|
|
|
|
|
| Percentage rated investment grade | 94 | % | | 97 | % |
The table below sets forth the scheduled maturities of AFG’s available for sale fixed maturity securities at December 31, 2024, based on their fair values. Securities with sinking funds are reported at average maturity. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid by the issuers.
| | | | | | | | | | | |
| Securities
With
Unrealized
Gains | | Securities
With
Unrealized
Losses |
| Maturity | | | |
| One year or less | 1 | % | | 7 | % |
| After one year through five years | 26 | % | | 25 | % |
| After five years through ten years | 15 | % | | 11 | % |
| After ten years | 1 | % | | 3 | % |
| 43 | % | | 46 | % |
Collateralized loan obligations and other asset-backed securities (average life of approximately 3 years) | 42 | % | | 30 | % |
Mortgage-backed securities (average life of approximately 6 years) | 15 | % | | 24 | % |
| 100 | % | | 100 | % |
The table below (dollars in millions) summarizes the unrealized gains and losses on fixed maturity securities by dollar amount:
| | | | | | | | | | | | | | | | | |
| Aggregate
Fair
Value | | Aggregate
Unrealized
Gain (Loss) | | Fair
Value as
% of Cost |
| Fixed Maturities at December 31, 2024 | | | | | |
| Securities with unrealized gains: | | | | | |
Exceeding $500,000 (32 securities) | $ | 520 | | | $ | 29 | | | 106 | % |
$500,000 or less (718 securities) | 3,599 | | | 69 | | | 102 | % |
| $ | 4,119 | | | $ | 98 | | | 102 | % |
| Securities with unrealized losses: | | | | | |
Exceeding $500,000 (158 securities) | $ | 1,857 | | | $ | (236) | | | 89 | % |
$500,000 or less (1,182 securities) | 4,077 | | | (117) | | | 97 | % |
| $ | 5,934 | | | $ | (353) | | | 94 | % |
The following table (dollars in millions) summarizes the unrealized losses for all securities with unrealized losses by issuer quality and the length of time those securities have been in an unrealized loss position:
| | | | | | | | | | | | | | | | | |
| Aggregate
Fair
Value | | Aggregate
Unrealized
Loss | | Fair
Value as
% of Cost |
| Securities with Unrealized Losses at December 31, 2024 | | | | | |
| Investment grade fixed maturities with losses for: | | | | | |
Less than one year (311 securities) | $ | 1,732 | | | $ | (22) | | | 99 | % |
One year or longer (861 securities) | 4,014 | | | (317) | | | 93 | % |
| $ | 5,746 | | | $ | (339) | | | 94 | % |
| Non-investment grade fixed maturities with losses for: | | | | | |
Less than one year (39 securities) | $ | 46 | | | $ | (3) | | | 94 | % |
One year or longer (129 securities) | 142 | | | (11) | | | 93 | % |
| $ | 188 | | | $ | (14) | | | 93 | % |
To evaluate fixed maturities for expected credit losses (impairment), management considers the following:
(a)whether the unrealized loss is credit-driven or a result of changes in market interest rates,
(b)the extent to which fair value is less than cost basis,
(c)cash flow projections received from independent sources,
(d)historical operating, balance sheet and cash flow data contained in issuer SEC filings and news releases,
(e)near-term prospects for improvement in the issuer and/or its industry,
(f)third-party research and communications with industry specialists,
(g)financial models and forecasts,
(h)the continuity of interest payments, maintenance of investment grade ratings and hybrid nature of certain investments,
(i)discussions with issuer management, and
(j)ability and intent to hold the investment for a period of time sufficient to allow for anticipated recovery in fair value.
Based on its analysis of the factors listed above, management believes AFG will recover its cost basis (net of any allowance) in the fixed maturity securities with unrealized losses and that AFG has the ability to hold the securities until they recover in value and had no intent to sell them at December 31, 2024. Although AFG has the ability to continue holding its fixed maturity investments with unrealized losses, its intent to hold them may change due to deterioration in the issuers’ creditworthiness, decisions to lessen exposure to a particular issuer or industry, asset/liability management decisions, market movements, changes in views about appropriate asset allocation or the desire to offset taxable realized gains. Should AFG’s ability or intent change regarding a particular security, a charge for impairment would likely be required. While it is not possible to accurately predict if or when a specific security will become impaired, increases in the allowance for credit losses could be material to results of operations in future periods. Significant declines in the fair value of AFG’s investment portfolio could have a significant adverse effect on AFG’s liquidity. For information on AFG’s realized gains (losses) on securities, see “Results of Operations — Realized Gains (Losses) on Securities.”
Uncertainties
As more fully explained in the following paragraphs, management believes that the areas posing the greatest risk of material loss are the adequacy of its insurance reserves and contingencies arising out of its former railroad and manufacturing operations.
Property and Casualty Insurance Reserves Estimating the liability for unpaid losses and loss adjustment expenses (“LAE”) is inherently judgmental and is influenced by factors that are subject to significant variation. Determining the liability is a complex process incorporating input from many areas of the Company including actuarial, underwriting, pricing, claims and operations management.
The estimates of liabilities for unpaid claims and for expenses of investigation and adjustment of unpaid claims are based upon: (i) the accumulation of case estimates for losses reported prior to the close of the accounting periods on direct business written (“case reserves”); (ii) estimates received from ceding reinsurers and insurance pools and associations; (iii) estimates of claims incurred but not reported (including possible development on known claims); (iv) estimates (based on experience) of expense for investigating and adjusting claims; and (v) the current state of law and coverage litigation.
The process used to determine the total reserve for liabilities involves estimating the ultimate incurred losses and LAE, adjusted for amounts already paid on the claims. The IBNR reserve is derived by estimating the ultimate unpaid reserve liability and subtracting case reserves for loss and LAE. See Note N — “Insurance — Insurance Reserves” to the financial statements for a discussion of the factors considered and actuarial methods used in determining management’s best estimate of the ultimate liability for unpaid losses and LAE.
The following table shows (in millions) the breakdown of AFG’s property and casualty insurance reserves between case reserves, IBNR reserves and LAE reserves (estimated amounts required to adjust, record and settle claims, other than the claim payments themselves) at December 31, 2024 and gross written premiums for the year ended December 31, 2024.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Gross Loss Reserves | | |
| | Case | | IBNR | | LAE | | Total
Reserves | | Gross Written Premiums |
| Statutory Line of Business | | | | | | | | | |
| Other liability — occurrence | $ | 986 | | | $ | 3,839 | | | $ | 795 | | | $ | 5,620 | | | $ | 1,828 | |
| Workers’ compensation | 986 | | | 1,117 | | | 347 | | | 2,450 | | | 1,359 | |
| Other liability — claims made | 315 | | | 721 | | | 444 | | | 1,480 | | | 806 | |
| Commercial auto/truck liability/medical | 445 | | | 628 | | | 154 | | | 1,227 | | | 777 | |
| Special property (fire, allied lines, inland marine, earthquake) | 714 | | | 235 | | | 35 | | | 984 | | | 2,990 | |
| Products liability — occurrence | 107 | | | 283 | | | 180 | | | 570 | | | 239 | |
| Commercial multi-peril | 201 | | | 134 | | | 86 | | | 421 | | | 470 | |
| Other lines | 340 | | | 511 | | | 169 | | | 1,020 | | | 1,703 | |
| Total Statutory | 4,094 | | | 7,468 | | | 2,210 | | | 13,772 | | | 10,172 | |
| Adjustments for GAAP: | | | | | | | | | |
| Foreign operations | 184 | | | 173 | | | 46 | | | 403 | | | 370 | |
| Deferred gains on retroactive reinsurance | — | | | 9 | | | — | | | 9 | | | — | |
| Loss reserve discounting | (5) | | | — | | | — | | | (5) | | | — | |
| Other | — | | | — | | | — | | | — | | | (9) | |
| Total Adjustments for GAAP | 179 | | | 182 | | | 46 | | | 407 | | | 361 | |
| Total GAAP Reserves and Premiums | $ | 4,273 | | | $ | 7,650 | | | $ | 2,256 | | | $ | 14,179 | | | $ | 10,533 | |
While current factors and reasonably likely changes in variable factors are considered in estimating the liability for unpaid losses and LAE, there is no method or system that can eliminate the risk of actual ultimate results differing from such estimates.
Following is a discussion of certain critical variables affecting the estimation of loss reserves of the more significant long-tail lines of business (asbestos and environmental liabilities are separately discussed below). Many other variables may also impact ultimate claim costs.
An important assumption underlying reserve estimates is that the cost trends implicitly built into development patterns will continue into the future. However, future results could vary due to an unexpected change in the underlying cost trends. This unexpected change could arise from a variety of sources including a general increase in economic inflation, social inflation, new medical technologies, or other factors such as those listed below in connection with AFG’s largest lines of
business. It is not possible to isolate and measure the potential impact of just one of these variables, and future cost trends could be partially impacted by several such variables. However, it is reasonable to address the sensitivity of the reserves to potential impact from changes in these variables by measuring the effect of a possible overall 1% change in future cost trends that may be caused by one or more variables. Utilizing the effect of a 1% change in overall cost trends enables changes greater than 1% to be estimated by extrapolation. Each additional 1% change in the cost trend would increase the effect on net earnings by an amount slightly (about 5%) greater than the effect of the previous 1%. For example, if a 1% change in cost trends in a line of business would change net earnings by $20 million, a 2% change would change net earnings by approximately $41 million.
The estimated cumulative adverse impact that a 1% change in cost trends in AFG’s more significant long-tail lines of property and casualty business (exceeding 5% of total reserves) would have on net earnings is shown below (in millions).
| | | | | |
| Effect of 1%
Change in
Cost Trends |
Line of business | |
| Other liability — occurrence | $ | 78 | |
| Workers’ compensation | 69 | |
| Other liability — claims made | 30 | |
| Commercial auto/truck liability/medical | 18 | |
The judgments and uncertainties surrounding management’s reserve estimation process and the potential for reasonably possible variability in management’s most recent reserve estimates may also be viewed by looking at how recent historical estimates of reserves have developed. The following table shows (dollars in millions) what the impact on AFG’s net earnings would be on the more significant lines of business if the December 31, 2024, reserves (net of reinsurance) were to develop at the same rate as the average development of the most recent five years.
| | | | | | | | | | | | | | | | | |
| 5-yr. Average
Development (a)(b) | | Net Reserves (b) December 31, 2024 | | Effect on Net
Earnings (a)(b) |
| Other liability — occurrence | 4.8 | % | | $ | 2,382 | | | $ | 115 | |
| Workers’ compensation | (5.7 | %) | | 2,080 | | | (118) | |
| Other liability — claims made | (2.2 | %) | | 1,024 | | | (23) | |
| Commercial auto/truck liability/medical | 2.2 | % | | 892 | | | 20 | |
(a)Adverse (favorable), net of tax effect.
(b)Excludes asbestos and environmental liabilities.
The following discussion describes key assumptions and important variables that affect the estimate of the reserve for loss and LAE of the more significant lines of business and explains what caused them to change from assumptions used in the preceding period.
Other Liability — Occurrence
This long-tail line of business consists of coverages protecting the insured against legal liability resulting from negligence, carelessness, or a failure to act causing property damage or personal injury to others. Some of the important variables affecting estimation of loss reserves for other liability — occurrence include:
•Litigious climate
•Unpredictability of judicial decisions regarding coverage issues
•Magnitude of jury awards
•Outside counsel costs
•Timing of claims reporting
AFG recorded adverse prior year reserve development of $210 million in 2024, $96 million in 2023 and $109 million in 2022 related to its other liability — occurrence coverage due primarily to continued claim severity increases in excess and umbrella liability coverages.
While management applies the actuarial methods discussed in Note N — “Insurance — Insurance Reserves” to the financial statements, more judgment is involved in arriving at the final reserve to be held. For recent accident years, more weight is given to the Bornhuetter-Ferguson method.
Workers’ Compensation
This long-tail line of business provides coverage to employees who may be injured in the course of employment. Some of the important variables affecting estimation of loss reserves for workers’ compensation include:
•Legislative actions and regulatory and legal interpretations
•Future medical cost inflation
•Economic conditions
•Frequency of reopening claims previously closed
•Advances in medical equipment and processes
•Pace and intensity of employee rehabilitation
•Changes in the use of pharmaceutical drugs
•Changes in mortality trends for permanently injured workers
Approximately 23% and 24% of AFG’s workers’ compensation reserves at December 31, 2024 relate to policies written in Florida and California, respectively.
AFG recorded favorable prior year reserve development of $128 million in 2024, $116 million in 2023 and $189 million in 2022, related to its workers’ compensation coverage due to lower than anticipated medical severity.
Other Liability — Claims Made
This long-tail line of business consists mostly of directors’ and officers’ liability (“D&O”). Some of the important variables affecting estimation of loss reserves for other liability — claims made include:
•Litigious climate
•Economic conditions
•Variability of stock prices
•Magnitude of jury awards
The general state of the economy and the variability of the stock price of the insured can affect the frequency and severity of shareholder class action suits and other situations that trigger coverage under D&O policies. For example, from 2008 to 2010, economic conditions led to higher frequency of claims, particularly in the D&O policies for small account and not-for-profit organizations. After peaking in 2010, claim frequency decreased and stabilized to near pre-2008 levels until dropping sharply during the pandemic-related shutdowns. Post-pandemic, frequency has increased slightly but has not rebounded to pre-pandemic levels.
AFG recorded favorable prior year reserve development of $15 million in 2024, $33 million in 2023 and $24 million in 2022 on its D&O business as claim frequency and severity were less than expected across several prior accident years.
Commercial Auto/Truck Liability/Medical
This line of business is a mix of coverage protecting the insured against legal liability for property damage or personal injury to others arising from the operation of commercial motor vehicles. The property damage liability exposure is usually short-tail with relatively prompt reporting and settlement of claims. The bodily injury and medical payments exposures are longer-tailed; although the claim reporting is relatively prompt, the final settlement can take longer to achieve. Some of the important variables affecting estimation of loss reserves for commercial auto/truck liability/medical are similar to other liability — occurrence and include:
•Magnitude of jury awards
•Unpredictability of judicial decisions regarding coverage issues
•Litigious climate and trends
•Change in frequency of severe accidents
•Health care costs and utilization of medical services by injured parties
AFG recorded adverse prior year reserve development of $36 million in 2024, $29 million in 2023 and $32 million in 2022 for this line of business due to higher than anticipated claim severity.
Recoverables from Reinsurers and Availability of Reinsurance AFG is subject to credit risk with respect to its reinsurers, as reinsurance contracts do not relieve AFG of its liability to policyholders. To mitigate this risk, substantially all reinsurance is ceded to companies rated “A” or better by S&P or is secured by “funds withheld” or other collateral.
The availability and cost of reinsurance are subject to prevailing market conditions, which are beyond AFG’s control and which may affect AFG’s level of business and profitability. Although the cost of certain reinsurance programs may
increase, management believes that AFG will be able to maintain adequate reinsurance coverage at acceptable rates without a material adverse effect on AFG’s results of operations. AFG’s gross and net combined ratios are shown in the table below.
See Item 1 — Business — “Property and Casualty Insurance Segment — Reinsurance” for more information on AFG’s reinsurance programs. For additional information on the effect of reinsurance on AFG’s historical results of operations see Note N — “Insurance — Reinsurance” to the financial statements.
The following table illustrates the effect that purchasing property and casualty reinsurance has had on AFG’s combined ratio over the last three years.
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| Before reinsurance (gross) | 98.2 | % | | 92.8 | % | | 90.9 | % |
| Effect of reinsurance | (7.0 | %) | | (2.4 | %) | | (3.6 | %) |
| Actual (net of reinsurance) | 91.2 | % | | 90.4 | % | | 87.3 | % |
Asbestos and Environmental-related (“A&E”) Insurance Reserves Asbestos and environmental reserves of the property and casualty group consisted of the following (in millions):
| | | | | | | | | | | |
| | December 31, |
| | 2024 | | 2023 |
| Asbestos | $ | 197 | | | $ | 202 | |
| Environmental | 162 | | | 168 | |
| A&E reserves, net of reinsurance recoverable | 359 | | | 370 | |
| Reinsurance recoverable, net of allowance | 135 | | | 128 | |
| Gross A&E reserves | $ | 494 | | | $ | 498 | |
Asbestos reserves include claims asserting alleged injuries and damages from exposure to asbestos. Environmental reserves include claims relating to polluted sites.
Asbestos claims against manufacturers, distributors or installers of asbestos products were presented under the products liability section of their policies, which typically had aggregate limits that capped an insurer’s liability. In addition, asbestos claims are being presented as “non-products” claims, such as those by installers of asbestos products and by property owners or operators who allegedly had asbestos on their property, under the premises or operations section of their policies. Unlike products exposures, these non-products exposures typically had no aggregate limits, creating greater exposure for insurers. Further, in an effort to seek additional insurance coverage, some insureds with installation activities who have substantially eroded their products coverage are presenting new asbestos claims as non-products operations claims or attempting to reclassify previously settled products claims as non-products claims to restore a portion of previously exhausted products aggregate limits.
Approximately 48% of AFG’s net asbestos reserves relate to policies written directly by AFG subsidiaries. Claims from these policies generally are product-oriented claims with only a limited amount of non-products exposures and are dominated by small to mid-sized commercial entities that are mostly regional policyholders with few national target defendants. The remainder is assumed reinsurance business that includes exposures from 1954 to 1983. The asbestos and environmental assumed claims are ceded by various insurance companies under reinsurance treaties. A majority of the individual assumed claims have exposures of less than $100,000 to AFG. Asbestos losses assumed include some of the industry known manufacturers, distributors and installers. Pollution losses include industry known insured names and sites.
Establishing reserves for A&E claims relating to policies and participations in reinsurance treaties and former operations is subject to uncertainties that are significantly greater than those presented by other types of claims. For this group of claims, traditional actuarial techniques that rely on historical loss development trends cannot be used and a range of reasonably possible losses cannot be estimated. Case reserves and expense reserves are established by the claims department as specific policies are identified. In addition to the case reserves established for known claims, management establishes additional reserves for claims not yet known or reported and for possible development on known claims. These additional reserves are management’s best estimate based on periodic comprehensive studies and internal reviews adjusted for payments and identifiable changes, supplemented by management’s review of industry information about such claims, with due consideration to individual claim situations.
Management believes that estimating the ultimate liability for asbestos claims presents a unique and difficult challenge to the insurance industry due to, among other things, difficulty in predicting the number of future claims, inconsistent court decisions, an increase in bankruptcy filings as a result of asbestos-related liabilities, unresolved issues such as whether coverage exists, novel theories of coverage, how claims are to be allocated among triggered policies and implicated years, whether claimants who exhibit no signs of illness will be successful in pursuing their claims and judicial interpretations that often expand theories of recovery and broaden the scope of coverage. Environmental claims likewise present challenges in prediction, due to uncertainty regarding the interpretation of insurance policies, complexities regarding multi-party involvements at sites, evolving cleanup standards and protracted time periods required to assess the level of cleanup required at contaminated sites.
While management believes that AFG’s reserves for A&E claims are a reasonable estimate of ultimate liability for such claims, actual results may vary materially from the amounts currently recorded due to the factors listed above. A 1% variation in loss cost trends, caused by any of the factors previously described, would change net earnings by approximately $28 million.
The following factors could impact AFG’s A&E reserves and payments:
•There is interest at the state level to attempt to legislatively address asbestos liabilities and the manner in which asbestos claims are resolved. These developments are fluid and could result in piecemeal state-by-state solutions.
•The manner by which bankruptcy courts are addressing asbestos liabilities is in flux.
•AFG’s insureds may make claims alleging significant non-products exposures.
AFG tracks its A&E claims by policyholder. The following table shows, by type of claim, the number of policyholders that did not receive any payments in the calendar year separate from policyholders that did receive a payment. Policyholder counts represent policies written by AFG subsidiaries and do not include assumed reinsurance.
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| Number of policyholders with no indemnity payments: | | | | | |
| Asbestos | 85 | | | 107 | | | 103 | |
| Environmental | 159 | | | 137 | | | 129 | |
| 244 | | | 244 | | | 232 | |
| Number of policyholders with indemnity payments: | | | | | |
| Asbestos | 51 | | | 47 | | | 45 | |
| Environmental | 18 | | | 23 | | | 25 | |
| 69 | | | 70 | | | 70 | |
| Total | 313 | | | 314 | | | 302 | |
Amounts paid (net of reinsurance recoveries) for asbestos and environmental claims, including LAE, were as follows (in millions):
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| Asbestos | $ | 6 | | | $ | 13 | | | $ | 12 | |
| Environmental | 5 | | | 2 | | | 11 | |
| Total | $ | 11 | | | $ | 15 | | | $ | 23 | |
The survival ratio is a measure often used by industry analysts to compare A&E reserves’ strength among companies. This ratio is typically calculated by dividing reserves for A&E exposures by the three-year average of paid losses, and therefore measures the number of years that it would take to pay off current reserves based on recent average payments. Because this ratio can be significantly impacted by a number of factors such as loss payout variability, caution should be exercised in attempting to determine reserve adequacy based simply on the survival ratio. At December 31, 2024, the property and casualty insurance segment’s three-year survival ratios compare favorably with industry survival ratios published by A.M. Best (as of December 31, 2023, and adjusted for several large portfolio transfers) as detailed in the following table:
| | | | | | | | | | | | | | | | | |
| Property and Casualty Insurance Reserves Three-Year Survival Ratio (Times Paid Losses) |
| Asbestos | | Environmental | | Total A&E |
| AFG (12/31/2024) | 19.4 | | | 26.2 | | | 22.0 | |
Industry (12/31/2023) | 8.7 | | | 7.5 | | | 8.4 | |
During the third quarter of 2024, AFG completed an in-depth internal review of its asbestos and environmental exposures relating to the run-off operations of its property and casualty insurance segment. AFG annually conducts a comprehensive review of its asbestos and environmental reserves. In connection with these reviews, AFG engages with outside counsel and, as appropriate, engineering and consulting firms and specialty actuarial firms.
During the 2024 internal review, no new trends were identified and recent claims activity was generally consistent with AFG’s expectations resulting from its in-depth internal reviews in the prior three years, and the most recent external study in 2020. As a result, and consistent with the internal review in the third quarter of 2023, the 2024 review resulted in no net change to AFG’s property and casualty insurance segment’s asbestos and environmental reserves.
Contingencies related to Subsidiaries’ Former Operations The A&E reviews and external study discussed above also encompassed reserves for various environmental and occupational injury and disease claims and other contingencies arising out of the railroad operations disposed of by APU Consolidated’s predecessor and certain manufacturing operations disposed of by APU Consolidated and its subsidiaries and by Great American Financial Resources, Inc. AFG recorded pretax special non-core A&E charges of $14 million in 2024 and $15 million in 2023 to increase liabilities for those operations as a result of the internal reviews. Liabilities for claims and contingencies arising from these former railroad and manufacturing operations totaled $91 million at December 31, 2024. For a discussion of the uncertainties in determining the ultimate liability, see Note M — “Contingencies” to the financial statements.
MANAGED INVESTMENT ENTITIES
Accounting standards require AFG to consolidate its investments in collateralized loan obligation (“CLO”) entities that it manages and owns an interest in (in the form of debt). See Note A — “Accounting Policies — Managed Investment Entities” and Note G — “Managed Investment Entities” to the financial statements. The effect of consolidating these entities is shown in the tables below (in millions). The “Before CLO Consolidation” columns include AFG’s investment and earnings in the CLOs on an unconsolidated basis.
CONDENSED CONSOLIDATING BALANCE SHEET
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Before CLO
Consolidation | | Managed
Investment
Entities | | Consol.
