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[KEATING, MUETHING & KLEKAMP, P.L.L. LETTERHEAD]
October 28, 1996
Direct Dial: (513) 579-6517
American Annuity Group, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
AAG Holding Company, Inc.
250 East Fifth Street
Cincinnati, Ohio 45202
American Annuity Group Capital Trust I
c/o AAG Holding Company, Inc. , Sponsor
250 East Fifth Street
Cincinnati, Ohio 45202
Ladies and Gentlemen:
We have acted as counsel to American Annuity Group, Inc., a Delaware
corporation (the "Company"), AAG Holding Company, Inc., an Ohio corporation
("Holding") and American Annuity Group Capital Trust I, a Delaware business
trust (the "Trust"), in connection with the preparation of the registration
statement of the Company and the Trust on Form S-3 (333-12535), filed with the
Securities and Exchange Commission (the "Commission") on September 24, 1996, as
amended by Amendment No. 1 filed on October 28, 1996 (the "Registration
Statement"), relating to the registration under the Securities Act of 1933 (the
"Securities Act"), of preferred securities of the Trust (the "Preferred
Securities") and subordinated debentures of Holding which are guaranteed by the
Company (the "Subordinated Debentures"). The Subordinated Debentures will be
issued in accordance with the provisions of an indenture (the "Indenture") to be
executed by the Company and The Bank of New York, as trustee (the "Trustee"),
the form of which is an exhibit to the Registration Statement. The Preferred
Securities will be guaranteed by the Company in the manner and to the extent set
forth in a Preferred Securities Guarantee Agreement (the "Preferred Securities
Guarantee"), the form of which is an exhibit to the Registration Statement.
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American Annuity Group, Inc.
AAG Holding Company, Inc.
American Annuity Group Capital Trust I
Page 2
October 28, 1996
In so acting, we have reviewed the Registration Statement, including
the prospectus (the "Prospectus") contained therein, the form of Indenture, form
of Subordinated Debenture and form of Preferred Securities Guarantee filed with
the Commission as exhibits to the Registration Statement. In addition, we have
examined originals or copies, certified or otherwise identified to our
satisfaction, of such corporate records, agreements, documents and other
instruments, and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and have made such inquiries
of such officers and representatives as we have deemed relevant and necessary as
a basis for the opinions set forth below.
In such examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently established, we
have relied upon certificates or comparable documents of officers and
representatives of the Company.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
1. The Subordinated Debentures have been duly and validly authorized by
Holding and, when executed, authenticated, issued and delivered in the manner
contemplated in the Indenture, will constitute legal, valid and binding
obligations of Holding, entitled to the benefits of the Indenture and
enforceable against Holding in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity) and except
to the extent that rights to indemnification thereunder may be limited by
federal or state securities laws or public policy relating thereto.
2. The Guaranty of the Subordinated Debentures included in the
Indenture and affixed to the form of the certificate for the Subordinated
Debentures has been duly and validly authorized by the Company and, such
Guaranty, when executed, authenticated, issued and delivered in the manner
contemplated in the Indenture, will constitute legal, valid and binding
obligation of the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a
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American Annuity Group, Inc.
AAG Holding Company, Inc.
American Annuity Group Capital Trust I
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October 28, 1996
proceeding at law or in equity) and except to the extent that rights to
indemnification thereunder may be limited by federal or state securities laws or
public policy relating thereto.
3. The Preferred Securities Guarantee has been duly and validly
authorized by the Company and, when executed and delivered by the Company, will
constitute the legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. These opinions may not be
used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a governmental agency, quoted,
cited or otherwise referred to without our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the heading
"Legal Matters" in the Prospectus, without admitting that we are "experts" under
the Securities Act of the rules and regulations of the Commission issued
thereunder with respect to any part of the Registration Statement, including
this exhibit thereto.
Yours truly,
KEATING, MUETHING & KLEKAMP, P.L.L.
BY: /s/ Paul V. Muething
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Paul V. Muething