended to appear, in
person or by proxy, at the meeting to nominate the persons specified in the
notice and (3) the consent of each such nominee to serve as director if so
elected.

The Proxy Form used by AFG for the annual meeting typically grants
authority to management's proxies to vote in their discretion on any matters
that come before the meeting as to which adequate notice has not been received.
In order for a notice to be deemed adequate for the 2003 annual meeting, it must
be received by March 16, 2003. In order for a proposal to be considered for
inclusion in AFG's proxy statement for that meeting, it must be received by
December 31, 2002.

REQUESTS FOR FORM 10-K

The Company will send, upon written request, without charge, a copy of
the Company's current Annual Report on Form 10-K to any shareholder who writes
to Fred J. Runk, Senior Vice President and Treasurer, American Financial Group,
Inc., One East Fourth Street, Cincinnati, Ohio 45202.

- 15 -

AMERICAN FINANCIAL GROUP, INC.
[LOGO]
One East Fourth Street
Cincinnati, Ohio 45202

AMERICAN FINANCIAL GROUP, INC.
Proxy for Annual Meeting

Registration Name and Address

The undersigned hereby appoints James C. Kennedy and Karl J. Grafe, and either
of them, attorneys and proxies, with the power of substitution to each, to
vote all shares of Common Stock of the Company that the undersigned may be
entitled to vote at the Annual Meeting of Shareholders of the Company to be
held on June 17, 2002 at 10:30 A.M., on the matter set forth below (and at
their discretion to cumulate votes in the election of directors if
cumulative voting is invoked by a shareholder through proper notice to the
Company), and on such other matters as may properly come before the meeting
or any adjournment thereof.

The Board of Directors recommends a vote FOR the following Proposal:

1. Proposal to Elect Directors

/ / FOR AUTHORITY to elect the / / WITHHOLD AUTHORITY to
nominees listed below (except vote for every nominee
those whose names have been listed below
crossed out)

Carl H. Lindner Carl H. Lindner III S. Craig Lindner
Keith E. Lindner Theodore H. Emmerich James E. Evans
William R. Martin William W. Verity

DATE: , 2002 SIGNATURE:
--------------------
----------------------------------------

SIGNATURE:

----------------------------------------

(if held jointly) Important: Please sign
exactly as name appears hereon indicating,
where proper, official position or
representative capacity. In case of joint
holders, all should sign.

PLEASE INDICATE YOUR VOTE ON THE PROPOSAL(S) BY MARKING THE APPROPRIATE BOX(ES)
ON THE VOTE CARD AT RIGHT. PLEASE SIGN, DATE, DETACH AND RETURN.

This proxy form is designed to enable the shareholder to detach and mail the
vote card without a return envelope. This is intended to reduce processing
costs, to maintain confidentiality, and to provide added shareholder
convenience.

Information pertaining to shareholder registration (account number and shares
held) appears only on this section of the card, which you retain.
Information on the part of the card mailed is encoded and is used solely to
enable vote tabulation.

If you have any questions about voting your shares with this form,
please call 1-800-368-3417 or 513-579-2414

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

The named proxy holders will vote the shares represented by this proxy in the
manner indicated. Unless a contrary direction is indicated, the proxy
holders will, except to the extent they exercise their discretion to
cumulate votes in the election of directors, vote such shares "FOR" the
proposals. If cumulative voting is invoked by a shareholder through proper
notice to the Company, unless a contrary direction is indicated, this proxy
will give the proxy holders authority, in their discretion, to cumulate all
votes to which the undersigned is entitled in respect of the shares
represented by this proxy and allocate them in favor of any one or more of
the nominees for director if any situation arises which, in the opinion of
the proxy holders, makes such action necessary or desirable. If any further
matters properly come before the meeting, such shares shall be voted on
such matters in accordance with the best judgment of the proxy holders.

TO VOTE BY TELEPHONE

Call TOLL-FREE using a Touch-Tone Phone

1-877-298-0570

(Cincinnati Area use 579-6707)

Follow these easy steps:

1. Review the accompanying Proxy Statement and Proxy Form and have them
nearby when you call.

2. Call the Toll Free number 1-877-298-0570 or the Cincinnati area local
number 579-6707.

3. Enter the 6 digit Proxy Number located in the gray shaded area above the
list of proposals on your proxy form.

4. Enter the 6 digit PIN Number located in the same gray shaded area.

5. Follow the recorded instructions.

Telephone voting is available Monday - Friday, 8:00 a.m. to 10:30 p.m.
Eastern Time and Saturday 8:00 a.m. to 4:30 p.m. Eastern Time.

Telephone voting will close at 9:00 a.m. Eastern Time on the meeting date.