Entries | | | | Consolidated
As Reported |
| December 31, 2024 | | | | | | | | | |
| Assets: | | | | | | | | | |
| Cash and investments | $ | 16,026 | | | $ | — | | | $ | (174) | | | (*) | | $ | 15,852 | |
| Assets of managed investment entities | — | | | 4,140 | | | — | | | | | 4,140 | |
| Other assets | 10,845 | | | — | | | (1) | | | (*) | | 10,844 | |
| Total assets | $ | 26,871 | | | $ | 4,140 | | | $ | (175) | | | | | $ | 30,836 | |
| Liabilities: | | | | | | | | | |
Unpaid losses and loss adjustment expenses and unearned premiums | $ | 17,763 | | | $ | — | | | $ | — | | | | | $ | 17,763 | |
| Liabilities of managed investment entities | — | | | 4,091 | | | (126) | | | (*) | | 3,965 | |
| Long-term debt and other liabilities | 4,642 | | | — | | | — | | | | | 4,642 | |
| Total liabilities | 22,405 | | | 4,091 | | | (126) | | | | | 26,370 | |
| | | | | | | | | |
| Shareholders’ equity: | | | | | | | | | |
| Common Stock and Capital surplus | 1,495 | | | 49 | | | (49) | | | | | 1,495 | |
| Retained earnings | 3,211 | | | — | | | — | | | | | 3,211 | |
| Accumulated other comprehensive income (loss), net of tax | (240) | | | — | | | — | | | | | (240) | |
| Total shareholders’ equity | 4,466 | | | 49 | | | (49) | | | | | 4,466 | |
| Total liabilities and shareholders’ equity | $ | 26,871 | | | $ | 4,140 | | | $ | (175) | | | | | $ | 30,836 | |
| | | | | | | | | |
| December 31, 2023 | | | | | | | | | |
| Assets: | | | | | | | | | |
| Cash and investments | $ | 15,438 | | | $ | — | | | $ | (175) | | | (*) | | $ | 15,263 | |
| Assets of managed investment entities | — | | | 4,484 | | | — | | | | | 4,484 | |
| Other assets | 10,042 | | | — | | | (2) | | | (*) | | 10,040 | |
| Total assets | $ | 25,480 | | | $ | 4,484 | | | $ | (177) | | | | | $ | 29,787 | |
| Liabilities: | | | | | | | | | |
Unpaid losses and loss adjustment expenses and unearned premiums | $ | 16,538 | | | $ | — | | | $ | — | | | | | $ | 16,538 | |
| Liabilities of managed investment entities | — | | | 4,446 | | | (139) | | | (*) | | 4,307 | |
| Long-term debt and other liabilities | 4,684 | | | — | | | — | | | | | 4,684 | |
| Total liabilities | 21,222 | | | 4,446 | | | (139) | | | | | 25,529 | |
| | | | | | | | | |
| Shareholders’ equity: | | | | | | | | | |
| Common Stock and Capital surplus | 1,456 | | | 38 | | | (38) | | | | | 1,456 | |
| Retained earnings | 3,121 | | | — | | | — | | | | | 3,121 | |
| Accumulated other comprehensive income (loss), net of tax | (319) | | | — | | | — | | | | | (319) | |
| Total shareholders’ equity | 4,258 | | | 38 | | | (38) | | | | | 4,258 | |
| Total liabilities and shareholders’ equity | $ | 25,480 | | | $ | 4,484 | | | $ | (177) | | | | | $ | 29,787 | |
(*)Elimination of the fair value of AFG’s investment in CLOs and related accrued interest.
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Before CLO
Consolidation (a) | | Managed
Investment
Entities | | Consol.
Entries | | | | Consolidated
As Reported |
| Three months ended December 31, 2024 | | | | | | | | | |
| Revenues: | | | | | | | | | |
Net earned premiums | $ | 1,850 | | | $ | — | | | $ | — | | | | | $ | 1,850 | |
| Net investment income | 202 | | | — | | | (8) | | | (b) | | 194 | |
| Realized gains (losses) on securities | (10) | | | — | | | — | | | | | (10) | |
| Income of managed investment entities: | | | | | | | | | |
| Investment income | — | | | 84 | | | — | | | | | 84 | |
| Gain (loss) on change in fair value of assets/liabilities | — | | | 3 | | | (4) | | | (b) | | (1) | |
| Other income | 36 | | | — | | | (4) | | | (c) | | 32 | |
| Total revenues | 2,078 | | | 87 | | | (16) | | | | | 2,149 | |
| Costs and Expenses: | | | | | | | | | |
| Insurance benefits and expenses | 1,661 | | | — | | | — | | | | | 1,661 | |
| Expenses of managed investment entities | — | | | 87 | | | (16) | | | (b)(c) | | 71 | |
| Interest charges on borrowed money and other expenses | 97 | | | — | | | — | | | | | 97 | |
| Total costs and expenses | 1,758 | | | 87 | | | (16) | | | | | 1,829 | |
| Earnings before income taxes | 320 | | | — | | | — | | | | | 320 | |
| Provision for income taxes | 65 | | | — | | | — | | | | | 65 | |
| Net earnings | $ | 255 | | | $ | — | | | $ | — | | | | | $ | 255 | |
| | | | | | | | | |
| Three months ended December 31, 2023 | | | | | | | | | |
| Revenues: | | | | | | | | | |
Net earned premiums | $ | 1,732 | | | $ | — | | | $ | — | | | | | $ | 1,732 | |
| Net investment income | 168 | | | — | | | (9) | | | (b) | | 159 | |
| Realized gains (losses) on securities | 31 | | | — | | | — | | | | | 31 | |
| Income of managed investment entities: | | | | | | | | | |
| Investment income | — | | | 100 | | | — | | | | | 100 | |
| Gain (loss) on change in fair value of assets/liabilities | — | | | 17 | | | (2) | | | (b) | | 15 | |
| Other income | 50 | | | — | | | (4) | | | (c) | | 46 | |
| Total revenues | 1,981 | | | 117 | | | (15) | | | | | 2,083 | |
| Costs and Expenses: | | | | | | | | | |
| Insurance benefits and expenses | 1,549 | | | — | | | — | | | | | 1,549 | |
| Expenses of managed investment entities | — | | | 117 | | | (15) | | | (b)(c) | | 102 | |
| Interest charges on borrowed money and other expenses | 97 | | | — | | | — | | | | | 97 | |
| Total costs and expenses | 1,646 | | | 117 | | | (15) | | | | | 1,748 | |
| Earnings before income taxes | 335 | | | — | | | — | | | | | 335 | |
| Provision for income taxes | 72 | | | — | | | — | | | | | 72 | |
| Net earnings | $ | 263 | | | $ | — | | | $ | — | | | | | $ | 263 | |
(a)Includes income of $8 million in the fourth quarter of 2024 and $9 million in the fourth quarter of 2023, representing the change in fair value of AFG’s CLO investments and $4 million of income in both the fourth quarter of 2024 and 2023, in CLO management fees earned.
(b)Elimination of the change in fair value of AFG’s investments in the CLOs, including $12 million and $11 million in the fourth quarter of 2024 and 2023, respectively, in distributions recorded as interest expense by the CLOs.
(c)Elimination of management fees earned by AFG.
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS - CONTINUED | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Before
CLO
Consol. (a) | | Managed
Investment
Entities | | Consol.
Entries | | | | Consolidated
As Reported |
| Year ended December 31, 2024 | | | | | | | | | |
| Revenues: | | | | | | | | | |
Net earned premiums | $ | 7,036 | | | $ | — | | | $ | — | | | | | $ | 7,036 | |
| Net investment income | 813 | | | — | | | (33) | | | (b) | | 780 | |
Realized gains (losses) on securities | — | | | — | | | — | | | | | — | |
| Income of managed investment entities: | | | | | | | | | |
| Investment income | — | | | 380 | | | — | | | | | 380 | |
| Gain (loss) on change in fair value of assets/liabilities | — | | | 12 | | | (8) | | | (b) | | 4 | |
| Other income | 137 | | | — | | | (13) | | | (c) | | 124 | |
| Total revenues | 7,986 | | | 392 | | | (54) | | | | | 8,324 | |
| Costs and Expenses: | | | | | | | | | |
| Insurance benefits and expenses | 6,467 | | | — | | | — | | | | | 6,467 | |
| Expenses of managed investment entities | — | | | 388 | | | (50) | | | (b)(c) | | 338 | |
| Interest charges on borrowed money and other expenses | 395 | | | — | | | — | | | | | 395 | |
| Total costs and expenses | 6,862 | | | 388 | | | (50) | | | | | 7,200 | |
Earnings before income taxes | 1,124 | | | 4 | | | (4) | | | | | 1,124 | |
| Provision for income taxes | 237 | | | — | | | — | | | | | 237 | |
Net earnings | $ | 887 | | | $ | 4 | | | $ | (4) | | | | | $ | 887 | |
| | | | | | | | | |
| Year ended December 31, 2023 | | | | | | | | | |
| Revenues: | | | | | | | | | |
Net earned premiums | $ | 6,531 | | | $ | — | | | $ | — | | | | | $ | 6,531 | |
| Net investment income | 769 | | | — | | | (27) | | | (b) | | 742 | |
Realized gains (losses) on: | | | | | | | | | |
Securities | (36) | | | — | | | — | | | | | (36) | |
Subsidiaries | (4) | | | — | | | — | | | | | (4) | |
| Income of managed investment entities: | | | | | | | | | |
| Investment income | — | | | 421 | | | — | | | | | 421 | |
| Gain (loss) on change in fair value of assets/liabilities | — | | | 29 | | | (2) | | | (b) | | 27 | |
| Other income | 162 | | | — | | | (16) | | | (c) | | 146 | |
| Total revenues | 7,422 | | | 450 | | | (45) | | | | | 7,827 | |
| Costs and Expenses: | | | | | | | | | |
| Insurance benefits and expenses | 5,968 | | | — | | | — | | | | | 5,968 | |
| Expenses of managed investment entities | — | | | 450 | | | (45) | | | (b)(c) | | 405 | |
| Interest charges on borrowed money and other expenses | 381 | | | — | | | — | | | | | 381 | |
| Total costs and expenses | 6,349 | | | 450 | | | (45) | | | | | 6,754 | |
Earnings before income taxes | 1,073 | | | — | | | — | | | | | 1,073 | |
| Provision for income taxes | 221 | | | — | | | — | | | | | 221 | |
Net earnings | $ | 852 | | | $ | — | | | $ | — | | | | | $ | 852 | |
(a)Includes income of $33 million in 2024 and $27 million in 2023, representing the change in fair value of AFG’s CLO investments and $13 million and $16 million of income in 2024 and 2023, respectively, in CLO management fees earned.
(b)Elimination of the change in fair value of AFG’s investments in the CLOs, including $37 million and $29 million in 2024 and 2023, respectively, in distributions recorded as interest expense by the CLOs.
(c)Elimination of management fees earned by AFG.
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS - CONTINUED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Before
CLO
Consol. (a) | | Managed
Investment
Entities | | Consol.
Entries | | | | Consolidated
As Reported |
| Year ended December 31, 2022 | | | | | | | | | |
| Revenues: | | | | | | | | | |
Net earned premiums | $ | 6,085 | | | $ | — | | | $ | — | | | | | $ | 6,085 | |
| Net investment income | 707 | | | — | | | 10 | | | (b) | | 717 | |
Realized gains (losses) on securities | (116) | | | — | | | — | | | | | (116) | |
| Income of managed investment entities: | | | | | | | | | |
| Investment income | — | | | 268 | | | — | | | | | 268 | |
| Gain (loss) on change in fair value of assets/liabilities | — | | | (2) | | | (29) | | | (b) | | (31) | |
| Other income | 134 | | | — | | | (17) | | | (c) | | 117 | |
| Total revenues | 6,810 | | | 266 | | | (36) | | | | | 7,040 | |
| Costs and Expenses: | | | | | | | | | |
| Insurance benefits and expenses | 5,347 | | | — | | | — | | | | | 5,347 | |
| Expenses of managed investment entities | — | | | 265 | | | (35) | | | (b)(c) | | 230 | |
| Interest charges on borrowed money and other expenses | 340 | | | — | | | — | | | | | 340 | |
| Total costs and expenses | 5,687 | | | 265 | | | (35) | | | | | 5,917 | |
Earnings before income taxes | 1,123 | | | 1 | | | (1) | | | | | 1,123 | |
| Provision for income taxes | 225 | | | — | | | — | | | | | 225 | |
Net earnings | $ | 898 | | | $ | 1 | | | $ | (1) | | | | | $ | 898 | |
(a)Includes a loss of $10 million representing the change in fair value of AFG’s CLO investments and $17 million of income in CLO management fees earned.
(b)Elimination of the change in fair value of AFG’s investments in the CLOs, including $18 million in distributions recorded as interest expense by the CLOs.
(c)Elimination of management fees earned by AFG.
RESULTS OF OPERATIONS
General
AFG’s net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. Core net operating earnings excludes realized gains (losses) on securities because such gains and losses are influenced significantly by financial markets, interest rates and the timing of sales. In addition, special charges related to coverage that AFG no longer writes, such as asbestos and environmental exposures, are excluded from core earnings.
The following table (in millions, except per share amounts) identifies non-core items and reconciles net earnings to core net operating earnings, a non-GAAP financial measure. AFG believes core net operating earnings is a useful tool for investors and analysts in analyzing ongoing operating trends and for management to evaluate financial performance against historical results because it believes this provides a more comparable measure of its continuing business.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | Year ended December 31, |
| 2024 | | 2023 | | 2024 | | 2023 | | 2022 |
Components of net earnings: | | | | | | | | | |
| Core operating earnings before income taxes | $ | 330 | | | $ | 304 | | | $ | 1,138 | | | $ | 1,127 | | | $ | 1,248 | |
| Pretax non-core items: | | | | | | | | | |
| Realized gains (losses) on securities | (10) | | | 31 | | | — | | | (36) | | | (116) | |
Realized loss on subsidiary | — | | | — | | | — | | | (4) | | | — | |
| Special A&E charges | — | | | — | | | (14) | | | (15) | | | — | |
| Gain (loss) on retirement of debt | — | | | — | | | — | | | 1 | | | (9) | |
| Other | — | | | — | | | — | | | — | | | — | |
Earnings before income taxes | 320 | | | 335 | | | 1,124 | | | 1,073 | | | 1,123 | |
| Provision for income taxes: | | | | | | | | | |
| Core operating earnings | 68 | | | 66 | | | 236 | | | 232 | | | 255 | |
| Non-core items: | | | | | | | | | |
| Realized gains (losses) on securities | (3) | | | 6 | | | — | | | (8) | | | (24) | |
Realized loss on subsidiary | — | | | — | | | 4 | | | — | | | — | |
| Special A&E charges | — | | | — | | | (3) | | | (3) | | | — | |
| Gain (loss) on retirement of debt | — | | | — | | | — | | | — | | | (2) | |
| Other | — | | | — | | | — | | | — | | | (4) | |
| Total provision for income taxes | 65 | | | 72 | | | 237 | | | 221 | | | 225 | |
Net earnings | $ | 255 | | | $ | 263 | | | $ | 887 | | | $ | 852 | | | $ | 898 | |
| | | | | | | | | |
| Net earnings: | | | | | | | | | |
| Core net operating earnings | $ | 262 | | | $ | 238 | | | $ | 902 | | | $ | 895 | | | $ | 993 | |
| Realized gains (losses) on securities | (7) | | | 25 | | | — | | | (28) | | | (92) | |
Realized loss on subsidiary | — | | | — | | | (4) | | | (4) | | | — | |
| Special A&E charges | — | | | — | | | (11) | | | (12) | | | — | |
| Gain (loss) on retirement of debt | — | | | — | | | — | | | 1 | | | (7) | |
| Other | — | | | — | | | — | | | — | | | 4 | |
Net earnings | $ | 255 | | | $ | 263 | | | $ | 887 | | | $ | 852 | | | $ | 898 | |
| | | | | | | | | |
| Diluted per share amounts: | | | | | | | | | |
| Core net operating earnings | $ | 3.12 | | | $ | 2.84 | | | $ | 10.75 | | | $ | 10.56 | | | $ | 11.63 | |
| Realized gains (losses) on securities | (0.09) | | | 0.29 | | | — | | | (0.33) | | | (1.06) | |
Realized loss on subsidiary | — | | | — | | | (0.05) | | | (0.04) | | | — | |
| Special A&E charges | — | | | — | | | (0.13) | | | (0.15) | | | — | |
| Gain (loss) on retirement of debt | — | | | — | | | — | | | 0.01 | | | (0.09) | |
| Other | — | | | — | | | — | | | — | | | 0.05 | |
Net earnings | $ | 3.03 | | | $ | 3.13 | | | $ | 10.57 | | | $ | 10.05 | | | $ | 10.53 | |
Net earnings were $255 million in the fourth quarter of 2024 compared to $263 million in the fourth quarter of 2023 reflecting net realized losses on securities in the fourth quarter of 2024 compared to net realized gains on securities in the fourth quarter of 2023, partially offset by higher core net operating earnings. Core net operating earnings for the fourth quarter of 2024 increased $24 million compared to the fourth quarter of 2023 reflecting higher net investment income, including improved returns on alternative investments, partially offset by lower underwriting profit. Net realized losses on securities of $7 million in the fourth quarter of 2024 and net realized gains on securities of $25 million in the fourth quarter of 2023 include $1 million of after-tax losses and $22 million of after-tax gains, respectively, from the change in fair value of equity securities that were still held at the balance sheet date.
Net earnings were $887 million for the full-year of 2024 compared to $852 million in 2023 reflecting the impact of net realized losses on securities in 2023 and higher core net operating earnings. Core net operating earnings for 2024 increased $7 million compared to 2023. Higher investment income outside of alternative investments was partially offset by lower returns on AFG’s alternative investment portfolio and lower underwriting profit. Net realized gains on securities of less than $1 million in 2024 and net realized losses on securities of $28 million in 2023 include $19 million of after-tax
gains and $2 million of after-tax losses, respectively, from the change in fair value of equity securities that were still held at the balance sheet date.
Net earnings were $852 million for the full-year of 2023 compared to $898 million in 2022 reflecting lower core net operating earnings and a special A&E charge recorded in the third quarter of 2023, partially offset by lower net realized losses on securities in 2023 compared to 2022. Core net operating earnings for 2023 decreased $98 million compared to 2022 reflecting lower returns on AFG’s alternative investment portfolio when compared to the strong performance of this portfolio in 2022 and lower underwriting profit, partially offset by higher investment income outside of alternative investments. Net realized losses on securities of $28 million in 2023 and $92 million in 2022 include $2 million and $75 million, respectively, of after-tax losses from the change in fair value of equity securities that were still held at the balance sheet date.
RESULTS OF OPERATIONS — THREE MONTHS ENDED DECEMBER 31, 2024 AND 2023
Segmented Statement of Earnings
AFG reports its operations as two segments: (i) Property and casualty insurance (“P&C”) and (ii) Other, which includes holding company costs and income and expenses related to the managed investment entities (“MIEs”).
AFG’s net earnings, determined in accordance with GAAP, include certain items that may not be indicative of its ongoing core operations. The following tables for the three months ended December 31, 2024 and 2023 identify such items by segment and reconcile net earnings to core net operating earnings, a non-GAAP financial measure that AFG believes is a useful tool for investors and analysts in analyzing ongoing operating trends (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Other | | | | | | |
| P&C | | Consol. MIEs | | Holding Co., other and unallocated | | Total | | Non-core reclass | | GAAP Total |
| Three months ended December 31, 2024 | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | |
Net earned premiums | $ | 1,850 | | | $ | — | | | $ | — | | | $ | 1,850 | | | $ | — | | | $ | 1,850 | |
| Net investment income | 195 | | | (8) | | | 7 | | | 194 | | | — | | | 194 | |
| Realized gains (losses) on securities | — | | | — | | | — | | | — | | | (10) | | | (10) | |
| Income of MIEs: | | | | | | | | | | | |
| Investment income | — | | | 84 | | | — | | | 84 | | | — | | | 84 | |
Gain (loss) on change in fair value of assets/liabilities | — | | | (1) | | | — | | | (1) | | | — | | | (1) | |
| Other income | 2 | | | (4) | | | 34 | | | 32 | | | — | | | 32 | |
| Total revenues | 2,047 | | | 71 | | | 41 | | | 2,159 | | | (10) | | | 2,149 | |
| | | | | | | | | | | |
| Costs and Expenses: | | | | | | | | | | | |
| Losses and loss adjustment expenses | 1,181 | | | — | | | — | | | 1,181 | | | — | | | 1,181 | |
| Commissions and other underwriting expenses | 467 | | | — | | | 13 | | | 480 | | | — | | | 480 | |
| Interest charges on borrowed money | — | | | — | | | 19 | | | 19 | | | — | | | 19 | |
| Expenses of MIEs | — | | | 71 | | | — | | | 71 | | | — | | | 71 | |
| Other expenses | 21 | | | — | | | 57 | | | 78 | | | — | | | 78 | |
| Total costs and expenses | 1,669 | | | 71 | | | 89 | | | 1,829 | | | — | | | 1,829 | |
| Earnings before income taxes | 378 | | | — | | | (48) | | | 330 | | | (10) | | | 320 | |
| Provision for income taxes | 81 | | | — | | | (13) | | | 68 | | | (3) | | | 65 | |
Core Net Operating Earnings | 297 | | | — | | | (35) | | | 262 | | | | | |
| Non-core earnings (loss) (*): | | | | | | | | | | | |
| Realized gains (losses) on securities, net of tax | — | | | — | | | (7) | | | (7) | | | 7 | | | — | |
| Net Earnings | $ | 297 | | | $ | — | | | $ | (42) | | | $ | 255 | | | $ | — | | | $ | 255 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Other | | | | | | |
| P&C | | Consol. MIEs | | Holding Co., other and unallocated | | Total | | Non-core reclass | | GAAP Total |
| Three months ended December 31, 2023 | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | |
Net earned premiums | $ | 1,732 | | | $ | — | | | $ | — | | | $ | 1,732 | | | $ | — | | | $ | 1,732 | |
| Net investment income | 161 | | | (9) | | | 7 | | | 159 | | | — | | | 159 | |
| Realized gains (losses) on securities | — | | | — | | | — | | | — | | | 31 | | | 31 | |
| Income of MIEs: | | | | | | | | | | | |
| Investment income | — | | | 100 | | | — | | | 100 | | | — | | | 100 | |
Gain (loss) on change in fair value of assets/liabilities | — | | | 15 | | | — | | | 15 | | | — | | | 15 | |
| Other income | 3 | | | (4) | | | 47 | | | 46 | | | — | | | 46 | |
| Total revenues | 1,896 | | | 102 | | | 54 | | | 2,052 | | | 31 | | | 2,083 | |
| | | | | | | | | | | |
| Costs and Expenses: | | | | | | | | | | | |
| Losses and loss adjustment expenses | 1,053 | | | — | | | 16 | | | 1,069 | | | — | | | 1,069 | |
| Commissions and other underwriting expenses | 468 | | | — | | | 12 | | | 480 | | | — | | | 480 | |
| Interest charges on borrowed money | — | | | — | | | 19 | | | 19 | | | — | | | 19 | |
| Expenses of MIEs | — | | | 102 | | | — | | | 102 | | | — | | | 102 | |
| Other expenses | 18 | | | — | | | 60 | | | 78 | | | — | | | 78 | |
| Total costs and expenses | 1,539 | | | 102 | | | 107 | | | 1,748 | | | — | | | 1,748 | |
| Earnings before income taxes | 357 | | | — | | | (53) | | | 304 | | | 31 | | | 335 | |
| Provision for income taxes | 74 | | | — | | | (8) | | | 66 | | | 6 | | | 72 | |
Core Net Operating Earnings | 283 | | | — | | | (45) | | | 238 | | | | | |
| Non-core earnings (loss) (*): | | | | | | | | | | | |
| Realized gains (losses) on securities, net of tax | — | | | — | | | 25 | | | 25 | | | (25) | | | — | |
| Net Earnings | $ | 283 | | | $ | — | | | $ | (20) | | | $ | 263 | | | $ | — | | | $ | 263 | |
(*)See the reconciliation of core earnings to GAAP net earnings under “Results of Operations — General” for details on the tax impacts of these reconciling items.
Property and Casualty Insurance Segment — Results of Operations
Performance measures such as underwriting profit or loss and related combined ratios are often used by property and casualty insurers to help users of their financial statements better understand the company’s performance. Underwriting profitability is measured by the combined ratio, which is a sum of the ratios of losses and loss adjustment expenses, and commissions and other underwriting expenses to premiums. A combined ratio under 100% indicates an underwriting profit. The combined ratio does not reflect net investment income, other income, other expenses or federal income taxes.
AFG’s property and casualty insurance operations contributed $378 million in pretax earnings in the fourth quarter of 2024 compared to $357 million in the fourth quarter of 2023, an increase of $21 million (6%) as a result of higher net investment income which was partially offset by lower underwriting profit.
