American Financial Group saw second-quarter net income nearly cut in half, with more than $50 million in charges to strengthen asbestos and environmental reserves contributing heavily to the decline.

Last night, the Cincinnati-based specialty insurer reported net income of $67.0 million, or 54 cents per share, for the 2007 second quarter, compared with $122.9 million, or $1.02 per share, in second-quarter 2006.

The second-quarter 2007 result included the impacts of an A&E reserve charge of $28.7 million related to property-casualty operations in runoff, and an additional $27.7 million A&E charge for exposures related to former railroad and manufacturing operations and sites.

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