AFG Proposes to Simplify Its Holding Company Structure

Cincinnati-based property/casualty insurer American Financial Group Inc. is proposing steps to simplify its corporate structure and eliminate the publicly-traded preferred stock of a subsidiary, thus converting minority interest into shareholders’ equity.

AFG owns 100 percent of the common stock and 79 percent of the voting equity securities of American Financial Corp. (AFC). AFC has one series of publicly held voting preferred stock, Series J, which represents the other 21 percent of AFC’s voting securities.

Under the proposal, AFG and AFC would merge, pursuant to which Series J preferred shareholders would receive $22 per share in common stock of the surviving corporation. All record holders of Series J Preferred on April 15 will be paid the regularly scheduled $1 semi-annual dividend on May 1.

The transaction would be subject to (the negotiation of specific terms and final documentation, the approval of the AFG and AFC boards of directors and an AFC special committee of independent directors, as wells as the receipt of all required shareholder, stock exchange listing and regulatory approvals.

As a result of certain shareholder approval requirements related to the proposal, AFC will not hold its meeting of shareholders until later this year.