The following table details AFG’s earnings before income taxes from its property and casualty insurance operations for the three months ended December 31, 2024 and 2023 (dollars in millions):
| | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | |
| 2024 | | 2023 | | % Change |
| Gross written premiums | $ | 2,043 | | | $ | 1,992 | | | 3 | % |
| Reinsurance premiums ceded | (583) | | | (547) | | | 7 | % |
| Net written premiums | 1,460 | | | 1,445 | | | 1 | % |
| Change in unearned premiums | 390 | | | 287 | | | 36 | % |
| Net earned premiums | 1,850 | | | 1,732 | | | 7 | % |
| Loss and loss adjustment expenses | 1,181 | | | 1,053 | | | 12 | % |
| Commissions and other underwriting expenses | 467 | | | 468 | | | — | % |
| Underwriting gain | 202 | | | 211 | | | (4 | %) |
| | | | | |
| Net investment income | 195 | | | 161 | | | 21 | % |
| Other income and expenses, net | (19) | | | (15) | | | 27 | % |
| Earnings before income taxes | $ | 378 | | | $ | 357 | | | 6 | % |
| | | | | |
| Three months ended December 31, | | |
| Combined Ratios: | 2024 | | 2023 | | Change |
| Specialty lines | | | | | |
| Loss and LAE ratio | 63.7 | % | | 60.7 | % | | 3.0 | % |
| Underwriting expense ratio | 25.3 | % | | 27.0 | % | | (1.7 | %) |
| Combined ratio | 89.0 | % | | 87.7 | % | | 1.3 | % |
| | | | | |
| Aggregate — including exited lines | | | | | |
| Loss and LAE ratio | 63.8 | % | | 60.8 | % | | 3.0 | % |
| Underwriting expense ratio | 25.3 | % | | 27.0 | % | | (1.7 | %) |
| Combined ratio | 89.1 | % | | 87.8 | % | | 1.3 | % |
AFG’s statutory combined ratio has been better than the U.S. industry average for 37 of the most recent 39 years. Management believes that AFG’s insurance operations have performed better than the industry as a result of its specialty niche focus, product line diversification, stringent underwriting discipline and alignment of compensation incentives.
AFG reports the underwriting performance of its Specialty property and casualty insurance business in the following sub-segments: (i) Property and transportation, (ii) Specialty casualty and (iii) Specialty financial.
To understand the overall profitability of particular lines, the timing of claims payments and the related impact of investment income must be considered. Certain “short-tail” lines of business (primarily property coverages) generally have quick loss payouts, which reduce the time funds are held, thereby limiting investment income earned thereon. In contrast, “long-tail” lines of business (primarily liability coverages and workers’ compensation) generally have payouts that are either structured over many years or take many years to settle, thereby significantly increasing investment income earned on related premiums received.
Gross Written Premiums
Gross written premiums (“GWP”) for AFG’s property and casualty insurance segment were $2.04 billion for the fourth quarter of 2024 compared to $1.99 billion for the fourth quarter of 2023, an increase of $51 million (3%). Detail of AFG’s property and casualty gross written premiums is shown below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | |
| 2024 | | 2023 | | |
| GWP | | % | | GWP | | % | | % Change |
| Property and transportation | $ | 585 | | | 29 | % | | $ | 623 | | | 31 | % | | (6 | %) |
| Specialty casualty | 1,126 | | | 55 | % | | 1,069 | | | 54 | % | | 5 | % |
| Specialty financial | 332 | | | 16 | % | | 300 | | | 15 | % | | 11 | % |
| $ | 2,043 | | | 100 | % | | $ | 1,992 | | | 100 | % | | 3 | % |
Reinsurance Premiums Ceded
Reinsurance premiums ceded (“Ceded”) for AFG’s property and casualty insurance segment were 29% of gross written premiums for the fourth quarter of 2024 compared to 27% of gross written premiums for the fourth quarter of 2023, an increase of 2 percentage points. Detail of AFG’s property and casualty reinsurance premiums ceded is shown below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | |
| 2024 | | 2023 | | Change in % of GWP |
| Ceded | | % of GWP | | Ceded | | % of GWP | |
| Property and transportation | $ | (186) | | | 32 | % | | $ | (197) | | | 32 | % | | — | % |
| Specialty casualty | (401) | | | 36 | % | | (369) | | | 35 | % | | 1 | % |
| Specialty financial | (53) | | | 16 | % | | (50) | | | 17 | % | | (1 | %) |
| Other specialty | 57 | | | | | 69 | | | | | |
| $ | (583) | | | 29 | % | | $ | (547) | | | 27 | % | | 2 | % |
Net Written Premiums
Net written premiums (“NWP”) for AFG’s property and casualty insurance segment were $1.46 billion for the fourth quarter of 2024 compared to $1.45 billion for the fourth quarter of 2023, an increase of $15 million (1%). Detail of AFG’s property and casualty net written premiums is shown below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | |
| 2024 | | 2023 | | |
| NWP | | % | | NWP | | % | | % Change |
| Property and transportation | $ | 399 | | | 27 | % | | $ | 426 | | | 30 | % | | (6 | %) |
| Specialty casualty | 725 | | | 50 | % | | 700 | | | 48 | % | | 4 | % |
| Specialty financial | 279 | | | 19 | % | | 250 | | | 17 | % | | 12 | % |
| Other specialty | 57 | | | 4 | % | | 69 | | | 5 | % | | (17 | %) |
| $ | 1,460 | | | 100 | % | | $ | 1,445 | | | 100 | % | | 1 | % |
Net Earned Premiums
Net earned premiums (“NEP”) for AFG’s property and casualty insurance segment were $1.85 billion for the fourth quarter of 2024 compared to $1.73 billion for the fourth quarter of 2023, an increase of $118 million (7%). Detail of AFG’s property and casualty net earned premiums is shown below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | |
| 2024 | | 2023 | | |
| NEP | | % | | NEP | | % | | % Change |
| Property and transportation | $ | 756 | | | 41 | % | | $ | 682 | | | 39 | % | | 11 | % |
| Specialty casualty | 754 | | | 41 | % | | 737 | | | 43 | % | | 2 | % |
| Specialty financial | 279 | | | 15 | % | | 244 | | | 14 | % | | 14 | % |
| Other specialty | 61 | | | 3 | % | | 69 | | | 4 | % | | (12 | %) |
| $ | 1,850 | | | 100 | % | | $ | 1,732 | | | 100 | % | | 7 | % |
Gross written premiums for the fourth quarter of 2024 increased $51 million (3%) compared to the fourth quarter of 2023 driven primarily by new business opportunities, a good renewal rate environment and increased exposures. Overall average renewal rates increased approximately 7% in the fourth quarter of 2024. Excluding overall rate decreases in the workers’ compensation businesses, renewal rates increased approximately 8%.
Property and transportation Gross written premiums decreased $38 million (6%) in the fourth quarter of 2024 compared to the fourth quarter of 2023. This decrease was due primarily to the impact of lower year-over-year commodity pricing on winter wheat premiums, coupled with elevated pricing competition and the non-renewal of certain under-performing accounts in the transportation businesses. Average renewal rates increased 7% for this group in the fourth quarter of 2024. Reinsurance premiums ceded as a percentage of gross written premiums were comparable in the fourth quarter of 2024 and the fourth quarter of 2023 reflecting higher cessions in the crop business offset by the impact of lower cessions in certain transportation businesses.
Specialty casualty Gross written premiums increased $57 million (5%) in the fourth quarter of 2024 compared to the fourth quarter of 2023. The primary drivers of growth were new business opportunities and favorable renewal pricing in
several of the targeted markets businesses and in the excess and surplus business. The mergers and acquisitions liability business also benefited from an increase in mergers and acquisition activity. This growth was tempered by lower year-over-year workers’ compensation premiums. Average renewal rates for this group increased approximately 8% in the fourth quarter of 2024. Excluding rate decreases in the workers’ compensation businesses, renewal rates for this group increased approximately 11%. Reinsurance premiums ceded as a percentage of gross written premiums increased 1 percentage point for the fourth quarter of 2024 compared to the fourth quarter of 2023 reflecting higher premiums in the excess and surplus and mergers and acquisitions liability businesses, which cede a larger percentage of premiums than some of the other businesses in the Specialty casualty sub-segment as well as higher cessions in the public sector business, partially offset by lower cessions in certain more heavily reinsured products in the social services business.
Specialty financial Gross written premiums increased $32 million (11%) in the fourth quarter of 2024 compared to the fourth quarter of 2023 due primarily to growth in the financial institutions business. Average renewal rates for this group increased approximately 3% in the fourth quarter of 2024. Reinsurance premiums ceded as a percentage of gross written premiums decreased 1 percentage point in the fourth quarter of 2024 compared to the fourth quarter of 2023 reflecting the impact of lower gross written premiums in the innovative markets business, which cedes a larger percentage of premiums than some of the other businesses in the Specialty financial sub-segment.
Other specialty The amounts shown as reinsurance premiums ceded represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty property and casualty insurance sub-segments. Reinsurance premiums assumed decreased $12 million (17%) in the fourth quarter of 2024 compared to the fourth quarter of 2023 reflecting a decrease in premiums retained, primarily from businesses in the Specialty casualty sub-segment.
Combined Ratio
Performance measures such as the combined ratio are often used by property and casualty insurers to help users of their financial statements better understand the company’s performance. The combined ratio is the sum of the loss and loss adjustment expenses (“LAE”) and underwriting expense ratios. These ratios are calculated by dividing each of the respective expenses by net earned premiums. The table below (dollars in millions) details the components of the combined ratio for AFG’s property and casualty insurance segment:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | | | Three months ended December 31, |
| 2024 | | 2023 | | Change | | 2024 | | 2023 |
| Property and transportation | | | | | | | | | |
| Loss and LAE ratio | 69.3 | % | | 69.0 | % | | 0.3 | % | | | | |
| Underwriting expense ratio | 19.9 | % | | 21.3 | % | | (1.4 | %) | | | | |
| Combined ratio | 89.2 | % | | 90.3 | % | | (1.1 | %) | | | | |
| Underwriting profit | | | | | | | $ | 82 | | | $ | 67 | |
| | | | | | | | | |
| Specialty casualty | | | | | | | | | |
| Loss and LAE ratio | 65.6 | % | | 59.6 | % | | 6.0 | % | | | | |
| Underwriting expense ratio | 23.4 | % | | 25.0 | % | | (1.6 | %) | | | | |
| Combined ratio | 89.0 | % | | 84.6 | % | | 4.4 | % | | | | |
| Underwriting profit | | | | | | | $ | 82 | | | $ | 114 | |
| | | | | | | | | |
| Specialty financial | | | | | | | | | |
| Loss and LAE ratio | 38.1 | % | | 34.8 | % | | 3.3 | % | | | | |
| Underwriting expense ratio | 42.6 | % | | 46.5 | % | | (3.9 | %) | | | | |
| Combined ratio | 80.7 | % | | 81.3 | % | | (0.6 | %) | | | | |
| Underwriting profit | | | | | | | $ | 54 | | | $ | 45 | |
| | | | | | | | | |
| Total Specialty | | | | | | | | | |
| Loss and LAE ratio | 63.7 | % | | 60.7 | % | | 3.0 | % | | | | |
| Underwriting expense ratio | 25.3 | % | | 27.0 | % | | (1.7 | %) | | | | |
| Combined ratio | 89.0 | % | | 87.7 | % | | 1.3 | % | | | | |
| Underwriting profit | | | | | | | $ | 204 | | | $ | 212 | |
| | | | | | | | | |
| Aggregate — including exited lines | | | | | | | | | |
| Loss and LAE ratio | 63.8 | % | | 60.8 | % | | 3.0 | % | | | | |
| Underwriting expense ratio | 25.3 | % | | 27.0 | % | | (1.7 | %) | | | | |
| Combined ratio | 89.1 | % | | 87.8 | % | | 1.3 | % | | | | |
| Underwriting profit | | | | | | | $ | 202 | | | $ | 211 | |
The Specialty property and casualty insurance operations generated an underwriting profit of $204 million in the fourth quarter of 2024 compared to $212 million in the fourth quarter of 2023, a decrease of $8 million (4%). Higher underwriting profit in the Property and transportation and Specialty financial sub-segments was more than offset by lower year-over-year underwriting profit in the Specialty casualty sub-segment, which was impacted by net adverse prior year reserve development in certain social inflation exposed businesses. Overall catastrophe losses were $21 million (1.1 points on the combined ratio), including $1 million in net reinstatement premiums in the fourth quarter of 2024 compared to catastrophe losses of $25 million (1.4 points), including $1 million in net reinstatement premiums in the fourth quarter of 2023.
Property and transportation Underwriting profit for this group was $82 million for the fourth quarter of 2024 compared to $67 million in the fourth quarter of 2023, an increase of $15 million (22%), reflecting higher year-over-year underwriting profitability in the crop insurance operations. Catastrophe losses for this group were $10 million (1.3 points on the combined ratio), including $1 million in net reinstatement premiums in the fourth quarter of 2024 compared to catastrophe losses of $5 million (0.6 points), including $2 million in net reinstatement premiums in the fourth quarter of 2023.
Specialty casualty Underwriting profit for this group was $82 million for the fourth quarter of 2024 compared to $114 million in the fourth quarter of 2023, a decrease of $32 million (28%). Higher year-over-year underwriting profit in the targeted markets businesses was more than offset by lower underwriting profit in the excess liability, workers’ compensation and executive liability businesses. Catastrophe losses, including the impact of lower than previously estimated losses from Hurricane Helene, had a favorable impact of $5 million (0.8 points on the combined ratio) compared
to catastrophe losses of $8 million (1.1 points), including a $1 million favorable impact from lower than previously estimated net reinstatement premiums in the fourth quarter of 2023.
Specialty financial Underwriting profit for this group was $54 million for the fourth quarter of 2024 compared to $45 million in the fourth quarter of 2023, an increase of $9 million (20%). This year-over-year increase reflects higher underwriting profit in the financial institutions business. Catastrophe losses were $17 million (6.2 points on the combined ratio) in the fourth quarter of 2024 compared to $4 million (2.0 points) in the fourth quarter of 2023.
Other specialty This group reported an underwriting loss of $14 million for the fourth quarter of 2024 and the fourth quarter of 2023, reflecting losses in the business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments. Favorable changes in estimated losses from Hurricane Helene resulted in a favorable impact of $1 million from catastrophe losses in the fourth quarter of 2024 compared to catastrophe losses of $8 million in the fourth quarter of 2023.
Aggregate Aggregate underwriting results for AFG’s property and casualty insurance segment include adverse prior year reserve development of $2 million in the fourth quarter of 2024 and $1 million in the fourth quarter of 2023 related to business outside of the Specialty group that AFG no longer writes.
Losses and Loss Adjustment Expenses
AFG’s overall loss and LAE ratio was 63.8% for the fourth quarter of 2024 compared to 60.8% for the fourth quarter of 2023, an increase of 3.0 percentage points. The components of AFG’s property and casualty losses and LAE amounts and ratio are detailed below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | |
| Amount | | Ratio | | Change in Ratio |
| 2024 | | 2023 | | 2024 | | 2023 | |
| Property and transportation | | | | | | | | | |
Current year, excluding catastrophe losses | $ | 517 | | | $ | 479 | | | 68.5 | % | | 70.2 | % | | (1.7 | %) |
| Prior accident years development | (3) | | | (12) | | | (0.5 | %) | | (1.8 | %) | | 1.3 | % |
| Current year catastrophe losses including the impact of net reinstatement premiums | 9 | | | 3 | | | 1.3 | % | | 0.6 | % | | 0.7 | % |
| Property and transportation losses and LAE and ratio | $ | 523 | | | $ | 470 | | | 69.3 | % | | 69.0 | % | | 0.3 | % |
| | | | | | | | | |
| Specialty casualty | | | | | | | | | |
Current year, excluding catastrophe losses | $ | 464 | | | $ | 466 | | | 61.6 | % | | 63.5 | % | | (1.9 | %) |
| Prior accident years development | 36 | | | (37) | | | 4.8 | % | | (5.0 | %) | | 9.8 | % |
| Current year catastrophe losses including the impact of net reinstatement premiums | (5) | | | 9 | | | (0.8 | %) | | 1.1 | % | | (1.9 | %) |
| Specialty casualty losses and LAE and ratio | $ | 495 | | | $ | 438 | | | 65.6 | % | | 59.6 | % | | 6.0 | % |
| | | | | | | | | |
| Specialty financial | | | | | | | | | |
Current year, excluding catastrophe losses | $ | 97 | | | $ | 89 | | | 34.8 | % | | 36.2 | % | | (1.4 | %) |
| Prior accident years development | (8) | | | (8) | | | (2.9 | %) | | (3.4 | %) | | 0.5 | % |
| Current year catastrophe losses including the impact of net reinstatement premiums | 17 | | | 4 | | | 6.2 | % | | 2.0 | % | | 4.2 | % |
| Specialty financial losses and LAE and ratio | $ | 106 | | | $ | 85 | | | 38.1 | % | | 34.8 | % | | 3.3 | % |
| | | | | | | | | |
| Total Specialty | | | | | | | | | |
Current year, excluding catastrophe losses | $ | 1,125 | | | $ | 1,085 | | | 60.8 | % | | 62.6 | % | | (1.8 | %) |
| Prior accident years development | 34 | | | (57) | | | 1.8 | % | | (3.3 | %) | | 5.1 | % |
| Current year catastrophe losses including the impact of net reinstatement premiums | 20 | | | 24 | | | 1.1 | % | | 1.4 | % | | (0.3 | %) |
| Total Specialty losses and LAE and ratio | $ | 1,179 | | | $ | 1,052 | | | 63.7 | % | | 60.7 | % | | 3.0 | % |
| | | | | | | | | |
| Aggregate — including exited lines | | | | | | | | | |
Current year, excluding catastrophe losses | $ | 1,125 | | | $ | 1,085 | | | 60.8 | % | | 62.6 | % | | (1.8 | %) |
| Prior accident years development | 36 | | | (56) | | | 1.9 | % | | (3.2 | %) | | 5.1 | % |
| Current year catastrophe losses including the impact of net reinstatement premiums | 20 | | | 24 | | | 1.1 | % | | 1.4 | % | | (0.3 | %) |
| Aggregate losses and LAE and ratio | $ | 1,181 | | | $ | 1,053 | | | 63.8 | % | | 60.8 | % | | 3.0 | % |
Current accident year losses and LAE, excluding catastrophe losses
The current accident year loss and LAE ratio, excluding catastrophe losses for AFG’s Specialty property and casualty insurance operations was 60.8% for the fourth quarter of 2024 compared to 62.6% in the fourth quarter of 2023, a decrease of 1.8 percentage points.
Property and transportation The 1.7 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects improved profitability in the crop, ocean marine and property and inland marine businesses, partially offset by higher claim severity in the commercial auto business.
Specialty casualty The 1.9 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in certain programs in the social services business that have a lower loss and LAE ratio than some of the other businesses in the Specialty casualty sub-segment and improved results in the workers’
compensation businesses, partially offset by higher claim severity in the excess and surplus business and the impact of pressure on rates in the executive liability business.
Specialty financial The 1.4 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses, reflects growth in the financial institutions business, which has a lower loss and LAE ratio than some of the other businesses in the Specialty financial sub-segment.
Net prior year reserve development
AFG’s Specialty property and casualty insurance operations recorded net adverse reserve development related to prior accident years of $34 million in the fourth quarter of 2024 compared to net favorable reserve development related to prior accident years of $57 million in the fourth quarter of 2023, a change of $91 million (160%).
Property and transportation Net favorable reserve development of $3 million in the fourth quarter of 2024 reflects lower than anticipated losses in the crop business and lower than expected claim severity in the aviation business, partially offset by higher than anticipated claim severity in the commercial auto business. Net favorable reserve development of $12 million in the fourth quarter of 2023 reflects lower than anticipated losses in the crop business and lower than expected claim frequency in the ocean marine and property and inland marine businesses.
Specialty casualty Net adverse reserve development of $36 million in the fourth quarter of 2024 reflects higher than anticipated claim frequency and severity in the umbrella and excess liability businesses and higher than expected claim severity in the social services and general liability businesses, partially offset by lower than expected claim severity in the workers’ compensation businesses. Net favorable reserve development of $37 million in the fourth quarter of 2023 reflects lower than anticipated claim severity in the workers’ compensation businesses, partially offset by higher than anticipated claim severity in the excess and surplus business and higher than expected claim frequency and severity in the excess liability and general liability businesses.
Specialty financial Net favorable reserve development of $8 million in the fourth quarter of 2024 reflects lower than anticipated claim frequency and severity in the financial institutions business and lower than expected claim severity in the fidelity business. Net favorable reserve development of $8 million in the fourth quarter of 2023 reflects lower than anticipated claim frequency and severity in the fidelity business and lower than expected claim frequency in the financial institutions and trade credit businesses.
Other specialty In addition to the development discussed above, total Specialty prior year reserve development includes net adverse reserve development of $9 million in the fourth quarter of 2024 and less than $1 million in the fourth quarter of 2023 primarily associated with AFG’s internal reinsurance program. The net adverse reserve development in 2024 is primarily related to social inflation exposed business assumed from the Specialty casualty sub-segment.
Aggregate Aggregate net prior accident years reserve development for AFG’s property and casualty insurance segment includes net adverse reserve development of $2 million in the fourth quarter of 2024 and $1 million in the fourth quarter of 2023 related to business outside of the Specialty group that AFG no longer writes.
Catastrophe losses
AFG generally seeks to reduce its exposure to catastrophes (whether resulting from climate change or otherwise) through individual risk selection, including minimizing coastal and known fault-line exposures, and the purchase of reinsurance. Based on data available at December 31, 2024 (including the expected placement of a catastrophe bond structure or additional other reinsurance protection in the second quarter of 2025), AFG’s exposure to a catastrophic earthquake or windstorm that industry models indicate should statistically occur once in every 100, 250 or 500 years as a percentage of AFG’s Shareholders’ Equity is shown below:
| | | | | | | | | | | | | | | | | | | | |
| | | Approximate impact of modeled loss on AFG’s Shareholders’ Equity | |
| Industry Model | | Excluding the expected placement of a catastrophe bond | | Including the expected placement of a catastrophe bond | |
| 100-year event | | 3% | | 2% | |
| 250-year event | | 6% | | 2% | |
| 500-year event | | 8% | | 3% | |
Catastrophe losses of $20 million (before $1 million in net reinstatement premiums) in the fourth quarter of 2024 resulted primarily from Hurricane Milton. Catastrophe losses of $24 million (before $1 million in net reinstatement premiums) in the fourth quarter of 2023 resulted primarily from storms in multiple regions of the United States.
Commissions and Other Underwriting Expenses
AFG’s property and casualty commissions and other underwriting expenses (“U/W Exp”) were $467 million in the fourth quarter of 2024 compared to $468 million for the fourth quarter of 2023, a decrease of $1 million. AFG’s underwriting expense ratio, calculated as commissions and other underwriting expenses divided by net premiums earned, was 25.3% for the fourth quarter of 2024 compared to 27.0% for the fourth quarter of 2023, a decrease of 1.7 percentage points. Detail of AFG’s property and casualty commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | |
| 2024 | | 2023 | | Change in % of NEP |
| U/W Exp | | % of NEP | | U/W Exp | | % of NEP | |
| Property and transportation | $ | 151 | | | 19.9 | % | | $ | 145 | | | 21.3 | % | | (1.4 | %) |
| Specialty casualty | 177 | | | 23.4 | % | | 185 | | | 25.0 | % | | (1.6 | %) |
| Specialty financial | 119 | | | 42.6 | % | | 114 | | | 46.5 | % | | (3.9 | %) |
| Other specialty | 20 | | | 35.2 | % | | 24 | | | 36.1 | % | | (0.9 | %) |
| $ | 467 | | | 25.3 | % | | $ | 468 | | | 27.0 | % | | (1.7 | %) |
Property and transportation Commissions and other underwriting expenses as a percentage of net earned premiums decreased 1.4 percentage points in the fourth quarter of 2024 compared to the fourth quarter of 2023. The decrease reflects the impact on the ratio of higher earned premiums, including in the crop business which has a lower commissions and other underwriting expense ratio than some of the other businesses in the Property and transportation sub-segment, and lower average commission rates in the transportation businesses due to a change in the mix of business.
Specialty casualty Commissions and other underwriting expenses as a percentage of net earned premiums decreased 1.6 percentage points in the fourth quarter of 2024 compared to the fourth quarter of 2023 reflecting a change in the mix of business towards products with lower commission rates.
