American Financial Group Announces Agreement to Sell Puerto Rico Subsidiary

Cincinnati-based American Financial Group, Inc.recently announced that its 82 percent owned subsidiary, Great American Financial Resources, Inc. has reached an agreement to sell Great American Life Assurance Company of Puerto Rico to Triple-S Management Corporation, also of Puerto Rico. The sale is expected to be completed in the first quarter of 2006. AFG does not expect to record a material after-tax gain or loss on the sale.

S. Craig Lindner, GAFRI’s chief executive officer and AFG co-CEO said, “Our investment in Great American Life of Puerto Rico has been very profitable and represents another example of our ability to create shareholder value through successful acquisitions. Since its acquisition in 1997 for approximately $50 million, we have recorded more than $81 million in GAAP earnings from GA-PR. We expect this transaction to be dilutive to AFG’s annual operating earnings by about $0.07 to $0.10 per share until the proceeds are reinvested in an acquisition or otherwise deployed at appropriate returns.”

According to Lindner, AFG believes the sale provides the company with significant capital to invest in GAFRI’s core U. S. operations and allows the company to focus on its expertise in the annuity, supplemental and life insurance operations. Each of these core lines of business is projected to produce operating earnings growth in 2006, he said.

Following the sale of Great American Life of Puerto Rico, GAFRI expects to have approximately $200 million of excess capital available for acquisitions, organic growth, or other transactions designed to increase shareholder value.

The financial strength and liquidity of both GAFRI and AFG have never been higher and Lindner emphasized that GAFRI is currently pursuing several opportunities to grow its core lines of business organically and through acquisitions.”

AFG also announced that it is pursuing the commutation of certain residual value exposures within its property and casualty insurance operations as part of a current strategic review of its residual value business. In addition, AFG expects greater than anticipated profits from its crop insurance businesses in the fourth quarter of 2005.