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Exhibit 8.1
[AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. LETTERHEAD]
October 15, 1996
American Financial Group, Inc.
One East Fourth Street
Cincinnati, OH 45202
American Financial Capital Trust I
c\o American Financial Group, Inc.
One East Fourth Street
Cincinnati, OH 45202
Attn: Thomas E. Mischell
Re: American Financial Group, Inc./American
Financial Capital Trust I--Registration Statement
on Form S-3 Registration No. 333-12537 Relating
to 4,600,000 Trust Originated Preferred Securities
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Gentlemen:
We have acted as tax counsel for American Financial Group, Inc. (the
"Company") and American Financial Capital Trust I (the "Trust") in connection
with the proposed issuance and sale by the Trust of its Trust Originated
Preferred Securities referred to above (the "Preferred Securities"). In
connection therewith, we have participated in the preparation of the discussion
set forth under the caption "United States Federal Income Taxation" (the "Tax
Discussion") in the Prospectus (the "Prospectus") that is part of Amendment No.
2 to the Registration Statement on Form S-3 filed by the Company and the Trust
with the Securities and Exchange Commission on October 15, 1996 (the
"Registration Statement"). Except as otherwise indicated, the terms utilized
herein have the same meaning as in the Registration Statement.
Our opinion is conditioned on the accuracy of the factual statements made
in the Registration Statement and the various documents filed therewith
(together the "Registration Documents"), and on timely and full compliance with
the terms of the Registration Documents by
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American Financial Group, Inc.
October 15, 1996
Page 2
all relevant parties to such documents. In particular, and without limiting the
scope of the preceding sentence, we have assumed for purposes of our opinion
that the Trustees will conduct the affairs of the Trust in accordance with the
Amended and Restated Declaration of Trust of American Financial Capital Trust I
dated October __, 1996 (the "Declaration"). In rendering our opinion, we also
have relied upon the representations made on behalf of the Company and the
Trust in letters to us dated October 15, 1996 (the "Representation Letters").
Our opinion is based on the Internal Revenue Code of 1986, as amended,
U.S. Treasury regulations promulgated thereunder, and administrative and
judicial interpretations thereof, all as of the date hereof and all of which
are subject to change, possibly on a retroactive basis. In this regard,
legislation has been proposed that could adversely affect the Company's ability
to deduct interest on the Subordinated Debentures.
Subject to the assumptions, qualifications, and conditions set forth
herein and in the Tax Discussion section of the Prospectus and in reliance on
the Representation Letters, it is our opinion that:
1. Although not entirely free from doubt, under current law and assuming
full compliance with the terms of the Indenture and the other Registration
Documents, the Subordinated Debentures will be classified for United States
federal income tax purposes as indebtedness of the Company.
2. Under current law and assuming full compliance with the terms of the
Declaration and the other Registration Documents, the Trust will be classified
for United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. Accordingly, for United States federal
income tax purposes, each holder of Preferred Securities generally will be
considered the owner of an undivided interest in the Subordinated Debentures.
3. Although not entirely free from doubt, under current law and assuming
full compliance with the terms of the Registration Documents and based on the
Company's representation that the likelihood of its exercising its option to
defer payments of interest is remote, the Subordinated Debentures will not
include original issue discount ("OID") unless and until an election to defer
the payment of interest actually is made.
We have reviewed the balance of the discussion set forth in the Prospectus
under the heading "United States Federal Income Taxation," and have concluded,
subject to the qualifications set forth in the preceding paragraph, that such
discussion accurately summarizes the specific tax matters addressed therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the use of our name under the headings "United
States Federal Income Taxation"
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American Financial Group, Inc.
October 15, 1996
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and "Legal Matters" in the Prospectus. In providing this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Commission promulgated thereunder. This opinion is
expressed as of the date hereof and we disclaim any undertaking to advise you
of any subsequent changes of the facts stated or assumed herein or any
subsequent changes in applicable law.
Very truly yours,
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.