Specialty financial Commissions and other underwriting expenses as a percentage of net earned premiums decreased 3.9 percentage points in the fourth quarter of 2024 compared to the fourth quarter of 2023 reflecting the impact on the ratio of higher earned premiums in the financial institutions business and a change in the mix of business towards products with lower commission rates.
Property and Casualty Net Investment Income
Net investment income in AFG’s property and casualty insurance operations was $195 million in the fourth quarter of 2024 compared to $161 million in the fourth quarter of 2023, an increase of $34 million (21%). The average invested assets and overall yield earned on investments held by AFG’s property and casualty insurance operations are provided below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended December 31, | | | | % |
| 2024 | | 2023 | | Change | | Change |
| Net investment income: | | | | | | | |
| Net investment income, excluding alternative investments | $ | 162 | | | $ | 156 | | | $ | 6 | | | 4 | % |
| Alternative investments | 33 | | | 5 | | | 28 | | | 560 | % |
| Total net investment income | $ | 195 | | | $ | 161 | | | $ | 34 | | | 21 | % |
| | | | | | | |
| Average invested assets (at amortized cost) | $ | 15,718 | | | $ | 15,227 | | | $ | 491 | | | 3 | % |
| | | | | | | |
| Yield (net investment income as a % of average invested assets) | 4.96 | % | | 4.23 | % | | 0.73 | % | | |
| | | | | | | |
| Tax equivalent yield (*) | 5.03 | % | | 4.31 | % | | 0.72 | % | | |
(*)Adjusts the yield on equity securities and tax-exempt bonds to the fully taxable equivalent yield.
The increase in the property and casualty insurance segment’s net investment income for the fourth quarter of 2024 compared to the fourth quarter of 2023 reflects the impact of higher balances of invested assets, higher returns on fixed maturity investments and higher returns on AFG’s alternative investment portfolio (partnerships and similar investments and AFG-managed CLOs). The property and casualty insurance segment’s overall yield on investments (net investment income as a percentage of average invested assets) was 4.96% for the fourth quarter of 2024 compared to 4.23% for the
fourth quarter of 2023, an increase of 0.73 percentage points. The annualized return earned on alternative investments was 4.9% in the fourth quarter of 2024 compared to 0.8% in the comparable prior year period.
Property and Casualty Other Income and Expenses, Net
Other income and expenses, net for AFG’s property and casualty insurance operations was a net expense of $19 million for the fourth quarter of 2024 compared to $15 million for the fourth quarter of 2023, an increase of $4 million (27%). The table below details the items included in other income and expenses, net for AFG’s property and casualty insurance operations (in millions):
| | | | | | | | | | | |
| Three months ended December 31, |
| 2024 | | 2023 |
|
|
|
|
| | | | | | | | | |
| Year ended December 31, | | Change |
| Combined Ratios: | 2024 | | 2023 | | 2022 | | 2024 - 2023 | | 2023 - 2022 |
| Specialty lines | | | | | | | | | |
| Loss and LAE ratio | 63.3 | % | | 61.5 | % | | 59.6 | % | | 1.8 | % | | 1.9 | % |
| Underwriting expense ratio | 27.9 | % | | 28.8 | % | | 27.6 | % | | (0.9 | %) | | 1.2 | % |
| Combined ratio | 91.2 | % | | 90.3 | % | | 87.2 | % | | 0.9 | % | | 3.1 | % |
| | | | | | | | | |
| Aggregate — including exited lines | | | | | | | | | |
| Loss and LAE ratio | 63.3 | % | | 61.6 | % | | 59.7 | % | | 1.7 | % | | 1.9 | % |
| Underwriting expense ratio | 27.9 | % | | 28.8 | % | | 27.6 | % | | (0.9 | %) | | 1.2 | % |
| Combined ratio | 91.2 | % | | 90.4 | % | | 87.3 | % | | 0.8 | % | | 3.1 | % |
AFG reports the underwriting performance of its Specialty property and casualty insurance business in the following sub-segments: (i) Property and transportation, (ii) Specialty casualty and (iii) Specialty financial.
Gross Written Premiums
Gross written premiums (“GWP”) for AFG’s property and casualty insurance segment were $10.53 billion in 2024 compared to $9.66 billion in 2023, an increase of $877 million (9%). GWP increased $599 million (7%) in 2023 compared to 2022. Detail of AFG’s property and casualty gross written premiums is shown below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, | | % Change |
| 2024 | | 2023 | | 2022 | | 2024 - 2023 | | 2023 - 2022 |
| GWP | | % | | GWP | | % | | GWP | | % | | | | |
| Property and transportation | $ | 4,735 | | | 45 | % | | $ | 4,146 | | | 43 | % | | $ | 4,060 | | | 45 | % | | 14 | % | | 2 | % |
| Specialty casualty | 4,543 | | | 43 | % | | 4,368 | | | 45 | % | | 4,115 | | | 45 | % | | 4 | % | | 6 | % |
| Specialty financial | 1,255 | | | 12 | % | | 1,142 | | | 12 | % | | 882 | | | 10 | % | | 10 | % | | 29 | % |
| $ | 10,533 | | | 100 | % | | $ | 9,656 | | | 100 | % | | $ | 9,057 | | | 100 | % | | 9 | % | | 7 | % |
Reinsurance Premiums Ceded
Reinsurance premiums ceded (“Ceded”) for AFG’s property and casualty insurance segment were 32% of gross written premiums for the year ended December 31, 2024 and 31% for both years ended December 31, 2023 and December 31, 2022, an increase of 1 percentage point for 2024 compared to 2023 and 2022. Detail of AFG’s property and casualty reinsurance premiums ceded is shown below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, | | Change in % of GWP |
| 2024 | | 2023 | | 2022 | | 2024 - 2023 | | 2023 - 2022 |
| Ceded | | % of GWP | | Ceded | | % of GWP | | Ceded | | % of GWP | | | | |
| Property and transportation | $ | (1,924) | | | 41 | % | | $ | (1,595) | | | 38 | % | | $ | (1,545) | | | 38 | % | | 3 | % | | — | % |
| Specialty casualty | (1,500) | | | 33 | % | | (1,424) | | | 33 | % | | (1,387) | | | 34 | % | | — | % | | (1 | %) |
| Specialty financial | (210) | | | 17 | % | | (207) | | | 18 | % | | (171) | | | 19 | % | | (1 | %) | | (1 | %) |
| Other specialty | 240 | | | | | 262 | | | | | 252 | | | | | | | |
| $ | (3,394) | | | 32 | % | | $ | (2,964) | | | 31 | % | | $ | (2,851) | | | 31 | % | | 1 | % | | — | % |
Net Written Premiums
Net written premiums (“NWP”) for AFG’s property and casualty insurance segment were $7.14 billion in 2024 compared to $6.69 billion in 2023, an increase of $447 million (7%). NWP increased $486 million (8%) in 2023 compared to 2022. Detail of AFG’s property and casualty net written premiums is shown below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, | | % Change |
| 2024 | | 2023 | | 2022 | | 2024 - 2023 | | 2023 - 2022 |
| NWP | | % | | NWP | | % | | NWP | | % | | | | |
| Property and transportation | $ | 2,811 | | | 39 | % | | $ | 2,551 | | | 38 | % | | $ | 2,515 | | | 41 | % | | 10 | % | | 1 | % |
| Specialty casualty | 3,043 | | | 43 | % | | 2,944 | | | 44 | % | | 2,728 | | | 44 | % | | 3 | % | | 8 | % |
| Specialty financial | 1,045 | | | 15 | % | | 935 | | | 14 | % | | 711 | | | 11 | % | | 12 | % | | 32 | % |
| Other specialty | 240 | | | 3 | % | | 262 | | | 4 | % | | 252 | | | 4 | % | | (8 | %) | | 4 | % |
| $ | 7,139 | | | 100 | % | | $ | 6,692 | | | 100 | % | | $ | 6,206 | | | 100 | % | | 7 | % | | 8 | % |
Net Earned Premiums
Net earned premiums (“NEP”) for AFG’s property and casualty insurance segment were $7.04 billion in 2024 compared to $6.53 billion in 2023, an increase of $505 million (8%). NEP increased $446 million (7%) in 2023 compared to 2022. Detail of AFG’s property and casualty net earned premiums is shown below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, | | % Change |
| 2024 | | 2023 | | 2022 | | 2024 - 2023 | | 2023 - 2022 |
| NEP | | % | | NEP | | % | | NEP | | % | | | | |
| Property and transportation | $ | 2,793 | | | 40 | % | | $ | 2,519 | | | 39 | % | | $ | 2,487 | | | 41 | % | | 11 | % | | 1 | % |
| Specialty casualty | 2,967 | | | 42 | % | | 2,886 | | | 44 | % | | 2,659 | | | 44 | % | | 3 | % | | 9 | % |
| Specialty financial | 1,032 | | | 15 | % | | 867 | | | 13 | % | | 698 | | | 11 | % | | 19 | % | | 24 | % |
| Other specialty | 244 | | | 3 | % | | 259 | | | 4 | % | | 241 | | | 4 | % | | (6 | %) | | 7 | % |
| $ | 7,036 | | | 100 | % | | $ | 6,531 | | | 100 | % | | $ | 6,085 | | | 100 | % | | 8 | % | | 7 | % |
The $877 million (9%) increase in gross written premiums in 2024 compared to 2023 reflects growth in each of the Specialty property and casualty sub-segments as a result of additional crop premiums from the CRS acquisition in the Property and transportation sub-segment and new business opportunities, increased exposures and a good renewal rate environment. Overall average renewal rates increased approximately 7% in 2024. Excluding the workers’ compensation businesses, renewal pricing increased approximately 8%.
The $599 million (7%) increase in gross written premiums in 2023 compared to 2022 reflects growth in each of the Specialty property and casualty sub-segments as a result of a combination of new business opportunities, increased exposures and a good renewal rate environment. Overall average renewal rates increased approximately 5% in 2023. Excluding the workers’ compensation businesses, renewal pricing increased approximately 6%.
Property and transportation Gross written premiums increased $589 million (14%) in 2024 compared to 2023. Year-over-year premium growth resulted from additional crop premium associated with the CRS acquisition as well as new business opportunities, a favorable rate environment and increased exposures in the commercial auto businesses. This year-over-year premium growth was tempered by the impact of lower year-over-year commodity pricing on winter wheat premiums, coupled with elevated pricing competition and the non-renewal of certain under-performing accounts in the
transportation businesses. Excluding crop premium, gross and net written premiums in this group grew by 5% and 4%, respectively. Average renewal rates increased approximately 8% for this group in 2024. Reinsurance premiums ceded as a percentage of gross written premiums increased 3 percentage points in 2024 compared to 2023 reflecting the impact of higher cessions in the crop business and growth in certain programs in the transportation businesses that cede a larger percentage of premiums than some of the other businesses in the Property and transportation sub-segment.
Gross written premiums increased $86 million (2%) in 2023 compared to 2022 reflecting the impact of increased rates, retentions and exposures in the transportation and ocean marine businesses and slightly higher crop premium related to the CRS acquisition in the fourth quarter of 2023. These items were partially offset by the impact of 2023 spring commodity futures pricing and related volatility on premiums in the crop business. Average renewal rates increased approximately 6% for this group in 2023. Reinsurance premiums ceded as a percentage of gross written premiums were comparable in 2023 and 2022 reflecting growth in alternative risk transfer products in the transportation businesses, offset by the impact of lower cessions in the crop business. Both of these businesses cede a larger percentage of premiums than some of the other businesses in the Property and transportation sub-segment.
Specialty casualty Gross written premiums increased $175 million (4%) in 2024 compared to 2023. The higher-year-over-year premiums resulted primarily from growth in the excess and surplus, excess liability and certain targeted markets businesses as a result of rate increases, new business opportunities and strong policy retention. The mergers and acquisitions liability business also benefited from an increase in mergers and acquisition activity. This growth was tempered by lower year-over-year workers’ compensation premiums. Average renewal rates increased approximately 6% for this group in 2024. Excluding overall rate decreases in the workers’ compensation businesses, renewal rates for this group increased approximately 9% in 2024. Reinsurance premiums ceded as a percentage of gross written premiums were comparable in 2024 and 2023 reflecting lower cessions in certain more heavily reinsured products in the social services business, offset by the impact of higher premiums in the excess and surplus and mergers and acquisitions liability businesses, which cede a larger percentage of premiums than some of the other businesses in the Specialty casualty sub-segment and higher cessions in the public sector business.
Gross written premiums increased $253 million (6%) in 2023 compared to 2022 due primarily to increased exposures from payroll growth and new business in the workers’ compensation businesses, new business opportunities, strong policy retention and rate increases in several of the targeted markets businesses and increased exposures and higher renewal rates in the excess and surplus and excess liability businesses. This growth was partially offset by lower premiums in the mergers and acquisitions liability and executive liability businesses. Average renewal rates increased approximately 4% for this group in 2023. Excluding overall rate decreases in the workers’ compensation businesses, renewal rates for this group increased approximately 6% in 2023. Reinsurance premiums ceded as a percentage of gross written premiums decreased 1 percentage point in 2023 compared to 2022 reflecting higher premiums in the workers’ compensation businesses (which cede a lower percentage of premiums than some of the other businesses in the Specialty casualty sub-segment) and lower cessions in the environmental and mergers and acquisitions liability businesses and at ABA Insurance Services.
Specialty financial Gross written premiums increased $113 million (10%) in 2024 compared to 2023. Year-over-year growth in the financial institutions business was partially offset by a decision to pause writing of new intellectual property-related coverage. Average renewal rates increased approximately 6% for this group in 2024. Reinsurance premiums ceded as a percentage of gross written premiums decreased 1 percentage point in 2024 compared to 2023 reflecting lower gross written premiums in the innovative markets business, which cedes a larger percentage of premiums than some of the other businesses in the Specialty financial sub-segment, partially offset by the impact of higher reinstatement premiums paid to reinsurers in the fidelity and surety businesses.
Gross written premiums increased $260 million (29%) in 2023 compared to 2022 due primarily to growth in the financial institutions business. Average renewal rates for this group increased approximately 5% in 2023. Reinsurance premiums ceded as a percentage of gross written premiums decreased 1 percentage point in 2023 compared to 2022 reflecting the impact of reinstatement premiums paid to reinsurers in 2022 related to Hurricane Ian.
Other specialty The amounts shown as reinsurance premiums ceded represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty property and casualty insurance sub-segments. Reinsurance premiums assumed decreased $22 million (8%) in 2024 compared to 2023 and increased $10 million (4%) in 2023 compared to 2022, reflecting changes in premiums retained, primarily from businesses in the Specialty casualty sub-segment.
Combined Ratio
The table below (dollars in millions) details the components of the combined ratio for AFG’s property and casualty insurance segment for 2024, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, | | Change | | Year ended December 31, |
| 2024 | | 2023 | | 2022 | | 2024 - 2023 | | 2023 - 2022 | | 2024 | | 2023 | | 2022 |
| Property and transportation | | | | | | | | | | | | | | | |
| Loss and LAE ratio | 69.9 | % | | 69.2 | % | | 69.8 | % | | 0.7 | % | | (0.6 | %) | | | | | | |
| Underwriting expense ratio | 22.5 | % | | 23.6 | % | | 21.9 | % | | (1.1 | %) | | 1.7 | % | | | | | | |
| Combined ratio | 92.4 | % | | 92.8 | % | | 91.7 | % | | (0.4 | %) | | 1.1 | % | | | | | | |
| Underwriting profit | | | | | | | | | | | $ | 211 | | | $ | 184 | | | $ | 208 | |
| | | | | | | | | | | | | | | |
| Specialty casualty | | | | | | | | | | | | | | | |
| Loss and LAE ratio | 62.4 | % | | 60.3 | % | | 54.7 | % | | 2.1 | % | | 5.6 | % | | | | | | |
| Underwriting expense ratio | 26.1 | % | | 26.7 | % | | 26.5 | % | | (0.6 | %) | | 0.2 | % | | | | | | |
| Combined ratio | 88.5 | % | | 87.0 | % | | 81.2 | % | | 1.5 | % | | 5.8 | % | | | | | | |
| Underwriting profit | | | | | | | | | | | $ | 340 | | | $ | 375 | | | $ | 500 | |
| | | | | | | | | | | | | | | |
| Specialty financial | | | | | | | | | | | | | | | |
| Loss and LAE ratio | 41.6 | % | | 37.8 | % | | 34.1 | % | | 3.8 | % | | 3.7 | % | | | | | | |
| Underwriting expense ratio | 45.5 | % | | 49.5 | % | | 49.6 | % | | (4.0 | %) | | (0.1 | %) | | | | | | |
| Combined ratio | 87.1 | % | | 87.3 | % | | 83.7 | % | | (0.2 | %) | | 3.6 | % | | | | | | |
| Underwriting profit | | | | | | | | | | | $ | 134 | | | $ | 110 | | | $ | 114 | |
| | | | | | | | | | | | | | | |
| Total Specialty | | | | | | | | | | | | | | | |
| Loss and LAE ratio | 63.3 | % | | 61.5 | % | | 59.6 | % | | 1.8 | % | | 1.9 | % | | | | | | |
| Underwriting expense ratio | 27.9 | % | | 28.8 | % | | 27.6 | % | | (0.9 | %) | | 1.2 | % | | | | | | |
| Combined ratio | 91.2 | % | | 90.3 | % | | 87.2 | % | | 0.9 | % | | 3.1 | % | | | | | | |
| Underwriting profit | | | | | | | | | | | $ | 626 | | | $ | 633 | | | $ | 780 | |
| | | | | | | | | | | | | | | |
| Aggregate — including exited lines | | | | | | | | | | | | | | |
| Loss and LAE ratio | 63.3 | % | | 61.6 | % | | 59.7 | % | | 1.7 | % | | 1.9 | % | | | | | | |
| Underwriting expense ratio | 27.9 | % | | 28.8 | % | | 27.6 | % | | (0.9 | %) | | 1.2 | % | | | | | | |
| Combined ratio | 91.2 | % | | 90.4 | % | | 87.3 | % | | 0.8 | % | | 3.1 | % | | | | | | |
| Underwriting profit | | | | | | | | | | | $ | 620 | | | $ | 631 | | | $ | 776 | |
The Specialty property and casualty insurance operations generated an underwriting profit of $626 million in 2024 compared to $633 million in 2023, a decrease of $7 million (1%). Higher underwriting profit in the Property and transportation and Specialty financial sub-segments was more than offset by lower underwriting profit in the Specialty casualty sub-segment and higher losses in the business assumed by AFG’s internal reinsurance program. Overall catastrophe losses were $182 million (2.6 points on the combined ratio), including $2 million in net reinstatement premiums, for 2024 compared to catastrophe losses of $165 million (2.5 points), including $3 million in net reinstatement premiums, for 2023.
The Specialty property and casualty insurance operations generated an underwriting profit of $633 million in 2023 compared to $780 million in 2022, a decrease of $147 million (19%). This decrease reflects lower underwriting profit in each of the Specialty property and casualty insurance sub-segments. Overall catastrophe losses were $165 million (2.5 points on the combined ratio), including $3 million in net reinstatement premiums, for 2023 compared to catastrophe losses of $93 million (1.5 points), including $5 million in net reinstatement premiums, for 2022.
Property and transportation Underwriting profit for this group was $211 million in 2024 compared to $184 million in 2023, an increase of $27 million (15%). Higher year-over-year underwriting profit in the property and inland marine and crop insurance operations was partially offset by lower underwriting profitability in the transportation businesses. Catastrophe losses were $65 million (2.3 points on the combined ratio), including $1 million in net reinstatement premiums, in 2024 compared to catastrophe losses of $53 million (2.0 points), including $2 million in net reinstatement premiums, in 2023.
Underwriting profit for this group was $184 million in 2023 compared to $208 million in 2022, a decrease of $24 million (12%). Below average underwriting profitability in the crop insurance operations was partially offset by higher year-over-year underwriting profit in the property and inland marine business. Catastrophe losses were $53 million (2.0 points on the combined ratio), including $2 million in net reinstatement premiums, in 2023 compared to catastrophe losses of $45 million (1.9 points), including $3 million in net reinstatement premiums, in 2022.
Specialty casualty Underwriting profit for this group was $340 million in 2024 compared to $375 million in 2023, a decrease of $35 million (9%). Higher year-over-year underwriting profit in the targeted markets businesses was more than offset by lower levels of favorable prior year reserve development in the executive liability business and social inflation driven adverse development in the umbrella and excess business. Catastrophe losses were $32 million (1.1 points on the combined ratio), including $1 million in net reinstatement premiums, in 2024 compared to catastrophe losses of $36 million (1.2 points), including $1 million in net reinstatement premiums, in 2023.
Underwriting profit for this group was $375 million in 2023 compared to $500 million in 2022, a decrease of $125 million (25%). The lower year-over-year underwriting profit was due primarily to lower favorable prior year reserve development in the workers’ compensation businesses and adverse reserve development in the public sector and excess and surplus businesses, partially offset by higher favorable prior year reserve development in the executive liability business. Catastrophe losses were $36 million (1.2 points on the combined ratio), including $1 million in net reinstatement premiums, in 2023 compared to catastrophe losses of $11 million (0.5 points) in 2022.
Specialty financial Underwriting profit for this group was $134 million in 2024 compared to $110 million in 2023, an increase of $24 million (22%). This year-over-year increase reflects higher underwriting profit in the financial institutions business, partially offset by lower profitability resulting from the pause in writing of intellectual property-related coverage. Catastrophe losses were $81 million (7.8 points on the combined ratio) in 2024 compared to catastrophe losses of $49 million (5.7 points) in 2023.
Underwriting profit for this group was $110 million in 2023 compared to $114 million in 2022, a decrease of $4 million (4%). This decrease reflects higher year-over-year catastrophe losses in the financial institutions business and lower underwriting profit in the surety business. Catastrophe losses were $49 million (5.7 points on the combined ratio) in 2023 compared to catastrophe losses of $36 million (4.9 points), including $3 million in net reinstatement premiums, in 2022.
Other specialty This group reported an underwriting loss of $59 million in 2024 compared to $36 million in 2023, an increase of $23 million (64%), reflecting higher losses in the business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments. Catastrophe losses were $4 million in 2024 compared to $27 million in 2023.
This group reported an underwriting loss of $36 million in 2023 compared to $42 million in 2022, a decrease of $6 million (14%), reflecting lower losses in the business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty sub-segments. The underwriting loss in 2022 relates primarily to losses from social inflation exposed operations in the Specialty casualty sub-segment. Catastrophe losses were $27 million in 2023 compared to $1 million in 2022.
Aggregate Aggregate underwriting results for AFG’s property and casualty insurance segment include adverse prior year reserve development of $6 million in 2024, $2 million in 2023 and $4 million in 2022, related to business outside of the Specialty group that AFG no longer writes.
