By Cliff Peale and Jim McNair
The Cincinnati Enquirer

Settling an antitrust lawsuit in California cost American Financial Group Inc. a $23.1 million charge during the third quarter ended Sept. 30, but the insurer still increased its quarterly earnings to $41.6 million, or 59 cents a share.

During the same quarter last year, AFG earned $26.9 million, or 39 cents a share. Excluding one-time items, core earnings from insurance operations increased 18 percent, to $51.2 million, or 73 cents a share.

AFG said one of its subsidiaries settled a 1994 lawsuit against it and several other California workers' compensation insurers, resulting in the special charge against earnings.

The company, the holding company for the financial interests of Reds owner Carl Lindner, said it still expects 2003 core earnings of $2.10 to $2.30 a share, and should increase that to $2.75 to $3 a share in 2004.

"The insurance industry continues to benefit from favorable pricing conditions," said Lindner, AFG's chairman and chief executive officer.

In another report:

• Cincinnati Financial Corp.: A $23 million pretax settlement payment from a vendor helped the Fairfield-based insurance company post a 44 percent increase in third-quarter net income.

The company said it earned $104 million in the three months ended Sept. 30, compared with $72 million in the same period last year. The settlement contributed $15 million, after taxes, to the company's net income. The company's third-quarter revenue, which derives mostly from property and casualty insurance premiums, rose 14.4 percent, to $836 million.Cincinnati Financial said losses resulting from catastrophe coverage payouts totaled $41 million during the quarter, slightly above its estimate.

E-mail cpeale@enquirer.com or jmcnair@enquirer.com.