Losses and Loss Adjustment Expenses
AFG’s overall loss and LAE ratio was 63.3%, 61.6% and 59.7% in 2024, 2023 and 2022, respectively. The components of AFG’s property and casualty losses and LAE amounts and ratio are detailed below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, | | | | |
| Amount | | Ratio | | Change in Ratio |
| 2024 | | 2023 | | 2022 | | 2024 | | 2023 | | 2022 | | 2024 - 2023 | | 2023 - 2022 |
| Property and transportation | | | | | | | | | | | | | | | |
Current year, excluding catastrophe losses | $ | 1,982 | | | $ | 1,774 | | | $ | 1,785 | | | 71.0 | % | | 70.5 | % | | 71.6 | % | | 0.5 | % | | (1.1 | %) |
| Prior accident years development | (94) | | | (84) | | | (92) | | | (3.4 | %) | | (3.3 | %) | | (3.7 | %) | | (0.1 | %) | | 0.4 | % |
| Current year catastrophe losses including the impact of net reinstatement premiums | 64 | | | 51 | | | 42 | | | 2.3 | % | | 2.0 | % | | 1.9 | % | | 0.3 | % | | 0.1 | % |
Property and transportation losses and LAE and ratio | $ | 1,952 | | | $ | 1,741 | | | $ | 1,735 | | | 69.9 | % | | 69.2 | % | | 69.8 | % | | 0.7 | % | | (0.6 | %) |
| | | | | | | | | | | | | | | |
| Specialty casualty | | | | | | | | | | | | | | | |
Current year, excluding catastrophe losses | $ | 1,832 | | | $ | 1,814 | | | $ | 1,632 | | | 61.7 | % | | 62.9 | % | | 61.4 | % | | (1.2 | %) | | 1.5 | % |
| Prior accident years development | (10) | | | (110) | | | (190) | | | (0.4 | %) | | (3.8 | %) | | (7.2 | %) | | 3.4 | % | | 3.4 | % |
| Current year catastrophe losses including the impact of net reinstatement premiums | 31 | | | 35 | | | 11 | | | 1.1 | % | | 1.2 | % | | 0.5 | % | | (0.1 | %) | | 0.7 | % |
Specialty casualty losses and LAE and ratio | $ | 1,853 | | | $ | 1,739 | | | $ | 1,453 | | | 62.4 | % | | 60.3 | % | | 54.7 | % | | 2.1 | % | | 5.6 | % |
| | | | | | | | | | | | | | | |
| Specialty financial | | | | | | | | | | | | | | | |
Current year, excluding catastrophe losses | $ | 359 | | | $ | 311 | | | $ | 252 | | | 34.9 | % | | 35.8 | % | | 36.0 | % | | (0.9 | %) | | (0.2 | %) |
| Prior accident years development | (11) | | | (32) | | | (47) | | | (1.1 | %) | | (3.7 | %) | | (6.8 | %) | | 2.6 | % | | 3.1 | % |
| Current year catastrophe losses including the impact of net reinstatement premiums | 81 | | | 49 | | | 33 | | | 7.8 | % | | 5.7 | % | | 4.9 | % | | 2.1 | % | | 0.8 | % |
Specialty financial losses and LAE and ratio | $ | 429 | | | $ | 328 | | | $ | 238 | | | 41.6 | % | | 37.8 | % | | 34.1 | % | | 3.8 | % | | 3.7 | % |
| | | | | | | | | | | | | | | |
| Total Specialty | | | | | | | | | | | | | | | |
Current year, excluding catastrophe losses | $ | 4,339 | | | $ | 4,079 | | | $ | 3,826 | | | 61.7 | % | | 62.4 | % | | 62.8 | % | | (0.7 | %) | | (0.4 | %) |
| Prior accident years development | (70) | | | (226) | | | (289) | | | (1.0 | %) | | (3.4 | %) | | (4.7 | %) | | 2.4 | % | | 1.3 | % |
| Current year catastrophe losses including the impact of net reinstatement premiums | 180 | | | 162 | | | 88 | | | 2.6 | % | | 2.5 | % | | 1.5 | % | | 0.1 | % | | 1.0 | % |
| Total Specialty losses and LAE and ratio | $ | 4,449 | | | $ | 4,015 | | | $ | 3,625 | | | 63.3 | % | | 61.5 | % | | 59.6 | % | | 1.8 | % | | 1.9 | % |
| | | | | | | | | | | | | | | |
| Aggregate — including exited lines | | | | | | | | | | | | | | | |
Current year, excluding catastrophe losses | $ | 4,339 | | | $ | 4,079 | | | $ | 3,826 | | | 61.7 | % | | 62.4 | % | | 62.8 | % | | (0.7 | %) | | (0.4 | %) |
| Prior accident years development | (64) | | | (224) | | | (285) | | | (0.9 | %) | | (3.4 | %) | | (4.7 | %) | | 2.5 | % | | 1.3 | % |
| Current year catastrophe losses including the impact of net reinstatement premiums | 180 | | | 162 | | | 88 | | | 2.5 | % | | 2.6 | % | | 1.6 | % | | (0.1 | %) | | 1.0 | % |
| Aggregate losses and LAE and ratio | $ | 4,455 | | | $ | 4,017 | | | $ | 3,629 | | | 63.3 | % | | 61.6 | % | | 59.7 | % | | 1.7 | % | | 1.9 | % |
Current accident year losses and LAE, excluding catastrophe losses
The current accident year loss and LAE ratio, excluding catastrophe losses for AFG’s Specialty property and casualty insurance operations was 61.7% in 2024, 62.4% in 2023 and 62.8% in 2022.
Property and transportation The 0.5 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses in 2024 compared to 2023 reflects growth in the crop business, which has a higher loss and LAE ratio than some of the other businesses in the Property and transportation sub-segment and higher reported claim severity in the commercial auto business, partially offset by the impact of improved profitability in the property and inland marine business.
The 1.1 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2023 compared to 2022 is due primarily to the impact of elevated large loss activity in the property and inland marine business in 2022 and improved results in certain transportation businesses, partially offset by lower profit in the crop business.
Specialty casualty The 1.2 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2024 compared to 2023 reflects improved results in the workers’ compensation and targeted markets businesses, partially offset by higher claim severity in the excess and surplus business.
The 1.5 percentage points increase in the loss and LAE ratio for the current year, excluding catastrophe losses in 2023 compared to 2022 reflects anticipated medical cost inflation and the impact of pressure on rates in the workers’ compensation businesses and higher claim severity in certain liability coverages.
Specialty financial The 0.9 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2024 compared to 2023 reflects growth in the financial institutions business, which has a lower loss and LAE ratio than some of the other businesses in the Specialty financial sub-segment, partially offset by higher reported losses and lower premiums in the fidelity and surety businesses.
The 0.2 percentage points decrease in the loss and LAE ratio for the current year, excluding catastrophe losses in 2023 compared to 2022 reflects lower claim frequency and growth in the financial institutions business, which has a lower loss and LAE ratio than some of the other businesses in the Specialty financial sub-segment, partially offset by higher claim severity in the innovative markets business.
Net prior year reserve development
AFG’s Specialty property and casualty insurance operations recorded net favorable reserve development related to prior accident years of $70 million in 2024 compared to $226 million in 2023 and $289 million in 2022, a decrease of $156 million (69%) and $63 million (22%), respectively.
Property and transportation Net favorable reserve development of $94 million in 2024 reflects lower than anticipated losses in the crop business, lower than expected claim severity in the property and inland marine and aviation businesses and lower than anticipated claim frequency and severity in the ocean marine business.
Net favorable reserve development of $84 million in 2023 reflects lower than anticipated losses in the crop business, lower than expected claim frequency and severity across the transportation businesses and lower than anticipated claim frequency in the property and inland marine and ocean marine businesses and in the Singapore operations.
Net favorable reserve development of $92 million in 2022 reflects lower than anticipated losses in the crop business, lower than expected claim frequency in the trucking and ocean marine businesses and in the Singapore operations, lower than expected claim frequency and severity in the aviation business and lower than anticipated claim severity in the property and inland marine business.
Specialty casualty Net favorable reserve development of $10 million in 2024 reflects lower than anticipated claim severity in the workers’ compensation businesses and lower than expected claim frequency and severity in the executive liability business, partially offset by higher than anticipated claim frequency and severity in the umbrella and excess liability and social services businesses and higher than expected claim severity in the public sector and general liability businesses.
Net favorable reserve development of $110 million in 2023 reflects lower than anticipated claim severity in the workers’ compensation businesses, lower than expected claim frequency in the executive liability and environmental businesses and favorable reserve development related to COVID-19 losses across several businesses, partially offset by higher than anticipated claim severity in the public sector business and higher than expected claim frequency and severity in the excess liability and general liability businesses.
Net favorable reserve development of $190 million in 2022 reflects lower than anticipated claim severity in the workers’ compensation businesses and lower than expected claim frequency in the executive liability and excess and surplus businesses, partially offset by higher than anticipated claim severity in the general liability, umbrella and excess liability, and certain targeted markets businesses.
Specialty financial Net favorable reserve development of $11 million in 2024 reflects lower than anticipated claim frequency and severity in the financial institutions and fidelity businesses and lower than expected claim frequency in the trade credit business, partially offset by higher than anticipated claim severity in the innovative markets and surety businesses.
Net favorable reserve development of $32 million in 2023 reflects lower than anticipated claim frequency in the trade credit, financial institutions and surety businesses and lower than expected claim frequency and severity in the fidelity business.
Net favorable reserve development of $47 million in 2022 reflects lower than anticipated claim frequency in the surety, trade credit and financial institutions businesses.
Other specialty In addition to the development discussed above, total Specialty prior year reserve development includes net adverse reserve development of $45 million, less than $1 million and $40 million in 2024, 2023, and 2022, respectively, primarily associated with AFG’s internal reinsurance program. The net adverse reserve development reflects $50 million, $4 million and $44 million in 2024, 2023 and 2022, respectively, of net adverse development associated with AFG’s internal reinsurance program, primarily related to social inflation exposed business assumed from the Specialty casualty sub-segment.
Aggregate Aggregate net prior accident years reserve development for AFG’s property and casualty insurance segment includes net adverse reserve development of $6 million in 2024, $2 million in 2023 and $4 million in 2022 related to business outside the Specialty group that AFG no longer writes.
Catastrophe losses
AFG generally seeks to reduce its exposure to catastrophes (whether resulting from climate change or otherwise) through individual risk selection, including minimizing coastal and known fault-line exposures, and the purchase of reinsurance. AFG recorded net catastrophe losses of $180 million in 2024 (before $2 million in net reinstatement premiums) primarily from winter and convective storms in multiple regions of the United States in the first and second quarters, Hurricane Helene in the third quarter and Hurricane Milton in the fourth quarter.
Catastrophe losses of $162 million in 2023 (before $3 million in net reinstatement premiums) resulted primarily from February and March storms across much of the United States in the first quarter and storms in multiple regions of the United States in the second, third and fourth quarters.
Catastrophe losses of $88 million in 2022 (before $5 million in net reinstatement premiums) resulted primarily from winter storms in multiple regions of the United States in the first quarter, storms in multiple regions of the United States in the second quarter, Hurricane Ian in the third quarter and Winter Storm Elliott in the fourth quarter.
Commissions and Other Underwriting Expenses
AFG’s property and casualty commissions and other underwriting expenses (“U/W Exp”) were $1.96 billion in 2024 compared to $1.88 billion in 2023, an increase of $78 million (4%). AFG’s underwriting expense ratio was 27.9% in 2024 compared to 28.8% in 2023, a decrease of 0.9 percentage points.
AFG’s property and casualty U/W Exp were $1.88 billion in 2023 compared to $1.68 billion in 2022, an increase of $203 million (12%). AFG’s underwriting expense ratio was 28.8% in 2023 compared to 27.6% in 2022, an increase of 1.2 percentage points.
Detail of AFG’s property and casualty commissions and other underwriting expenses and underwriting expense ratios is shown below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, | | Change in % of NEP |
| 2024 | | 2023 | | 2022 | | 2024 - 2023 | | 2023 - 2022 |
| U/W Exp | | % of NEP | | U/W Exp | | % of NEP | | U/W Exp | | % of NEP | | | | |
| Property and transportation | $ | 630 | | | 22.5 | % | | $ | 594 | | | 23.6 | % | | $ | 544 | | | 21.9 | % | | (1.1 | %) | | 1.7 | % |
| Specialty casualty | 774 | | | 26.1 | % | | 772 | | | 26.7 | % | | 706 | | | 26.5 | % | | (0.6 | %) | | 0.2 | % |
| Specialty financial | 469 | | | 45.5 | % | | 429 | | | 49.5 | % | | 346 | | | 49.6 | % | | (4.0 | %) | | (0.1 | %) |
| Other specialty | 88 | | | 36.1 | % | | 88 | | | 33.9 | % | | 84 | | | 34.7 | % | | 2.2 | % | | (0.8 | %) |
| $ | 1,961 | | | 27.9 | % | | $ | 1,883 | | | 28.8 | % | | $ | 1,680 | | | 27.6 | % | | (0.9 | %) | | 1.2 | % |
Property and transportation Commissions and other underwriting expenses as a percentage of net earned premiums decreased 1.1 percentage points in 2024 compared to 2023 reflecting the impact on the ratio of higher earned premiums, including in the crop business which has a lower commissions and other underwriting expense ratio compared to some of the other businesses in the Property and transportation sub-segment and lower average commission rates in the transportation businesses due to a change in the mix of business.
Commissions and other underwriting expenses as a percentage of net earned premiums increased 1.7 percentage points in 2023 compared to 2022 reflecting the impact of lower profit-based ceding commissions related to below average profitability in the crop operations, the impact on the ratio of lower earned premiums in the crop operations (which has a lower commissions and other underwriting expense ratio compared to some of the other businesses in the Property and transportation sub-segment) and higher expenses related to certain technology initiatives.
Specialty casualty Commissions and other underwriting expenses as a percentage of net earned premiums decreased 0.6 percentage points in 2024 compared to 2023 reflecting a change in the mix of business towards products with lower commission rates, partially offset by lower ceding commissions received in the workers’ compensation businesses.
Commissions and other underwriting expenses as a percentage of net earned premiums increased 0.2 percentage points in 2023 compared to 2022 reflecting higher expenses related to certain technology initiatives, partially offset by the impact on the ratio of growth in earned premiums in the workers’ compensation businesses.
Specialty financial Commissions and other underwriting expenses as a percentage of net earned premiums decreased 4.0 percentage points in 2024 compared to 2023 due primarily to the impact on the ratio of higher earned premiums in the financial institutions business and a change in the mix of business towards products with lower commission rates.
Commissions and other underwriting expenses as a percentage of net earned premiums decreased 0.1 percentage points in 2023 compared to 2022 reflecting the impact on the ratio of growth in earned premiums in the financial institutions and innovative markets businesses, partially offset by higher expenses related to certain technology initiatives and the impact of lower profit-based commissions to agents and lower reinstatement premiums recorded in 2022 as a result of losses from Hurricane Ian.
Property and Casualty Net Investment Income
Net investment income in AFG’s property and casualty insurance operations was $784 million in 2024 compared to $729 million in 2023, an increase of $55 million (8%). Net investment income in AFG’s property and casualty insurance operations was $729 million in 2023 compared to $683 million in 2022, an increase of $46 million (7%). The average invested assets and overall yield earned on investments held by AFG’s property and casualty insurance operations are provided below (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, | | 2024 - 2023 | | 2023 - 2022 |
| 2024 | | 2023 | | 2022 | | Change | | % Change | | Change | | % Change |
| Net investment income: | | | | | | | | | | | | | |
| Net investment income, excluding alternative investments | $ | 626 | | | $ | 566 | | | $ | 418 | | | $ | 60 | | | 11 | % | | $ | 148 | | | 35 | % |
| Alternative investments | 158 | | | 163 | | | 265 | | | (5) | | | (3 | %) | | (102) | | | (38 | %) |
| Total net investment income | $ | 784 | | | $ | 729 | | | $ | 683 | | | $ | 55 | | | 8 | % | | $ | 46 | | | 7 | % |
| | | | | | | | | | | | | |
| Average invested assets (at amortized cost) | $ | 15,479 | | | $ | 14,753 | | | $ | 14,048 | | | $ | 726 | | | 5 | % | | $ | 705 | | | 5 | % |
| | | | | | | | | | | | | |
| Yield (net investment income as a % of average invested assets) | 5.06 | % | | 4.94 | % | | 4.86 | % | | 0.12 | % | | | | 0.08 | % | | |
| | | | | | | | | | | | | |
| Tax equivalent yield (*) | 5.13 | % | | 5.01 | % | | 4.96 | % | | 0.12 | % | | | | 0.05 | % | | |
(*)Adjusts the yield on equity securities and tax-exempt bonds to the fully taxable equivalent yield.
The increase in the property and casualty insurance segment’s net investment income in 2024 compared to 2023 reflects the impact of higher balances of invested assets and higher returns on fixed maturity investments, partially offset by lower returns on AFG’s alternative investments portfolio (partnerships and similar investments and AFG-managed CLOs). The property and casualty insurance segment’s overall yield on investments (net investment income as a percentage of average invested assets) was 5.06% in 2024 compared to 4.94% in 2023, an increase of 0.12 percentage points. The annualized return earned on alternative investments was 6.1% in 2024 compared to 7.0% in 2023.
The increase in net investment income in 2023 compared to 2022 reflects the impact of higher yields on fixed maturity investments and higher balances of invested assets, partially offset by lower returns on AFG’s alternative investments portfolio as compared to the very strong performance of this portfolio in the prior year period. The property and casualty
insurance segment’s overall yield on investments was 4.94% in 2023 compared to 4.86% in 2022, an increase of 0.08 percentage points. The annualized return earned on alternative investments was 7.0% in 2023 compared to 13.2% in 2022.
Property and Casualty Other Income and Expenses, Net
Other income and expenses, net for AFG’s property and casualty insurance operations was a net expense of $76 million in 2024, $56 million in 2023 and $40 million in 2022, an increase of $20 million (36%) in 2024 compared to 2023 and an increase of $16 million (40%) in 2023 compared to 2022. The table below details the items included in other income and expenses, net for AFG’s property and casualty insurance operations (in millions):
| | | | | | | | | | | | | | | | | |
| Year ended December 31, |
| 2024 | | 2023 | | 2022 |
| Other income: | | | | | |
| Income related to the sale of real estate | $ | — | | | $ | — | | | $ | 1 | |
| Other | 8 | | | 16 | | | 11 | |
| Total other income | 8 | | | 16 | | | 12 | |
| Other expenses: | | | | | |
| Amortization of intangibles | 20 | | | 15 | | | 11 | |
| Interest expense on funds withheld | 50 | | | 41 | | | 29 | |
| Acquisition expenses related to CRS | — | | | 3 | | | — | |
| Other (*) | 14 | | | 13 | | | 12 | |
| Total other expenses | 84 | | | 72 | | | 52 | |
| Other income and expenses, net | $ | (76) | | | $ | (56) | | | $ | (40) | |
(*)Includes $9 million of expenses in 2024, 2023 and 2022 related to certain technology initiatives.
The decrease in other income in 2024 compared to 2023 is due primarily to death benefits received in 2023 from company-owned life insurance policies. The higher amortization of intangibles in 2024 compared to 2023 and 2023 compared to 2022 reflects the acquisition of CRS in July 2023. The $9 million (22%) increase in interest expense on funds withheld in 2024 compared to 2023 and the $12 million (41%) increase in 2023 compared to 2022 reflects the impact of higher balances and higher interest rates paid on funds withheld.
Holding Company, Other and Unallocated — Results of Operations
AFG’s net GAAP pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $204 million in 2024 compared to $191 million in 2023, an increase of $13 million (7%). AFG’s net core pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $190 million in 2024 compared to $177 million in 2023, an increase of $13 million (7%).
AFG’s net GAAP pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $191 million in 2023 compared to $180 million in 2022, an increase of $11 million (6%). AFG’s net core pretax loss outside of its property and casualty insurance segment (excluding realized gains and losses) totaled $177 million in 2023 compared to $171 million in 2022, an increase of $6 million (4%).
The following table details AFG’s GAAP and core loss before income taxes from operations outside of its property and casualty insurance segment in 2024, 2023 and 2022 (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year ended December 31, | | % Change |
| 2024 | | 2023 | | 2022 | | 2024 - 2023 | | 2023 - 2022 |
| Revenues: | | | | | | | | | |
| Net investment income | $ | 29 | | | $ | 40 | | | $ | 24 | | | (28 | %) | | 67 | % |
| Other income — P&C fees | 111 | | | 125 | | | 89 | | | (11 | %) | | 40 | % |
| Other income | 18 | | | 21 | | | 33 | | | (14 | %) | | (36 | %) |
| Total revenues | 158 | | | 186 | | | 146 | | | (15 | %) | | 27 | % |
| | | | | | | | | |
| Costs and Expenses: | | | | | | | | | |
| Property and casualty insurance — loss adjustment and underwriting expenses | 51 | | | 68 | | | 38 | | | (25 | %) | | 79 | % |
| Other expense — expenses associated with P&C fees | 60 | | | 57 | | | 51 | | | 5 | % | | 12 | % |
| Other expenses (*) | 161 | | | 162 | | | 143 | | | (1 | %) | | 13 | % |
| Costs and expenses, excluding interest charges on borrowed money | 272 | | | 287 | | | 232 | | | (5 | %) | | 24 | % |
| Loss before income taxes, excluding realized gains and losses and interest charges on borrowed money | (114) | | | (101) | | | (86) | | | 13 | % | | 17 | % |
| Interest charges on borrowed money | 76 | | | 76 | | | 85 | | | — | % | | (11 | %) |
Core loss before income taxes, excluding realized gains and losses | (190) | | | (177) | | | (171) | | | 7 | % | | 4 | % |
Pretax non-core special A&E charge | (14) | | | (15) | | | — | | | (7 | %) | | — | % |
Pretax non-core gain (loss) on retirement of debt | — | | | 1 | | | (9) | | | (100 | %) | | (111 | %) |
GAAP loss before income taxes, excluding realized gains and losses | $ | (204) | | | $ | (191) | | | $ | (180) | | | 7 | % | | 6 | % |
(*)Excludes pretax non-core special A&E charges of $14 million and $15 million in 2024 and 2023, respectively, a pretax non-core gain on retirement of debt of $1 million in 2023 and a pretax non-core loss on retirement of debt of $9 million in 2022.
Holding Company and Other — Net Investment Income
AFG recorded net investment income on investments held outside of its property and casualty insurance segment of $29 million, $40 million and $24 million in 2024, 2023 and 2022, respectively. The $11 million (28%) decrease in 2024 compared to 2023 reflects the impact of lower average investment balances. The $16 million (67%) increase in 2023 compared to 2022 reflects the impact of a small portfolio of securities held at the holding company that were carried at fair value through net investment income. These securities, all of which were sold in 2022, declined in value by $7 million in 2022. Excluding the change in fair value of these equity securities, net investment income outside of AFG’s property and casualty insurance segment increased $9 million in 2023 compared to 2022 reflecting the impact of higher interest rates on cash and fixed maturity investments, partially offset by lower average investment balances.
Holding Company and Other — P&C Fees and Related Expenses
Summit, a workers’ compensation insurance subsidiary, collects fees from a small group of unaffiliated insurers for providing underwriting, policy administration and claims services. In addition, certain of AFG’s property and casualty insurance businesses collect fees from customers for ancillary services such as workplace safety programs and premium financing. In 2024, AFG collected $100 million in fees for these services compared to $91 million in 2023 and $82 million in 2022. Management views this fee income, net of the $60 million in 2024, $57 million in 2023 and $51 million in 2022, in expenses incurred to generate such fees, as a reduction in the cost of underwriting its property and casualty insurance policies. In addition, AFG’s property and casualty insurance businesses earned $11 million in 2024 and $34 million in 2023 in fees as compensation for providing services related to the administration of crop insurance business generated by CRS for its former owner prior to AFG’s acquisition of CRS and $7 million in 2022 in fees from AFG’s disposed annuity operations as compensation for certain services provided under a transition services agreement. The expenses related to providing such services are embedded in underwriting expenses. Consistent with internal management reporting, these fees and the related expenses are netted and recorded as a reduction of loss adjustment and other underwriting expenses in AFG’s segmented results.
Holding Company and Other — Other Income
Other income in the table above includes $13 million in 2024, $16 million in 2023 and $17 million in 2022, in management fees paid to AFG by the AFG-managed CLOs (AFG’s consolidated managed investment entities). The management fees are eliminated in consolidation — see the other income line in the Consolidated MIEs column under “Results of
Operations — Segmented Statement of Earnings.” Excluding amounts eliminated in consolidation, AFG recorded other income outside of its property and casualty insurance segment of $5 million in both 2024 and 2023 and $16 million in 2022. The decrease in 2024 and 2023 compared to 2022 is due primarily to income from the sale of real estate in 2022.
Holding Company and Other — Other Expenses
Excluding the non-core special A&E charges and the non-core gain on retirement of debt discussed below, AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $161 million in 2024 compared to $162 million in 2023, a decrease of $1 million (1%).
Excluding the non-core special A&E charge and the non-core gain (loss) on retirement of debt discussed below, AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded other expenses of $162 million in 2023 compared to $143 million in 2022, an increase of $19 million (13%) reflecting the favorable impact of poor stock market performance in 2022 on expenses related to deferred compensation obligations to employees that are tied to stock market performance. To mitigate the impact of fair value changes related to the equity components of these obligations, AFG entered into a total return swap in the second half of 2022.
Holding Company and Other — Interest Charges on Borrowed Money
AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded interest expense of $76 million in both 2024 and 2023 and $85 million in 2022. The $9 million (11%) decrease in interest expense in 2024 and 2023 compared to 2022 is due primarily to the retirement of AFG’s $425 million principal amount of 3.50% Senior Notes during the first six months of 2022.
Holding Company and Other — Special A&E Charges
As a result of the in-depth internal reviews of A&E exposures discussed under “Uncertainties — Asbestos and Environmental-related (“A&E”) Insurance Reserves,” AFG’s holding companies and other operations outside of its property and casualty insurance segment recorded pretax non-core special charges of $14 million in 2024, $15 million in 2023 and a minor charge in 2022 (included in AFG’s core operating earnings) to increase liabilities related to the A&E exposures of AFG’s former railroad and manufacturing operations. The 2024 and 2023 charges reflect changes in the scope and costs of investigation and an increase in estimated remediation costs at a limited number of sites. AFG has also increased its reserve for asbestos and toxic substance exposures arising out of these operations. Total charges recorded to increase liabilities for A&E exposures of AFG’s former railroad and manufacturing operations (included in other expenses) were $24 million in 2024, $22 million in 2023, and $17 million in 2022.
Holding Company and Other — Gain (Loss) on Retirement of Debt
During 2023, AFG repurchased $23 million principal amount of its senior notes, which resulted in a $2 million pretax non-core gain and recorded a $1 million pretax non-core loss related to the write-off of debt issue costs associated with its previous revolving credit facility, which was replaced in June 2023. During 2022, AFG retired $472 million principal amount of its senior notes, which resulted in a $9 million pretax non-core loss.
Realized Gains (Losses) on Securities
AFG’s realized gains (losses) on securities were net gains of less than $1 million in 2024 compared to net losses of $36 million in 2023, a change of $36 million (100%). AFG’s consolidated realized gains (losses) on securities were net losses of $36 million in 2023 compared to $116 million in 2022, a decrease of $80 million (69%). Realized gains (losses) on securities consisted of the following (in millions):
| | | | | | | | | | | | | | | | | |
| Year ended December 31, |
| 2024 | | 2023 | | 2022 |
| Realized gains (losses) before impairment allowances: | | | | | |
| Disposals | $ | (4) | | | $ | (33) | | | $ | (15) | |
| Change in the fair value of equity securities | 32 | | | 10 | | | (96) | |
| Change in the fair value of derivatives | (1) | | | (2) | | | (12) | |
| Other | — | | | — | | | 10 | |
| 27 | | | (25) | | | (113) | |
| | | | | |
| Change in allowance for impairments on securities | (27) | | | (11) | | | (3) | |
| Realized gains (losses) on securities | $ | — | | | $ | (36) | | | $ | (116) | |
The $33 million net realized loss from disposals in 2023 includes losses of $15 million from the sale of investments in banks and $5 million from the sale of municipal bonds.
The $32 million net realized gain from the change in the fair value of equity securities in 2024 includes gains of $21 million on investments in banks and financing companies, $8 million on investments in natural gas companies and $5 million on investments in technology companies, partially offset by losses of $6 million on investments in energy companies.
The $10 million net realized gain from the change in the fair value of equity securities in 2023 includes gains of $8 million on investments in retail companies, $7 million on investments in banks and financing companies, $5 million on investments in capital goods companies and $4 million on investments in natural gas companies, partially offset by losses of $8 million on investments in media companies and $6 million on investments in energy companies.
The $96 million net realized loss from the change in the fair value of equity securities in 2022 includes losses of $51 million on investments in banks and financing companies, $21 million on investments in media companies, $14 million on investments in healthcare companies, $7 million on investments in technology companies and $3 million on investments in retail companies, partially offset by gains of $17 million on investments in energy and natural gas companies.
The $27 million change in allowance for impairments on securities in 2024 relates primarily to allowances taken on corporate bonds from a single issuer in the financial sector and fixed maturities from a single issuer in the retail sector.
Realized Loss on Subsidiaries
In the second quarter of 2024, AFG recorded $4 million in net tax expense related to a pending IRS settlement regarding the sale of a subsidiary in a prior year.
In the third quarter of 2023, AFG recorded a realized loss on subsidiary of $4 million, consisting of a $26 million goodwill impairment charge, partially offset by a $22 million reduction in the fair value of a contingent consideration liability, both related to AFG’s investment in Verikai. See Note D — “Fair Value Measurements” and Note H — “Goodwill and Other Intangibles” to the financial statements.
Consolidated Income Taxes
AFG’s consolidated provision for income taxes was $237 million in 2024 compared to $221 million in 2023, an increase of $16 million (7%). AFG’s consolidated provision for income taxes was $221 million in 2023 compared to $225 million in 2022, a decrease of $4 million (2%). See Note L — “Income Taxes” to the financial statements for an analysis of items affecting AFG’s effective tax rate.
RECENTLY ADOPTED ACCOUNTING STANDARDS
See Note C — “Segments of Operations” to the financial statements for accounting guidance adopted in the fourth quarter of 2024, which requires enhanced disclosures about significant segment expenses and a description of the composition of other segment expenses by business segment. The title and position of the chief operating decision maker (“CODM”) and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources is also required to be disclosed.
ACCOUNTING STANDARDS TO BE ADOPTED
In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Improvements to Income Tax Disclosures. ASU 2023-09 is intended to improve income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation presented in both dollar and percentage terms; (ii) the disaggregation of income taxes paid (net of refunds received), income (loss) before income taxes and income taxes by jurisdiction (federal, state and foreign taxes); and (iii) further disaggregation of income taxes paid by any individual jurisdiction equal to or exceeding five percent of total income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. As of December 31, 2024, AFG has not adopted ASU 2023-09. Management is evaluating the impact of the standard to AFG’s income tax disclosures. Since ASU 2023-09 only requires additional disclosure, the adoption of this guidance will not have an impact on AFG’s results of operations or financial condition.
In November 2024, the FASB issued ASU No. 2024-03 (“ASU 2024-03”), Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires additional information and disaggregation of specified expense categories in the notes to financial statements. ASU 2024-04 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted and applied either prospectively or
retrospectively. As of December 31, 2024, AFG has not adopted ASU 2024-03. Management is evaluating the impact of the standard to AFG’s income statement expense disclosures. Since ASU 2024-03 only requires additional disclosures, the adoption of this guidance will not have an impact on AFG’s results of operations or financial condition.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Market risk represents the potential economic loss arising from adverse changes in the fair value of financial instruments. AFG’s exposures to market risk relate primarily to its investment portfolio, which is exposed to interest rate risk and, to a lesser extent, equity price risk. To a much lesser extent, AFG’s long-term debt is also exposed to interest rate risk.
Fixed Maturity Interest Rate Risk In general, the fair value of AFG’s fixed maturity investments is inversely correlated to changes in interest rates. AFG’s fixed maturity portfolio is comprised of primarily fixed-rate investments with intermediate-term maturities. This practice is designed to allow flexibility in reacting to fluctuations of interest rates. The portfolios of AFG’s insurance operations are managed with an attempt to achieve an adequate risk-adjusted return while maintaining sufficient liquidity to meet policyholder obligations.
Consistent with the discussion in Item 7 — Management’s Discussion and Analysis — “Investments,” the following table demonstrates the sensitivity of the fair value of AFG’s fixed maturity portfolio to reasonably likely changes in interest rates by illustrating the estimated effect on AFG’s fixed maturity portfolio that an immediate increase of 100 basis points in the interest rate yield curve would have at December 31 (based on the duration of the portfolio, dollars in millions). Effects of increases or decreases from the 100 basis points illustrated would be approximately proportional.
| | | | | | | | | | | |
| 2024 | | 2023 |
| Fair value of fixed maturity portfolio | $ | 10,474 | | | $ | 10,434 | |
| Percentage impact on fair value of 100 bps increase in interest rates | (3.0 | %) | | (3.0 | %) |
| Pretax impact on fair value of fixed maturity portfolio | $ | (314) | | | $ | (313) | |
Equity Price Risk AFG’s equity securities are reported at fair value with holding gains and losses recognized in net earnings. At December 31, 2024 and 2023, the fair value of AFG’s equity securities totaled $751 million and $1.02 billion, respectively. These investments are exposed to price risk, which is the potential loss arising from decreases in fair value. Market prices of equity securities, in general, are subject to fluctuations, which could cause future values to differ significantly from the current reported values. General economic swings influence the performance of the underlying industries and companies within those industries. Industry and company-specific risks also have the potential to substantially affect the value of AFG’s portfolio.
AFG utilizes a total return swap to offset changes in liabilities related to the equity price risk of certain deferred compensation arrangements. Gains or losses from changes in fair value of the total return swap are generally offset by changes in the carrying value of the related liabilities, both of which are included in other expenses.
Long-Term Debt The following table shows scheduled principal payments on fixed-rate long-term debt of AFG and its subsidiaries and related weighted average interest rates for each of the subsequent five years and for all years thereafter (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2024 | | | December 31, 2023 | |
| | Scheduled Principal Payments | | Rate | | | Scheduled Principal Payments | | Rate | |
| 2025 | $ | — | | | — | % | | 2024 | $ | — | | | — | % | |
| 2026 | — | | | — | % | | 2025 | — | | | — | % | |
| 2027 | — | | | — | % | | 2026 | — | | | — | % | |
| 2028 | — | | | — | % | | 2027 | — | | | — | % | |
| 2029 | — | | | — | % | | 2028 | — | | | — | % | |
| Thereafter | 1,498 | | | 4.9 | % | | Thereafter | 1,498 | | | 4.9 | % | |
| Total | $ | 1,498 | | | 4.9 | % | | Total | $ | 1,498 | | | 4.9 | % | |
| | | | | | | | | | |
| Fair Value | $ | 1,276 | | | | | Fair Value | $ | 1,345 | | | | |
Item 8. Financial Statements and Supplementary Data
| | | | | |
| Page |
Report of Independent Registered Public Accounting Firm (PCAOB ID: ) | |
Consolidated Balance Sheet as of December 31, 2024 and 2023 | |
Consolidated Statement of Earnings for the years ended December 31, 2024, 2023 and 2022 | |
Consolidated Statement of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022 | |
Consolidated Statement of Changes in Equity for the years ended December 31, 2024, 2023 and 2022 | |
Consolidated Statement of Cash Flows for the years ended December 31, 2024, 2023 and 2022 | |
| Notes to Consolidated Financial Statements | |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
AFG’s management, with participation of its Co-Chief Executive Officers and its Chief Financial Officer, has evaluated AFG’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15) as of the end of the period covered by this report. Based on that evaluation, AFG’s Co-CEOs and CFO concluded that the controls and procedures are effective. There have been no changes in AFG’s internal control over financial reporting during the fourth fiscal quarter of 2024 that materially affected, or are reasonably likely to materially affect, AFG’s internal control over financial reporting.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AFG’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rules 13a-15(f). Under the supervision and with the participation of management, including AFG’s Co-Chief Executive Officers and Chief Financial Officer, AFG conducted an evaluation of the effectiveness of internal control over financial reporting as of December 31, 2024, based on the criteria set forth in “Internal Control — Integrated Framework” issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission.
There are inherent limitations to the effectiveness of any system of internal controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective internal controls and procedures can only provide reasonable assurance of achieving their control objectives.
Based on AFG’s evaluation, management concluded that internal control over financial reporting was effective as of December 31, 2024. The attestation report of AFG’s independent registered public accounting firm on AFG’s internal control over financial reporting as of December 31, 2024, is set forth on page 80.
Item 9B. Other Information
During the three months ended December 31, 2024, none of the Company’s directors or officers , or modified a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
To the Shareholders and the Board of Directors of American Financial Group, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited American Financial Group, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, American Financial Group, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2024 and 2023, the related consolidated statements of earnings, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedules listed in the Index at Item 15(a)(2) and our report dated February 25, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| | | | | | | | |
| /s/ Ernst & Young LLP | | |
| Cincinnati, Ohio | | |
| February 25, 2025 | | |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of American Financial Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of American Financial Group, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of earnings, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedules listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 25, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| | | | | | | | |
| | Valuation of investments in fixed maturity securities |
| Description of the Matter | | As of December 31, 2024, the fair value of the Company’s fixed maturity securities totaled $10.47 billion, a portion of which are valued based on internally developed prices, using significant inputs not based on, or corroborated by, observable market information, or which are valued based on non-binding broker quotes. The fair values of these securities are determined by management applying the methodologies outlined in Note D to the consolidated financial statements. The credit spread applied by management for internally developed fixed maturity investment values and the lack of visibility into assumptions used in non-binding broker quotes are significant unobservable inputs, which create greater subjectivity when determining the fair values. Credit spread inputs are developed based on management’s review of trade activity for comparable securities and credit spreads over the treasury yield of securities with a similar duration.
Auditing the fair value of the fixed maturity securities that use unobservable inputs was complex and highly judgmental due to the judgment used by the Company in determining unobservable inputs and assumptions to estimate the securities’ fair value. Significant unobservable inputs and assumptions include credit spreads over the treasury yield and non-binding broker quotes. |
| | | | | | | | |
| How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over management’s valuation process for the fixed maturity securities priced using unobservable inputs. This included, among others, testing controls over investment pricing and the development and review of significant inputs and assumptions used in determining the fair values.
To test the Company’s investment fair values, our audit procedures included, among others, comparing the fair values for a sample of securities to pricing service values or internally developed cash flow models. With the assistance of our valuation specialists, we evaluated the valuation methodologies used by the Company and compared the Company’s fair value estimate to an independently calculated range of fair value estimates for a sample of securities. We evaluated information that corroborated or contradicted the Company’s fair value estimates, including observable spreads and transaction data for similar securities. |
| | | | | | | | |
| | Unpaid losses and loss adjustment expenses |
| Description of the Matter | | As of December 31, 2024, the Company’s unpaid losses and loss adjustment expenses reserve liabilities net of reinsurance recoverables, net of allowance, (“reserves”) totaled $9.22 billion as disclosed in Note N to the consolidated financial statements. This liability represents management’s best estimate of the ultimate net cost of all unpaid losses and loss adjustment expenses and is determined by using case-basis evaluations, actuarial projections, and management’s judgment. Estimating the reserves is inherently judgmental and is influenced by factors that are subject to significant variation, particularly for lines of business that develop or are paid over a long period of time or that contain exposures with high potential severities, such as workers’ compensation, other liability, and asbestos and environmental. Auditing management’s best estimate of reserves was complex because it required the involvement of our actuarial specialists due to the highly judgmental nature of the assumptions used in the evaluation process. The significant judgment was primarily due to the sensitivity of management’s best estimate to the selection and weighting of actuarial methods, loss development factors, and expected loss ratios. These assumptions have a significant effect on the valuation of reserves. |
| | | | | | | | |
| How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the process for estimating reserves. This included, among others, the review and approval processes that management has in place for the methods and assumptions used in estimating the reserves.
With the assistance of actuarial specialists, our audit procedures included, among others, an evaluation of the Company’s selection and weighting of actuarial methods used, including consideration of methods used in prior periods and those used in the industry for the specific types of insurance. To evaluate the significant assumptions used by management, we compared the significant assumptions, including loss development factors, and expected loss ratios, to factors historically used and current industry benchmarks. We also performed a review of the development of prior years’ reserve estimates. With the assistance of actuarial specialists, we established an independent range of reasonable reserve estimates, which we compared to management’s best estimate. |
| | | | | | | | |
| | |
| | |
/s/ | | |
| We have served as the Company’s auditor since 1961. | | |
| | |
| February 25, 2025 | | |
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in Millions)
| | | | | | | | | | | |
| December 31, |
| 2024 | | 2023 |
| Assets: | | | |
| Cash and cash equivalents | $ | | | | $ | | |
| Investments: | | | |
Fixed maturities, available for sale at fair value (amortized cost — $ and $; allowance for expected credit losses of $ and $) | | | | | |
| Fixed maturities, trading at fair value | | | | | |
| Equity securities, at fair value | | | | | |
| Investments accounted for using the equity method | | | | | |
| Mortgage loans | | | | | |
| Real estate and other investments | | | | | |
| Total cash and investments | | | | | |
| | | |
| Recoverables from reinsurers | | | | | |
| Prepaid reinsurance premiums | | | | | |
| Agents’ balances and premiums receivable | | | | | |
| Deferred policy acquisition costs | | | | | |
| Assets of managed investment entities | | | | | |
| Other receivables | | | | | |
| Other assets | | | | | |
| Goodwill | | | | | |
| Total assets | $ | | | | $ | | |
| | | |
| Liabilities and Equity: | | | |
| Unpaid losses and loss adjustment expenses | $ | | | | $ | | |
| Unearned premiums | | | | | |
| Payable to reinsurers | | | | | |
| Liabilities of managed investment entities | | | | | |
| Long-term debt | | | | | |
| Other liabilities | | | | | |
| Total liabilities | | | | | |
| | | |
| Shareholders’ equity: | | | |
Common Stock, par value — shares authorized — and shares outstanding | | | | | |
| Capital surplus | | | | | |
| Retained earnings | | | | | |
| Accumulated other comprehensive income (loss), net of tax | () | | | () | |
| Total shareholders’ equity | | | | | |
| Total liabilities and shareholders’ equity | $ | | | | $ | | |
See notes to consolidated financial statements.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(In Millions, Except Per Share Data)
| | | | | | | | | | | | | | | | | |
| Year ended December 31, |
| 2024 | | 2023 | | 2022 |
| Revenues: | | | | | |
Net earned premiums | $ | | | | $ | | | | $ | | |
| Net investment income | | | | | | | | |
| Realized gains (losses) on: | | | | | |
| Securities | | | | () | | | () | |
| Subsidiaries | | | | () | | | | |
| Income of managed investment entities: | | | | | |
| Investment income | | | | | | | | |
Gain (loss) on change in fair value of assets/liabilities | | | | | | | () | |
| Other income | | | | | | | | |
| Total revenues | | | | | | | | |
| | | | | |
| Costs and Expenses: | | | | | |
| Losses and loss adjustment expenses | | | | | | | | |
| Commissions and other underwriting expenses | | | | | | | | |
| Interest charges on borrowed money | | | | | | | | |
| Expenses of managed investment entities | | | | | | | | |
| Other expenses | | | | | | | | |
| Total costs and expenses | | | | | | | | |
Earnings before income taxes | | | | | | | | |
Provision for income taxes | | | | | | | | |
|
|
Net Earnings | $ | | | | $ | | | | $ | | |
| | | | | |
Earnings per Common Share: | | | | | |
|
|
| Total basic earnings | $ | | | | $ | | | | $ | | |
|
|
|
| Total diluted earnings | $ | | | | $ | | | | $ | | |
| Average number of Common Shares: | | | | | |
| Basic | | | | | | | | |
| Diluted | | | | | | | | |
See notes to consolidated financial statements.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(In Millions)
| | | | | | | | | | | | | | | | | |
| Year ended December 31, |
| 2024 | | 2023 | | 2022 |
Net earnings | $ | | | | $ | | | | $ | | |
| | | | | |
Other comprehensive income (loss), net of tax: | | | | | |
| Net unrealized gains (losses) on securities: | | | | | |
| Unrealized holding gains (losses) on securities arising during the period | | | | | | | () | |
| Reclassification adjustment for realized (gains) losses included in net earnings | | | | | | | | |
| Total net unrealized gains (losses) on securities | | | | | | | () | |
| Net unrealized gains (losses) on cash flow hedges: | | | | | |
| Unrealized holding gains (losses) on cash flow hedges arising during the period | () | | | () | | | () | |
| Reclassification adjustment for investment income included in net earnings | | | | | | | | |
| Total net unrealized gains (losses) on cash flow hedges | | | | | | | () | |
| Foreign currency translation adjustments | () | | | | | | () | |
Pension and other postretirement plan adjustments | | | | () | | | | |
Other comprehensive income (loss), net of tax | | | | | | | () | |
| | | | | |
Comprehensive income | $ | | | | $ | | | | $ | | |
See notes to consolidated financial statements.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Dollars in Millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Shareholders’ Equity |
Common Shares | | | Common Stock and Capital Surplus | | Retained Earnings | | Accumulated Other Comp. Income (Loss) | | Total |
| Balance at December 31, 2021 | | | | | $ | | | | $ | | | | $ | | | | $ | | |
Net earnings | — | | | | — | | | | | | — | | | | |
Other comprehensive loss | — | | | | — | | | — | | | () | | | () | |
Dividends ($ per share) | — | | | | — | | | () | | | — | | | () | |
| Shares issued: | | | | | | | | | | |
| Exercise of stock options | | | | | | | | — | | | — | | | | |
| Restricted stock awards | | | | | | | | — | | | — | | | | |
| Other benefit plans | | | | | | | | — | | | — | | | | |
| Dividend reinvestment plan | | | | | | | | — | | | — | | | | |
| Stock-based compensation expense | — | | | | | | | — | | | — | | | | |
| Shares acquired and retired | () | | | | () | | | () | | | — | | | () | |
| Shares exchanged — benefit plans | () | | | | () | | | () | | | — | | | () | |
| Forfeitures of restricted stock | () | | | | — | | | — | | | — | | | — | |
| | | | | | | | |
| Balance at December 31, 2022 | | | | | $ | | | | $ | | | | $ | () | | | $ | | |
Net earnings | — | | | | — | | | | | | — | | | | |
Other comprehensive income | — | | | | — | | | — | | | | | | | |
Dividends ($ per share) | — | | | | — | | | () | | | — | | | () | |
| Shares issued: | | | | | | | | | | |
| Exercise of stock options | | | | | | | | — | | | — | | | | |
| Restricted stock awards | | | | | | | | — | | | — | | | | |
| Other benefit plans | | | | | | | | — | | | — | | | | |
| Dividend reinvestment plan | | | | | | | | — | | | — | | | | |
| Stock-based compensation expense | — | | | | | | | — | | | — | | | | |
| Shares acquired and retired | () | | | | () | | | () | | | — | | | () | |
| Shares exchanged — benefit plans | () | | | | () | | | () | | | — | | | () | |
| Forfeitures of restricted stock | () | | | | — | | | — | | | — | | | — | |
| | | | | | | | |
| Balance at December 31, 2023 | | | | | $ | | | | $ | | | | $ | () | | | $ | | |
Net earnings | — | | | | — | | | | | | — | | | | |
Other comprehensive income | — | | | | — | | | — | | | | | | | |
Dividends ($ per share) | — | | | | — | | | () | | | — | | | () | |
| Shares issued: | | | | | | | | | | |
| Exercise of stock options | | | | | | | | — | | | — | | | | |
| Restricted stock awards | | | | | | | | — | | | — | | | | |
| Other benefit plans | | | | | | | | — | | | — | | | | |
| Dividend reinvestment plan | | | | | | | | — | | | — | | | | |
| Stock-based compensation expense | — | | | | | | | — | | | — | | | | |
| | | | | | | | |
| Shares exchanged — benefit plans | () | | | | () | | | () | | | — | | | () | |
| Forfeitures of restricted stock | () | | | | — | | | — | | | — | | | — | |
| | | | | | | | |
| Balance at December 31, 2024 | | | | | $ | | | | $ | | | | $ | () | | | $ | | |
See notes to consolidated financial statements.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Millions)
| | | | | | | | | | | | | | | | | |
| Year ended December 31, |
| 2024 | | 2023 | | 2022 |
| Operating Activities: | | | | | |
| Net earnings | $ | | | | $ | | | | $ | | |
| Adjustments: | | | | | |
| Depreciation and amortization | | | | | | | | |
| Realized gains (losses) on investing activities | | | | | | | | |
Net purchases of trading securities | () | | | () | | | () | |
| Change in: | | | | | |
| Reinsurance and other receivables | () | | | () | | | () | |
| Other assets | | | | () | | | () | |
| Insurance claims and reserves | | | | | | | | |
| Payable to reinsurers | | | | | | | | |
| Other liabilities | () | | | | | | () | |
| Managed investment entities’ assets/liabilities | () | | | | | | () | |
| Other operating activities, net | () | | | () | | | () | |
Net cash provided by operating activities | | | | | | | | |
| | | | | |
| Investing Activities: | | | | | |
| Purchases of: | | | | | |
| Fixed maturities | () | | | () | | | () | |
| Equity securities | () | | | () | | | () | |
| Mortgage loans | () | | | | | | () | |
Other investments | () | | | () | | | () | |
| Real estate, property and equipment | () | | | () | | | () | |
| Businesses | () | | | () | | | () | |
| Proceeds from: | | | | | |
| Maturities and redemptions of fixed maturities | | | | | | | | |
| Repayments of mortgage loans | | | | | | | | |
| Sales of fixed maturities | | | | | | | | |
| Sales of equity securities | | | | | | | | |
Sales of other investments | | | | | | | | |
| Sales of real estate, property and equipment | | | | | | | | |
|
Cash and cash equivalents of businesses acquired | | | | | | | | |
| Managed investment entities: | | | | | |
| Purchases of investments | () | | | () | | | () | |
| Proceeds from sales and redemptions of investments | | | | | | | | |
| Other investing activities, net | () | | | () | | | () | |
Net cash provided by (used in) investing activities | | | | | | | () | |
| | | | | |
| Financing Activities: | | | | | |
|
| Reductions of long-term debt | | | | () | | | () | |
| Issuances of Common Stock | | | | | | | | |
| Repurchases of Common Stock | | | | () | | | () | |
| Cash dividends paid on Common Stock | () | | | () | | | () | |
| Issuances of managed investment entities’ liabilities | | | | | | | | |
| Retirements of managed investment entities’ liabilities | () | | | () | | | () | |
|
Net cash used in financing activities | () | | | () | | | () | |
| Net Change in Cash and Cash Equivalents | | | | | | | () | |
| Cash and cash equivalents at beginning of year | | | | | | | | |
| Cash and cash equivalents at end of year | $ | | | | $ | | | | $ | | |
See notes to consolidated financial statements.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | | | | | | | | | | | |
| INDEX TO NOTES |
| | | | | |
| A. | Accounting Policies | | I. | Long-Term Debt | |
| B. | Acquisitions of Businesses | | J. | Leases | |
| C. | Segments of Operations | | K. | Shareholders’ Equity | |
| D. | Fair Value Measurements | | L. | Income Taxes | |
| E. | Investments | | M. | Contingencies | |
| F. | Derivatives | | N. | Insurance | |
| G. | Managed Investment Entities | | O. | Additional Information | |
| H. | Goodwill and Other Intangibles | | | | |
A.
small acquisitions in 2024 and its acquisition of Crop Risk Services in 2023 (see Note B — “Acquisitions of Businesses”) and the write-off of a portion of goodwill related to AFG’s investment in Verikai in 2023 (see Note H — “Goodwill and Other Intangibles”). These fair value measurements were based on significant inputs that are unobservable (Level 3). There were no other material nonrecurring fair value measurements in 2024, 2023 or 2022.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
million in assets and $ million in liabilities of a temporary warehousing entity that was established to provide AFG the ability to form a new CLO. At closing, all warehoused assets will be transferred to the new CLO and the liabilities will be repaid.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
million, 2023 – million and 2022 – million.
There were anti-dilutive potential common shares related to stock compensation plans or adjustments to net earnings in the calculation of diluted earnings per share for the years ended December 31, 2024, 2023 or 2022.
or less when purchased are considered to be cash equivalents for purposes of the financial statements.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
B.
billion and was the seventh largest provider of multi-peril crop insurance in the United States based on 2022 premiums. At closing, AFG paid AIG $ million (based on $ million in net tangible assets) using cash on hand.
Expenses related to the acquisition were $ million and were expensed as incurred. | | |
Tangible assets acquired: | |
Cash and cash equivalents | $ | | |
Agents’ balances and premiums receivable | | |
Other assets | | |
Total tangible assets acquired | $ | | |
| |
Liabilities acquired: | |
Other liabilities | $ | | |
Total liabilities acquired | | |
Net tangible assets acquired, at fair value | | |
Excess purchase price over net tangible assets acquired | $ | | |
| |
| Allocation of excess purchase price: | |
Intangible assets acquired (*) | $ | | |
Deferred tax asset (*) | | |
Goodwill | | |
| $ | | |
In the purchase price allocation, $ million of the purchase price was recognized as finite lived intangible assets primarily related to existing agency relationships, which will be amortized over an average estimated life of approximately years. The acquisition resulted in the recognition of $ million in GAAP basis goodwill based on the excess of the purchase price over the fair value of the net assets acquired. The acquisition resulted in $ million of tax basis goodwill, which is deductible for tax purposes.
In the fourth quarter of 2024, AFG acquired an insurance agency business for $ million, including $ million in cash, and a consulting company for $ million in cash. Virtually all of the purchase price for each acquisition was recorded as an amortizing intangible asset representing the fair value of the customer bases at acquisition.
In the third quarter of 2022, AFG acquired an insurance agency business for $ million, including $ million in cash. Virtually all of the purchase price was recorded as an amortizing intangible asset representing the fair value of the agency’s customer base at acquisition.
C.
segments: Property and casualty insurance and Other, which includes holding company assets and costs.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
AFG’s CODMs are its Co-CEOs. The CODMs evaluate the performance of the Property and casualty insurance segment based on return on equity and underwriting profit. The CODMs use this measure to allocate resources and make capital decisions.
Sales of property and casualty insurance outside of the United States represented % of AFG’s revenues in 2024, % in 2023 and % in 2022.
| | $ | | | | Other | | | | | |
| Total assets | $ | | | | $ | | |
(*)Not allocable to sub-segments.
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| Revenues | | | | | |
| Property and casualty insurance: | | | | | |
| Premiums earned: | | | | | |
| Specialty | | | | | |
| Property and transportation | $ | | | | $ | | | | $ | | |
| Specialty casualty | | | | | | | | |
| Specialty financial | | | | | | | | |
| Other specialty | | | | | | | | |
|
|
| December 31, 2024 | | | | | | | | | | | |
| Fixed maturities: | | | | | | | | | | | |
U.S. Government and government agencies | $ | | | | $ | | | | | % | | $ | () | | | $ | | | | | % |
States, municipalities and political subdivisions | () | | | | | | | % | | () | | | | | | | % |
| Foreign government | | | | | | | | % | | () | | | | | | | % |
| Residential MBS | () | | | | | | | % | | () | | | | | | | % |
| Commercial MBS | | | | | | | | % | | | | | | | | | % |
| Collateralized loan obligations | | | | | | | | % | | () | | | | | | | % |
| Other asset-backed securities | () | | | | | | | % | | () | | | | | | | % |
| Corporate and other | () | | | | | | | % | | () | | | | | | | % |
| Total fixed maturities | $ | () | | | $ | | | | | % | | $ | () | | | $ | | | | | % |
| | | | | | | | | | | |
| December 31, 2023 | | | | | | | | | | | |
| Fixed maturities: | | | | | | | | | | | |
U.S. Government and government agencies | $ | | | | $ | | | | | % | | $ | () | | | $ | | | | | % |
States, municipalities and political subdivisions | () | | | | | | | % | | () | | | | | | | % |
| Foreign government | | | | | | | | % | | () | | | | | | | % |
| Residential MBS | () | | | | | | | % | | () | | | | | | | % |
| Commercial MBS | | | | | | | | % | | () | | | | | | | % |
| Collateralized loan obligations | | | | | | | | % | | () | | | | | | | % |
| Other asset-backed securities | () | | | | | | | % | | () | | | | | | | % |
| Corporate and other | () | | | | | | | % | | () | | | | | | | % |
| Total fixed maturities | $ | () | | | $ | | | | | % | | $ | () | | | $ | | | | | % |
At December 31, 2024, the gross unrealized losses on fixed maturities of $ million relate to approximately securities. Investment grade securities (as determined by nationally recognized rating agencies) represented approximately % of the gross unrealized loss and % of the fair value of securities with unrealized losses.
To evaluate fixed maturities for expected credit losses (impairment), management considers whether the unrealized loss is credit-driven or a result of changes in market interest rates, the extent to which fair value is less than cost basis, historical operating, balance sheet and cash flow data from the issuer, third party research, communications with industry specialists and discussions with issuer management.
AFG analyzes its MBS for expected credit losses (impairment) each quarter based upon expected future cash flows. Management estimates expected future cash flows based upon its knowledge of the MBS market, cash flow projections (which reflect loan to collateral values, subordination, vintage and geographic concentration) received from independent sources, implied cash flows inherent in security ratings and analysis of historical payment data.
Management believes AFG will recover its cost basis (net of any allowance) in the securities with unrealized losses and that AFG has the ability to hold the securities until they recover in value and had no intent to sell them at December 31, 2024.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | |
| Provision for expected credit losses on securities with no previous allowance | | | | | | | | |
| Reductions to previously recognized expected credit losses | () | | | | | | () | |
| Reductions due to sales or redemptions | | | | () | | | () | |
| Balance at December 31, 2022 | | | | | | | | |
|
| Provision for expected credit losses on securities with no previous allowance | | | | | | | | |
Additions (reductions) to previously recognized expected credit losses | | | | () | | | | |
| Reductions due to sales or redemptions | () | | | () | | | () | |
| Balance at December 31, 2023 | | | | | | | | |
|
| Provision for expected credit losses on securities with no previous allowance | | | | | | | | |
Additions to previously recognized expected credit losses | | | | | | | | |
| Reductions due to sales or redemptions | | | | () | | | () | |
| Balance at December 31, 2024 | $ | | | | $ | | | | $ | | |
(*)Includes MBS, collateralized loan obligations and other asset-backed securities (“ABS”).
In 2024, 2023 and 2022, AFG did not purchase any securities with expected credit losses.
| | $ | | | | | % | | After one year through five years | | | | | | | | % |
| After five years through ten years | | | | | | | | % |
| After ten years | | | | | | | | % |
| | | | | | | | % |
Collateralized loan obligations and other ABS (average life of approximately years) | | | | | | | | % |
MBS (average life of approximately years) | | | | | | | | % |
| Total | $ | | | | $ | | | | | % |
(*)Amortized cost, net of allowance for expected credit losses.
Certain risks are inherent in fixed maturity securities, including loss upon default, price volatility in reaction to changes in interest rates, and general market factors and risks associated with reinvestment of proceeds due to prepayments or redemptions in a period of declining interest rates.
There were no investments in individual issuers that exceeded 10% of shareholders’ equity at December 31, 2024 or 2023.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | Change in fair value (*) | | | | () | | | | |
| Equity securities: | | | | | |
Dividends | | | | | | | | |
Change in fair value | | | | | | | () | |
Equity in earnings of partnerships and similar investments | | | | | | | | |
Cash and cash equivalents | | | | | | | | |
| Other | | | | | | | | |
| Gross investment income | | | | | | | | |
| Investment expenses | () | | | () | | | () | |
Net investment income | $ | | | | $ | | | | $ | | |
(*)The change in the fair value of fixed maturities classified as trading and derivatives embedded in convertible fixed maturities related to limited partnerships and similar investments.
) | | $ | () | | | $ | () | | | $ | | | | $ | () | | | $ | () | | | $ | () | | | $ | | | | Equity securities | | | | — | | | | | | | | | | | | — | | | | | | | |
| Mortgage loans and other investments | | | | | | | | | | | | | | | | () | | | () | | | | |
| Total pretax | | | | () | | | | | | | | | () | | | () | | | () | | | | |
| Tax effects | () | | | | | | | | | () | | | | | | | | | | | | () | |
| Net of tax | $ | | | | $ | () | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | () | | | $ | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2022 |
| | | | | Realized gains (losses) | | |
| | | | | | | | | Before Impairments | | Impairment Allowance | | Total | | Change in Unrealized |
| Fixed maturities | | | | | | | | | $ | () | | | $ | () | | | $ | () | | | $ | () | |
| Equity securities | | | | | | | | | () | | | — | | | () | | | | |
| Mortgage loans and other investments | | | | | | | | | | | | | | | | | | | |
| Total pretax | | | | | | | | | () | | | () | | | () | | | () | |
| Tax effects | | | | | | | | | | | | | | | | | | | |
| Net of tax | | | | | | | | | $ | () | | | $ | () | | | $ | () | | | $ | () | |
All equity securities are carried at fair value through net earnings.
| | $ | () | | | $ | () | | | Included in net investment income | | | | | | | | |
| $ | | | | $ | | | | $ | () | |
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | | Gross losses | () | | | () | | | () | |
F.
| | $ | | | | $ | | | | $ | | | | | | | | | | | | |
| Derivatives not designated as hedging instruments: | | | | | | | | |
Fixed maturities with embedded derivatives | Fixed maturities | | | | | | | | | | | | |
Total return swap | Other assets/Other liabilities | | | | | | | | | | | | |
| | | $ | | | | $ | | | | $ | | | | $ | | |
AFG’s interest rate swaps are designated and qualify as highly effective cash flow hedges to mitigate interest rate risk related to certain floating-rate securities included in AFG’s portfolio of fixed maturity securities. The purpose of each of these swaps is to effectively convert a portion of AFG’s floating-rate fixed maturity securities to fixed rates by offsetting the variability in cash flows attributable to changes in the applicable Secured Overnight Financing Rate (“SOFR”).
Under the terms of the swaps, AFG receives fixed-rate interest payments in exchange for variable interest payments based on SOFR. The notional amounts of the interest rate swaps generally decline over each swap’s respective life (the swaps expire between January 2025 and October 2029) in anticipation of the expected decline in AFG’s portfolio of fixed maturity securities with floating interest rates based on SOFR. The total outstanding notional amount of AFG’s interest rate swaps was $ billion at December 31, 2024 compared to $ billion at December 31, 2023, reflecting scheduled amortization, partially offset by new swap in 2024 ($ million notional amount at issuance). Amounts reclassified from AOCI to net earnings were losses of $ million and $ million in 2024 and 2023, respectively, and income of less than $ million (net) in 2022. Based on forward interest rate curves at December 31, 2024, management estimates that it will reclassify approximately $ million of pre-tax net losses on interest rate swaps in AOCI to net investment income over the next twelve months. The actual amount will vary based on changes in SOFR. A collateral receivable supporting these swaps of $ million and $ million at December 31, 2024 and December 31, 2023, respectively, is included in other assets in AFG’s Balance Sheet.
The fixed maturities with embedded derivatives consist of convertible fixed maturity securities and interest-only and principal-only MBS. AFG records the change in the fair value of these securities in net earnings. These investments are part of AFG’s overall investment strategy and represent a small component of AFG’s overall investment portfolio.
AFG is exposed to fair value changes from certain equity and fixed maturity market-based exposures related to its deferred compensation obligations to certain employees. To mitigate this risk, AFG entered into a total return swap in 2022. AFG’s Balance Sheet includes a $ million receivable for collateral posted related to the swap (included in other assets) at December 31, 2024, and a $ million liability to return collateral related to the swap (included in other liabilities) at December 31, 2023.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | () | | | $ | | | | | | | | | | | |
Non-designated hedges: | | | | | | | | |
| Fixed maturities with embedded derivatives | | Realized gains (losses) on securities | | () | | | () | | | () | |
| Fixed maturities with embedded derivatives | | Net investment income | | | | | () | | | | |
| Total return swap | | Other expenses | | | | | | | | () | |
| Earnings (losses) on non-designated hedges | | | | | | | | | | () | |
| Total earnings (losses) on derivatives | | | | $ | | | | $ | () | | | $ | () | |
G.
% to % of the most subordinate debt tranche of active collateralized loan obligation entities (“CLOs”), which are considered variable interest entities. AFG also owns portions of the senior debt tranches of certain of these CLOs. Upon formation between 2012 and 2024, these entities issued securities in various senior and subordinate classes and invested the proceeds primarily in secured bank loans, which serve as collateral for the debt securities issued by each CLO. None of the collateral was purchased from AFG. AFG’s investments in the subordinate debt tranches of these entities receive residual income from the CLOs only after the CLOs pay expenses (including management fees to AFG) and interest on and returns of capital to senior levels of debt securities. There are no contractual requirements for AFG to provide additional funding for these entities. AFG has not provided and does not intend to provide any financial support to these entities.
AFG’s maximum exposure to economic loss on the CLOs that it manages is limited to its investment in those CLOs, which had an aggregate fair value of $ million (including $ million invested in the most subordinate tranches and $ million invested in a temporary warehousing entity) at December 31, 2024.
In 2024, AFG formed new CLOs, which issued an aggregate $ million face amount of liabilities (including $ million face amount purchased by AFG). In 2023, AFG formed new CLO, which issued $ million face amount of liabilities (including $ million face amount purchased by AFG). In 2022, AFG formed new CLOs, which issued an aggregate $ million face amount of liabilities (including $ million face amount purchased by AFG). In 2024 and 2023, and CLOs were substantially liquidated in accordance with the CLO indentures, respectively.
| | $ | | | | $ | | | | Purchases | | | | | | | | |
| Sales | () | | | | | | | |
| Distributions | () | | | () | | | () | |
| Change in fair value | | | | | | | () | |
| Change in accrued interest | | | | | | | () | |
| Balance at end of period (*) | $ | | | | $ | | | | $ | | |
(*)Excludes $ million, $ million and $ million invested in temporary warehousing entities at December 31, 2024, 2023 and 2022, respectively, that were established to provide AFG the ability to form new CLOs.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | () | | | Liabilities | | | | () | | | | |
| Management fees paid to AFG | | | | | | | | |
CLO earnings (losses) attributable to AFG | | | | | | | () | |
(*)Included in revenues in AFG’s Statement of Earnings.
The aggregate unpaid principal balance of the CLOs’ fixed maturity investments exceeded the fair value of the investments by $ million and $ million at December 31, 2024 and 2023, respectively. The aggregate unpaid principal balance of the CLOs’ debt exceeded its carrying value by $ million and $ million at those dates, respectively. The CLO assets include loans with an aggregate fair value of $ million at December 31, 2024 and $ million at December 31, 2023, for which the CLOs are not accruing interest because the loans are in default (aggregate unpaid principal balance of $ million at December 31, 2024 and $ million at December 31, 2023).
In addition to the CLOs that it manages, AFG had investments in CLOs that are managed by third parties (therefore not consolidated), which are included in available for sale fixed maturity securities and had a fair value of $ billion at December 31, 2024 and $ billion at December 31, 2023.
H.
| Purchase of CRS | | |
Goodwill impairment charge related to investment in Verikai | () | |
Balance at December 31, 2023 and 2024 | $ | | |
AFG recorded a goodwill impairment charge of $ million in 2023 related to its investment in Verikai (included in the property and casualty insurance segment). The impairment indicator was slower than anticipated growth in the business supported by the Verikai technology relative to what was projected at acquisition. Management utilized the discounted cash flow method of the income approach to calculate the impairment charge. This charge and the impact of reducing the fair value of the contingent consideration related to the Verikai acquisition (see Note D — “Fair Value Measurements”) are included in realized loss on subsidiaries in AFG’s Statement of Earnings.
Included in other assets in AFG’s Balance Sheet is $ million at December 31, 2024 and $ million at December 31, 2023 of amortizable intangible assets related to acquisitions. These amounts are net of accumulated amortization of $ million and $ million, respectively. Amortization of intangibles was $ million in 2024, $ million in 2023 and $ million in 2022. The decrease in amortizable intangible assets during 2024 is a result of the amortization discussed previously, partially offset by an increase in amortizable intangible assets related to the fair value of the customer bases of AFG’s acquisitions in the fourth quarter of 2024 (see Note B — “Acquisitions of Businesses”).
Future amortization of intangibles (weighted average amortization period of years is estimated to be $ million per year in 2025 and 2026, $ million in 2027, $ million in 2028, $ million in 2029 and $ million thereafter.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
I.
% Senior Notes due June 2047$ | | | | $ | () | | | $ | | | | $ | | | | $ | () | | | $ | | | % Senior Notes due April 2030 | | | | () | | | | | | | | | () | | | | |
| Other | | | | | | | | | | | | | | | | | |
| | | | () | | | | | | | | | () | | | | |
| | | | | | | | | | | |
| Direct Subordinated Obligations of AFG: | | | | | | | | | | | |
% Subordinated Debentures due September 2060 | | | | () | | | | | | | | | () | | | | |
% Subordinated Debentures due December 2059 | | | | () | | | | | | | | | () | | | | |
% Subordinated Debentures due June 2060 | | | | () | | | | | | | | | () | | | | |
% Subordinated Debentures due March 2059 | | | | () | | | | | | | | | () | | | | |
| | | | () | | | | | | | | | () | | | | |
| $ | | | | $ | () | | | $ | | | | $ | | | | $ | () | | | $ | | |
At December 31, 2024, there are scheduled principal payments on debt for the subsequent five years.
During 2023, AFG repurchased $ million principal amount of its % Senior Notes due in June 2047 for $ million and $ million principal amount of its % Senior Notes due in April 2030 for $ million in open market transactions.
During 2022, AFG repurchased $ million principal amount of its % Senior Notes due in August 2026 for $ million, $ million principal amount of its % Senior Notes due in June 2047 for $ million and $ million principal amount of its % Senior Notes due in April 2030 for $ million in open market transactions. In June 2022, AFG redeemed the remaining $ million of outstanding % Senior Notes due August 2026 for $ million (including a $ million make-whole call premium).
AFG can borrow up to $ million under its revolving credit facility, which expires in June 2028. Amounts borrowed under this agreement bear interest at rates ranging from % to % (currently %) over a SOFR-based floating rate. amounts were borrowed under this facility at December 31, 2024 or December 31, 2023.
Cash interest payments on long-term debt were $ million in both 2024 and 2023 and $ million in 2022.
J.
| | $ | | | | Lease liability | | | | | |
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | |
|
|
|
|
|
|
|
|
|
|
|
))
|
|
|
|
|
|
|
|
|
))
|
|
|
|
|
|
|
)) | () | |
(*)The reclassification adjustments affected the following lines in AFG’s Statement of Earnings:
| | | | | | | | | | | | | | |
| OCI component | | Affected line in the statement of earnings | |
| Pretax - Net unrealized gains (losses) on securities | | Realized gains (losses) on securities | |
| Pretax - Net unrealized gains (losses) on cash flow hedges | | Net investment income | |
| Pretax - Net unrealized gains (losses) on pension and other postretirement plans | | Other expenses | |
| Tax | | Provision for income taxes | |
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
L.
% to the provision for income taxes as shown in AFG’s Statement of Earnings (dollars in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| Amount | | % of EBT | | Amount | | % of EBT | | Amount | | % of EBT |
Earnings before income taxes (“EBT”) | $ | | | | | | $ | | | | | | $ | | | | |
| | | | | | | | | | | |
| Income taxes at statutory rate | $ | | | | | % | | $ | | | | | % | | $ | | | | | % |
| Effect of: | | | | | | | | | | | |
| Employee stock ownership plan dividend paid deduction | () | | | ( | %) | | () | | | ( | %) | | () | | | ( | %) |
| Tax exempt interest | () | | | ( | %) | | () | | | ( | %) | | () | | | ( | %) |
| Stock-based compensation | () | | | | % | | () | | | | % | | () | | | | % |
| Change in valuation allowance | () | | | | % | | () | | | | % | | () | | | ( | %) |
| Dividend received deduction | () | | | | % | | () | | | | % | | () | | | | % |
| Nondeductible expenses | | | | | % | | | | | | % | | | | | | % |
Adjustment related to sale of subsidiary (*) | | | | | % | | | | | | % | | | | | | % |
Adjustment to prior year taxes | | | | | % | | () | | | | % | | () | | | | % |
| Foreign operations | | | | | % | | | | | | % | | | | | | % |
| Other | | | | | % | | | | | | % | | | | | | % |
| Provision for income taxes as shown in the statement of earnings | $ | | | | | % | | $ | | | | | % | | $ | | | | | % |
(*)In 2024, AFG recorded $ million in net tax expense related to a pending IRS settlement regarding the sale of a subsidiary in a prior year.
On January 1, 2023, the two major tax provisions in the Inflation Reduction Act ("IRA”) became effective. The IRA created a new corporate alternative minimum tax (“CAMT”) based on the earnings that a company reports in its financial statements and imposes a 1% excise tax on corporate stock repurchases. Any CAMT incurred would be available to offset taxes payable under the standard calculation in future periods. Accordingly, the CAMT is a timing difference and would result in the recording of an offsetting deferred tax asset with no impact on overall income tax expense. While AFG meets the financial statement income thresholds to be subject to CAMT, management does not believe AFG will incur a CAMT liability for 2024. The excise tax on stock repurchases in excess of any issuances is recorded as part of the cost of the repurchases directly in shareholders’ equity.
Since almost all of AFG’s earnings are taxable based on U.S. tax rates, the Global Intangible Low-taxed Income (“GILTI”) provision is not expected to be material to AFG’s results of operations and will be recorded in the period that any tax arises.
The Organisation for Economic Co-operation and Development, an intergovernmental organization with 38 member countries, has proposed a global minimum corporate tax rate of 15% (“Pillar Two”). Due to AFG’s limited international operations and the tax rate AFG is subject to in those jurisdictions, management does not believe Pillar Two will have a material impact on AFG’s results of operations.
AFG’s 2013 — 2018 and 2021 — 2024 tax years remain subject to examination by the IRS.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | | State | | | | | | | | |
| Foreign | | | | () | | | | |
| Deferred taxes: | | | | | |
| Federal | | | | | | | | |
| Provision for income taxes | $ | | | | $ | | | | $ | | |
| | | Operating Loss – United Kingdom | indefinite | | | | (*) |
(*)£ million
Deferred income tax assets and liabilities reflect temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes.
| | $ | | | | Foreign underwriting losses | | | | | |
|
| Insurance claims and reserves | | | | | |
| Employee benefits | | | | | |
Lease liabilities | | | | | |
| Other, net | | | | | |
Total deferred tax assets before valuation allowance | | | | | |
| Valuation allowance against deferred tax assets | () | | | () | |
| Total deferred tax assets | | | | | |
| Deferred tax liabilities: | | | |
| Investment securities | () | | | () | |
| Deferred policy acquisition costs | () | | | () | |
| Insurance claims and reserves transition liability | () | | | () | |
Lease right of use assets | () | | | () | |
| Real estate, property and equipment | () | | | () | |
| Total deferred tax liabilities | () | | | () | |
| Net deferred tax asset | $ | | | | $ | | |
AFG’s net deferred tax asset at December 31, 2024 and 2023 is included in other assets in AFG’s Balance Sheet. The decrease in AFG’s net deferred tax asset at December 31, 2024 compared to December 31, 2023 reflects lower net unrealized losses on fixed maturities and the increase in fair value of equity securities and carrying value of limited partnership investments still owned.
The likelihood of realizing deferred tax assets is reviewed periodically. Any adjustments required to the valuation allowance are made in the period during which developments requiring an adjustment become known.
At December 31, 2024, there were unrecognized tax benefits or related interest and penalties. At December 31, 2023, there were unrecognized tax benefits and related interest and penalties of less than $ million. AFG’s provision for income
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
Cash payments for income taxes, net of refunds, were $ million for both 2024 and 2023 and $ million for 2022.
M.
million and $ million, respectively, for the former railroad and manufacturing operations. The 2022 review resulted in a small adjustment to AFG’s A&E reserves.
The property and casualty group’s liability for A&E reserves was $ million at December 31, 2024; related recoverables from reinsurers (net of allowances for doubtful accounts) at that date were $ million.
At December 31, 2024, APU and its subsidiaries had liabilities for environmental and personal injury claims and other contingencies aggregating $ million. The environmental claims consist of a number of proceedings and claims seeking to impose responsibility for hazardous waste remediation costs related to certain sites formerly owned or operated by the railroad and manufacturing operations. Remediation costs are difficult to estimate for a number of reasons, including the number and financial resources of other potentially responsible parties, the range of costs for remediation alternatives, changing technology and the time period over which these matters develop. The personal injury claims and other contingencies include pending and expected claims, primarily by former employees of PCTC, for injury or disease allegedly caused by exposure to excessive noise, asbestos or other substances in the workplace and other labor disputes.
At December 31, 2024, GAFRI had a liability of $ million for environmental costs and certain other matters associated with the sales of its former manufacturing operations.
While management believes AFG has recorded adequate reserves for the items discussed above, the outcome is uncertain and could result in liabilities that may vary from amounts AFG has currently recorded. Such amounts could have a material effect on AFG’s future results of operations and financial condition.
In addition, AFG and its subsidiaries are involved in litigation from time to time, generally arising in the ordinary course of business. This litigation may include, but is not limited to, general commercial disputes, lawsuits brought by policyholders, employment matters, reinsurance collection matters and actions challenging certain business practices of insurance subsidiaries. None of these matters are expected to have a material adverse impact on AFG’s results of operations or financial condition.
N.
billion at December 31, 2024, were on deposit as required by regulatory authorities.
Insurance Reserves Estimating the liability for unpaid losses and loss adjustment expenses (“LAE”) is inherently judgmental and is influenced by factors that are subject to significant variation. Determining the liability is a complex process incorporating input from many areas of the Company including actuarial, underwriting, pricing, claims and operations management.
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | | Less reinsurance recoverables, net of allowance | | | | | | | | |
| Net liability at beginning of period | | | | | | | | |
| Provision for losses and LAE occurring in the current year | | | | | | | | |
|
|
Net decrease in the provision for claims of prior years | () | | | () | | | () | |
| Total losses and LAE incurred | | | | | | | | |
| Payments for losses and LAE of: | | | | | |
| Current year | () | | | () | | | () | |
| Prior years | () | | | () | | | () | |
| Total payments | () | | | () | | | () | |
| Foreign currency translation and other | () | | | | | | | |
| Net liability at end of period | | | | | | | | |
| Add back reinsurance recoverables, net of allowance | | | | | | | | |
| Gross unpaid losses and LAE included in the balance sheet | $ | | | | $ | | | | $ | | |
The net decrease in the provision for claims of prior years in 2024 reflects (i) lower than anticipated losses in the crop business, lower than expected claim severity in the property and inland marine and aviation businesses and lower than anticipated claim frequency and severity in the ocean marine business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses and lower than expected claim frequency and severity in the executive liability business (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency and severity in the financial institutions and fidelity businesses and lower than expected claim frequency in the trade credit business (within the Specialty financial sub-segment). This favorable development was partially offset by (i) higher than anticipated claim frequency and severity in the umbrella and excess liability and social services businesses and higher than expected claim severity in the public sector and general liability businesses (within the Specialty casualty sub-segment), (ii) higher than anticipated claim severity in the innovative markets and surety businesses (within the Specialty financial sub-segment) and (iii) net adverse development associated with AFG’s internal reinsurance program (within Other specialty).
The net decrease in the provision for claims of prior years in 2023 reflects (i) lower than anticipated losses in the crop business, lower than expected claim frequency and severity across the transportation businesses and lower than anticipated claim frequency in the property and inland marine and ocean marine businesses and in the Singapore operations (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses, lower than expected claim frequency in the executive liability and environmental businesses and favorable reserve development related to COVID-19 losses across several businesses (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the trade credit, financial institutions and surety businesses and lower than expected claim frequency and severity in the fidelity business (within the Specialty financial sub-segment). This favorable development was partially offset by higher than anticipated claim severity in the public sector business and higher than expected claim frequency and severity in the excess liability and general liability businesses (within the Specialty casualty sub-segment).
The net decrease in the provision for claims of prior years in 2022 reflects (i) lower than anticipated losses in the crop business, lower than expected claim frequency in the trucking and ocean marine businesses and in the Singapore operations, lower than expected claim frequency and severity in the aviation business and lower than anticipated claim severity in the property and inland marine business (within the Property and transportation sub-segment), (ii) lower than anticipated claim severity in the workers’ compensation businesses and lower than expected claim frequency in the executive liability and excess and surplus businesses (within the Specialty casualty sub-segment) and (iii) lower than anticipated claim frequency in the surety, trade credit and financial institutions businesses (within the Specialty financial
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | Specialty casualty | | |
| Specialty financial | | |
| Other specialty | | |
| Total Specialty (excluding foreign reserves) | | |
| |
| Other reserves | |
| Foreign operations | | |
| A&E reserves | | |
| Unallocated LAE | | |
| Other | | |
| Total other reserves | | |
| Total reserves, net of reinsurance | | |
| |
| Add back reinsurance recoverables, net of allowance | | |
| Gross unpaid losses and LAE included in the balance sheet | $ | | |
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | | | | 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Total | | $ | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cumulative Paid Claims and Allocated LAE, Net of Reinsurance | | | | |
| Accident Year | | For the Years Ended (2015–2023 is Supplementary Information and Unaudited) | | | | |
| 2015 | | 2016 | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | % (a) | | |
| 2015 | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | | % | | |
| 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2023 | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2024 | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| | | | | | | | | | | | | | | | | | Total | | $ | | | | | | |
| | | | | | | | Unpaid losses and LAE — years 2015 through 2024 | | | | | | | |
| | | | Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE) | | | | | | | |
| | | | Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE) | | $ | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Supplementary Information and Unaudited) | | | | |
| | Year 1 | | Year 2 | | Year 3 | | Year 4 | | Year 5 | | Year 6 | | Year 7 | | Year 8 | | Year 9 | | Year 10 | | | | |
| Annual | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | | |
| Cumulative | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | | |
(a)Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at December 31, 2024).
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | | | | 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Total | | $ | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cumulative Paid Claims and Allocated LAE, Net of Reinsurance | | | | |
| Accident Year | | For the Years Ended (2015–2023 is Supplementary Information and Unaudited) | | | | |
| 2015 | | 2016 | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | % (a) | | |
| 2015 | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | | % | | |
| 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2023 | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2024 | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| | | | | | | | | | | | | | | | | | Total | | $ | | | | | | |
| | | | | | | | Unpaid losses and LAE — years 2015 through 2024 | | | | | | | |
| | | | Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE) | | | | | | | |
| | | | Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE) | | $ | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Supplementary Information and Unaudited) | | | | |
| | Year 1 | | Year 2 | | Year 3 | | Year 4 | | Year 5 | | Year 6 | | Year 7 | | Year 8 | | Year 9 | | Year 10 | | | | |
| Annual | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | | |
| Cumulative | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | | |
(a)Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at December 31, 2024).
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | | | | 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Total | | $ | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cumulative Paid Claims and Allocated LAE, Net of Reinsurance | | | | |
| Accident Year | | For the Years Ended (2015–2023 is Supplementary Information and Unaudited) | | | | |
| 2015 | | 2016 | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | % (a) | | |
| 2015 | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | | % | | |
| 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2023 | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2024 | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| | | | | | | | | | | | | | | | | | Total | | $ | | | | | | |
| | | | | | | | Unpaid losses and LAE — years 2015 through 2024 | | | | | | | |
| | | | Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE) | | () | | | | | |
| | | | Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE) | | $ | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Supplementary Information and Unaudited) | | | | |
| | Year 1 | | Year 2 | | Year 3 | | Year 4 | | Year 5 | | Year 6 | | Year 7 | | Year 8 | | Year 9 | | Year 10 | | | | |
| Annual | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | ( | %) | | ( | %) | | | | |
| Cumulative | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | | |
(a)Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at December 31, 2024).
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | | | | 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Total | | $ | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cumulative Paid Claims and Allocated LAE, Net of Reinsurance | | | | |
| Accident Year | | For the Years Ended (2015–2023 is Supplementary Information and Unaudited) | | | | |
| 2015 | | 2016 | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | % (b) | | |
| 2015 | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | | % | | |
| 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2023 | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2024 | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| | | | | | | | | | | | | | | | | | Total | | $ | | | | | | |
| | | | | | | | Unpaid losses and LAE — years 2015 through 2024 | | | | | | | |
| | | | Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE) | | | | | | | |
| | | | Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE) | | $ | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Supplementary Information and Unaudited) | | | | |
| | Year 1 | | Year 2 | | Year 3 | | Year 4 | | Year 5 | | Year 6 | | Year 7 | | Year 8 | | Year 9 | | Year 10 | | | | |
| Annual | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | | |
| Cumulative | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | | |
(a)The amounts shown in Other specialty represent business assumed by AFG’s internal reinsurance program from the operations that make up AFG’s other Specialty property and casualty insurance sub-segments. Accordingly, the liability for incurred claims and allocated LAE represents additional reserves held on claims counted in the tables provided for the other sub-segments (above).
(b)Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at December 31, 2024).
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | | | | 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Total | | $ | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cumulative Paid Claims and Allocated LAE, Net of Reinsurance | | | | |
| Accident Year | | For the Years Ended (2015–2023 is Supplementary Information and Unaudited) | | | | |
| 2015 | | 2016 | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | % (a) | | |
| 2015 | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | | % | | |
| 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2023 | | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| 2024 | | | | | | | | | | | | | | | | | | | | | | | | % | | |
| | | | | | | | | | | | | | | | | | Total | | $ | | | | | | |
| | | | | | | | Unpaid losses and LAE — years 2015 through 2024 | | | | | | | |
| | | | Unpaid losses and LAE — 11th year and prior (excluding unallocated LAE) | | | | | | | |
| | | | Unpaid losses and LAE, net of reinsurance (excluding unallocated LAE) | | $ | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
(Supplementary Information and Unaudited) | | | | |
| | Year 1 | | Year 2 | | Year 3 | | Year 4 | | Year 5 | | Year 6 | | Year 7 | | Year 8 | | Year 9 | | Year 10 | | | | |
| Annual | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | | |
| Cumulative | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | | |
(a)Represents the cumulative percentage paid of incurred claims and allocated LAE (net of reinsurance, as estimated at December 31, 2024).
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
Statutory Information AFG’s U.S.-based insurance subsidiaries are required to file financial statements with state insurance regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities (statutory basis).
| | $ | | | | $ | | | | $ | | | | $ | | |
The National Association of Insurance Commissioners’ (“NAIC”) model law for risk-based capital (“RBC”) applies to property and casualty insurance companies. RBC formulas determine the amount of capital that an insurance company needs so that it has an acceptable expectation of not becoming financially impaired. Companies below specific trigger points or ratios are subject to regulatory action. At December 31, 2024 and 2023, the capital ratios of all AFG insurance companies substantially exceeded the RBC requirements. AFG’s insurance companies did not use any prescribed or permitted statutory accounting practices that differed from the NAIC statutory accounting practices at December 31, 2024 or 2023.
Payments of dividends by AFG’s insurance companies are subject to various state laws that limit the amount of dividends that can be paid. Under applicable restrictions, the maximum amount of dividends available to AFG in 2025 from its insurance subsidiaries without seeking regulatory approval is $ billion. Additional amounts of dividends require regulatory approval.
Holding Company Dividends AFG declared and paid common stock dividends to shareholders totaling $ million, $ million and $ billion in 2024, 2023 and 2022, respectively. Currently, there are no regulatory restrictions on AFG’s retained earnings or net earnings that materially impact its ability to pay dividends. Based on shareholders’ equity at December 31, 2024, AFG could pay dividends of approximately $ billion without violating its most restrictive debt covenant. However, the payment of future dividends will be at the discretion of AFG’s Board of Directors and will be dependent on many factors including AFG’s financial condition and results of operations, the capital requirements of its insurance subsidiaries, and rating agency commitments.
Reinsurance In the normal course of business, AFG cedes reinsurance to other companies to diversify risk and limit maximum loss arising from large claims. However, AFG remains liable to its insureds regardless of whether a reinsurer is able to meet its obligations.
| | $ | | | | $ | | | | Reinsurance assumed | | | | | | | | |
| Reinsurance ceded | () | | | () | | | () | |
| Net written premiums | $ | | | | $ | | | | $ | | |
| | | | | |
| Direct premiums earned | $ | | | | $ | | | | $ | | |
| Reinsurance assumed | | | | | | | | |
| Reinsurance ceded | () | | | () | | | () | |
| Net earned premiums | $ | | | | $ | | | | $ | | |
| | | | | |
| Reinsurance recoveries | $ | | | | $ | | | | $ | | |
AMERICAN FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | Increase in allowance from acquisition of CRS | — | | | — | | | — | | | — | | | | | | — | |
| Provision for expected credit losses | | | | | | | | | | | | | | | | | |
| Write-offs charged against the allowance | | | | | | | | | | () | | | | | | | |
| Balance at December 31 | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
O.
million.
Benefit Plans AFG expensed approximately $ million in 2024, $ million in 2023 and $ million in 2022 for its retirement and employee savings plans.
PART III
The information required by the following Items will be included in AFG’s definitive Proxy Statement for the 2025 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission within 120 days after the end of the Registrant’s fiscal year and is incorporated herein by reference.
ITEM 10 Directors, Executive Officers of the Registrant and Corporate Governance
ITEM 11 Executive Compensation
ITEM 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
ITEM 13 Certain Relationships and Related Transactions, and Director Independence
ITEM 14 Principal Accountant Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules
| | | | | | | | | | | | | | | | | | | | |
| (a) | Documents filed as part of this Report: |
| 1. | Financial Statements are included in Part II, Item 8. |
| | |
| 2. | Financial Statement Schedules: |
| | | Schedules filed herewith for 2024, 2023, and 2022: | |
| | | | Page |
| | | II — Condensed Financial Information of Registrant | |
| | | III — Supplementary Insurance Information | |
| | | | |
| | | All other schedules for which provisions are made in the applicable regulation of the Securities and Exchange Commission have been omitted as they are not applicable, not required, or the information required thereby is set forth in the Financial Statements or the notes thereto. | |
| | |
| 3. | Exhibits — See Exhibit Index on the next page. |
| | |
INDEX TO EXHIBITS
AMERICAN FINANCIAL GROUP, INC.
| | | | | | | | | | | | | | | | | | | | |
| Number | | Exhibit Description | | |
| | Amended and Restated Articles of Incorporation, filed as Exhibit 3.A to AFG’s Form 10-K for 2019. | | (*) |
| | Amended and Restated Code of Regulations, filed as Exhibit 3.1 to the Form 8-K filed on April 1, 2020. | | (*) |
| 4 | | Instruments defining the rights of security holders. | Registrant has no outstanding debt issues exceeding 10% of the assets of Registrant and consolidated subsidiaries. |
| | Material Contracts: | | | | |
| | Amended and Restated Non-Employee Directors Compensation Plan, filed as Exhibit 10 to the Form S-8 Registration Statement (File No. 333-184913) filed by AFG on November 13, 2012. | | (*) |
| | Deferred Compensation Plan Amended and Restated as of January 1, 2022 filed as Exhibit 10 to the Form S-8 Registration Statement (File No. 333-268292) filed by AFG on November 10, 2022. | | (*) |
| | Annual Senior Executive Bonus Plan | | |
| | Amended and Restated Nonqualified Auxiliary RASP, filed as Exhibit 10(f) to AFG’s Form 10-K for 2008. | | (*) |
| | Amended and Restated 2015 Stock Incentive Plan, filed as Exhibit 10.1 to the Form 8-K filed by AFG on May 24, 2024. | | (*) |
| | Senior Executive Long Term Incentive Compensation Plan, filed as Appendix A to AFG’s Proxy Statement filed on April 1, 2016. | | (*) |
| | Amended and Restated Credit Agreement entered into among American Financial Group, Inc., the Bank of America, N.A., as Administrative Agent, and several lenders, filed as Exhibit 10.1 to AFG’s Form 8-K filed on June 27, 2023. | | (*) |
| |
| | |
| | Subsidiaries of the Registrant. | | |
| | Consent of independent registered public accounting firm. | | |
| | Certification of Co-Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002. | | |
| | Certification of Co-Chief Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002. | | |
| | Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002. | | |
| | Certification of Co-Chief Executive Officers and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | |
| | American Financial Group, Inc. Executive Officer Clawback Policy, filed as Exhibit 97 to AFG’s Form 10-K for 2023. | | (*) |
| 101.INS | | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | | |
| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document. | | |
| 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | | |
| 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document. | | |
| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document. | | |
| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | | |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | | |
| | | | | | |
| | | | | | |
| (*) Incorporated herein by reference. | | | | |
| | $ | | | | Investment in securities | | | | | |
| Investment in subsidiaries (*) | | | | | |
| Real estate and other investments | | | | | |
| Other assets | | | | | |
| Total assets | $ | | | | $ | | |
| | | |
| Liabilities and Equity: | | | |
| Long-term debt | $ | | | | $ | | |
| Other liabilities | | | | | |
| Shareholders’ equity | | | | | |
| Total liabilities and equity | $ | | | | $ | | |
Condensed Statement of Earnings
| | | | | | | | | | | | | | | | | |
| Year ended December 31, |
| 2024 | | 2023 | | 2022 |
| Revenues: | | | | | |
| Dividends from subsidiaries | $ | | | | $ | | | | $ | | |
| Equity in undistributed earnings of subsidiaries | | | | | | | | |
| Investment and other income | | | | | | | | |
| Total revenues | | | | | | | | |
| | | | | |
| Costs and Expenses: | | | | | |
| Interest charges on intercompany borrowings | | | | | | | | |
| Interest charges on other borrowings | | | | | | | | |
| Other expenses | | | | | | | | |
| Total costs and expenses | | | | | | | | |
| | | | | |
| Earnings before income taxes | | | | | | | | |
| Provision for income taxes | | | | | | | | |
Net Earnings | $ | | | | $ | | | | $ | | |
Condensed Statement of Comprehensive Income
| | | | | | | | | | | | | | | | | |
| Year ended December 31, |
| 2024 | | 2023 | | 2022 |
Net earnings | $ | | | | $ | | | | $ | | |
| Other comprehensive income (loss), net of tax | | | | | | | () | |
Total comprehensive income, net of tax | $ | | | | $ | | | | $ | | |
________________________
(*)Investment in subsidiaries includes intercompany receivables and payables.
AMERICAN FINANCIAL GROUP, INC. — PARENT ONLY
SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT — CONTINUED
(In Millions)
| | $ | | | | $ | | | | Adjustments: | | | | | |
| Equity in net earnings of subsidiaries | () | | | () | | | () | |
| Dividends from subsidiaries | | | | | | | | |
| Other operating activities, net | | | | () | | | () | |
| Net cash provided by operating activities | | | | | | | | |
| | | | | |
| Investing Activities: | | | | | |
| Capital contributions to subsidiaries | () | | | () | | | () | |
| Returns of capital from subsidiaries | | | | | | | | |
|
Purchases of investments, property and equipment | () | | | () | | | () | |
|
| Proceeds from: | | | | | |
| Maturities and redemptions of investments | | | | | | | | |
| Sales of investments, property and equipment | | | | | | | | |
|
|
Net cash provided by investing activities | | | | | | | | |
| | | | | |
| Financing Activities: | | | | | |
|
| Reductions of long-term debt | | | | () | | | () | |
| Issuances of Common Stock | | | | | | | | |
| Repurchases of Common Stock | | | | () | | | () | |
| Cash dividends paid on Common Stock | () | | | () | | | () | |
|
| Net cash used in financing activities | () | | | () | | | () | |
| | | | | |
| Net Change in Cash and Cash Equivalents | | | | | | | () | |
| Cash and cash equivalents at beginning of year | | | | | | | | |
| Cash and cash equivalents at end of year | $ | | | | $ | | | | $ | | |
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | Other | | — | | | — | | | — | | | — | | | () | | | | | | — | | | | | | — | |
| Total | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | | | | | | | | |
| 2023 | | | | | | | | | | | | | | | | | | |
Property and casualty insurance | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| Other | | — | | | — | | | — | | | — | | | | | | | | | — | | | | | | — | |
| Total | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | | | | | | | | |
| 2022 | | | | | | | | | | | | | | | | | | |
Property and casualty insurance | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| Other | | — | | | — | | | — | | | — | | | | | | — | | | — | | | | | | — | |
| Total | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | |
| | | |
| American Financial Group, Inc. |
| | |
| | | |
| | | |
| February 25, 2025 | By: | | /s/ Brian S. Hertzman |
| | | Brian S. Hertzman |
| | | Senior Vice President and Chief Financial Officer |
__________________________________________________________________________________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| | | | | | | | | | | | | | |
| Signature | | Capacity | | Date |
| | | | |
| /s/ Carl H. Lindner III | | Co-Chief Executive Officer and Director | | February 25, 2025 |
| Carl H. Lindner III | | (Principal Executive Officer) | | |
| | | | |
| /s/ S. Craig Lindner | | Co-Chief Executive Officer and Director | | February 25, 2025 |
| S. Craig Lindner | | (Principal Executive Officer) | | |
| | | | |
| /s/ Brian S. Hertzman | | Senior Vice President and Chief Financial Officer | | February 25, 2025 |
| Brian S. Hertzman | | (Principal Financial and Accounting Officer) | | |
| | | | |
| /s/ John B. Berding | | President and Director | | February 25, 2025 |
| John B. Berding | | | | |
| | | | |
| /s/ James E. Evans | | Director | | February 25, 2025 |
| James E. Evans | | | | |
| | | | |
| /s/ Gregory G. Joseph | | Lead Independent Director* | | February 25, 2025 |
| Gregory G. Joseph | | | | |
| | | | |
| /s/ Mary Beth Martin | | Director | | February 25, 2025 |
| Mary Beth Martin | | | | |
| | | | |
| /s/ Amy Y. Murray | | Director* | | February 25, 2025 |
| Amy Y. Murray | | | | |
| | | | |
/s/ Roger K. Newport | | Director* | | February 25, 2025 |
Roger K. Newport | | | | |
| | | | |
| /s/ Evans N. Nwankwo | | Director | | February 25, 2025 |
| Evans N. Nwankwo | | | | |
| | | | |
| /s/ William W. Verity | | Director | | February 25, 2025 |
| William W. Verity | | | | |
| | | | |
| /s/ John I. Von Lehman | | Director* | | February 25, 2025 |
| John I. Von Lehman | | | | |
| | | | |
| | | | |
| * Member of the Audit Committee | | | |
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